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NGV Transportation

VOL. 27| JUL - SEP 2016 | USD 30

NGV

TRANSPORTATION MAGAZINE

FEATURES

SPECIAL REPORTS UNDERSTANDING THE BARRIERS TO THE USE OF CNG AS AN NGV FUEL IN NIGERIA

ENGINEERING APPLICATION OF CNOOC’S LARGE LNG TANK TECHNICAL SYSTEM - CGTANKTM

WE SEE THE LNG SUPPLY BUT WHERE IS THE DEMAND? EVENT & EXHIBITION:

LNG ROADMAP

- LNG AS A DRIVING FORCE FOR CROSS-BORDER COOPERATION WITHIN EUROPE


EDITOR’S TWO CENTS

Greetings all!

NGV

TRANSPORTATION

The year seems to be zipping right by us, we are well into 2016 already and the energy markets seem to be adapting to the cheap oil environment. The conglomerates are still making investments in natural gas projects as the line between LNG buyers and sellers slowly fades. They are increasingly making spot trading of LNG a part of their business for some extra revenue. LNG is going through a real period of change and it is necessary that the industry bends and forms to accommodate the latest trends in the market so that it can move towards the next stage in its evolutionary journey. I personally believe that natural gas is just too dynamic a fuel to ever face obstacles that cannot be overcome. Like I’ve mentioned on numerous occasions, markets a cyclical and the energy industry is very volatile – the upswings and downswings can be immense but they rarely last for very long. This is not to say that there will not be huge obstacles to overcome – there very well will be and the current slump in oil prices has certainly put doubts in those who have recently entered or are not familiar with the industry. In this issue we’ve prepared for you some interesting technical articles for you once more – researchers in Italy proide an analysis on FMECA and HAZOP integrated methodology for LNG support with regards to LNG transport and terminal operations. There is also a very nice study detailing the safety risks associated with a dual fuel LNG/diesel heavy duty trucks. We also delve into the complicated natural gas industry in Pakistan and look into the situation from the perspective of the Assistant Executive Director of LNG; Rahil Pitafi of OGRA in Pakistan. Furthermore, the pit bull of LNG; Rudolf Huber continues to give his insights on all things LNG and speaks extensively on the unsettling reality of FSRUs in the current market. As always we hope this issue intrigues you and we welcome any feedback that you might have. Keep fighting the good fight and plan for the future! There’s an old saying that goes, ‘Failing to plan is planning to fail’ and it resonates close to those involved in the LNG business – it’s time to be prepared or be left behind.

MAGAZINE Published by:

NATURAL GAS GLOBAL

Managing Director Vincent Choy

vincent@naturalgaslobal.com

Chief Editor Rizal Rahman

rizal.rahman@naturalgasglobal.com

Editor Ryan Pasupathy

ryan@naturalgasglobal.com

Business Development Samuel Tan

samuel.tan@naturalgasglobal.com

Marketing Manager Sheryl Chia

sheryl@naturalgasglobal.com

Graphic Designer Puspo Aurum

puspo@olifen.co.id

Follow us on our social media platforms to receive the latest natural gas news from around the world! www.facebook.com/NGVTMag www.linkedin.com/company/ NGV-Transportation @NGVTmag

Our Address: Natural Gas Global 52 Foch Road, #02-02 Singapore 209274 PT Olifen Global Indonesia 20th Floor, Wisma KEIAI Jl. Jend. Surdirman Kav 3-4 Central Jakarta - Indonesia All rights reserved. No portion of this publication covered by the copyright herein may be reproduced in any form or means – graphic, electronic, mechanical, photocopying, recording, taping, etc – without the written consent of the publisher. Opinions expressed by contributors and advertisers are not necessarily those of the publisher and editor.

Ryan Pasupathy Editor

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Vol.27 Jul - Oct 2016 NGV Transportation


CONTENT

03

NEWS AROUND THE WORLD EDITOR’S TWO CENTS ANALYSIS OF NATIONAL POLICIES AND ITS IMPACT ON NGV GROWTH IN JAPAN

01 39

30

FEATURES: ENGINEERING APPLICATION OF CNOOC’S LARGE LNG TANK TECHNICAL SYSTEM - CGTANKTM

13

SPECIAL REPORT: UNDERSTANDING THE BARRIERS TO THE USE OF CNG AS AN NGV FUEL IN NIGERIA

EVENT& EXHIBITION: 3RD LNG ROADMAP - LNG AS ADRIVING FORCE FOR CROSS-BORDER COOPERATION WITHIN EUROPE

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SPECIAL REPORT: INTERVIEW WITH MR. IGOR PALKA - IFAT

34

26

WE SEE THE LNG SUPPLY BUT WHERE IS THE DEMAND?


