Regional LNG with new concept technology and business model

JungHan Lee's picture
JungHan Lee, President, LNG Solutions
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Energy is indispensable for human welfare and industrial developments. For developing countries, new sources of energy are strongly needed, and gas and LNG take an important role with relative abundance in the regions. Whereas conventional LNG has been developed targeting larger volume of production for long distance and overseas export, there are many necessities for regional energy infrastructures and technologies which are different from those of traditional LNG. In developing countries, small scale gas and LNG sometimes compete with diesel oil rather than large scale pipeline gas or LNG.

At the same time, there are many small scattered onshore and offshore gas sources to be monetized for domestic markets in the regions. Typical large scale LNG aims to export up to 10,000 Km radius, whereas, small and medium scale LNG may need only a 500 - 2,000 Km boundary. Therefore, business models and technologies for overseas export LNG and the ones for regional LNG should be different from each other.

Linking with existing gas infrastructures: In developing countries, the gas infrastructures are widely different from those of traditional large scale LNG importing countries. Pipeline systems may be limited to certain provincial areas and CNG may be widely used before entering the LNG system in developing countries. Therefore, localized LNG and CNG combined system can be more appropriate in some cases.

The energy industry provides high quality stable jobs for many people, which is why solving energy problems in a country can be regarded as a strong opportunity for national industry developments. Maximizing local portions in technology, investment, and operations are important for the national industry from a long-term point of view. With this, the LNG industry in developing countries may need different approaches in technology and business model.

Meeting growing regional gas demands: Despite the growing new demands in the developing countries, domestic gas fields have not been properly developed because of the small unit of production and expensive unit costs. In this regard, new technologies suitable for small and medium scale LNG development would be necessary.

To overcome the conflicting tasks of small scale production and unit price competitiveness, the new concept, Cluster LNG, has been developed. Cluster LNG:

  • Adopts higher pressure and consequent higher temperature liquefaction together with efficient refrigerants for the corresponding pressure and temperature range.
  • Provides minimum gas delivery price to end-users by integrating liquefaction, transportation, and regasification for specific locations and conditions.
  • Due to the CO2 and nitrogen tolerant characteristics of Cluster LNG in the feed gas; acid gas treatment system and nitrogen rejection system may be simplified or omitted.

The liquefaction energy performance (KJ of required energy /Kg of LNG production) and CO2 emission index (CO2 emission ton / produced LNG ton) of Cluster LNG surpass those of high-end large scale LNG plants. The Cluster LNG technologies have been verified through theoretical studies and a series of pilot plant operations.

Inherent high performance of Cluster LNG naturally enables low initial and operation costs, and the reduced CAPEX and OPEX would provide contingencies from commercial and technology uncertainties due to: adverse feed gas price, LNG sales price, EPC cost, marketing, and other factors. The unit cost competitiveness activates stranded onshore and offshore gas field developments.

In small scale regional LNG, selection of efficient liquefaction process, flexibility with existing CNG system, and regional specific solutions would be important criteria to consider. LNG produced from the small-scale LNG plants would contribute to the regional welfare and industrial developments by maximizing local potions and by facilitating stable LNG supplies to many domestic regional consumers.

Share your insights & join the conversation: Do you agree - Can the Cluster LNG concept overcome small scale production and unit price competitiveness? Leave your comment below.

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