The LNG Industry

No commodity has ever been so crucial to all human activity as energy in the modern world, and of all the forms of energy, LNG most exemplifies the intricacy as well as the efficacy of our modern, global economy, for instance, by the plans for the huge Rotterdam port to provide general bunkering of LNG. Our technology allows us to send LNG to any place in the world, which would make Natural Gas the most preferred of transport and portable fuels, eliminating pollution, while dramatically reducing cost and CO2 impact.

Natural Gas burns clean with 20% less CO2 impact and requires relatively little equipment. China has declared it the preferred fuel in order to reduce coal pollution in the cities and provide more power with available fabrication and construction capital. LNG is Natural Gas cooled to a liquid, so that it can be transported to the population centers from the gas wells. Although LNG supplies only 2.6% total world consumption, Natural Gas is on the order of 15%, expanding rapidly since there is a near limitless supply of cheap, low pollution fuel.

LNG has, so far, supplied energy for core electrical power, but the constituent technologies exist for many other applications, especially road, marine, and rail transportation. Although LNG is cheaper, as a road vehicle fuel, it needs an initial critical mass of filling stations and vehicles, which should happen in the United States where there exists so much LNG industry already, peak shaving plants spread around the country, and the best network of gas pipelines. The situation is pending on filling station LNG installation and car conversions, which are not difficult.

Micro-LNG, including small LNG, will supply the fuel distribution or filling station network. The very large LNG plants are on the coasts for access to shipping and have little interest in supplying trucking. The commonality of equipment as the industry progresses, the general availability if not ubiquity of LNG, the impact on pollution and CO2, and the price lower than fuel oil, these will all facilitate providing gas to stranded industrial users. Globally, the demand and the applications have a longer and steeper progress path, but immediately there exists LNG virtual pipeline applications to bring electrical power to stranded communities.

Tens of thousands of fracking wells in North America are going to restart and will need micro-LNG to prevent flaring. Flaring around the world is being reduced wherever possible, and Micro-LNG extends that possibility a lot. There are other similar applications, including bio methane.

Meanwhile, progress in marine and rail are substantial. Thousands of trucks running between depots, barges, ferries, and ships are already running on LNG. Thousands of wells around the world must eliminate flaring, which needs LNG. South America, Africa, and Asia have communities without power, which can be supplied by LNG virtual pipelines.

LNG industry growth will be very large. The total energy industry expenditure is on the order of $9 trillion per year. The increase in global energy consumption is 2.1% per year, equal to the entire current LNG industry, and LNG is expected to supply a lot of this. Coal and fuel oil are slowly being phased out, and LNG will supply a lot of this. In addition to these core power consumers, there are the variegated applications of small users, Micro-LNG, which are potentially 30% of the total.

Micro-LNG is a vast market with variegated applications needing a lot of customer support and specialized design, which market will draw and maintain more than a few suppliers. The systems must operate robustly, autonomously, and remotely, because the customers are small, often having little staff, and not LNG knowledgeable. Such systems are designed differently, unlike large plants, for minimum equipment. The designing engineer commissions the plant and interfaces directly with the customer. All this requires experienced engineers.

The incredible circumstance is that energy, of which LNG is playing a crucial and major part, is a commodity key to almost every human activity, of which there is a practically limitless supply, an endlessly increasing demand, and a rapidly evolving technology. It’s like the surge of a perfect storm.

Mission and Challenge

Apeiron LNG believes that the LNG industry is poised for a surge comprising, besides large increases in core energy, both the new market of micro-LNG and the re-opening market of LNG pre-FEED consulting. Apeiron LNG intends to expand into the market with specifically adapted technology and a team of experts as well as extended engineering services.

Apeiron LNG believes that the requirement is for very experienced engineers and continuous customer support from Design to Commissioning and Operations.

Apeiron has some IP or trade secret, which provides some market exclusion and buffer as well as customer retention.

Experience also works best in simultaneously arranging for capacities, constraints, limits and guarantees, along with price and schedule. In producing plants and modules in a developed region such as the United States, it works better to use an extended range of engineering and fabrication services to improve consistency between guarantees, FEED and Detail Design/Fabrication Documents, and the performance of the constructed plant. Operations is the purpose of the plant, and Commissioning takes the systems from inert to ready for Operations.

The Apeiron LNG team’s combined experience covers all crucial skills in LNG cryogenic technologies, gas turbines, and gas treatment.

Apeiron LNG has been monitoring the emerging micro-LNG industry. The most likely outcome is that the overall LNG industry will grow fast enough to absorb all the available LNG engineering and operating experience and considerable fabrication capacity.

