A Review of the Nigerian Energy Industry

Singapore adds infrastructure to remain major Asian energy hub

Mega oil gas petroleum refinery29 August 2013, News Wires – Singapore takes its role as an Asian energy hub seriously and constantly upgrades its infrastructure to support its status as the regional oil and gas centre.

Two projects currently undertaken by the government are an offshore hydrocarbons storage facility and an expansion in the capacity of the Singapore’s new liquefied natural gas, LNG, terminal, which received its first commercial LNG cargo May 7 – marking the start of operations and completion of the $1.33 billion (SGD 1.7 billion) Main Terminal Project.
Singapore’s Hydrocarbons Sector

The energy sector has been a revenue contributor to the Singapore economy for well over a century, ever since oil trading activities began in 1891.

Today, the domestic hydrocarbon industry has evolved, with business activity including refining, petrochemicals, storage and other related services, along with trading. Relevant data suggests that the oil and gas sector is still growing in Singapore, necessitating an expansion in infrastructure to keep pace with industry needs.
Singapore was one of the world’s top three export refining as well as oil and gas trading centres – with physical oil trade accounting for $375 billion – in 2007. It was the world’s busiest marine bunkering center and a major oil and oil product pricing centre, according to “Factsheet on the Energy Industry” compiled by Singapore’s Economic Development Board, EDB. EDB is the lead government agency for planning and executing strategies to enhance the country’s position as a global business centre.

Refining capacity in Singapore grew over 11 percent from 2007 to 1.395 million barrels per day in 2012, while oil exports from the country’s three refineries rose 4.3 percent from 68.1 million tons per annum (mtpa) to 71 mtpa over the same period, figures from BP Statistical Review of World Energy 2013 showed.

Bunker sales in Singapore jumped 35.2 percent from 31.5 mtpa in 2007 to 42.6 mtpa in 2012, with Singapore retaining its position as the world’s busiest market, figures from the Maritime Port Authority of Singapore indicated.

“All three legs of the oil industry – refining, trading and logistics – must grow in tandem for the whole industry to move to the next level,” EDB said.
To realise these objectives, the government has committed itself to growing the necessary infrastructure. Hydrocarbons storage capacity like the underground Jurong Rock Cavern, JRC, on Jurong Island – home of the country’s integrated energy and chemical industry – is being constructed, while additional LNG storage space would provide flexibility needed not just to meet Singapore’s future gas needs, but also to pursue new business opportunities in the LNG market.

Innovation on Energy Storage
Singapore has been constantly dogged by the issue of space constraint as it grows its energy sector. The island republic, being a major oil trading center, needed more storage capacity to cope with industry demands.

New ideas and solutions were floated, culminating in government’s decision to develop underground and floating storage in Singapore.

“Faced with the growing demand for oil storage, coupled with the scarcity of industrial land in Singapore, Jurong Town Corporation (JTC) ventured underground … in search of an innovative solution for more industrial space. This initiative resulted in the company unlocking the potential of subterranean depths beneath the sea, and carving out a groundbreaking solution for oil storage with the gigantic underground rock caverns off Jurong Island,” JTC – a government organization – said on its website.

The JRC, Southeast Asia’s first underground hydrocarbon storage facility, will create 51.91 million cubic feet (1.47 million cubic meters) of storage capacity for oil, including crude oil, condensates and naphtha, when it is fully completed in 2014.

Apart from JRC, JTC is embarking on the development of a very large floating structure, VLFS, for storing oil and petrochemical products. The process began with preliminary feasibility studies carried out by MPA, JTC and the National University of Singapore, NUS, which were completed in June 2007, JTC Assistant CEO Phillip Su told the StocExpo Asia Conference Oct. 2, 2007.

The VLFS is designed as a collection of large floating platforms which can either be moored to land or operated as standalone units, according to JTC. Its core structure will very likely be constructed from concrete, a material chosen for its fire-resistant properties. The VLFS comprises two rectangular modules, each with a storage capacity of 5.29 million cubic feet (150,000 cubic metres).