NEWS AROUND THE WORLD

PAKISTAN May 2016: LOI Issued for Second LNG Terminal

The Government of Pakistan has issued a letter of intent for the development of a second LNG handling Terminal at Port Qasim in Karachi. Petroleum and Natural Resources Minister Shahid Khaqan Abbasi revealed that it was a consortium of Fauji Oil Terminal and Distribution Company (Fotco) and Pakistan Gas Port Ltd that had won the tender. The board of directors of Pakistan LNG Terminals Limited had approved the financial bid of the consortium, which offered a levellised (service) charge of $0.4177 per million British thermal units (mmbtu) with a handling capacity of 600 million cubic feet of LNG per day (mmcfd). - The Express Tribune

POLAND

COLUMBIA

June 2016: First Commercial LNG Cargo Received

Poland received its first commercial LNG Cargo signifying its progress towards another step from being free from dependence on Russian gas. The Al Nuaman tanker docked at the Swinoujscie terminal, with 210,000 cubic meters of gas. Poland relies on Russian gas for about two-thirds of its total consumption and will get its second commercial shipment from Norway later this month. The nation has proposed doubling the 3 billion zloty (US $760 million) terminal’s initial capacity of 5 billion cubic meters a year, or about a third of annual consumption, and building a pipeline to Norway to completely cut its reliance on Russia.

May 2016: Mitsui Will Deliver Colombia’s First LNG Shipment Mitsui & Co. has been selected to deliver Colombia’s first cargo of LNG as the country makes preparations for a floating import terminal. According to the deal, Mitsui will send the cargo to the gas storage complex that Sociedad Portuaria El Cayao SA ESP, owned in part by Colombia gas provider Promigas, is completing off Colombia’s northern coast. The site is planned to be fully operational by November. - The Japan Times

- Bloomberg

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Vol.27 Jul - Oct 2016 NGV Transportation


NEWS AROUND THE WORLD

GREECE

ANGOLA

RUSSIA

May 2016: Bulgaria and Greece Form Task Force to Build Greek LNG Terminal

June 2016: Angola LNG Resumes Shipments After Interruption

Bulgarian Energy Holding (BEH) and Gastrade have set up a joint task force to develop a proposal for an offshore LNG terminal in Northern Greece. Currently, the country has one existing LNG terminal on an islet off Athens. This second terminal is planned to be located near the northern city of Alexandroupoli. The facility is meant to have an estimated capacity of 6.1 bcm per year.

Angola LNG has resumed production in its Soyo natural gas liquefying plant in northern Zaire following an interruption that was brought about by a technical failure back in 2014. Artur Pereira, ALNG Marketing Chairman, has said that, “The market changed a lot while our unit stopped, but we are happy as we are managing to deliver LNG from Angola throughout the world and assume our position as a trustable and safe supplier in the LNG world market,”

June 2016: Shell and Gazprom Set to Sign a Deal on LNG Development in the Baltic

- Ekathimerini.com

Shell is looking at signing a deal with Russian gas company Gazprom as part of a plan to begin an LNG project at UstLuga in the Baltic Sea. The project is expected to include a two train LNG plant as well as a pipeline. The plant is planned to be finished by 2021 and cost around US $10 billion. - Oilprice.com

- All Africa

THAILAND June 2016: Thailand Risks Facing Serious LNG Shortage

production is depleting ahead of the concessions. With operators unlikely to invest more into the depleting field, Thailand will need to look for LNG supplies from elsewhere to supplement this shortfall.