The Market: LNG as the Fuel Of Choice

LNG is becoming the fuel of choice. China has declared it so in order to cut the pernicious effects of coal, which could devastate the health of city dwellers. Stricter regulations of fuel oil pollution for ship bunkering (ship propulsion fuel) have now led to projects to install LNG in major ports. There exist fleets of road trucks running on LNG between depots. Designs have been developed for LNG rail. LNG for personal cars is recognized as feasible.

LNG cuts CO2 emissions by 20%, NOXs are reduced to insignificant, and all other pollutants to zero.

LNG is relatively safe compared to gasoline and diesel. Gasoline spreads dangerously along the ground, and will ignite in contact with a spark, although it does evaporate in a few minutes. Diesel will not ignite in contact with a spark, but it burns just as well as gasoline once in contact with a flame, and it does not evaporate quickly. LNG, being much lighter than air, evaporates straight up very quickly and disperses. It ignites with a spark, but not so easily as gasoline, and the peculiar nature of evaporated LNG results in smaller explosions peripherally to the main evaporated cloud, which dissipates in air before it can explode.

Although the technologies are known for LNG as automobile as well as truck fuel, it yet requires national organization to implement simultaneously LNG in enough filling stations and in enough cars to kick off the system.

LNG Market Share of World Energy

LNG, as the preferred fuel, can be expected to increase capacity for a very long time. Although the increase in LNG trade has been remarkable, it can be reasonably expected to be even more extraordinary. LNG occupies about 15% of the world energy market. World energy consumption is increasing at about 2.4% per year, although this rate will probably increase. LNG will pick up nearly all of this, as it replaces the more difficult fuels, such as coal or fuel oil and other petroleum and refinery products. This amounts to an increase in LNG of 17%, perhaps more as it penetrates other markets.

The Peculiar Situation of North America

North America is peculiarly situated to implement LNG. Fracking, which was totally unexpected by the oil industry or anyone, provides near limitless gas and promises to keep the price low for the foreseeable future. The engineering exists: companies that have been implementing large projects abroad now do it in the United States. The pipelines exist, and the regulations are conducive. The workforce is among the best in the world.

LNG in 2016 had a global capacity of 258 MTPA, million tons per annum. It is expected to grow by as much as 17% or more per year. Already the US has or is constructing about 65 MTPA. This massive development has been brought on by the availability of supply, especially existing pipelines, suitable sites in the wetlands and coastal regions of Louisiana and Texas, and excellent infrastructure and workforce, which can be compared to the situation in British Columbia, who have implemented only one small project, in spite of all the gas just over the mountains.

Modularization in fabrication and the global reach of the big engineering & construction companies bring in touch a global market for the most transmittable commodity, which is expertise: in engineering experience, skilled craftsmen in fabrication and in design, and in commissioning and operations. Workforces such as these cannot easily be expanded, but in a market that outstrips the workforce supply, the workforce that has the most concentration of expertise as well as industry vertical integration will be the one to expand the fastest, and that overwhelming appears to be the United States.

North America has in the ground a near limitless supply of gas from both wells and fracking.

The Technological Development of the LNG Industry

Although the LNG industry operates fairly efficiently, with roughly 85-90% gas efficiency for liquefaction, transportation, and regasification, there is yet a lot of development possible to reduce the amount of equipment to accomplish this, equipment which adds to costs and CO2 impact. Most designs are done in the manner of traditional hydrocarbon processes, large gas plants and refineries, avoiding anything not already proven in industry, one company required 15 years. The LNG industry is a new industry; innovation is requisite. There are improvements being made in all phases and nearly all systems.

LNG Market Sectors

The first large LNG plants were built in the 1970s. There’s been a lot of expansion since then. However, until recently, almost all the LNG industry was in core power: large power stations supplying the main grid. The primary reason for this was core power required dedicated large LNG plants, and there were few of them, each constructed for contracted, long-term supply.

By 2018 there are many plants, yet cargoes are not yet fungible. Although there are spot cargoes, LNG is not a commodity, but only because LNG is temporarily overbuilt. When demand catches up, spot cargoes will provide a commodity.

Meanwhile, LNG technology advanced for markets other than core electricity: trucks and cars, all sorts of marine, rail, and industrial heating remote from pipelines. These are new or incipient markets, with the beginnings of implementation. The technology is there, but, as is always the case with vehicles, there has to be a network of filling stations and a critical flow of vehicles to justify the network.

The need for energy is becoming more acute. The developing nations will pick up technologies faster, as fast as they can capitalize and provide a technically current workforce. Because of the less developed condition of infrastructure, it’s actually easier to go in a new direction, such as LNG for vehicles. The per capita energy consumption will move faster toward the developed countries. The most developed application is marine: barges, ferries, cruise ships, and, more recently, a big move on large shipping. Large shipping uses a lot of fuel oil, but it’s the dirtiest of liquid fuels and stricter pollution regulations and stepped up monitoring are driving advanced plans to convert to LNG in some of the largest ports. There are some straightforward reasons for this, such as that it is easier to convert a ship than a barge for the fuel savings for the installation cost. Although there are thousands of LNG trucks on the road, personal vehicles have to be kick started with investment in the fuel supply distribution and vehicle conversions. But that isn’t so hard and it has a lot of motivation for both price and CO2 impact. LNG will supply conversions as well as expansions.

