Cheaper and faster options available

Importing Liquefied Natural Gas – II

by Dr Janaka Ratnasiri

In Part I of this article, the Writer published in The Island of 11.01.2021, the writer estimated that liquefied natural gas (LNG) imported through the proposed floating storage and regasification unit (FSRU) will take a minimum of six years before the gas could be delivered, considering the possible delays likely to be encountered at every approval stage and the time taken for mobilizing the FSRU. He also said that there are faster ways of getting LNG into the country bypassing all these procedures which are discussed here.

TRADITIONAL METHODS OF IMPORTING LNG

Traditionally, LNG is transported in purposely built carriers of capacity 150,000 – 260,000 cubic metres (cm), which need jetties with depth over 16 m to berth. The terminal for unloading LNG requires insulated storage tanks built on the jetty enabling transfer of LNG to the tank using solid arms, vapourizers to convert LNG into gas and compressors to pressurize the gas before dispatching to customers through pipelines.

The quantity of LNG required to operate combined cycle gas turbine (CCGT) type power plants of capacity 1,000 MW at 85% plant factor is about 1 Mt, which is the minimum throughput required for economically viable operation. It is estimated that such a terminal will cost over USD 500 million and take over five years to complete.

The Writer in his article on 06.01.2021 mentioned that setting up the proposed FSRU will take a minimum of six years to commission including the time taken for obtaining many approvals, though the actual setting up time will not likely be more than 3 years.

USE OF LOW DRAUGHT SMALL CARRIERS

On the West Coast North of Colombo, the sea close to the coast is rather shallow, with the 5 fathom (9.1 m) bathymetry contour lying about 1.25 km from the coast, and the 10 fathom (18.2 m) bathymetry contour lying about 6.5 km from the coast. Hence, it is difficult to construct a traditional land-based terminal close to Colombo. However, a site has been identified at Dikkowita where there is a break in the reef which allows shallow boats to be brought in. Already a Fishery Harbour has been built at this site, and the Ministry of Fisheries had called for proposals to develop projects around the harbour. In response, a proposal was submitted to build a mini-LNG terminal adjoining the Fishery Harbour seawards and this was accepted by the Fisheries Ministry with concurrence of stakeholder organizations.

Hence, one option is to build such a mini-terminal. The proposed project envisages deploying small LNG carriers with capacity 16,000 cm (7,200 t) having a draught below 5 m to bring LNG to the country. For storage, two cryogenic tanks each of capacity 10,000 t of LNG (22,200 cm) were planned to be built on the jetty enabling transfer of LNG from a carrier direct to the storage tank. A gas-fired 300 MW CCGT power plant operating at 80% plant factor requires 285 kt of LNG annually or 24 kt of LNG monthly. With the capacity of the carrier being only 7,200 t of LNG, it has to bring 40 loads of LNG annually or 3.3 loads a month. The proponent has proposed that LNG will be supplied at the spot market price prevailing at Singapore LNG Terminal on short term contract, with supply agreements signed when the spot market price is low with safeguards against price hikes that prevail during Winter when the demand for LNG is high.

The project though accepted by the Ministry of Fisheries and a pre-feasibility study completed, it is yet to receive approval of the Ministry of Energy (MoE) which is mandated to authorize LNG import and distribution. LNG is not a commodity that can be purchased off the shelf. It has to be ordered years or months ahead even on the spot market. Unless the MoE gives the green light for the project, Proponent is unable to enter into any contract for the supply of LNG and undertake an Environmental Impact Assessment (EIA) study. Hence, sooner the MoE grants approval, earlier it will be possible to meet the President’s aspirations.

USE OF ISO INSULATED CONTAINERS

A second option is to bring LNG loaded in insulated standard size containers conforming to ISO Standards in normal container carriers. Once the LNG container is transported to Colombo Port, it could be unloaded on to a road truck and taken direct to a customer site. In view of the highly flammable nature of LNG, particularly if it leaks out and get vaporized, its delivery through the Port and transporting along highways need special approval of the Ports Authority and the Motor Traffic Department, respectively. Transporting of gas across the country as LNG in containers is a more convenient method than using pipelines, because the latter requires many time-consuming approvals, land acquisitions, long construction time and social impacts.

Once delivered at the site, the consumer has two options to unload LNG. Either, a separate insulated tank could be built to store the delivered LNG which could be subsequently re-gasified and transferred to the power plant or the factory in pipelines. Since it is expensive to build LNG storage tanks, the other option is to use the container itself for storage which can hold the gas in liquid form for over two months. With this option, it is necessary to construct three platforms on to which the containers could be unloaded. One will be for keeping the container in use, second is to keep the empty container once it runs out of gas and the third is to keep the new container.

