Has the time come for Small Scale LNG?

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Oil & Gas Terminals and Maritime Operations
Small Scale LNG

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Small Scale Liquified Natural Gas
Since the advent of LNG in the 1960’s, with Algeria being the first large scale
supplier, LNG has developed as an important provider of energy. Production
developed from 50 Mtpa in 1990 to 250 Mtpa in 2015.
LNG trade is originally based on very long term contracts (typically 20-25 years)
due to the heavy investments that are required to liquify, store, transport and
regassify the gas. Now, with in excess of 50 large scale liquifaction trains and
over 100 regassification terminals in production, LNG is gradually becoming a
commodity. LNG is starting to be traded at lower volumes on shorter contracts,
enabling small scale import gassification terminals to be viable.
Is this the advent of Small Scale LNG?
Small Scale LNG

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The typical small scale LNG facility
The common small scale LNG facitity serves the import and regassification of LNG into an area which has no access
to a gas grid. Such a LNG terminal typically consist of the following main elements:
• A storage tank with related cooling and safety equipment
• A marine jetty to receive the LNG from tankers
• Gassification equipment to turn the LNG from its cooled liquid state into pressurized gas
• Loading facilities for trucks, trians or barges and/or a pipe line feeder facility
Typicals of a small scale LNG terminal:
• Plot size: 1 – 4 hectares
• Storage capacity: 10 – 50,000 m3
• Investment: USD 25 – 100 million
• Construction time: 1 – 2 years

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Why small scale LNG?
Large Scale LNG facilities are developed to feed large national or regional gas grids and are often supplementary to
natural gas pipelines. Small scale LNG is typically refered to as secondary infrastructure that is supplied with
smaller LNG tankers from large scale LNG facilities.
Small scale LNG import terminals are hence not connected to major gas grids, like their large brothers. Instead their
function is to supply locations without a gas grid. They can supply a multitude of needs.
• Electricity powerplants, traditionally fueled by fueloil or gasoil, are seeking to transform to less environmentally
pollutant fuels. Switching to gas is one of the easiest transformations.
• The same applies to industrial facilities that consume large amounts of fossil fuels. Examples are desalination
plants, oil refineries and mining industries.
• Also smaller industries need to move away from fossil fuels. Supply of LNG by means of tank trucks from LNG
terminals to these industries becomes more and more an option.
• In the so-called SECA zones, where stringent air pollution rules apply, the shipping industry needs to shift from
high sulphur fuel oil to less polluting alternatives, amongst which LNG.
• Remote locations, like islands, have never been able to provide their inhibitants with the advantages of a gas
grid. Small scale LNG provides the possibility to feed a local grid.
Often more than one of the above developments combined provide sufficient reason to develop a small scale LNG
terminal. Often this is in relatively remote locations where energy transformation of a powerplant or large industry
triggers the introduction of natural gas to that location. Existing examples are many Japanese and Indonesian islands
and the Scandinavian sub-continent.

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Will LNG become a small scale commodity?
Maybe it is the chicken or the egg. Without the infrastructure
there will not be a trade and vice versa. More and more large LNG
regassification facilities start to provide possibilities to supply
LNG to smaller scale LNG tankers and barges. The current price
of LNG and the low utilization rates of the import facilities make it
more likely for energy companies to look into smaller scale
commodity trade.
The global sustainability agenda combined with the increasing
availability of LNG will make it necessary and possible for remote
locations to switch from petroleum products to gas.
Small Scale LNG