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Small-scale LNG makes inroads in transport and power markets

Alicia Trent, Product Leader, Oil and Gas Processing, Baker Hughes, a GE Company, Houston, Texas

Gas Processing spoke with Alicia Trent, Product Lead for small-scale LNG for Baker Hughes, a GE Company, about the state of the small-scale gas processing market. Numerous drivers are leading the development of small-scale LNG projects around the world, with many of these drivers addressing specific and niche markets, as well as the push to make use of isolated and stranded gas reserves.

GP. As crude oil prices improve, how will smaller-scale LNG compete against petroleum-based fuels?

Trent. The transition toward a low-carbon world is progressing, with companies testing different strategies to develop the optimal solution for each small-scale LNG application. These solutions have evolved into simpler, more precise applications fit for a large range of needs, from the source and final end-use to project-specific considerations, such as weather and construction details.

This process results in a deeper understanding of which LNG solutions are commercially and technically suitable, and when each project may become feasible (i.e., arbitrage in fuel prices and availability of supply and demand). These developments, combined with the improvement in crude oil prices, will see LNG compete globally in a less ad hoc and more focused way, especially outside of China, which has already seen an increase in small-scale LNG due to regulations. Furthermore, as technology applications and the evolution of solutions grow, the skepticism and barriers for LNG adoption lessen.

GP. What are the main advantages to smaller-scale LNG that are attracting investors? Do you see these advantages expanding for technology developers, and if so, how?

Trent. At the heart of small-scale LNG is the liquefaction process. It enables the economic transport and/or storage of natural gas to drive its commercial competitiveness and ease of market adoption for fueling and industrial needs vs. incumbent fuels. Small-scale LNG is particularly interesting, as it provides more flexibility in applications that would be a challenge to meet using traditional baseload LNG.

For instance, many operators have an interest in quick-to-market solutions to monetize gas sooner and increase competitiveness by quickly testing solutions. Small-scale LNG allows for quicker time to market because the equipment is “off-the-shelf”—the designs can be modularized to allow for fast installation and fewer site issues. The designs are also simpler, allowing for reductions in project time and potential project risk. In addition, a range of execution strategies exist for small-scale plants that can be tailored to the customer and site economics. These plants can be completely built into the field (“stickbuilt”) or, on the other end of the spectrum, made completely “plug-and-play” to allow for versatility in installation in even the most challenging conditions. Whatever the conditions, flexibility in design and execution is available to drive a specific project’s competitiveness.

The philosophy of small-scale LNG is interesting, as the focus is on CAPEX and de-risking projects to prevent cost overrun. For a small project, a slight overrun can have severe economic consequences, so very careful measures are taken to ensure a fully integrated solution, both commercially and technically, to drive project profitability. This focus and rigor can be applied to all ranges of LNG to drive its uptake in the global market. Whether it is one small-scale LNG train or multiple mid-scale LNG trains, the approach of small-scale LNG provides the flexibility to drive the right solution for each project.

GP. In which markets or applications do you see smaller-scale LNG as being more versatile, efficient and/or cost-effective than larger-scale LNG?

Trent. Liquefying natural gas enables a wider range of uses for natural gas. These uses vary drastically in application (from small export to domestic use), capacity, frequency of use (batch or continuous) and customer specifics. Therefore, different solutions are warranted to drive each project forward. Where long-term, large-scale supply and demand are secured, and local or regional dynamics (such as labor costs and site conditions) are favorable, large-scale facilities have evolved to become effective and competitive solutions.

Conversely, multiple applications exist where the aforementioned dynamics are not clear and require different solutions to move a project forward. For instance, there is a growing need to find smaller-scale, flexible solutions to drive projects in countries facing energy poverty, particularly where a gas source exists nearby. In many cases, this is a wasted gas source that is being flared and can be captured in a small-scale LNG facility.

Present demand in these areas is not significant enough to warrant larger-scale solutions. Small-scale LNG provides the flexibility to begin the adoption of natural gas to provide electricity to these villages and towns. These applications are also consistent with the size of the demands of mining and drilling operations, as well as the growing need for fueling in marine shipment and long-haul trucking. Lastly, a need exists for flexible LNG solutions for small export applications, such as island nations. Small-scale LNG project economics help make these projects possible.

The growth of LNG is widespread, and the different needs for each project are wide-ranging. Small-scale LNG is one solution that provides versatility to answer some of the most challenging issues.

GP. The transportation applications for smaller-scale LNG are large and growing. Which areas of the world will see the most significant developments for truck refueling and ship bunkering from smaller-scale LNG production?

Trent. The adoption of LNG as a fuel is evolving, and a range of different factors determine the solutions that are a best fit for each application. LNG has not only evolved differently, but has also grown disproportionately around the world. For example, the initial growth in the US was encouraged by the fuel pricing differential, but this has slowed due to the lower differential in recent years.

In China, LNG growth has been stimulated by government regulations. The same situation is being seen in Europe. The significant potential for growth in Europe is due, in large part, to the growing push to reduce greenhouse gases, as well as government support for alternative fuels.

In countries with limited energy availability, an opportunity exists for fueling applications as governments look for economically viable ways to power their towns. As different solutions are tested, LNG will become increasingly viable and economically competitive.

Although the exact growth rate is unclear, the factors that lead to LNG growth are known, and the growth of LNG remains positive. GP

GP0817 Viewpoint Alicia Trent

Ms. Trent is a graduate of the Georgia Institute of Technology, where she earned a BS degree in chemical and biomolecular engineering, and an MS degree in mechanical engineering. She serves on the steering committee for GE Houston Women’s Network and co-leads GE’s Asian Pacific American Forum Myconnections.Alicia Trent is the Product Line Leader for the oil and gas processing division of Baker Hughes, a GE Company. Appointed to this position in January 2015, she leads the global growth in these areas of the business. She has broad experience in the gas industry, including technical, marketing and management expertise.

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