A 40 ft container has a capacity of 46 kl of LNG which has an energy content of about 1,000 GJ. The energy demand of a 300 MW CCGT power plant as shown before is 285 kt of LNG annually which is equivalent to about 46,000 GJ per day. This means a 300 MW CCGT power plant can be fed with 46 container loads of LNG per day imported in standard size containers. Currently, Colombo Port handles more than 5,500 of 20 ft equivalent containers daily, and therefore additional 46 containers will pose no problem. Also, with the anticipated expansion of the Port, it should be able to handle even a higher volume of containers to feed more power plants.

President’s Saubhagye Dekma Policy Framework says “Convert Kelanitissa plant to a natural gas turbine plant and implement two similar plants in Kerawalapitiya and Hambantota before 2023”. The only way to bring NG to Kelanitissa and Kerawalapitiya before 2023 to realize the President’s aspiration is to use insulated containers as described above. Hence, the relevant authorities should give the necessary clearance for this project as a matter of priority.

SUPPLYING LNG FOR DIFFERENT APPLICATIONS

For the operation of a power plant, it is necessary to have a separate storage tank for transferring the LNG brought in containers before it is vapourized for feeding to the power plant since continuity of supply is important. For use in Industrial Estates or Housing Schemes, where the demand is low, the second option mentioned above is more suitable. Once re-gasified, the gas could be supplied to individual industries in an Industrial Estate or individual apartments in a housing scheme in a local pipeline network, managed by an approved organization having licensed staff.

Containers containing LNG meant for transport applications could be taken to a central yard where the LNG is converted into gas and then pressurized for loading into CNG bowsers. Vehicles with spark-ignited (SI) engines could easily be converted into operation with natural gas, supplied under pressure as CNG in bowsers designed for CNG transport. Facilities for dispensing CNG to motor vehicles could be made available at road-side fuel outlets, using the same procedure as that used for transporting LPG and feeding it to vehicles. The only requirement is that the operator will have to obtain a licence from the Petroleum Corporation and enhance the fire-fighting facilities in view of the additional fire risks. With the introduction of NG operated vehicles, the vehicle emission testing centres will become redundant.

Natural gas cannot be used directly in compression-ignited engines as it lacks properties to self-ignite upon compression as in the case of diesel oil. But it can be used blended slightly with diesel, which will provide the necessary ignition while NG will provide the necessary power. Though the use of NG as a substitute for diesel will reduce air pollution and has a price advantage, it does not give the same power output as that from a diesel engine with similar capacity. Further, NG operated heavy vehicles are about 50% more expensive than a similar diesel heavy vehicle. Hence, its use has not caught up like in the case of vehicles with SI engines.

OTHER OPTIONS AVAILABLE

The Cabinet of Ministers, at its meetings held on 09^th May and 02^nd October, 2018, has granted approval for a Chinese Company to build a 400 MW gas-fired power plant at Hambantota Port along with an LNG terminal, as a government-to-government project and implemented as a joint venture with the CEB. The electricity generated will be used solely for feeding the Chinese Industrial Estate at Hambantota. The project has been granted necessary approvals including EIA on a fast tract basis and its construction is underway.

A third option is to negotiate with China to permit Sri Lanka to use its terminal for bringing LNG in separate carriers engaged by Sri Lanka, upon payment of a toll fee. In many instances, LNG terminals are operating below capacity and if it is the case with the terminal at Hambantota, this should be possible. On the other hand, Sri Lanka could negotiate with China to import and supply Sri Lanka’s requirements at an agreed price.

The imported LNG after regasification could be brought to Kerawalapitiya and Kelanitissa in pipelines possibly laid along the Highway Reservation from Hambantota with no issues of land acquisition coming up. However, laying of a gas pipeline requires a detailed EIA study, which may take a minimum of one year including time taken to issue the terms of reference and public scrutiny time. In addition, the time taken for negotiations with China and getting approval from the Cabinet will take a minimum of one more year.

Thereafter, preparing bid documents and calling for proposals from prospective contractors, evaluating the proposals and awarding the contract and carrying out the actual work will likely to take at least another 3 years, which will extend the total time period to 5 years. It may be possible to fast tract the process by conducting some of these activities in parallel. One advantage of this option is that it is a more permanent solution than the rest, but will have to depend on the Chinese for its sustenance.

CONCLUSION

Several options are available for importing LNG other than building a land-based or a floating terminal as currently proposed. Some of these are of shorter duration but of limited capacity, while another is of permanent nature and also has high capacity. However, a final decision has to be taken after carrying out a detailed technical and financial assessment of each option, assessing the future demand for overall energy in the country as well as possible sectors where energy needs could be met from natural gas. The Ministry of Energy will have to give the highest priority to undertake such a study.