Global Industry Analysis (2017 – 2020), Growth Trends and Market Forecast (2021 – 2025)
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Thriving Demand for Small-scale LNG Bodes Well for Micro-LNG (Less than 0.1 MTPA) Market
The major cost of liquified natural gas (LNG) is incurred in transportation. The gas is often sailed halfway across the globe to large LNG terminals from where it is distributed by trucks, or through pipelines, as well as over large distances. While the LNG business has customarily cantered essentially around the advancement of consistently expanding plant limits, the innovation has permitted the advances relevant to little volumes to be cutthroat, and possibly monetarily alluring. Local production of LNG dramatically shortens the supply chain to make it possible to lower the overall costs. This is where micro-LNG comes into picture.
Micro-scale LNG plants can broadly be defined as those with the capacities below 50,000 tpy (100,000 gal/d). In recent years, as the world has increasingly shifted away from heavier distillates in favour of cleaner-burning fuel sources, the role of natural gas in the global energy landscape has expanded dramatically. With a greater number of end-use companies seeking small-scale LNG for a broad range of application areas such as marine transport, power, heavy duty vehicles, and some other industrial sectors, the global micro-LNG market is likely to witness robust growth prospects in the foreseeable future.
Low Capital Costs Aid in Expansion of Micro-LNG Capacities; Stringent Emission Regulations Further Uplift Market Prospects
Growing investments into small-scale LNG facilities are primarily attributed to its lower initial investment costs compared with that involved in conventional LNG. This means that supplies can come online in a relatively short period of time, and it also has flexibility in terms of logistics, and operation otherwise difficult to find in pipeline supply. Small-scale LNG import terminals present the most economical option for those economies that have just opened their doors to LNG as a fuel to be adopted for industrial applications. Capital expenditure (CAPEX) requirements are obviously on average significantly lower for micro-LNG plants but on a $/tonne per annum basis, they are not necessarily more competitive than the large-scale LNG business.
A small-scale LNG liquefaction plant costs more than 8-10 times when compared to the costs associated with micro-LNG plants. At the same time, large-scale projects may seem capital-intensive, and extremely risky, and typically use complex technologies, and equipment that demand high maintenance. Additionally, they face a constantly changing regulatory environment. Presented here are simpler technologies, and infrastructure, quick deployment options, smaller sizes of projects, and more targeted approaches to enable delivery of these projects online with relatively low capital requirement, and at reduced risk. Although small-scale plants lack benefits of economies of scale of the larger projects, there is a reduced need for on-site infrastructure (such as that for independent power generation), and specialised equipment owing to their minimal size, and relative simplicity in terms of operation.
The demand for micro-LNG facilities is highly driven by the price of natural gas available in the market. Natural gas will be a leading fuel of choice going forward, and LNG will be a significant component of this gas supply chain. Furthermore, micro-scale LNG can bring attractive environmental benefits to both gas production (preventing flaring), as well as end-customer use (LNG for transport/power & heating generation) compared to alternative fossil fuels.
Investments Surge in Micro-LNG Liquefaction Facilities
Globally, the micro-LNG facilities mainly consist of LNG liquefaction plants supplying LNG satellite stations with annual LNG volumes of up to 0.2 MTPA. As an indication, these LNG quantities correspond to the yearly LNG demand for a power plant - up to approximately 100 MW. Currently, flare gas segment dominates, and constitutes more than 65-70% of the global micro-LNG liquefaction (less than 0.1 MTPA) market. Gas flaring is one of the most challenging energy-related, and environmental problems facing the world today. Environmental consequences associated with gas flaring have a considerable impact on local populations, often resulting in severe health issues. Generally, gas flaring is visible, and emits both noise, and heat.
The micro-LNG chain is virtually identical to the conventional LNG chain, differing only in the scale. One difference is that for small gas volumes, LNG transport is feasible using trucks (onshore), or barges (offshore), rather than large marine LNG carriers. The sizing, and cost of the different elements of the chain depend on the specific characteristics of each project such as gas volume, composition, distance to consumers, storage, LNG infrastructure requirements, and geographical location. Micro-LNG targets small distance-based customers that can receive the desired volume of LNG without any delay through roadways as they are a more cost-effective, and faster mode of delivery than pipelines. In micro-LNG, the liquefaction plant operator buys the gas from a gas supplier. The operator liquefies the gas, and sells the LNG to the market, which is then transported by trucks to LNG satellite facilities, or fuelling stations. The end users consume LNG either in their installations, or in transport means such as heavy trucks, and buses. Once liquefied, the compressed LNG must make its way from the supply to the demand centre.
Asia Pacific to Remain a Highly Promising Region for Micro-LNG Market Proliferation
The year-on-year increase in the demand for LNG liquefaction plants has triggered investments in mini/micro-LNG. Asia Pacific, especially China, is the dominant region in terms of installed micro-LNG facilities below 0.1 MTPA. The demand for micro-LNG liquefaction (Less than 0.1 MTPA) in Asia Pacific is expected to grow faster than that in North America by 2030. Energy security, followed by rapid population growth, and subsequently increasing demand for electricity, is expected to shape the micro-LNG (Less than 0.1 MTPA) market in Asia Pacific.
North America remains one of the lucrative markets for micro-LNG. In Canada, the proposed micro-scale LNG advancement is warming up in northwest B.C. Moreover, Pacific Northern Gas Ltd. is proposing to overhaul its current natural gas pipeline, the Western Transmission Gas Line, including re-establishing portions of the framework that hasn't been utilised for over 10 years now. This overhauled pipeline would take care of two proposed miniature LNG offices, viz. Skeena LNG, and Port Edward LNG. Each of these three proposed projects are clearing their path through the administrative interaction.
Global Micro-LNG (Less than 0.1 MTPA) Market: Competitive Landscape
Some of the key players involved in the global micro-LNG market include Chiyoda Corporation, GLP, Cryonorm, Prometheus Energy, EcoEléctrica Inc., Gasum Oy, Wartsila, Siemens AG, GE, Linde Group, Petronas, Royal Dutch Shell, Equinor, Eni SpA, and Black & Veatch.