Hydrocarbon Processing - April 2021 - GP-23

LNG TECHNOLOGY

Evolution and innovation for an
increasingly dispersed LNG market
J. G. BAGULEY and R. WHEELER, Magnolia LNG LLC, Houston, Texas

The LNG industry must adapt to
changing market conditions to grow,
thrive and reach its full potential. LNG
consumption and commercial patterns
are in a state of change, yet the production
facilities and systems supplying the markets-as well as the financing institutions
that underpin their existence-are proving glacial in their speed to react.
The advent and opportunities for the
use of LNG as a fuel for factories, off-grid
power plants, long-haul road transportation, locomotives, harbor and nearshore
service vessels, ferries and international
marine shipping are creating a market that
is more diverse and dispersed than the
traditional, large-volume, point-to-point
structure forming the basis for much of
the existing global LNG value chain.
This new market also exhibits greater
elasticity in demand than contemplated
in traditional sales-and-purchase agreements and financing conditions. LNG
must overcome some challenges to
achieve its potential as the preferred clean
hydrocarbon fuel and a complementary
solution to increased renewables penetration. One hurdle is that LNG production
and loading, product transportation and
delivery infrastructure must introduce
systems that enable LNG to reach this
increasingly diverse and dispersed market, or else energy consumers will turn to
other sources out of necessity. Additionally, financing of these projects must consider the increased variability/seasonality
of demand, as well as offtake by multiple
smaller customers with corresponding
smaller balance sheets and less established (if any) credit credentials.
Despite these challenges, significant
opportunities exist. Typical (non-pandemic) global diesel fuel prices are on
the order of $20/MMBtu-$30/MMBtu,
while current large-bulk LNG deliver-

ies are available at well under half that
price, proving a strong economic basis
for growth as a replacement for diesel and
other distillate fuels, in addition to the
reduced emissions incentive delivered by
LNG. The total global marine fuel energy
consumption alone approaches the global
LNG production volume energy, which
itself is less than 3% of total global energy consumption. A growing market for
smaller LNG ships, transport barges, ISO
containers and LNG distribution trucks
has emerged, and additional innovative
development is necessary in the future. A
substantial growth market exists for LNG,
but only if the industry can develop and finance a supply infrastructure to meet this
evolutionary opportunity.
LNG market discussion. The size of the
prize available to the LNG industry for expanding into a broader slice of the global
energy market is substantial. Total global
energy consumption in 2019 was 583.9
exajoules1 (an exajoule is 1,018 joules, an
unimaginably large number-2019 usage
was the energy equivalent of 4.431 T gal
of gasoline), which was a nominal 1.3% increase from 2018. This represents the total of natural gas, oil, nuclear, coal, hydropower and renewables. Of this amount,
natural gas provided 24% of global energy
in 2019, in third place behind oil and coal.
LNG itself represents nominally 12%
of global natural gas, or under 3% of global energy-i.e., while LNG garners a lot
of attention, it actually represents a very
small fraction of the world's energy consumption, providing an excellent opportunity for significant growth.
The unique characteristics of LNG
must be considered when seeking to capture these growth opportunities. First,
the volumetric energy density of LNG is
low. Compared to diesel or fuel oil, LNG

carries only about 58% of energy per
unit volume. Consequently, to carry the
equivalent amount of diesel fuel, a vehicle
would require a substantially larger LNG
fuel tank or be faced with the need to
make more frequent refueling stops.
Using compressed natural gas (CNG)
in lieu of LNG worsens the situation,
since the energy density of CNG (3,600
psi) is only about 25% of that for diesel,
or less than half of LNG's energy density.
However, on a weight basis, the energy
density of LNG is actually double that
of diesel, so when weight is critical, LNG
may provide advantages.
Fuel temperature and metallurgy are
also important considerations; at -160°C
(-256°F), LNG must be stored in insulated containers suitable for cryogenic conditions (stainless steel or aluminum), and
the LNG must be vaporized and heated
prior to use. Fuel storage duration is another consideration; conventional liquid
fuels (diesel, fuel oil, gasoline, aviation fuels) can be stored indefinitely with suitable
care. LNG storage will eventually need to
vent boiloff gas, as LNG cannot be maintained in the liquid state without external
or internal refrigeration. The amount of
time that LNG can be stored prior to venting depends on the container, and ranges
from 70 d-80 d for large ISO containers2 to
as little as 4 d for small cylinders.
In addition, LNG is generally not a
pure component fluid, and the lightest
of its components (nitrogen, methane)
tend to selectively boil off first, causing
the remaining liquid to concentrate the
heavier components (ethane, propane,
butane). In time, this can cause the composition of the LNG to go off-spec compared to user requirements, and must be
carefully managed.
LNG has long been a " big-time " business: big owners (national and internaGas Processing & LNG | MARCH/APRIL 2021 23

Hydrocarbon Processing - April 2021

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