Interview with GE Oil & Gas: The role of small-scale LNG in the evolving gas marketplace

Hasan Dandashly's picture
Hasan Dandashly, President and CEO, Downstream Technology Solutions, GE Oil and Gas
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Interview with Hasan Dandashly, President and CEO, Downstream Technology Solutions at GE Oil and Gas, conducted by Gas Processing and originally published in the official Gastech 2015 show daily.

What do you see as some of the advantages of small scale LNG vs. large-scale LNG? How is small-scale gas processing transforming the developing world, as well as US infrastructure?

Hasan Dandashly: Gas is clearly becoming more abundant in the world. It’s one of the cleanest fuels, and it’s a fairly cost-effective fuel. To capitalize on this gas for many applications—power generation, industry, petrochemical production and transportation—a network is required. Often, the network remains the integral part of connecting the source of gas to the points of consumption, such as power, industry, transportation, etc.

The networks that connect these points are made of pipelines, of which the US has an abundance. However, as we know, building new pipelines is not cheap and is time consuming—they have to go through a lot of regulatory hurdles before they are built. LNG tankers (and CNG tankers, for shorter distances) are another part of the network. They enable gas to be liquefied in one part of the world and then moved to another part of the world for consumption.

However, it takes a while to build networks involving big LNG plants, tankers and pipelines. There are areas where you can speed up the development of the network by liquefying or compressing gas at a small scale, at the point where the gas becomes available, and then transporting it to the point of use. We call this the Virtual Pipeline, with alternative transportation methods, such as trucking, taking the place of physical pipelines (featured image). It supplements the network, and the benefits of that supplement and of the small-scale LNG process are faster speed to market and lower CAPEX, so gas demand can be met quickly and cheaply. There are multiple applications for this technology. In North America, there’s an application in the oil field, which GE has already demonstrated, through a JV with Ferus Natural Gas Fuels, in an agreement with Statoil. In this agreement, the JV is capturing flared gas in the Bakken shale play. We treat the gas, we compress it into CNG using GE technology, and then we move it to the rigs and fracing pumps in the Bakken using Ferus Natural Gas Fuels’ expertise in distribution. This strategy is good for the environment because we’re capturing gas that would be flared otherwise, and we’re also saving our customers money on diesel used to run rigs and fracing pumps.

Other applications for small-scale LNG in North America focus on transportation. With retrofitting, you can use LNG or CNG instead of diesel for heavy-duty trucking, locomotive, marine and mining operations. For some of these vehicles, natural gas can now be both the cargo and the fuel. Another application in North America is exports. Sometimes there’s less gas available to process, or it’s desirable to begin production at a smaller scale, with the option of expanding operations in the future, as capital allows. Big LNG plants require large input sources of natural gas and require investment in a large, full-capacity system upfront. But when you have a plant that’s assembled from 10 small-scale LNG trains, its operation and maintenance flexibility can be optimized. In the field, it takes a lot less time to put the modules together. Also, one train can be installed at a time, and the system can be scaled up by adding trains as is necessary or financially feasible.

At the international level, it gets very interesting. Small-scale LNG is developing in China and can be implemented within relatively small space constraints. A lot of transportation in China is driven by natural gas. Since they are developing the market for vehicles and other transportation methods, the demand for new vehicles is higher than in a more saturated market. New vehicles running on natural gas can be sold more easily, which is easier than retrofitting vehicles already on roads. Small-scale LNG also has an advantage in China because, from a regulatory perspective, LNG is taxed and priced differently than regular gasoline, to provide an economic advantage. […]

Small-scale LNG is an exciting space. It’s not an “either/or” with regard to largescale LNG, though; one doesn’t take away from the other. As gas becomes more available and more prevalent, small-scale liquefaction and compression, and the concept of a Virtual Pipeline, add to the network. The large-scale LNG plants will always be able to operate fairly efficiently and cheaply with large volumes of gas, but they take longer to build and can be more expensive than small-scale LNG plants.

Read the full interview by Gas Processing.

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