“The demand for LNG continues to grow worldwide as countries seek to replace oil and heavy fuel oil with LNG as a cleaner and cheaper fuel for power generation, shipping, ground transport and industrial use. However, uptake remains slow because of a lack of the requisite infrastructure and investment to deliver reliable and sustainable supply. Much of Asia requires massive development of assets to bring the gas from its source to demand centers dispersed over vast geographies where it is estimated that $70 to $80 billion USD needs to be invested in gas infrastructure over the next decade.” Atlantic, Gulf & Pacific Company (AG&P), March 2017
In a KNect365 Energy article last month “Breaking the Mold: LNG Pricing & Contracts in 2017” Jason Feer of Poten & Partners described the phenomenon of how many countries are entering the LNG market for the first time: “the Philippines' domestic gas supplies are depleting so they see future LNG imports as a way to secure energy supplies in the future. Pakistan is switching from other fuels, plus they’re growing and don’t have enough domestic production. Ghana's economy is growing and they need reliable energy supplies.” These burgeoning LNG markets require new infrastructure, for as Feer explains: “You have to understand that for LNG the supply chain is very specific – you have specific facilities, specific skill sets needed. You need a refrigerated LNG terminal, not like oil markets where a tank is a tank. There are infrastructure requirements.”
One company working to alleviate those infrastructure issues is Atlantic, Gulf & Pacific Company (AG&P) a Filipino company which describes themselves as being at the “forefront of developing small-scale LNG infrastructure.” To get a better picture of what their work entails, I spoke with Derek Thomas, Head of their Advanced A&D Unit. Thomas describes his company’s products and services as “High Value Density” solutions that “enable distributed industrial development in locations where costs and the lack of support infrastructure could otherwise be prohibitive.”
KNect365 Energy: As Head of the Advanced R&D Unit, can you tell me about some of the technologies and advancements you’re most excited about right now?
Derek Thomas: The huge expansion in LNG usage over recent decades has created a range of supporting technologies that have been proven in demanding scenarios across the full value chain from initial liquefaction through shipping and then cargo transfer, storage and regasification. Traditionally these have been applied to large facilities and vessels, owned and operated by some of the world’s largest companies, but the market is now expanding dramatically to a include a much wider range of asset sizes and a broader base of stakeholders.
The exciting prospect is not any particular technology, but how these proven systems are being brought together to create effective and economic infrastructure which supports the burgeoning new LNG marketplace.
The exciting prospect is not any particular technology, but how these proven systems are being brought together to create effective and economic infrastructure which supports the burgeoning new LNG marketplace. Specifically we are finding ways of integrating technology from the best global suppliers and appropriately downscaling the systems to enable delivery of clean and cost effective LNG energy to a diverse and vibrant new marketplace that previously did not have access to this energy source.
KNect365 Energy: Can you explain a little how your Advanced R&D using “disruptive innovation” to our readers? How is it disruptive, for example?
Our view of “disruptive innovation” is to take proven concepts and technologies and recombine and integrate them in such ways as to make energy solutions more cost effective, scalable and faster to bring into operation.
Derek Thomas: Our view of “disruptive innovation” is to take proven concepts and technologies and recombine and integrate them in such ways as to make energy solutions more cost effective, scalable and faster to bring into operation. This relies on the idea of standardizing all the way up the design hierarchy so that you are using proven and reusable pieces to build ever more complex modules, and mixing and matching these modules to create different types of solutions.
It is this sort of approach that has made the automotive industry so effective at delivering cost effective solutions, and even more so the electronics industry. In contrast, industrial engineering has traditionally followed a bespoke design philosophy which means that projects are designed from the ground up each time.
It is this sort of approach that has made the automotive industry so effective at delivering cost effective solutions, and even more so the electronics industry. In contrast, industrial engineering has traditionally followed a bespoke design philosophy which means that projects are designed from the ground up each time. We believe that the emerging smaller and more diversified LNG markets cannot tolerate the costs and timeframes associated with this approach, and require a “design once build many” philosophy which reduces much of the infrastructure pieces to standardized products.
KNect365 Energy: At the conference you will be discussing: “Integrated solutions for the delivery of LNG”. Can you give our readers (and those who cannot be at the LNGgc Americas conference) a sneak peak and tell us a little about what AG&P is doing there?
Derek Thomas: Natural gas is being adopted globally as a preferred fuel for cleaner power generation, but many locations do not have access to traditional pipeline gas. For those sites the availability of LNG at much lower prices and on more flexible contract terms means that it is now possible to consider using it as an energy source by creating a “Virtual LNG pipeline”. This relies on our ability to build out a delivery network that is suitably scaled a economically viable for a wide range of potential power generators. This infrastructure includes a range of smaller vessels, import terminals, storage and regasification facilities which are designed to be cost effective at the scales required by smaller power plants and the trend towards Distributed Energy Resources as opposed to larger centralized plants. Another aspect that we are working on together with major power plant equipment suppliers is a expandable range of Floating Power Plants based on a modular approach. Our ability to supply these factory built power plants at costs equal or below that of land based stick built plants and in a much shorter timeframe will be a key enabler in locations such as Argentina which is looking to dramatically expand its power generating capability.
KNect365 Energy: Can you talk about the latest technology or advances in Floating LNG?
Derek Thomas: We are seeing the culmination of a decades long development with the deployment of open ocean floating LNG liquefaction projects in Asia, Australia and Africa. Consistent with our philosophy of delivering pragmatic and cost effective solutions, we are focussed on simpler barge based platforms for near shore applications. These can take advantage of sheltered moorings and pipeline quality gas in many locations and thus have a radically lower cost basis than the deepwater projects. Initial targets are for smaller units producing producing in the range of 100,000 tons of LNG per year and aimed at regional supply, peak shaving and LNG marine bunkering. Beyond that we see opportunities to apply the same basic approach but expand production to between .5 and 1 million tons per year and have a very strategically focussed LNG export facility. The much lower cost and time to production for such a plant makes it attractive to a number of global locations where projects are looking to take advantage of the next upcoming window of opportunity in the early 2020s that will result from increasing demand and the delay in sanctioning any new world scale production facilities.
Don't miss Global LNG experts such as Derek Thomas and Jason Feer at our LNGgc Americas event in Houston this May 31.