Instant LNG terminals
May 1, 2012 12:00 PM, By Rick Weber
Peakshave plants offer potential for a relatively low-cost, quick expansion of vehicular LNG supply
FROM a technical and logistical standpoint, existing liquefied natural gas (LNG) peakshavers can offer a relatively low-cost expansion of the vehicular LNG supply, according to Jeffrey Beale, president of CH-IV International.
“There are certainly business models that support owners considering the re-assignment of existing LNG assets for this purpose,” he said. “The question is, will they?”
CH-IV has a lengthy history of consulting on issues related to LNG infrastructure. In addition to providing engineering and design services on all levels of LNG infrastructure, CH-IV has also provided operations and regulatory support for its customers.
Beale worked at three of the original four LNG import terminals in the United States, founded CH-IV in 1991, and installed the “world's first self-serve LNG fueling station” in Bloomfield, New Mexico, in October 1995. He spent much of the 1990s promoting LNG as vehicle fuel, later focusing more on world-class LNG facilities and LNG peakshavers.
In his presentation “Readying an Existing Plant for LNG Fuel Sales,” Beale said many of the concepts about using existing peakshavers or marginal or transitional LNG supply were covered back in the 1990s. He spoke earlier this year during World LNG Fuels 2012, which was hosted by Zeus Intelligence
“When you talk about modifying facilities, you need to think about more than just truck loading,” he said. “What are the other opportunities for delivering movement of LNG out of the facility?”
Beale said the LNG “Peakers” were purposely built in the late-1960s and 1970s to provide seasonal natural gas peakshaving during high-demand periods.
“The original design basis was to liquefy for 200 days — April to October — so that for about 20 days a year, you could take LNG out, pump it up, vaporize it, and put it into a pipeline on those very high gas-demand days,” he said. “The reality is that with much improved gas-transmission systems and shale gas, we have substantially reduced reliance on the original need for LNG peakshaving. Why they were built was justified and regulated initially, but most of those reasons have changed substantially.
“Rarely are substantial volumes of LNG drawn down historically, or currently, during the winter. Liquefiers are significantly underutilized because they don't use them to run those 200 days a year and in many cases some only run enough days to keep in the rate base to show they're still using them. And LNG storage tank sits near full at the end of heating season. If you go back and look at historical data on the use of these tanks, you find that a regional storage volume under virtually any scenario is no longer required for peakshaving.”
He said the average size of the 58 peakers' LNG storage is a 360,000-barrel LNG tank (15 million gallons). If you assume the historical maximum of 90% utilization — which he says is more on the order of 40% to 70% over the last 10 years — you can use the “excess” 10% volume for continuous LNG production and truck shipments to vehicle fueling sites.
“So you have the 360,000-barrel LNG tank, take the top 10% and make it available for truck-out and you still have 800 million standard cubic feet of natural gas available for peakshaving — way above what they historically have been needing,” he said. “That gives you 1.5 million gallons available from the average LNG storage tank for the vehicular market on a continuing basis, especially if the liquefaction season is extended from 200 to 300 days per year.
“There's no reason you can't increase production from 200 to 300 days. You should be able to operate every day, other than those days when the winter peak is so high. You have that 10% for your supply during those days, so you can continue making your production. Most liquefaction facilities can run 340 to 350 days a year without worrying about a major maintenance issue. You can operate virtually year-round with a state-of-the-art liquefaction system, operate the top 10% of that tank, and have a substantial product increase within that market.”
He said one of the other requirements most likely will involve upgrading the truck-loading station. Most of these facilities were designed with the capability to load a few trucks, but not on a commercial basis.
“Say you have 1.5 million gallons in storage,” he said. “That's a three-day storage capacity. That's 500,000 gallons a day available for truck-out. That's 50 trucks. You're going to want to upgrade the truck-loading station to handle 50 trucks a day.
