GENERAL QUESTIONS
PERU LNG is the first liquefied natural gas processing plant in South America. Its installation makes Peru a leader in the energy industry. It is also the largest private investment in hydrocarbons made in the country, amounting to USD 3.8 billion. The large scale of PERU LNG shows that Peru is an attractive destination for large investments. PERU LNG raises the position of Peru as a country in the international community in terms of investor confidence and possibilities for economic development.
PERU LNG is an engine for economic development and employment generation. During the peak of its construction phase, PERU LNG employed more than 20,000 Peruvian workers in the installation of the pipeline and construction of the LNG plant. During the three-year construction phase, Peruvian professionals and technicians participated in intensive training programs that complemented the transfer of technology and knowledge for an unprecedented industry in the country. In the construction phase (2006-2010), PERU LNG generated a cumulative impact of 2% in GDP growth.
PERU LNG is a Peruvian company comprised of four leading companies in the global energy industry: Hunt Oil (United States), MidOcean (United States), Shell (The Netherlands) and Marubeni (Japan).
The liquefied natural gas processing plant installed by PERU LNG is located at kilometer 163 of the Panamericana Sur highway, south of Lima.
LNG is liquid natural gas obtained by cooling natural gas to -261°F (-163°C). It is an odorless, colorless, non-corrosive, non-toxic, and environmentally friendly liquid. This facilitates its transportation over long distances by reducing its volume by 600 times.
The operation consists of three components: a 408-kilometer pipeline, a cryogenic processing plant with two storage tanks, and a marine terminal.
The PERU LNG project, consisting of a natural gas processing plant, a gas transportation pipeline, and a port terminal, was built on the basis of various construction contracts, the most important of which were the engineering, procurement, and construction (EPC) contracts with the companies of the Chicago Bridge & Iron (CB&I) group for the plant, with Techint S.A.C. for the pipeline and with the CDB Consortium, made up of Odebrecht, Saipem and Jan de Nul, for the port terminal. The construction activities took approximately 4 years, from 2006 to the inauguration of the plant on June 10, 2010.
The main contractors during the construction phase included CB&I, which was in charge of building the plant; CDB, which was in charge of building the marine terminal; and Techint, which installed the gas pipeline. In addition, dozens of Peruvian subcontractors also participated, including Graña y Montero, Cosapi, Translei, Minera San Martín, Cosmos, Aceros Arequipa, Técnicas Metálicas, Esmetal, and Sima.
The first shipment was made on June 22, 2010.
The destination of the LNG cargoes is determined by Shell International Trading Midlle East (SITME).
TECHNICAL QUESTIONS
PERU LNG uses natural gas, which is transported to the plant for processing.
Natural gas is a clean fuel composed basically of methane and ethane, which is found at great depths in the Earth. It has no odor, no color, is lighter than air and does not mix with water. It has become one of the most demanded energy sources along with hydropower. Natural gas is the cleanest fossil fuel currently available; it produces fewer emissions and pollutants than coal or oil.
No, although both are fluids in a gaseous state, there are certain differences between the two. Below we have specified the main differences:
- The gas that comes in domestic balloons is known as LPG or liquefied petroleum gas, which is mainly composed of propane, which is a heavier gas than air.
- The gas that comes in domestic gas cylinders (LPG) is pressurized between 60 to 120 psi of pressure (similar to the pressure that inflates the tires of cargo trucks) and flavored with a chemical agent that gives it the characteristic smell of "rotten egg" to facilitate its detection in homes.
By contrast…
- Natural gas is composed primarily of methane, which is a lighter fluid than air.
- The natural gas transported through the pipeline is pressurized at very high pressure, in some cases exceeding 2000 psi, which is 20 times the pressure of a truck tire. In addition, the natural gas transported by PERU LNG does not contain any flavoring agent.