Thailand is at risk of being short of 6,300 MW of electricity in 2021 due to possible disruption of up to 9 million tonnes of LNG. This has been caused by the lack of continued investment into Erawan and Bongkot gas fields. Production concessions offered by the fovernment for these blocks are due to expire in 2022 – 2023 nad

Vol.27 Jul - Oct 2016 NGV Transportation

- Bangkok Post

4


PANAMA

MOZAMBIQUE

June 2016: Chinese Freighter First To Ply Expanded Panama Canal, LNG Tankers to Come

June 2016: Contracts Approved for FLNG

A giant Chinese freighter made the first trip through the expanded Panama Canal on the 24th of June to mark the completion of almost 10 years of work. Thousands of people cheered the vessel on as it passed through the canal. President Juan Carlos Varela said that, “This is a great day, a day of national unity and a day for Panama. This is the route that unites the world.”

LNG is gaining traction with big users of gas in China’s industrial sector as domestic prices have hit record lows prompting city gas distributors to offer attractive discounts on piped volumes to keep their customers from picking up their gas elsewhere.

Mozambique’s government is going ahead with Eni’s 3.4 mtpa FLNG project despite worries that the country’s debt crisis would stall its LNG developments. The country’s council of ministers approved the SPA for the offtake of LNG from Eni’s Coral FLNG. But while the government has sanctioned the SPA with BP for the full 3.4 mtpa of offtake from Coral, the agreement has not yet been signed by the other Area 4 partners; Eni, China National Petroleum Corp., Kogas and Galp Energia. LNG will be sold to BP under a free-on-board, oil-linked contract with a slope of around 11.5%.

- Interfax Global Energy

- Interfax Global Energy

June 2016: GTT Settles in China

SOUTH AFRICA

- The Japan Times

CHINA June 2016: Bargain Price LNG in China Winning Industrial Fans

GTT has inaugurated their presence in China as of June. Philippe Berterottière, Chairman and CEO of GTT, said that, ““GTT and HudongZ h o n g h u a Shipbuilding’s collaboration has been an LNG carrier construction success story in China. GTT wants now to contribute to the development of LNG as a fuel in the country. This is why the company is opening an office in Shanghai.” - Hellenic Shipping News

June 2016: LNG Import Unit Being Set Up for Gas-toPower Program South Africa is creating a unit to import LNG for power plants as Cheniere Energy await fuel tenders for annual shipments of around 3 million tonnes. The Gas industrialisation unit will initially focus on importing LNG as South Africa aims to reduce its reliance on coal. Cheniere is among companies interested in supplying South Africa’s gas-to-power program, which plans to add 3,126 megawatts of capacity between 2019 and 2025 that could require annual LNG imports of about $530 million. - Bloomberg


NEWS AROUND THE WORLD

INDONESIA June 2016: Need For More CNG Stations

Drivers in Indonesia are expressing their disinterest in CNG as it is felt that stations are sparsely located and have long waiting times. LNG and CNG for vehicles was introduced in

the country in 2012 and never gained popularity. Expensive installations and converter kits added to these woes, not to mention that gas only proved to have slight cost benefits over

gasoline. The government has been trying to encourage increased use of gas, thought to be the cleaner counterpart to other fossil fuels, by ordering Pertamina and state-owned gas company Perusahaan Gas Negara (PGN) to build and operate more gas stations. Gas has not gained much traction here. Pertamina data shows that gas used by vehicles has only increased by 5.26 percent from 3.8 million standard cubic feet of gas per day (mmscfd) last year to 4 mmscfd this year. Pertamina currently has 54 gas fuel stations set up across the country, most of which are located in Greater Jakarta, although several others are located Palembang in South Sumatra, Semarang in Central Java and Balikpapan in East Kalimantan. Currently only 14 gas fuel stations are in operation, while the other 40 are set to start operating only by the end of 2017. - Jakarta Post

July 2016: BP Will Go Ahead with US $8 Billion LNG Project Three-quarters of the gas from the new ‘Train 3’ will be supplied to Indonesian power utility Perusahaan Listrik Negara (PLN) while the rest will go to Japan’s Kansai Electric Power Co. This decision also secured a $2.43-billion onshore building contract for a consortium led by Tripatra, part of Indonesia’s Indika Energy Group.

BP has received final investment approval for their expansion project of Tangguh LNG clearing the way to begin operations by 2020. The oil and gas giants are going ahead with the expansion despite announcing it would pull back on spending this year. The investment will boost annual LNG production capacity at the Tangguh project in Indonesia’s West Papua province by 50 percent to 11.4 million tonnes.

