Currently, small-scale LNG allows enhanced access to clean and affordable energy as the global population is soaring, and at the same time, boosts rapid maritime and land transport expansion.
On the supply side, the development of small-scale LNG supply chains and use of natural gas as a transport fuel has created considerable excitement as a new source of demand in an expected oversupplied LNG market for few years to come. On demand side, the ‘chicken & egg’ dilemma has been positively solved by demonstration and political support. LNG as a fuel has finally captured full attention from the gas industry itself and from much-diversified demand segments, including fast-growing economies, maritime and transport sectors, power generation and final users.
It has been a recurrent debate if LNG is a new commodity or just a way to bring natural gas to markets. Both are true realities. What matters is that small-scale LNG – when gas is liquefied and stored in small containers – opens to new markets much quicker than pipeline gas. It delivers an adequate and long-term solution to new territories and market segments.
Natural gas is an abundant resource with – to the contrary of oil – geopolitically less concentrated reserves. In spite of initial supply concerns, the main key drivers are the LNG affordability and availability: there is a primary distribution of LNG in most coastal countries with merely few exceptions. Only “the last tiny mile” to retail final clients needs to be covered with additional infrastructures. This is probably why we call it “small-scale”, this is not a big issue.
LNG is now seen as the right fuel for clean power generation and to bring energy to remote places. So-called virtual pipelines are substitutes for physical pipelines that distribute gas via land or sea shipping. LNG is also a fuel of choice for transport of any kind, including short-sea shipping and global maritime, but also inland navigation, road transport and non-road vehicles or railways.
We are on an irreversible pathway to renewable energy and, despite being a fossil fuel, natural gas has key environmental benefits that could make it the fuel of the 21st Century. The shale gas revolution has opened up vast potential supplies of natural gas that can generate cleaner electricity than coal and will be a much cleaner fuel than oil products having high sulphur and nitrogen oxides contents. Natural gas ultimately can serve as a bridge fuel to a lower-carbon future.
Small-scale LNG brings many dimensions to the market as the innovation will disrupt gas, fuel and transport industries. Small-scale LNG opens new trading and supplies opportunities between traditional up-, mid- and downstream business. Besides the traditional large-scale LNG gas carriers, we see the emergence of mid-scale feeders and “milk-delivery” concepts.
New efficient solutions are being announced every week in the small-scale LNG world, either to low-cost liquefaction in smaller quantities or to enhance distribution in parcels and facilitate bunkering with cost-effective breakthrough infrastructures: standardized containers, LNG-brick tank concept, floating pontoon, articulated barges, flexible hoses, and more.
Innovation is coming into the business side too. Small-scale demand has accelerated the mid-scale LNG trade, market globalisation and gas price discovery. LNG will develop into a stirring global market with gas becoming a real commodity. A profound and liquid spot market is key to manage new flexibilities that are increasingly needed to balance regional supplies with fast-growing but unpredictable demand regional markets.
To conclude, small-scale LNG might be more impactful on fuel markets than the gas industry itself. LNG bunkering and small-scale LNG distribution won't transform the global LNG demand. But it has the potential to accelerate structural changes in the way LNG is traded and shipped worldwide, opening new markets and promoting flexible and mid-scale trading and storage. It will drive significant changes in the global fuel supply map, adding new major bunkering locations.
If you would like to hear more on small and mid-scale LNG developments, be sure to register to attend the 2018 Gastech Exhibition and Conference and gain exclusive industry insights by market experts.
Image courtesy of Wison - Versatile LNG distribution vessel, designed to deliver small LNG parcels to multiple locations with shallow draft
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