The Micro-LNG Market

Micro-LNG isn’t so much a market in terms of final consumer as much as it is the supplier. Marine and road vehicles are not the only consumer. There are oil wells all around that don’t have a disposal for off-gases, and it’s increasingly unacceptable to flare them, as has been traditional. In the United States, it is currently allowable to flare for one year on any new well, a regulation that permits reasonable time to set up equipment to process the un-condensable gas. But these days, equipment can be set up faster, and this applies to fracking, which is in many ways very different from other wells, and there are many and increasing fracking wells.

The technology of fracking is improving, for example, instead of hauling a diesel generator and diesel fuel bins to site, and astute innovator developed a self-driving generator that runs on well gas, greatly improving the logistics and costs. Fracking is partly driven by a different usage: traditional wells tap into gas domes or evolve smaller amounts from depressured liquid. Fracking wells operate in smaller zones, there are many of them, probably a couple of million in North America. They are turned off and capped if the market demand drops. Right now, many are capped and their allowed year of flaring has expired; to reopen them, there has to be disposal for the gas – it cannot be flared. Very many do not have access to a gas pipeline, and the wells often do not produce gas in excess of what is consumed for power.

Micro-LNG is a good solution for eliminating flaring. The technology is available but will still be undergoing a lot of development. There will be a crowd of suppliers with various technical adaptations for quite a few years before the more efficacious solutions are finalized. Apeiron LNG is technically well ahead of the game here.

The collective LNG industry is not totally conscious of the micro-LNG need. Although it’s an advantage that Apeiron is focused on micro-LNG, the market can be expected to be large and technically varied: no provider can dominate and control.

The Opportunity of Pre-Feed Consulting

One of the advantages of achieving and maintaining LNG experience, across all the phases of project from pre-FEED to Commissioning and Operations, is to visualize how the design needs to be, not from just design rules and methodology, but from eventual Operation by the client. This is what enables really good pre-FEED understanding and advice, consulting: what’s achievable and how do we get there.

Design and Fabrication in the US for Foreign Installation

There is more modularization than ever before. The US has a huge industry for hydrocarbon design and construction, with regulations expeditiously balanced between facilitating industry while maintaining the reliability of adherence to standards. It is efficient, it is automating, it has vertical and horizontal industry support, and it is meeting the needs of a large part of the world in LNG and other hydrocarbon processing.

Apeiron LNG’s Market and Product

Apeiron LNG intends to provide consulting, equipment, and operating expertise to fracking customers to eliminate flaring. Consulting can extend to any phase of the operations except down hole and well-head, but would include any separations or product transport.

The same functions can be performed to eliminate any flaring in upstream or downstream operations. There are many opportunities here, including carbon trading.

Another product is a complete supply chain from Natural Gas to electricity, for electrically remote communities, a virtual pipeline, i.e., liquefaction, trucking, regasification, and electrical generation.

Apeiron can consult to larger projects, especially for pre-FEED.

Apeiron LNG’s Specifically Adapted Technology

Micro-LNG prefers limited equipment rather than limited gas or energy cost; the emphasis is on CAPEX rather than OPEX. Larger plants in justify more complex equipment. Getting this to work in micro-LNG is not easy. Apeiron has various specifically adapted technology. One solves a crucial problem on feed preparation for liquefaction. Others minimize equipment while enabling more robust startup and shutdown. The competitive target is full remote operation, 30 minute startup and zero hydrocarbon loss cold trip-restart.

Some of this technology could be better marketed if demonstrated in bench or pilot scale equipment.

Apeiron LNG’s Business Strategy

Apeiron LNG believes that the micro-LNG market needs minimal capital outlay for the minimal solution of flare reduction, which includes an economical disposal of the resulting LNG. It believes that the customers are not, as a large liquefaction plant would be, LNG industry professionals or hydrocarbon processes, but hydrocarbon suppliers, e.g., frackers. Apeiron LNG’s product is a complete solution to an ancillary but unavoidable obstacle.

Initially, Apeiron LNG, does not intend to maximize sales with a lean but healthy profit, relying mostly on customer interaction. Once the fabrication and installation product lines have been made feasible, focus can shift to cost cutting and pricing.

Apeiron intends to fully utilize available fabricators and engineering services, remaining flexible but securing supply lines. North America has great infrastructure and there is no reason to re-create these services in-house when there are so many competent specialists. Some things must be, such as the core liquefaction technology, from companies such as APCI, Bechtel , and Linde. Apeiron can realize special designs through relationships with fabricators.