Benefits, challenges and technologies: AG&P on Indonesia’s LNG industry

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Derek Thomas, Head - Advanced Research Unit, AG&P
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Global demand for gas is expected to increase by 2% a year and LNG is set to rise at twice that rate. Specifically, Indonesia’s gas demand will grow at an average annual rate of 5% over the next decade, with the biggest demand coming from the power generation sector.

In light of the Gas Indonesia Summit & Exhibition returning for its 2nd edition on 12th-14th July, Gastech Insights spoke to the Head of Advanced Research Unit at AG&P, Derek Thomas, to discover more about the technologies supporting Indonesia’s gas growth and the actions the industry should take.

Gastech Insights: What are the benefits and challenges of LNG distribution in Indonesia?

Derek Thomas: Demand for LNG continues to grow worldwide as countries replace diesel and heavy oils with a cleaner and cheaper fuel for power generation, shipping, ground transport and industrial use. However, in Indonesia the uptake remains slow because of a lack of the requisite infrastructure and investment to deliver reliable and sustainable supplies of LNG at a cost-effective price.

South East Asia requires substantial development to deliver gas into demand centers dispersed over complex geographies. It is estimated that $70 to $80 billion should be invested in gas infrastructure over the next decade.

Indonesia is a prime example of both the difficulties and benefits as it struggles to provide more and cleaner energy for a widely-distributed demand base that varies greatly in size and is not interconnected by a monolithic grid of either wires or pipelines.

Gastech Insights: What technologies will facilitate Indonesia’s small-mid LNG sector?

Derek Thomas: The huge expansion of LNG usage over recent decades has created a range of supporting technologies and procedures that have been well proven in demanding scenarios. These cover the full value chain from initial liquefaction through shipping, cargo transfer, storage, regasification and last mile distribution.

For Indonesia, the exciting prospect is not any particular technology, but how these proven systems are brought together to create effective and economic infrastructure which supports the burgeoning next generation LNG marketplace.

Specifically, AG&P is integrating technology from the best global suppliers and appropriately applying its own engineering skills in scaling the systems to enable delivery of clean and cost effective energy.

Gastech Insights: What actions are needed to support Indonesia’s gas industry growth?

Derek Thomas: Natural gas is being adopted across Indonesia as a preferred fuel for cleaner power generation, but many locations do not have access to traditional pipeline gas. For those sites, LNG must be made available at economically viable prices and on more flexible contract terms.

This relies on our ability to build out a delivery network that is suitably scaled for a wide range of potential energy consumers. AG&P provides a range of smaller vessels, import terminals, storage and regasification facilities, and truck loading bays which are designed to be cost effective at the scales required by smaller consumption centers.

The overall demand for LNG across Indonesia is very substantial, but many locations individually cannot support the investment in infrastructure needed to provide a base for transition to LNG. Appropriate aggregation of numerous localized consumers into viable regional markets will be a key aspect in the development of the Indonesian internal LNG market.

Gastech Insights: What are you looking forward to at the Gas Indonesia Summit in July?

Derek Thomas: Many of the issues facing Indonesia with respect to internal distribution of LNG are shared by other locations globally and the technical pieces are available to solve these problems.

The Gas Indonesia Summit provides a unique forum to discuss how these concepts can be applied within the Indonesian context to move projects forward. This interaction is of immense value and AG&P is excited to be part of GIS and advancing Indonesian gas development.

Share your insights and join the conversation: Do you believe LNG is the key solution to solve Indonesia's growing gas demands? Leave your comments below.

To learn more, Julian Thomas, AG&P's VP is discussing "Small-scale LNG Supply Chain Optimisation" at the Gas Indonesia Summit & Exhibition, 12-14th July 2017 at the Jakarta Convention Centre. Buy your delegate pass here.

Image courtesy AG&P