Vol.27 Jul - Oct 2016 NGV Transportation

- Reuters US

6


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NEWS AROUND THE WORLD

QATAR June 2016: Qatargas and RWEST in Deal for LNG Delivery to Europe

Qatargas has announced a flexible Sales and Purchas Agreement with RWE Supply & Trading (RWEST) which is an European electricity and gas company. Qatargas will deliver up to 1.1 million tonnes

of LNG per annum to RWEST in North West Europe for seven and a half years. The LNG will be supplied from Qatargas 3, a joint venture between Qatar Petroleum, ConocoPhillips and Mitsui & Co. Ltd. Qatargas

chartered Q-Flex LNG vessels will deliver the LNG to RWEST in North West Europe. - The Peninsular Qatar

IRAN

NIGERIA

June 2016: Exports to Kenya, Tanzania and South Africa Begin

June 2016: Savings Up to US $5 Billion from Gas Development

Iran has started exports of LNG to African nations, Kenya, Tanzani and South Africa. These shipments are being carried out through LNG ISO tank containers. Currently Pakistan and Afghanistan are the main Iranian LNG clients but in recent years the country has been trying to gain a larger share of the global LNG market through supply deals such as this one.

The Nigerian Federal Government is expected to save US $5 billion each year if it actively pursues aggressive gas development in Nigeria. The country’s gas reserves have also increased from 186 tcf to 190 tcf. Development of the sector will lead to increased domestic energy security. Development will result in the reduction of gas flaring in Nigeria (which currently ranks second in the world for flare volumes).

- Hellenic Shipping News - All Africa

Vol.27 Jul - Oct 2016 NGV Transportation

8


NEWS AROUND THE WORLD

INDIA June 2016: India Seeks Better LNG Deal Through South Korea and Japan India is looking for better LNG deals through an alliance with Japan and South Korea and also possibly China to supplement their ever growing demand for energy. Dharmendra Pradhan, Indian minister of Petroleum and Natural Gas, said that, “For the next two to three decades, gas is going to be a major part of the energy basket for Asian energy consumers. We want to bring together the countries and form a network which can together source reasonable, rational and affordable LNG.” State-owned oil and gas company, GAIL is spearheading these talks. - Reuters India

June 2016: Ban on Retrofitting CNG Kits to Be Lifted in New Delhi Following complaints of unapproved and uncertified CNG fuel kits being distributed in India by by retrofitting centers just one week prior to this, the Delhi Government put CNG conversion on hold. This ban has since been lifted as they government has planned to issue an order allowing Motor Licensing Officers (MLOs) to resume registration of “inuse” cars fitted with CNG kits, said Jain. The order will enable car owners to convert petrol-run cars to CNG and bring relief to retrofitting centres across the city. - India Express

June 2016: Gail Likely to Realign Tamil Nadu Pipeline to Connect LNG Terminal

Gail looks like they are likely to agree to Tamil Nadu’s demand of realigning the proposed pipeline to connect to Petronet’s LNG Terminal in Kochi with Bengaluru along the national highway that has been held back for many years now. Protests have come from thousands of farmers that would have to be relocated or damaged if they proceed with their plans effectively halting the development of the project from being completed in 2013. The Terminal in Kochi has already been ready for 3 years now.

AUSTRALIA - Economic Times

AUSTRALIA July 2016: Local LNG Struggling Despite $172 Billion in Investments Australian LNG has been facing some tough times recently despite huge investments having gone into many of the massive projects undertaken. The problem here being that investments made several years ago during the price boom have gone stale as prices have slumped tremendously and affected projected margins severely. It is still felt though that Australian LNG will grow to become competitive despite these market setbacks if they are able to remain in operation till the market adjusts to these new ‘norms’. - Oilprice.com

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Vol.27 Jul - Oct 2016 NGV Transportation


NEWS AROUND THE WORLD

GHANA

SINGAPORE

June 2016: Expecting First LNG Shipments in 2017

July 2016: Expanding Green Incentives to Encourage LNG Bunkering

Ghana expects to start importing LNG early 2017 according to CEO of Ghana Petroleum Corporation (GNPC). GNPC is in the market for 250 – 500 mllion cubic feet of gas per day to help generate power in the country. Two import terminal projects are already planned. Golar LNG has already supplied a floating terminal to the Atlantic coast port of Tema, but there are certain logistical issues causing uncertainty over when it will start up. Golar LNG and West African Gas Limited (WAGL) said last year that a contract was signed for the provision of the 170,000 bcm for newbuild FSRU Golar Tundra for an initial period of five years with the option for WAGL to extend for a further five years.