There's no reason why truck drivers can't load the trucks. That's a piece of this. The facility should be designed so that the truck driver has complete control to get in, do what he needs to do, load the truck, and get out.
“You can do that by simply providing two card-access gates, relocating the loading rack outside the plant proper, and providing scales for automated loading. The driver initiates LNG trailer PLC-controlled loading. It doesn't involve the plant. There's no reason why you have to get the plant involved in truck loading.”
And if you're going to do all of this, why not put in your own LNG/CNG fueling station at the same time?
He said he talked recently to the staff at Enviro Express' two-year-old fueling station in Bridgeport, Connecticut. It was built for the company's 18 trucks, but Enviro Express received substantial interest from other operators.
“Remember, these people haul trash for a recycling power plant,” he said. “Now they're looking to expand LNG/CNG sales at the first station and build a second LNG fueling station. This is a company hauling trash that's all of a sudden saying, 'I think there's money to be made in selling LNG to vehicles. So it's a new way of thinking out there by a lot of people.”
Beale said that a gas utility typically would say, “We're regulated. We can't do that!”
“If you walk away after they say that, you're missing the opportunity, he said. “That is ‘utility thinking,’ and it's hard to break through. It doesn't seem to change. People seem to come to the same conclusion, but it's time to start slowly making them understand there are benefits to them in making use of an existing asset for another reason.
“Let's go back to what the role of regulated utility is: ‘A utility must provide service on a nondiscriminatory basis to all requesting service within the utility's service territory. The service must be provided on a reliable basis and must be responsive to the consumer's needs.’ They don't want to touch one gallon of LNG in their tanks because it's one gallon less to their client. On the other hand, if they have an asset and can gain profit off of that asset, instead of looking at it as overhead, it becomes a profit center.
“You can share some of that revenue with the rate base. Instead of worrying about that one gallon of LNG being reserved for your rate base, you're actually reducing the cost to the rate-base payers. That's probably the approach to take with most of these utilities. That's the key. Think in terms of cost-sharing with a rate base. I believe lowering the cost to the rate base by sharing profit might be considered being ‘responsive to the consumer's needs.’ Seems like a potential win-win.”
He said many US LNG import terminals are converting to liquefaction and export. The typical LNG “train” is the equivalent of 4.5 million metric tons, which is 650 million standard cubic feet, eight million gallons, and 750 trucks per day.
“So it begs a question: ‘OK, if you're going to make all this LNG, what's a couple of percent putting into the vehicle market?’ Remember, they're moving a lot of product.”
But he said there are issues with large marine LNG facilities:
Marine LNG pumps are not typically suited for LNG truck loading.
“Their pumps are not going to be designed for loading a truck at 350 gallons a minute. They're designed to put out 250,000 cubic meters an hour. They're big, big pumps.”
Security issues typically are much more stringent at marine terminals.
“A fence is not going to work so well with a large international marine operation. But it comes down to this: This is not what they do. That little couple percent might help the domestic natural gas industry move into larger sections, but at the same time, that's not what they're there for. I think there is some possibility this could occur but I don't think we should be looking for these large export facilities to be large resources of LNG. But I hope I'm wrong.
Increased LNG spill potential.
“Every time you connect and disconnect to tank trailers, there's opportunity for a spill. If I'm an operator for an LNG facility, I'm saying, ‘Uh-uh, you're not bringing in 100 trucks a day. That's 200 times a day you connect and disconnect.’”
He said there will be more LNG facilities built, whether they're piggybacked on existing facilities or brand new — especially in light of the hydraulic fracturing being done on the shale plays, particularly the Marcellus Shale in Pennsylvania and New York.
“All of a sudden now, within the shale play, you have demand potential for LNG,” he said. “It seems like a logical progression. You have a base load for LNG to be used for the well process, being fracking or others. Once you start talking about building a permanent liquefaction infrastructure, adding more for vehicular fuel is incremental. It seems there are opportunities in the field.”
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