The natural gas transported through the pipeline is pressurized at very high pressure, in some cases exceeding 2000 psi of pressure, which is 20 times the pressure in the tire of a cargo truck. Therefore, it is not possible to make a connection to the pipeline to supply homes directly. This situation is very similar to the high and medium voltage electrical transmission lines, which carry a lot of energy through the cables and in order to be able to use this energy, it must first pass through electrical substations so that it is suitable for domestic use at 220 volts.
For this reason, the Government has designated other companies that are in charge of adapting the conditions of natural gas so that it can be distributed to consumers (homes and businesses) in a safe manner.
LNG is obtained by purifying natural gas and cooling it to a temperature of -163° Celsius (-261°F). Through this cooling process, natural gas is transformed into a liquid, which reduces its volume by 600 times.
Natural gas can be transported by pipeline from the production area to consumers at relatively close distances. However, installing and maintaining a natural gas pipeline over long distances is not economically efficient. If we reduce the volume of natural gas by converting it to liquid, it can be transported over long distances in ships or LNG tankers.
In the event of a leak, when the LNG gets in contact with water at room temperature, it forms a very thin layer of ice on the surface until the LNG rises in temperature and evaporates. The LNG does not mix or sink in water, nor does it remain for a very long time in a liquid state on the surface so as to cover living species or objects. No clean-up operation is required, as the rapid evaporation of LNG leaves no residue.
An accidental LNG leak is unlikely to cause a fire because LNG evaporates almost instantaneously and, since it is lighter than air, it disperses quickly.
QUESTIONS REGARDING CONSTRUCTION AND INDUSTRIAL SAFETY
The total land area is 521 hectares (5.21 km²). The plant covers 50 hectares.
PERU LNG installed a 34" diameter, 408 km pipeline from the point of interconnection with the existing TGP pipeline in Chiquintirca, San Miguel de la Mar, Ayacucho, to the LNG plant. Installation of the PERU LNG pipeline began in 2007 and was completed in early 2010.
The pipeline is listed in the Guinness Book of Records as the highest gas pipeline in the world, with an altitude of 4901 meters above sea level.
Pipeline transportation is the safest way of transporting this type of fuel from the extraction wells to the city for distribution to homes by the corresponding companies. The PERU LNG pipeline has had no failures (0 failures) in its more than 10 years of operation.
The marine terminal is composed of a 1.3 km. long pier, a berth for cargo ships, a 300-meter wide dredged navigation channel and an 800-meter long breakwater to allow the safe loading of LNG onto LNG carriers.
During the construction phase, approximately 20,000 direct and indirect jobs were created. In 2009 alone, during the peak of the construction phase, PERU LNG employed 10,675 workers, of which 90 % were Peruvian.
One hundred percent of the unskilled labor required during the construction phase was hired in the communities and localities of the areas of direct influence. More than 5600 workers were hired in Chincha and Cañete and more than 4000 in the communities located along the pipeline route.
It is important to highlight that more than 50% of the Peruvian workers employed during the construction phase was made up of skilled workers. This project has been possible thanks to the work of Peruvian labor.
PERU LNG develops a series of social and environmental investment initiatives to fulfill its commitment to improve the well-being of the communities in the areas of direct influence and to benefit local populations in a sustainable manner. These programs are developed based on the needs of the communities, which are identified through participatory processes with the support of the population. Their purpose is to contribute to improving the productive capacity of farmers and ranchers, training for fishermen, strengthening local management skills, improving health and education conditions, and promoting the care and conservation of the environment and natural resourceses.
The project was designed and built according to the highest standards of the global LNG industry.
Processes and equipment are monitored to achieve safe, efficient operation, and environmentally acceptable noise levels. PERU LNG has training programs in place and safety measures are fully complied with. There are preventive and corrective procedures and permanent communication between operators, workers, and local communities.
Contingency plans are in place to minimize the likelihood of incidents and ensure a timely and effective response. These plans also ensure that incidents and related risks are properly communicated to the communities, government organizations, and all those who must respond in case of an emergency.
