Securing LNG supplies

Sakhalin Island’s oil and gas fields hold recoverable reserves estimated at 45 billion barrels of oil equivalent, close to the overall volume of unexplored resources in the North Sea.

The LNG plant near Prigorodnoye in the south of Sakhalin Island has a capacity of 9.6 million tonnes of LNG a year. Full production capacity was reached in 2010, placing it sixth among all the LNG plants operating in the world.

LNG sold in long-term contracts

Sakhalin Energy has agreements to supply LNG to Japan — the world’s largest market for LNG — South Korea and other markets for up to 20 years. About two-thirds of Sakhalin Energy’s LNG will be exported to nine buyers in Japan, with the remaining third going to South Korea and North America. LNG is used for heating and cooking in homes and to generate power.

From the first LNG cargo sent on March 29, 2009 until the end of 2010 Sakhalin Energy exported more than 250 LNG cargoes. 152 more standard LNG cargoes were scheduled to be delivered by the end of 2011.

Starting in 2011, it intends to gradually ramp up the production capacity of the LNG plant by 1.5% annually for the coming years to help increase its market share.

In March 2011, when a major earthquake and a subsequent tsunami shook Japan, Sakhalin Energy provided it with additional LNG supplies.

Harnessing the cold

Shell pioneered the commercialisation of LNG technology more than 40 years ago. A clear, non-toxic liquid that forms when natural gas is cooled to –162 degrees Celsius (-260 Fahrenheit), LNG can be transported by sea in specially designed ships and stored more easily than natural gas because it occupies up to 600 times less space. In Sakhalin, the cold weather provides a helping hand.

For Sakhalin-2, Shell developed a two-stage liquefaction process that takes advantage of very low temperatures to cool the natural gas using a special refrigerant mix and an air-cooling process. The composition of the mix can be changed to suit the colder climate in winter. Thanks to creative engineering solutions like these, Sakhalin-2 uses 6% less energy than a similar Shell facility in the Middle East and 9% less than a Shell plant in the Far East and turns the gas saved into LNG. It also produces less carbon dioxide.

Before shipping, the LNG is stored in two insulated storage tanks. The earth beneath the tanks is warmed electrically to prevent freezing. Frozen soil expands, and would destabilise the ground beneath the tanks.

Ice-breaking LNG carriers

The LNG is loaded on LNG carriers from an 805-metre long jetty in an operation that can take up to 16 hours. Customers’ vessels pick up LNG from the newly built Prigorodnoye port. In addition, three carriers each with a capacity of 145,000 cubic metres were specially built in Japan for Sakhalin Energy for shipping LNG — the Grand Aniva, Grand Elena and Grand Mereya. Their extra-thick steel hulls can plough through ice.

All key components at the LNG plant have been engineered to survive the most severe earthquake that can be expected in the area measuring up to 7.5 on the Richter scale. Such an earthquake is only expected to occur once in 1,000 years on the southern tip of Sakhalin Island. Cross bracing with girders on steel structures adds extra strength while reinforced concrete structures were made thicker. Key joints were also reinforced.

The two LNG storage tanks were designed not to collapse or leak even in the case of an earthquake roughly equivalent to one that destroyed over 3,500 houses and damaged 11,000 in Niigata, Japan in 1964 — an earthquake of this magnitude is only expected to occur in the area once in 3,000 years. The tanks are fixed to their reinforced concrete foundations to limit motion.

Construction of the LNG plant started in August 2003. At its peak around 10,000 people from more than 40 countries were employed on the site.