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Virtual pipelines a solution for small scale LNG

Nicholas Newman

Never heard of virtual pipelines, well I had better explain they are scheduled shipments of oil and gas transported by barge, ship, rail or road tanker to customers located beyond existing pipeline networks. Here is a snap-shot of some of the market developments and innovations worldwide concerned with virtual LNG technologies.

North Atlantic

For instance, the Swiss-owned chemicals company INEOS is using a fleet of eight ocean-going multi-gas tankers to each carry 27,500m3 of ethane of US shale gas. These LNG tankers are crossing the Atlantic from Marcus Hook deep-water terminal near Philadelphia to its chemical plants in Scotland and Norway. Here is a snap-shot of some of the market developments and innovations worldwide concerned with virtual LNG technologies.

North America

Elsewhere, in North America, due to congestion on railways and pipelines, virtual pipelines are in operation using river barges to transport crude oil from shale oil fields to refineries along East Coast and the Gulf of Mexico. The barges make use of such navigable waterways as the Mississippi and Missouri Rivers, Great Lakes and Intercoastal Waterway.

LNG on rail

In North America, two railroads aim to transport LNG in Alaska and Florida. Both Alaska Railways and Florida East Coast Railroad (FECR), aim to move ahead with plans to use trains transporting LNG in ISO tanks in the coming year.  Since September Alaska Railways had begun demonstration trials of this new service. Already, FECR has already introduced LNG fuelled locomotives, which are much more environmentally friendly than traditional diesel-powered trains.

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Marine terminal

In addition, there are plans by LNG America to set up virtual gas pipelines using LNG carrying barges, to meet the needs of customers not connected to the North American pipeline network. Such customers include deliveries to offshore oil rigs, LNG power vessels and the many customers living on islands across the continent.

New England

In New England, where gas prices are some of the highest in North America, due to capacity bottlenecks in the interstate gas pipelines that link the region with the shale gas fields to the west. In order to overcome such capacity constraints, the region has set up a virtual pipeline. It consists of three to four tankers per month delivering LNG to Engie SA’s Everett terminal near Boston, for  delivery by truck or pipeline to customers.

However, in areas beyond the existing gas grid operated by Vermont Gas Systems Inc and others,  a new virtual gas operator NG Advantage is supplying gas to gas-hungry consumers paper mills, food processors, breweries and universities, not connected to the main gas grid. This is because of opposition to expansion of the gas grid by some residents, or because local pipelines are too small. NG Advantage LLC., buys gas at hubs connected to the grid in Vermont and New Hampshire. However, NG Advantage ideal customers are those needing to replace a minimum of $750,000 worth of fuel oil. NG Advantage currently sources its gas from Vermont Gas’ connections in Canada, which trace back to Alberta. The company hopes to build another terminal in New York State, which would allow it to access pipelines serving the  Marcellus Shale gas fields.

Boston-based Xpress Natural Gas has set up similar operations serving the markets in New England, Virginia and Washington. The market focus is remote factories, like those in timber, mining and agriculture. One of its newest customers is the Port Townsend mill in Washington State. The mill requires about five truckloads of CNG a day. Each truck holds about 355 million standard cubic feet of gas.

Developments in Europe

LNG Value Chain
LNG Value Chain

But, in Europe, the main hub LNG reception ports for bulk cargos serving North West Europe are Antwerp and  Rotterdam.  These ports are developing break-bulk distribution facilities that will enable bunker ships and smaller barge tankers to berth and load, before either being despatched to riverside marine terminals or direct to ships in need of refueling, such as Shell’s Greenstream LNG fueled barge.The Greenstream barge is the first of 15 such vessels, Shell plans to operate in Northwestern Europe’s inland waters.

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VEKA DEEN LNG INLAND CARRIER supplying an LNG fuelled ship

However, other operators are developing LNG barge carriers, such as LNG PRIME owned by the VEKA Group and Deen Shipping. The LNG PRIME is 90 meters long and has a loading capacity of 1.000 ton of LNG. It is designed to distribute LNG to the growing LNG bunker market in the Amsterdam-Rotterdam and Antwerp region including Vlissingen and Ghent.

