The attractiveness of natural gas as a principal source of fuel for a range of uses is predicated on several factors. Principal of them is readily available supply, growing concerns and acceptance about global warming, technological advantages of gas use in power generation and other end use sectors, growing substitutability of liquid petroleum products by gas, advances made in scaling up LNG production and shipping capacities, and, finally, emergence of new and unconventional gas resources, like Shale gas, as very credible supply sources over long term.
India, presently facing a natural gas supply crunch primarily owing to the decline of domestic gas production, and is in dire need to secure additional gas/RLNG as well as diversify its natural gas basket. However, given the domestic gas supplies outlook, sluggish progress with commercial exploitation of unconventional resources like CBM and uncertain schedule for transnational pipeline projects, it is evident that India will need larger and larger imports of LNG to meet the overall gas demand.
India, despite meeting demand gap by importing LNG the challenge still lies in supplying it within proximity to prospective buyers with the help of existing transportation infrastructure mainly through pipelines. Three years down the line, India is likely to have increased supplies of natural gas but too few pipes to carry them as infrastructure fails to keep pace with the coming supply surge. Implementation hurdles and unviable tariffs have slowed work on pipelines, threatening the target to add 15,918km of pipelines to the existing 12,144km by the end of 12th Five-year Plan in March 2017. The delays could mean that while gas supply may pick up beyond 2017 when several liquefied natural gas (LNG) terminals become operational and supplies from domestic sources improve, there will not be adequate infrastructure to transport gas, especially to the eastern and central parts of the country. Pipeline work is complete only on 2,700km, or 17% of the target, and is under way for an additional 4,000km. Projects to lay 6,200km pipelines are in different stages of being bid out by PNGRB, while there is no clarity on the final 3,700km
This means opportunity for investors in purpose-built facilities called mini- and micro-LNG plants that can be constructed close enough to natural gas supply and closer to customers that need energy.
IGU defines small-scale liquefaction and regasification facilities as plants with a capacity of less than 1 MTPA. In turn, SSLNG ships are defined as vessels with a capacity of less than 18,000 cubic meters. Small-scale liquefaction plants are built with a variety of objectives in mind, including commercializing small gas fields, shortening gas-to-market times, marketing small quantities of gas usually flared, peak shaving and direct use of LNG.
China and USA are the frontrunners in the Small Scale LNG technology and its usage in wide industry applications such as transportation, exploration & production of hydrocarbon, mining operation, power generation and as peak shavers etc. There were 400+ LNG re-fueling stations in China at end-2012, and 12 MTPA Capacity at small-scale liquefaction plants in China. While US has 84 LNG re-fueling stations in US as of January 2014 and 29 small liquefaction stations.
India has prioritized to increase the domestic oil and gas output which puts the marginal/small size/isolated fields both onshore and offshore on top precedence for exploration and probable to use small scale LNG technology. These fields were marginalized due to size of reserves, resource constraints of NOC, access to area, availability of Consumer (s), lack of Infrastructure, tax structure and policy on pricing & marketing. Companies like Petronet and GSPC are already active in supplying LNG to the end consumers via LNG trucks.
InfralineEnergy Oil & Gas Research Team
The views expressed here are solely those of the author in his private capacity and do not in any way represent the views of the Infraline Technologies (India) Pvt. Ltd. (organization). The organization is not liable for any use that may be made of the information contained therein and any direct/indirect consequences resulting therefrom.