The government turned down an offer to place the LNG storage facility up to 100km offshore and instead preferred to have the facility placed permanently inside Marsaxlokk port, The Sunday Times of Malta has learnt.
Sources close to Enemalta told this newspaper the second-placed bidders for the new power station, US-based Endeavor Energy, had proposed to supply a modern Floating Storage Re-gasification Unit (FSRU) to be located several kilometres outside the port to supply the new plant with re-gasified gas through an underwater pipeline.
However, despite Endeavor’s offer and its technical assurances to Enemalta that the infrastructure proposed will not take longer to build than placing a tanker permanently inside the port, the government still opted to choose the proposal made by Electrogas, the only consortium with Maltese shareholding.
The sources also confirmed that the option being proposed by Electrogas – to use an old LNG carrier as a permanent storage facility – is “unique” with no similar ports in the world using the same system.
On the other hand, an FSRU is considered to be less risky from a safety point even if placed inside a port.
“The vessel offered by the second-placed bidders is purpose-built as opposed to a conversion of a 30+ year old former LNG tanker to be placed in Marsaxlokk,” the sources said.
“The FSRU vessel offered is much cleaner and safer to operate than a converted carrier and is powered completely by natural gas-boil off versus the use of diesel of heavy fuel oil typically used by concerted carriers,” they said.
Contacted at their Texas headquarters, a spokesman for Endeavour declined to comment stating only that “the company is bound by a confidentiality clause and cannot give details on its proposal. Since the deal has not been closed yet we want to respect our confidentiality clause,” he said.
In a story which appeared in Times of Malta yesterday, Electrogas confirmed that locating the floating storage unit outside Marsaxlokk bay is not on the cards due to timeframes for the completion of the project and its related costs.
The winning consortium, which still has to sign the final contract, said the option to place the storage tanker offshore would also be costlier and will mean higher electricity tariffs for consumers.
According to the plan chosen by the government, an LNG storage tanker is to be placed permanently inside the port adjacent to the new power plant.
A new infrastructure including a new jetty and a re-gasification plant has to be built to accommodate the storage tanker.
On the other hand, an FRSU place outside the port will not need any land based re-gasification plant as re-gasified gas will be pumped directly from the vessel to fire the turbines in the new power station through an underwater pipeline.
The latter technology is already being used in many parts of the world including in Livorno, Italy.
FSU vs FSRU for new power plant:
Option 1:
A Floating Storage Unit is an old LNG carrier converted to serve as a permanent storage facility instead of appropriate tanks offshore. It has to be refilled by another LNG carrier berthed adjacent to it.
An FSU could not be placed offshore, as least not at any great distance, because the piping between the FSU and the land-based re-gasification systems would not be practical.
This would require special insulated cryogenic piping for transporting LNG, which would be extremely costly, and is practically impossible to do.
Option 2:
The Floating Storage and Re-gasification Unit (FSRU) can be located offshore at a distance between 10km and 100km. The difference is that the FRSU delivers gas rather than liquid. It is easy to transport gas in underwater gas pipelines, is considered routine for the industry and is cost efficient even at significant distances.
An FRSU could be placed either inside or outside a port. There is usually no impact on construction time whether it is in a port or offshore. An existing purpose-built FSRU can be connected and commissioned in a short time. Some of these projects have been completed in less than a year. No re-gasification unit and jetty are needed with an FSRU.