Singapore has taken another step forward to encourage the use of LNG as a sustainable fuel source for the maritime industry. The Maritime and Port Authority of Singapore has extended its Green Ship Programme to ships running on LNG. Under the plan, Singapore flagged ships are encouraged to reduce CO2 and SO emissions which will allow them to enjoy a reduction of initial registration fees and a rebate on annual tonnage taxes.

CANADA

- All Africa

- The Star

- Business Times

June 2016: Malaysia’s Petronas Led LNG Project Environmental Review Resumes The environmental review of Petronas LNG project in Western Canada has resumed following a final 3 month extension granted by the federal government. Petronas and its partners have been waiting about three years for their permit to go ahead with their plans for the Pacific Northwest LNG export Terminal in British Columbia. The review process was paused in March when the regulator requested further information from them.

LITHUANIA June 2016: Litgas in Talks for a Klaipeda LNG Bunkering Vessel Dalius Misiunas, Chairman and CEO at Lietuvos Energija, says the a joint venture between LitGas, UAB (LitGas), and Blue LNG is being considered, which could see Blue LNG operate a small LNG vessel that will perform bunkering operations and transport gas from Klaipėdos Nafta’s Klaipėda LNG terminal. “We are not ruling out some sort of cooperation, but there are no concrete decisions yet,” he said. - Ship & Bunker

Vol.27 Jul - Oct 2016 NGV Transportation

10


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FEATURE ARTICLE 4th EDITION

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Country Focused Session – South Korea

Gas & LNG Distribution and Technology

Changes in Japan’s Energy Market Structure

Country Focused Session – China

Operations of Small-Scale Producers Accessing Large-Scale Markets and Vice Versa

Pricing Mechanism in Japan Compared to Other Markets

COMMERCIAL STREAM

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New Horizons for Gas in a Low-Carbon, Post COP 21 World

The Role for Gas & LNG in Marine Transportation: Dawn of a Major New Era?

Trading, Origination & Pricing Updates: LNG as the New Global Commodity?

Future Markets & Opportunities in Gas-Fired Power Generation

Raising Capital and Delivering Gas & LNG Projects in Tight Economic Times

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Extending Life of LNG Facilities Large to Small Scale Offshore and Deepwater Gas and LNG Developments and Technologies

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Process and Plant Design Optimisation

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POST-CONFERENCE WORKSHOP 12

Vol.27 Jul - Oct 2016 NGV Transportation


FEATURE ARTICLE

ENGINEERING APPLICATION OF CNOOC’S LARGE LNG TANK TECHNICAL SYSTEM

CGTANK

TM

Fig. 9 Operation diagram of Tianjin LNG Phase 1 Project The completion and commissioning of Tianjin LNG Phase 1 Project is a landmark in CNOOC LNG practice. This project gave CGTankTM a stage show and also enhanced the core competency of CNOOC in LNG energy industry.

Introduction China National Offshore Oil Corp. (CNOOC) is the largest LNG importer in China. Up to now, CNOOC has built 10 LNG receiving terminals and 30 large LNG storage tanks, which imported 13.39 million tonnes of LNG in 2015, which accounted for 70% of total LNG imports in China. LNG tank storage is complex and construction costs are high. LNG tank technology is one of the cutting-edge technologies in the field of energy and CNOOC has the biggest demand for LNG tanks design and build. Early technology providers were

all international contractors. Based on the design and construction experience of the relevant company, after several years of research, the LNG storage tank technology system “CGTank TM” was developed successfully in 2012, which marks China’s full mastery of LNG storage technology. CGTank TM includes a number of technological breakthroughs, multiple patents, software copyrights, and specially developed algorithms. In a CGTank TM technical system, computing software is developed independently, all conditions and calculations

