CERAWeek ’15: GE leader sees strong momentum for small-scale LNG

By Adrienne Blume

HOUSTON -- At the IHS CERAWeek conference, Hydrocarbon Processing spoke to Hasan Dandashly, President and CEO of Downstream Technology Solutions for GE Oil and Gas, about the role of small-scale LNG in the evolving natural gas marketplace and the opportunities for implementing small-scale gas processing in different world regions.

An excerpt of the discussion appears below. The full interview will appear in the July/August issue of Gas Processing, which will include a special report on small-scale processing solutions.

 

HP: What do you see as some of the advantages of small-scale LNG vs. large-scale LNG, and how are small-scale gas processing options transforming the developing world, as well as US infrastructure?

Dandashly: Gas is clearly becoming more abundant in the world. It's one of the cleanest fuels, and it's a fairly cost-effective fuel. To capitalize on this gas for many applications—power generation, industry, petrochemical production and transportation—a network is required.

There are many sources of gas, and there are many destinations where the gas will be consumed. These networks are made of pipelines, of which the US has an abundance. However, as we know, building new pipelines isn't cheap and it's not easy—they have to go through a lot of regulatory hurdles before they're built. LNG tankers are another part of the network. They enable gas to be liquefied in one part of the world and then moved to another part of the word for consumption.

However, it takes a while to build big LNG plants, tankers and pipelines. There are areas where you can speed up the development of the network by liquefying gas at the small-scale, from the point where the gas becomes available, and then trucking it to the point of use. We call this the Virtual Pipeline. It supplements the network, and the benefits of that supplement and of the small-scale LNG process are faster speed to market and lower CAPEX, so gas demand can be met more quickly and cheaply.

There are multiple applications for this technology. In North America, there's an application for the oil field, which GE has already demonstrated in an agreement with Statoil. In this agreement, we're capturing flared gas in the Bakken shale play. We treat the gas, we compress it into CNG using GE technology, and then we move it to the rigs and fracking pumps in the Bakken.

This strategy is good for the environment because we're capturing gas that would be flared anyway, and we're also saving on diesel used to run rigs and fracking pumps. We have a JV partner, Ferus, which specializes in the trucks that move the gas around.

Other applications for small-scale LNG in North America focus on transportation. You can move from diesel to LNG, or to CNG, for heavy-duty trucking, locomotive, marine and mining operations. These are all areas where you can take the gas and compress it or liquefy it, and then truck it to the point of use that is not very far away.

Another application in North America is exports. Sometimes there's less gas available, or it's desirable to have speed to market and the flexibility of being able to turn production up or down. Big LNG plants are baseload; they run all the time, and you're not going to turn down a big LNG train. But when you have a plant that is made out of 10 small-scale LNG trains, it can be started faster, because the components are modular. In the field, it takes a lot less time to put the modules together. Also, one train can be started at a time, and production can be adjusted based on what is needed.

At the international level, it gets very interesting. Small-scale LNG is big in China. A lot of transportation in China is driven by LNG, because as they're developing the market, they're adding new trucks; they don't have to go back and retrofit. Small-scale LNG also has an advantage in China because, from a regulatory perspective, LNG is not taxed and priced like regular gas.

In Indonesia, you need power and you have gas, but you don't have a lot of transmission grids or pipelines. So the ability to liquefy the gas and generate power with it provides a solution for a specific need.

Sub-Saharan Africa is another great area where there's a lot of gas and a big need for power generation, but there isn't a sufficient pipeline network. By liquefying gas on a small scale and trucking it, speed of production and speed to market can be achieved, and affordable power can be provided to areas where the economy is depressed.

Affordable power will actually revive the economy beyond just providing lights in people's homes. For example, in northern Nigeria, a lot of the economy is dying just because there's no power. If you're able to liquefy gas and truck it, and then generate power with it, then you can come to market fast and you can provide agility in the network. A pipeline is difficult to build and easy to destroy; a Virtual Pipeline with trucks can come online faster and create agility in the network.

Small-scale LNG is an exciting space. It's not an "either/or" with regard to large-scale LNG, though; one doesn't take away from the other. As gas becomes more available and more prevalent, small-scale liquefaction and compression, and the concept of a Virtual Pipeline, add to the network.

 

HP: Small-scale processing solutions offer flexibility, cost effectiveness and speed to market, which are three things that are extremely attractive to producers and supplier, especially in this low-cost environment. It sounds like GE has the tools to meet these needs and put these systems into place almost anywhere the resources support it.

Dandashly: Absolutely. Small-scale LNG does meet those needs. I think the discussion is also moving toward how traditional LNG can become more modular and cost effective as we move into the future. At GE, we have solutions on both ends. We have great capabilities for large-scale LNG, and we build very good modular solutions also.

In Australia, where we're installing modules, there's a great capability for building modular LNG. You need to build things in a modular way in Australia; you can't build everything onsite in some areas because of protected environments.

We have modular capability even for our largest LNG solution, and on the small-scale side, we have complete modular capability, where we can build a complete turnkey train. We provide the compression for large-scale plants, which is the heart of an LNG train. We provide the whole process for small scale—the whole train. So, by the time the modules get to the site, there is minimal installation work needed.