Lanner Helps Fluxys LNG Fine Tune LNG Terminal Capabilities

Background

Fluxys LNG is the operator of the LNG receiving terminal at Zeebrugge and is part of Fluxys which since the demerger in 2001, is an independent natural gas transport company. As a leader in the transport sector in the heart of Europe, Fluxys LNG plays a key role in the management of flows in the European gas market.

Fluxys has over 800 employees and a consolidated balance sheet total of 1,836 million euro (year 2003). Some 700 collaborators are responsible for maintenance, operation and development of the gas infrastructure: a natural gas transport network in Belgium comprising some 3739 km of pipeline, associated infrastructure, an underground storage facility and also a terminal for liquefied natural gas (LNG) in Zeebrugge.  With 18 points of connection to natural gas sources and neighboring networks, the Fluxys network is one of the best-interconnected systems in Western Europe.

The Zeebrugge LNG terminal currently has a capacity of 4.5 billion cubic meters (BCM) of natural gas per year. This represents around one third of the gas consumption in Belgium.

The full capacity of the Zeebrugge LNG Terminal is contracted until early 2007 by one shipper Distrigas. In line with the European Gas Directive which provides for third party access (TPA) to key gas infrastructure assets, Fluxys LNG launched an open season to gauge the market interest in using the terminal after that period. This resulted in a number of shippers expressing a serious interest in booking capacity from 2007 to an extent that the re-commercialization of the terminal could also require an expansion to take place (additional storage, additional send out capacity and a nitrogen based gas quality conversion facility). 

During the follow-up discussions, individual shippers expressed concerns over the guarantee of their individual access in a multishipper environment of the LNG Terminal. The expansion of capacity indeed means that most of the equipment blocks within the terminal need to be expanded, from tank storage through to vaporization equipment. Failure to create the right capacity at every one of these points could cause a range of problems including insufficient space in storage to discharge a tanker at the right time, or failure to deliver the required send out rate of the right quality of gas to the gas networks.

Fluxys LNG therefore had a requirement to provide evidence to the LNG shippers that the Zeebrugge terminal will have a capacity of 8.5 BCM per year so that they can be certain that the quantity of LNG the shippers intended to to deliver could be handled without interruption by the terminal. The shippers were not prepared to rely solely on Fluxys analysis and insisted on an independent review so Lanner was invited to certify the capacity.  Lanner, in close co-operation with Fluxys, developed a model based on their extensive knowledge of the LNG and shipping sectors incorporating the shipping activities of each of the prospective suppliers. The model also incorporated the dynamic scheduling of their deliveries to coincide with available slots, tidal and weather behavior at the port as well as operational constraints and behaviors within the terminal. This gives the model the same restrictions and likely behaviors as will be encountered in reality.

Results

Lanner and Fluxys LNG ran experiments and fine tuned the behavior of the model which proved that the required capacity existed in the terminal, and allowed the contracts to be set at a combined total in excess of 9 BCM per year compared with the initial target of 8.5 BCM per year.  Each supplier has contracted for the right to discharge and regasify a quantity of gas per year. RasGas II has rights for 4.5 BCM per year, Distrigas has rights for 2.5 BCM per year and Tractebel Global LNG has rights for 2.1 BCM per year, all for fifteen to twenty year period starting in 2007.  In order to meet this demand, Fluxys LNG is investing 165 million in doubling the terminal’s capacity by 2007.