13

for the tank are completed with a fluid-solid coupling FEM model. In consideration of multi-point contact; seismic action research and inner examination research based on European standards and combined with a response spectrum analysis; the stress calculated by the theory of maximum shear failure is set as the standard of evaluation for the first time. Engineering application of CGTankTM in Tianjin LNG Phase 1 Project CGTank TM techniques have been applied to the construction of two full

Vol.27 Jul - Oct 2016 NGV Transportation


FEATURE ARTICLE

Fig. 1 Model of LNG tank

Fig. 2 FEM Calculation model of LNG tank

Fig. 3 Calculation results of LNG tank

CGTankTM has been used in 4 projects from 2012, they are Tianjin LNG Phase 1 Project, Guangxi LNG Project, Fujian LNG Phase 2 Project and Tianjin LNG Phase 2 Project.

containment tanks of 3Ă—104 m 3 for the Tianjin LNG Phase 1 Project, during which several difficulties have been overcome. The first is low bearing pressure on the terrestrial foundation constituted by dredger fill in a short period. The second is the challenge of dealing with high earthquake accelerations (up to 7.875 m/s2 locally, which was the highest at that time in China). The accomplishment of the Tianjin LNG Phase

1 Project is a landmark of independently designing and constructing LNG tanks by CNOOC with the aid of other domestic companies for the first time. Engineering application of CGTank TM in Guangxi LNG Project CGTank TM techniques have been applied to the construction of two full containment tanks of 3Ă—104 m 3 for Guangxi LNG Project, which was also used in the

Fig. 4 Piles and slab construction

Vol.27 Jul - Oct 2016 NGV Transportation

14

Tianjin LNG Phase 1 Project. Compared with Tianjin LNG Phase 1 , Guangxi LNG has better geological conditions and thus, the earthquake threat is reduced, so the CGTank TM design has been optimized, such that the length and the number of piles were reduced. Engineering application of CGTank TM in Fujian LNG Phase 2 Project CGTank TM techniques have been applied to the


FEATURE ARTICLE

Fig. 6 Roof construction

construction of two full containment tanks of 16×104 m 3 for Fujian LNG Phase 2 Project. This is the first time that the CGTank TM has been used in 16×104 m 3 tank size construction. The Fujian LNG Phase 2 Project faced many difficulties, such as the risk of significant earthquake threat, extremely complicated geological conditions, a large rock line angle, high rock strength and a few other

0

Fig. 7 Inner tank construction

minor considerations. For the CGTank TM, the difficulties are both a challenge and an opportunity. During the design phase, full consideration is given to the actual situation from both multi-angle and multi-level demonstrations. Through a series of analyses it becomes possible to solve all of these practical problems. The CGTank TM system has been constantly undergoing improvement

with each new project. Anchorage zone and thermal corner protection unified analysis technology have been developed and refined in this manner. The technology of the roof beam frame nonlinear analysis, which considers initial defects has also been used for the first time in this most recent project. Pile foundation project solutions have undergone expert review right from the initial phase of construction.

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Fig. 11 Overall picture of Guangxi LNG tank

Fig. 10 Pile arrangement plan by CGTankTM

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Vol.27 Jul - Oct 2016 NGV Transportation


FEATURE ARTICLE

Fig. 13 Roof beam frame nonlinear analysis by CGTankTM

Fig. 14 Pile construction of Tianjin LNG Phase 2 Project

Engineering application of CGTank TM in Tianjin LNG Phase 2 Project CGTank TM techniques have been applied to the construction of one of the 16x104 m 3 containment tanks for the Tianjin LNG Phase 2 Project. The biggest difficulties faced by the Tianjin project are low bearing pressure on the terrestrial foundation constituted by dredger fill in a short period and the challenge

from high earthquake accelerations. In order to solve these problems, the length of the pile foundation has been designed for 56 m, and the total number of piles was adjusted to be 454. Conclusion The engineering application of CGTank TM technology has demonstrated the capability of custom design for full containment LNG tanks by CNOOC. From Tianjin LNG

NTM

By Zhang Chao, Xiao Li

XIAO LI

ZHANG CHAO Zhang Chao(1981-), PHD, chief engineer of liquefied natural gas (LNG) structure and ground engineering of CNOOC. Mainly engaged in LNG storage tank in terms of scientific research, design and construction work.

