If oil or coal is produced in areas of the world which lack natural gas infrastructure or a nearby gas market, a significant portion of this associated gas may be released into the atmosphere, un-ignited (vented) or ignited (flared). The gas is alternatively re-injected into the reservoir to help maintain pressure. Flaring and venting of natural gas from oil wells and coal mining represents a significant source of greenhouse gas emissions. Flaring alone contributes to more than 1% to global emissions of CO₂ .This represent about 13% of committed emission reductions by developed countries under the Kyoto Protocol for the period 2008-2012. The World Bank estimates that over 150 billion cubic meters (bcm) of natural gas are being flared and vented annually. That is the equivalent of the combined annual natural gas consumption of Germany and France. And the 40 billion cubic meters of gas flared in Africa is equivalent to half of the continent’s power consumption.

Many places there are also reserves of stranded natural gas-resources that are abandoned because currently there is no economical way to get it to the markets. With natural gas becoming such an important and marketable commodity, producers would like to recover and get some value out of these resources which to a certain degree already are partly processed.

As a way to meet these demands there is a growing interest in small scale LNG process and plant solutions to help solve the challenges mentioned above from a number of countries on almost all continents. Production capacities of small scale LNG plants vary in the range from 2000 up to 1 million tons of LNG per year. By comparison, a typical large scale plant has a production capacity of between 2.5 and 15 million tons of LNG per year.  As already pointed out in Small is beautiful – LNG your life small-scale LNG applications had been successfully introduced as industrial applications in mid-90ies, pioneered by Norway.

As for today – and started since the new millennium – size matters even more and small-scale LNG plant became even smaller; now called mini-LNG, creating and carving new markets with a plethora of possibilities to think about. New gas sources, i.e. biogas, landfill gas, even coal bed methane gas became interesting for liquefaction, energy storage and distribution. Shortcuts like liquefied biogas (LBG) and liquefied methane gas (LMG) were introduced and became pending slogans in the industry and among customers.

LNG, another general-purpose-fuel

On the supply side, stranded gas reserves, flare gas, landfill, coal bed methane, or biogas are abundant but had not been economical viable in recent years. Turning these reserves of gas into value-added general-purpose-fuel seem to be both economically feasible and very attractive for an environmental stand point. What is a general-purpose-fuel? Regarding today’s infrastructure, and due to inter-dependencies between producers and customers gasoline, diesel and natural gas are considered general-purpose-fuels, enabling a non-disruptive mobility market, constant heat and electricity production and – above all – energy storage.  Many business venture are spinning around general-purpose-fuels. The major disadvantage of natural gas, compared to gasoline and diesel, is its inherent low energy density, which, in fact, is simply implied by its gaseous character. LNG on the other side, turned into liquid state is  comparable to gasoline or diesel, regarding energy density.

Small-scale LNG

Small-scale LNG or, to bluntly spoken, small-scale LMG applications may become everybody’s darling in the industry, simply because the proof is in the pudding, which, in fact, is response time. Business is strongly related to response time, as already pointed out in the article Another day before the energy crisis? and short response time in the market is the key to satisfy customers and secure further investments. In short, small-scale LNG applications require upstream, midstream and, of course, downstream players. Methane gas will be pre-treated, liquefied, stored and distributed and, as it reaches its final destination, regasified. Most interestingly, the appeal of LNG is the use of the existing infrastructure for the before mentioned general-purpose-fuels, today’s gasoline stations to secure mobility and, decentralized energy productions applications in form of gas-turbines, gas motors or, even fuel cells, to constantly provide electricity and heat, where it is locally required. As we reexamine the scope of LNG it can be noticed, that LNG may help markets to undergoes a more moderate shift away from oil, coal and nuclear power, prior to entering renewable energies.

Also, LNG and its substitutes, i.e. LBG (Liquefied Biogas) and LMG (Liquefied Methane Gas, retrieved from stranded gas sources such as flare gas) are entering the mobility market, powering engines for heavy-duty trucks and buses in public transportation.

The use of LNG in  sea- and ocean-going vessels had been neglected, so far. From 2010 onwards, and with respect to the introduction to national bonus-malus systems (incentive programs), particularly in Scandinavia, LNG will be become interesting as fuel in marine transportation. Key drivers are NO_x emission figures, which, in fact, must be reduced by 20 in 2011, and by 80% from 2016 onwards; favouring substantially the use of clean LNG. Also, sulfur in marine fuels must be reduced from 2020 onwards to 0.1% for near shore going vessels, and to 0.5% for ocean-going vessels. On the contrary, heavy fuel oils can contain up to 4.5% sulfur, which will be converted to SO_x.

Interestingly, ferries operating at the Baltic Sea will be firstly converted towards to alternative use of LNG as fuel, favouring new “onshore” based small-scale LNG production sites. Again, LNG, the general-purpose-fuel, finds another downstream player:  ferries – sounds pretty fair to me.

Energy comes in form of, mainly, electricity, fuel, and heat; fundamental things, yet so interlinked in today’s complex world. We do need them and will need them again and again. To sing a common theme, primary energy is always created foremost through energy production that strongly depends on fossil fuels or renewables. This then may imply a sort of limitation; are fossil fuels and renewables endless? And what is the corollary? And can this limitation tamper with the nowadays-perfect dance of business, commerce and our way of spending energy? Without any doubts, we are now entering a very contentious matter by raising such questions.

