Small-To-Mid-Scale LNG - A new LNG World is Emerging
- Francoise Sabatier (EVP Linde Engineering) | Marcus Lang (EVP Linde Engineering)
- Document ID
- World Petroleum Congress
- 21st World Petroleum Congress, 15-19 June, Moscow, Russia
- Publication Date
- Document Type
- Conference Paper
- 2014. World Petroleum Council
- mid-scale LNG, Small-scale LNG
- 2 in the last 30 days
- 142 since 2007
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Small scale LNG production, distribution and applications to substitute petroleum products have been pioneered at the turn of this millennium in Norway and China. Australia and the US followed with first projects. Commercially driven by the price differential between petroleum products and natural gas prices as well as clean air politics today small-to mid-scale LNG is at the verge of establishing sizable operations in many geographies and - even though a very minor part of petroleum products are being substituted - forming a future multibillion dollar global market for operators, wholesalers, equipment and plant suppliers.
Compared with the global, world-scale LNG business small scale business is a local and regional affair. LNG is produced in small or mid-scale LNG plants or world scale bulk loads are broken into smaller parcels. Different from world scale LNG where large cargoes are handled and regasified to feed national pipeline systems, smallscale LNG relies on further cryogenic distribution such as coastal LNG carriers, trucks and eventually in the near future rail cars and river barges. Typically LNG is stored locally and on-board near the point of use. This paper after laying out the main regional demand and supply side trends for small-to-mid-scale LNG describes and illustrates key technology elements of the small-scale LNG chain and introduces examples of successfulsmall-to-mid-scale LNG developments.
The small-to-mid-scale LNG market essentially is a petroleum replacement play. Based on the average barrel of oil refined in the US approximately 30% of the oil barrel, namely LPG, diesel, fuel oil, is a target for replacement through small-to-mid-scale LNG.
While 30% of the oil barrel certainly represent an enormous, virtually unlimited market potential replacement of petroleum products with LNG in reality can be a challenging task. As methane the main component of LNG boils at – 163°C (at 1.013 mbar) a dedicated, compared to diesel and gasoline relatively sophisticated and capital intensive cryogenic distribution chain has to be in place to reach the point of use. Aggregation of demand is the key to amortize the investment. While there is great interest, opportunity and technology available to replace petroleum products, the significant investment requirements and necessity to aggregate demand create a hen-oregg dilemma typical for emerging industries with a grid-based infrastructure, such as telecommunications, pipeline systems or the introduction of diesel fuel for passenger cars in the US. Users willing to switch are unable to source LNG at the point of use, while entrepreneurs willing to invest in infrastructure find it hard to aggregate enough demand to justify an investment decision. Governmental incentive programs can play an important role here. And above all it needs time.
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