Vol.27 Jul - Oct 2016 NGV Transportation

Phase 1, the R&D center of CNOOC Gas and Power Group has continued design review, preliminary design and technical support for several LNG receiving terminal projects. These projects are are being built to improve these customised techniques and provide detail design for many projects. CNOOC has got fully capable of participating in international projects of LNG terminal.

Xiao Li(1986-), PHD, senior engineer of liquefied natural gas (LNG) structure and ground engineering of CNOOC. Mainly engaged in LNG storage tank in terms of scientific research, design and construction work.

16


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SPECIAL REPORT

UNDERSTANDING THE BARRIERS TO THE USE OF CNG AS AN NGV FUEL IN NIGERIA

LESSONS FROM INTERNATIONAL MARKETS

N

igeria experiences p e r e n n i a l shortage of transportation energy despite being a leading oil and gas exporting country. While the country has installed refining capacity that exceeds domestic demand, the refineries are dilapidated and – partly as a result – do not operate anywhere near capacity and compel importation of more than 80% of the refined petroleum products consumed locally. Additionally, the Nigerian population grew by almost 400% to nearly 180 million between 1960 and 2016 and witnessed significant urban

drift in the same period, from 14% of the population living in urban areas in 1960 to over 50% in 2016. These changes suggest increase in demand for transportation energy. Despite these challenges, Nigeria continues to flare about 20% of the associated gas encountered in the oil exploration and production process. The government owned national oil company - Nigeria National Petroleum Corporation (NNPC) reported that oil producers flared about 51% of the associated gas produced between 1990 and 2010, a volume of about 459 billion cubic meters (bcm). To put this into perspective, this

19

volume represents 53 billion litres gasoline equivalent, which is more than 14.5 years worth of Nigeria’s gasoline consumption. To address the twin challenges of gas flaring and transportation energy shortages, the Nigerian government proposed the use of compressed natural gas (CNG) as an automotive fuel in the 1990s as part of a range of initiatives to harness natural gas resources but progress has been slow with only 2,210 natural gas vehicles (NGVs) representing 0.04% of the total national vehicle fleet and only eight operational CNG refuelling stations. NGV implementation approaches and outcomes in

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SPECIAL REPORT Table 1: Country comparative analysis India

Pakistan

Iran

Brazil

Argentina

NZ

USA

Clarity of strategic intent Energy security Environmental concerns Economic considerations Legal backing Standards and codes National interest Pricing Judicial ruling NGV production Learning and adaptation Study of other countries Pilot programme Development of standards Assignment of responsibilities Promotion Regulation Production and distribution Research and development Financial incentives Sales tax exemption Tax on conventional fuel Low interest loans/credits Custom duty waiver on kits Subsidy on NGVs and kits Subsidy on retrofitting gas stations Tax credit NG pricing Regulated in favour of NG Market Building market confidence Public fleet conversion Safety Public campaign Infrastructural development Private CNG stations Public CNG stations Private sector-owned pipelines Government-owned pipelines

seven countries with diverse experiences were examined to gain understanding of the barriers to NGV market development, identify the critical success factors for adoption of CNG as an automotive fuel, and draw lessons for Nigeria. The countries studied were selected to represent the market spectrum comprising of early development (India), sustained growth (Argentina and Brazil), rapid growth (Pakistan and Iran), low penetration (the US) and collapsed market (New Zealand). Analysis employed philosophical hermeneutic principles to secondary data derived from academic literature, published reports from a variety of national and international agencies, grey literature and text from online sources. i. Clarity of the strategic intent

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or main drivers for the use of CNG as an automotive fuel; ii. Provision of legal backing, including legislation, regulation, policies and operational guidelines to guide and drive the CNG programme; iii. Learning and adaptation, which are reflected in the processes adopted by the country in conceptualization and execution of its natural gas (NG) programme; iv. Assignment of responsibilities to specific entities for various elements of the NGV market development; v. Application of financial incentives to promote NGV market development; vi. A sufficient price gap between NG and conventional fuels; vii. The building of consumer and market confidence

20

Nigeria

deliberately; and viii. Development of domestic NG pipelines and other NG refuelling infrastructure.