Let us remember what opinions the mavens of the last decades have expressed about centralized energy production: reliable and safe energy production in tandem with exploitation and distribution of secured fossil fuel provision. It is widely believed and constantly repeated that fossil fuels is not scarce. It is with so many promises that we began to feel like the boy who plugged the dyke with his fingers, only to find out leaks breaking out all around him. Abundance is everywhere and all the time.

Centralized trivia?

The lights of the dark ages were based on firewood, turf and petroleum. Over the years we stumbled upon coal, crude oil, natural gas and even harnessed the power of the atoms. Centralized energy production was the key to successfully provide electricity to households and industrial areas alike. We were ‘smothered” with life-long promises about cheap and reliable electricity and even heat to keep households warm. Finally, and for the moment, perhaps most mysteriously, we never question the fuse of energy production and commerce. We simply rely on it. Are there any restraints related to the given centralized trivia, which, in fact, works so perfectly fine until now? Very often the argument goes that centralized energy production stifles innovation, and, consequently, competition, which goes alongside the emergence of decentralized energy production. Nothing in the argument of securing energy production, nor in the argument that most people make when talking about the subject of doing business as usual, should draw into doubt this simple point; competition, and the necessity to integrate a variety of different energy production solutions provided by variety of players.

Idea sharing?

Idea sharing is a self-propelling mechanism, which gives room to even more ideas, driving competition forward, and in case of free markets, grants contracts to secure energy production. Does that imply centralized energy production, operated by a few companies, squelches idea sharing, even competition? Hard to tell, yet currently, less than 20 mega-companies, both state and commercial-based, dictate the terms by which energy flows in our world. By centralizing power over the Earth’s energy resources, the energy companies create the very conditions that reward economies of scale, and centralization of economic activity, in many other industries.

As for today, and with the market already divided into strikingly homogenously acting monopolists, who follow the idea of protecting the given monopoly position; will if they are rational, be willing to spend the net present value of their monopoly to defend it. They are more than ready to shoot – even back.

Never aim if you are not ready to shoot

Does decentralized energy production supply key arguments to aim and shoot? Is there really a difference in business approach compared to successfully acting monopolists? Imagine the following:

You are standing at the side of the street. Your flat is on fire. You are definitely annoyed and upset because to some extend you helped start the fire. Next to you is a bucket, filled with gasoline. Most apparently, gasoline will not put out the fire.

As you ponder the overall mess, someone else comes along. In a panic mood, he grabs the bucket. Before you have a chance to tell him to stop – or before he realizes just why he should stop – the bucket is in the air. The gasoline is about to hit the already blazing flat. And the fire that the gasoline will ignite is about to ignite everything around.

The given example indicates how difficult it is to overcome commonly accepted models in nowadays world. You may not solve the energy production and distribution problem by using the same kind of approach you started that set up the problem. It may do mischief because everything around will be affected too. A gentle shift, towards a leaner, cleaner energy production and distribution is the key; starting with natural gas, that can be simply provided from a variety of sources – fossil fuel based, such as conventional natural gas, on coal mine gas and flare gas; and renewables, such as biogas and even landfill gas.

Getting started by accretion in the natural gas market

Natural gas is widely accepted as fossil fuel – with the lowest impact on greenhouse gas emissions if burned or converted to CO2. Oil produces one-third more CO2 than natural gas equivalent unit of energy produced, while coal produces two-third more CO2.  More importantly, it is fast becoming the fuel of choice for the generation of electricity. It is also increasingly being used as a fuel for transportation, which, in fact, is crucial for tomorrow’s markets. New technological breakthroughs in converting gas-to-liquids have reduced costs and brought liquids gas to a range that is competitive with traditional commodities, such as gasoline and diesel.  Without any doubt, natural gas is one of the key elements to help set up a decentralized energy production and distribution scheme – speaking globally, but acting locally.

Small-scale LMG contribution

As already pointed out in the article “Small is beautiful – LNG your life” LNG and its derivatives, such as LMG (Liquefied Methane Gas) and even LBG (Liquefied Biogas), might be the missing link between traditional commodities, i.e. coal, uranium, natural gas. Do we really need liquefied methane gas produced in small-scale quantities? Is not methane itself considered a traditional commodity?

The very beauty of small-scale LMG applications is the rapid response time between idea sharing and turn-key ready plant delivery. Response time is crucial in businesses where energy commodity prizes are becoming even more volatile in the upcoming future as today. Everything turns to be uncertain, yet energy production and distribution MUST be secured, but not by using old business models. Moreover, LMG is a respected way of energy storage and easy to transport as it will use an existing infrastructure. Small-scale LMG applications follow the philosophy of mainly off-the-shelf-components, which is an intrinsic part of doing business in the future due to small prices and increased competition. More than that, the utopia of LMG is inherently plausible because LMG is the fuel-of-all-trades, the general-purpose-fuel: it can be produced in many ways but stored and distributed in only one.

How many days left until the energy crisis?

We have pulled down the stars to our will, one may argue, why not secure energy supply, production and distribution on a global scale without incurring any crisis?

What day will be tomorrow? Someday after dawn. So will there be a crisis related to the supply, even the distribution of energy? Easy to tell, if you use the missing link between traditional and renewable energies.