However, in Scandinavia, a small gas consumer with a long coastline and many islands, has with the help of small ships and road tankers been delivering LNG to consumers for many years. Elsewhere in southern European waters, the EU is working with various member states to develop similar delivery systems to supply its many island communities, as first pioneered in Scandinavia.

LNG Rail Tankers

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LNG tank car

In May 2016, the German Federal Railway Authority has approved the first approved design of LNG tank car for use on European railways.The transport capacity of gas rail tank cars ranges from 22 m³ to 122 m³. This enabled Skangass Ltd to sign a deal to lease 20 LNG freight cars from German logistics operator  VTG Aktiengesellschaft,  which will be able to transport about 1,500 cubic meters of LNG, equal to 30 highway trucks.

Australia

In Australia, Mobile LNG and sub161 are in the process of  setting up a virtual LNG pipeline network to serve the many remote communities and industries including mining, rail both passenger and freight, buses, trucking and power generation users, not connected to countries gas grid. MLNG is planning to build a $1 billion Virtual Gas Pipeline distribution system based on four LNG hubs in Australia. Each hub will facilitate LNG production, distribution, refueling and regasification facilities. The Darwin hub is expected to cost at least $250 million with a proposed production capacity of 400 tons per day of LNG.

table-of-savings
ECONOMIC BENEFITS OF LNG USE

This quantity of LNG will be distributed to the wider expanses of the region via road and rail, using specially constructed ISO Tanks. The second phase expansion will also feature distribution via sea. These ISO tanks can be delivered in customer specified quantities and frequencies, and in tank sizes of either 22,000 litres or 44,000-litre capacity. Already, the Fortescue Metals Group operated Solomon mine is buying power from a dual fuel 125-megawatt diesel and gas

Already, the Fortescue Metals Group operated Solomon mine is buying power from a dual fuel 125-megawatt diesel and gas power station, which has replaced an estimated 300,000 litres of diesel used each day with 11 terajoules of natural gas.

The benefits of replacing diesel with LNG for Australia include a reduction in the diesel import bill by $636 million per year by encouraging the use of LNG instead of diesel. This should result in regional fuel savings of $330 million per year and cut greenhouse gas emissions by 500,000 tonnes reports Mobile LNG.

Developments Elsewhere

In Southeast Asia, the archipelagos that make up Indonesia and the Philippines prove a challenge for traditional LNG gas to power projects. One company, Atlantic, Gulf and Pacific Co. (AG&P) has announced that it will introduce a virtual LNG pipeline in order to help bridge the capacity demands for power in island communities of the region too small for traditional scale LNG gas to power solutions.

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Gasfin  floating LNG supply infrastructure for EDF

In the Caribbean, small-scale LNG operators are aiming to operate virtual pipelines to supply coastal regions and the many island communities in the region. Gasfin is currently developing the world’s first integrated mid-scale floating LNG supply infrastructure for EDF. Designed to ship, store and regasify 0.5mtpa of LNG, which will allow EDF’s power plants in Martinique and Guadeloupe to switch to gas. This should result is significant fuel cost savings and environmental benefits for both operators and customers.

This is seen as an ideal solution, where traditional power delivery models are often too bulky to be practical to meet relatively smaller scale energy requirements. The arrival of virtual pipelines is seen as an ideal solution for supplying small-scale LNG solutions; including floating storage, re-gasification and power plants in archipelagos and other remote areas.

In the future, it is likely that the concept of virtual pipelines will be used in markets too small to encourage the development of traditional pipelines at present, such as South Africa. Also, where existing geography makes it difficult to construct pipelines such as the islands that make up the Philippines and Indonesia.

One Comment

  1. Norway, a small gas consumer with a long coastline has been using small ships to get gas to consumers for many years.
    Virtual pipelines are also trucks and containers (by rail, road or sea) – used in many countries already. Much more versatile and less risk of stranded pipeline assets in uncertain times 😉

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