At Ahart Solutions International, we envision a future where natural gas will play a major role in our energy mix. Advances in technology and an ever-evolving market are the main factors driving small scale LNG.
What is the small scale LNG technology? Generally, small scale LNG could be segmented into nano and micro LNG:
1. Nano LNG – This application is ideal for flared gas of 1-6 mmscfpd. Known as a CryoBox, this unit could produce up to 15 metric tons or 700 mmbtu of LNG per day. This solution could be easily scaled up for added capacity. Distribution is achieved by using cryogenic hoses to fill intermodal tanks.
2. Micro LNG - The building blocks of a micro LNG production site are very similar to the conventional scale projects. Modular in design these plants are prefabricated off-site and delivered on site in modules or trains. It means it could be scaled up faster and more cost-effectively than conventional plants. Typically these plants could produce from 100,000 gallons or 8624 mmbtu per day to 1 M gallons or 82,644 mmbtu per day. We add to this a truck filling rack for filling 40ft intermodal tanks with a capacity of 18MT or 900 mmbtu.
3. Virtual pipelines – Virtual pipelines are substitutes for physical pipelines that distribute gas via land or sea transport. They replicate the continuous flow of energy via transportation logistics using trucks or ships. We combine truck filling facilities with intermodal tanks, trucking, and freight services to move LNG from producers to consumers. Regasification occurs either at the receiving terminal or at the customer’s site.
Market trends: Curtailing a temperature increase of 2 degrees Celsius represents one of our highest priorities -adopting cleaner forms of energy our greatest challenge in the coming century. By comparison, natural gas is cleaner burning than coal, diesel and other types of fuel oils. It has virtually no sulphur and has 40% less carbon dioxide than diesel and 60% less CO2 than coal. Institutions such as the IMO implemented stringent standards for vessels cutting sulphur emissions from 3.4% to 0.5%. While some have chosen to install expensive scrubbers the more popular choice is to convert to LNG. We expect to see new builds adopt LNG driven engines and a growth in LNG bunkering. Shell has already commissioned its second LNG bunkering vessel with a capacity of 4000 cbm.
In its 2018 LNG outlook report, Shell has forecasted that by 2030 LNG would account for 45% of fuel demand making it the choice fuel over renewables at 18%, oil at 12% and coal at 2%. Power generation will account for 45% followed by industry, agriculture and transportation. We are seeing a greater uptake in the market by power plants and industries that want to substitute coal and diesel for natural gas. For example, there is a growing trend in Africa and Asia to develop more power generation capacity. Governments in Angola, Nigeria and Guinea Conakry, for example, have amended their legislation to allow Independent Power Providers (IPPs) to set up private power generation plants. In most cases, the operator would negotiate a 5-10 year power off-take agreement with the government or private industries.
One power provider in Conakry for example, running 2x25MW dual-fuel turbines, has planned to phase out diesel in favour of natural gas. When we factor in the $2M spent on replacing filters from burning diesel LNG is more attractive. With an annual consumption of 3M mmbtu this makes it an ideal market for small scale LNG. Similarly, we are seeing power plants in Indonesia with capacities of 50MW seeking to adopt LNG over CNG. With gas being flared at 1.2-6mmscfpd and the NOCs mandate to monetize the gas, we foresee good prospects for growth.
Growing supply represents opportunities for small scale LNG. Fracking technology which has opened up the “tight gas” market has unleashed billions of cubic feet of gas onto the market making the US a net exporter of gas. What was once receiving terminals along the GoM coast are now being converted to export terminals. Further south in Miami Florida companies have ceased the opportunity to export cheap gas into the Caribbean. Countries such as Jamaica, Barbados and Bermuda have now joined a growing group of countries importing gas by way of LNG. It’s not feasible by physical pipeline but the use of the virtual pipeline model makes it possible.
Not only are these countries concerned about reducing their carbon footprint they are equally concerned about delivering cheaper energy to their citizens. In Bermuda, for example, the government was able to cut the cost of power production per Kwh by 50% by replacing diesel with LNG.
It’s clear that there is no shortage of natural gas and with advances in technology and a growing demand from local consumers there are immense prospects for LNG. Based on studies by Shell we have another 200 years at the minimum of gas reserves. The challenge is how do we balance hydrocarbons with renewables in the energy mix, how do we balance LNG exports with local consumption and how do we provide access to those that require it. The opportunity for a cleaner tomorrow looks brighter.
If you would like to hear more about small scale LNG and the latest developments in the market, book your delegate place today to attend the Gastech Exhibition and Conference taking place 17-20th September in Barcelona.
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