Following its successful entry into the LNG (liquefied natural gas) sector, Teekay has joined with Sea NG and Marubeni in a consortium which has taken a leading position in the emerging CNG (compressed natural gas) market and is prepared to build the world’s first purpose-built CNG vessels, says Captain Gary Baron, Director, Business Development, Teekay Gas Services.
Teekay is ready to build a CNG ship using Sea NG’s patented Coselle CNG containment system and ship design. Photo courtesy of Sea NG.
“We believe in 2008 we will see the first projects announced, and we hope the first CNG vessels will be in the colors of our consortium,” he says. “Momentum has been gathering since 2002 – and if a customer comes to us tomorrow to build them a ship, we are ready.”
In January, Teekay signed an agreement with Canada-based Sea NG, a world leader in the development of CNG containment technology, and Japanese trading house Marubeni, a global player in implementing major capital projects. Under the agreement, the companies will work together to develop CNG projects worldwide.
Teekay will build and operate the ships, Marubeni will expedite financing, and Sea NG will provide its patented Coselle CNG containment system and ship design, the only one so far approved by the American Bureau of Shipping.
Entering the CNG sector is a good fit for Teekay enabling it to utilize strengths and experience from the offshore and gas transportation sectors of its business.
“This agreement allows us to offer our customers a wider range of gas transportation solutions,” Capt. Baron notes. “We will be able to provide an alternative to LNG where there is a requirement to deliver smaller quantities of energy over shorter distances.”
The optimum distance for CNG vessels is between 150 and 1,500 nautical miles, a market segment that cannot effectively be served by pipeline or LNG transportation.
A significant amount of the world’s natural gas, known as “stranded gas” cannot currently be commercialized because its source is too small or remote. However, CNG technology enables marginal fields to be brought into commercial production.
In the case of offshore oil and gas discoveries, CNG aids environmental protection by eliminating the need for “flaring off” gas or re-injection into the ground. Instead the gas can be transported as CNG and commercialized thereby helping fund future oil field exploration and development.
Capt. Baron says the market potential is considerable and CNG one day may equal LNG in importance to the global energy supply chain. He adds, “Where there is only relatively small amounts of gas, shipping it as CNG does not compete with the LNG market, in fact it complements it.”
He says Teekay is “very excited” to be at the forefront of this new industry, adding a new business stream to its growing portfolio of midstream solutions and expanding its customer base to benefit smaller producers.
“This project reflects our ability to step outside our comfort zone in the development of new services.” he concludes. “When it comes to transporting CNG – the Teekay consortium is ready.”