The supervisory body commissioned by the Government to verify the actions of PERU LNG is the Regulatory Agency for Investment in Energy and Mining (OSINERGMIN, by its Spanish initials). In this case, OSINERGMIN frequently verifies that PERU LNG complies with all the requirements established in the Hydrocarbon Pipeline Transportation Regulation, which was approved by Supreme Decree 081-2007-EM, as well as with applicable international standards.
In addition, PERU LNG proactively conducts internal audits by specialized consultants who verify that the operation and maintenance of the pipeline are carried out in compliance with industry best practices.
Natural gas is lighter than air. In the hypothetical event of a leak, natural gas would dissipate rapidly under normal weather conditions. There are no hazards related to skin contact, skin absorption, eye contact, or ingestion.
QUESTIONS REGARDING SOCIAL RESPONSIBILITY
PERU LNG develops a series of social and environmental investment initiatives to fulfill its commitment to improve the well-being of the communities in the areas of direct influence and to sustainably benefit the local populations. These programs are developed based on the needs of the communities, which are identified through participatory processes with the support of the population. Their purpose is to contribute to improving the productive capacity of farmers and ranchers, training for fishermen, strengthening local management skills, improving health and education conditions, and promoting the care and conservation of the environment and natural resources.
Ongoing meetings are held with authorities, organizations, institutions, and representatives of the population to inform them about the activities performed by the company. Local media, such as radio stations and/or the press, are also used. Members of the communities and the general public communicate with the company through the telephone exchange, website, or by visiting the PERU LNG offices in Lima, Cañete, Chincha, or Huamanga.
QUESTIONS REGARDING ENVIRONMENTAL ISSUES AND CULTURAL HERITAGE
PERU LNG has four Environmental and Social Impact Assessments (ESIA) that were approved in 2006. These studies were carried out prior to any construction activity in order to identify, prevent, and interpret the possible social and environmental impacts of the project. The ESIAs were presented at public hearings and were commented on by the population and their representatives. All information on the Environmental and Social Impact Studies can be found on the PERU LNG website: www.perulng.com.
PERU LNG not only complies with high national and international environmental standards, such as the performance standards of the IFC (the financial arm of the World Bank) on social and environmental sustainability and the environmental policy of the IDB, but also implements a series of additional environmental conservation programs. An exemplary program is the Biodiversity Monitoring Plan (BMAP), which is composed of a series of site- and species-specific plans and programs aimed at protecting the natural resources near the pipeline, the plant, and the marine terminal.
PERU LNG has carried out a series of pre-construction works to identify and avoid archaeological sites along the area comprising the plant and the pipeline. The findings were rescued for subsequent scientific investigation. As for the sites encountered by archaeological monitors during construction, work was halted until the salvage excavations were completed. All work was carried out under the supervision of the National Institute of Culture (currently the Ministry of Culture), the responsible Peruvian governmental entity, and the recovered artifacts and information were handed over to that institution.
PERU LNG and the National Institute of Culture (INC) worked together to develop detailed studies and publications about the preserved materials. Exhibitions of the findings were also organized in museums in Lima and Ayacucho in order to contribute to the knowledge of the national culture.
FINANCE RELATED QUESTIONS
PERU LNG has received USD 2.25 billion in financing from international entities and private Peruvian institutions. International financing came from the Inter-American Development Bank (IDB), the World Bank International Finance Corporation (IFC), the Export-Import Bank of the United States, the Export-Import Bank of Korea, the Italian Export Credit Agency (SACE), Société Générale, BBVA, Calyon, Sumimoto, ING, Mizuho and the Bank of Tokyo-Mitsubishi. In addition, the company successfully placed USD 200 million in bonds in the local market. Shareholders made a capital contribution of USD 1.6 billion. In addition to providing financial support, these institutions also permanently audit PERU LNG in term of its social and environmental performance.
The total investment required to develop the entire project amounted to approximately USD 3.8 billion.