The structure would provide a total minimum storage capacity of 10.59 million cubic feet (300,000 cubic metres), or the equivalent of a Very Large Crude Carrier. As it will occupy only 17.29 acres (7 hectares) of foreshore space compared to 49.42 acres (20 hectares) of land for the same storage capacity, this will result in tremendous space-saving in land-scarce Singapore. Given that the proposed VLFS is a modular system, storage capacity can be increased easily when needed.

Progress on the VLFS, which is likely to be located at Pulau Sebarok near an existing tankfarm owned by Dutch-based Royal Vopak, has been slow since the Jurong Consultants-British Maritime Technology Group consortium completed a front end engineering design study for the project over a year ago.

However in January, the Building and Construction Authority provided some expectation that the project would move to the construction stage when it cited the VLFS as a major public sector project likely to be awarded in 2013. This was followed in May, when JTC issued a tender for marine and land oil investigation work to be carried out at the Pulau Sebarok site, with the data gathered expected to be used for engineering design and installation of the VLFS, Singapore’s Business Times reported.

A check with JTC by Rigzone indicated however that the engineering, procurement and construction, EPC, tender is still on hold.
“The [EPC] tender has not been issued yet, we cannot share the information on the project … it is not convenient to share the timeline [of the VLFS] project at this stage,” a JTC source told Rigzone.

When the EPC tender for the VLFS is finally issued by JTC, industry observers estimated that construction might take one to one-and-a-half year to complete. This timeline would depend largely on the type of material used in the project, with steel taking a shorter time compared to concrete.

Both steel and concrete “have advantages over the other although I personally prefer concrete as it has higher inertia … movement-wise it is more stable, good against fire and [can better handle the] impact from ships,” Professor C.M. Wang, director of Structures & Mechanics and Department of Civil and Environmental Engineering at NUS and a member of NUS’ Very Large Floating Structures Research Group told Rigzone.

The cost of constructing the VLFS is naturally an issue in the EPC tender. Construction “cost is a major driver,” Wang added.

EPC Tender Pending for Fourth LNG Tank
While the VLFS is inching slowly towards construction, work to raise throughput capacity at the LNG Terminal in Singapore to 6 mtpa remained on track, and construction of the third tank and secondary berth are expected to be completed as planned by the end of 2013.

To meet Singapore’s future energy needs, the government decided in October 2012 – eight months before the LNG Terminal began operations in May 2013 – to proceed with a plan to boost the infrastructure by constructing a fourth LNG tank and associated facilities, raising the capacity at the LNG terminal to about 9 Mtpa.

WorleyParsons Pte Ltd. was engaged to carry out the FEED, which forms the basis for Singapore LNG Corp, SLNG, to “invite tenders for the EPC contract for the construction of the new facilities, as well as develop the capital cost estimates for the expansion,” SLNG said in a press release.

“FEED has completed [as scheduled in the second quarter of this year] … a review process of the FEED is underway between SLNG and its shareholders,” a SNLG source told Rigzone.

When the FEED review is completed, SLNG will commence tendering for an EPC contractor for the fourth LNG tank and the associated facilities, which may happen sometime next year.

“Once the EPC tender is out, it may take about 3-6 months to award … and the fourth tank should be ready by 2017,” the SLNG told Rigzone.

Infrastructure Capacity Matters
Oil and gas remain a valuable sector in the Singapore economy, contributing almost 5 percent to the country’s gross domestic product in 2007. With the government keen on growing the pie further, steps have been taken to “strengthen the competitiveness of the energy industry … [including] innovative logistics solutions to enhance the synergies of refining, trading, and logistics activities to meet global energy demand,” the EDB said on its Energy website.

The development of the VLFS and the fourth LNG tank is part of the government policy to create sufficient infrastructure capacity to help Singapore remained a major energy hub in the region. While the VLFS is targeted at increasing storage space for liquid fuels, the additional LNG tank is intended – according to SNLG’s vision – to build up the country’s position as a center for LNG and gas trading in Asia, on par with what it has already achieved for oil trading.

Given the energy industry’s growing demands for storage in Singapore, these infrastructural projects are unlikely to have much idle capacity when they are fully operational.

The new capacity could help solidify Singapore’s position as a focal point for energy business in Asia as competition is bound to emerge from neighbouring facilities in Southeast Asia, particularly Malaysia. Meanwhile, the industry awaits the completion of these projects.

– Rigzone

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