Eight critical factors were identified for the successful adoption of CNG as an automotive fuel as follows: An evaluation of Nigeria against these critical success factors indicates significant gaps in the current situation in the country, except for the strategic intent, where the country compared favourably. Table 1 summarizes the analysis and shows the diversity in experience of the countries examined. Strategic intent: CNG has been adopted as transportation fuel in many countries for various reasons of which economic benefits/considerations, environmental concern/ benefits, energy security, and availability of natural gas resources are the major drivers. For example, the Supreme Court of India in an effort to control vehicular emissions ordered the conversion of the city bus fleet to CNG and the USA is pursuing alternative energy for energy independence and security. While Iran’s crude oil reserve is the second largest globally and the country is the fourth largest producer of crude oil, over reliance on importation of petrol in satisfying domestic demand led to the adoption of CNG as transport fuel. In Nigeria, the need to reduce gas flaring, spiralling fuel prices and increasing environmental concerns are the driving forces for domestic utilization of NG in general. However, these strategic intents have not resulted in change in the transportation


SPECIAL REPORT sector. Until 2008, when the National Domestic Gas Supply Policy and the National Domestic Gas Supply and Pricing Regulation were introduced, the focus of government was the abatement of gas flaring as seen in the provisions of the Petroleum (Drilling and Production) Regulation 1969 and the Associated Gas Re-injection Act 1979. Consequently, oil producers focused on gas re-injection rather than gas gathering and utilization leading to a significant increase in the volume and percentage of associated gas re-injected and slow adoption of gas as a fuel domestically. As reported by the NNPC, more than 0.5 trillion cubic feet (tcf) of associated gas has been re-injected annually since 2002. Incentives for gas exploration and production were only provided through the Nigerian Liquefied Natural Gas (NLNG) (Fiscal Incentives, Guarantees and Assurances) Act 1990, the Associated Gas Framework Agreement of 1992 and later through Section 39 of the Companies Income Tax Act 2007. Legal backing: Establishment and enforcement of sound guidelines, codes and standards, as well as the use of legislative, regulatory and/or judicial mandates, help deepen penetration. Divergence from established conversion standards in New Zealand caused technical problems, which resulted in unfavourable publicity and fluctuations in vehicle conversion rates, while adherence to standards in Argentina spurred growth. In India, the various mandates issued by the Supreme Court were pivotal to CNG adoption. In Pakistan, Iran and New Zealand, mandates were used to foster vehicle conversion, obtain OEM participation and achieve CNG infrastructure development. The situation is different in Nigeria where there

are no legal provisions to promote the automotive use of CNG. While successive governments have promulgated laws aimed at abating gas flaring, these have failed to achieve the desired results. Apart from making pronouncements at public functions, the government has not demonstrated any seriousness towards the implementation of NG in the transportation sector, as there are no standards or regulations. Learning and adaptation: The current implementation approach lacks coordination and is without focus. The government-owned Nigerian Gas Company Limited (NGC), which is wholly responsible for gas transmission and sales, and a local company entered into a joint venture agreement in 2007 to establish a chain of CNG refilling stations. The pilot scheme is in Benin City, within the Niger Delta region, where gas is produced. Targets included the conversion of 50,000 vehicles in the first four years and the construction of between eight and ten CNG stations, 50km of steel pipeline and two conversion workshops in the first two years. As at the end of 2015, nine years after the commencement of the pilot programme, only the target

21

for conversion workshops had been met. Assignment of responsibilities: Each country studied, had a focus for implementation and assigned responsibilities for the critical elements of market development. In India, GAIL (India) Limited was charged with the implementation of the CNG programme, Mahanagar Gas Limited (MGL) – a joint venture between GAIL (India) Limited, British Gas and the Government of Maharashtra and Indraprastha Gas Limited (IGL) – a joint venture between GAIL (India) Limited, Bharat Petroleum Corporation and the Delhi Government were responsible for developing the Mumbai and Delhi markets respectively. In Argentina, Yacimientos Petrolífero Fiscales (YPF), a state-owned petroleum and NG exploration and production company, was charged with implementation while Gas del Estado, a state-owned NG transmission and distribution company was assigned the supervisory function. In Brazil, Inmetro was charged with the responsibility of establishing quality and safety regulations, Ibama was responsible for providing environmental related

Vol.27 Jul - Oct 2016 NGV Transportation


SPECIAL REPORT regulations, and Petrobras was responsible for the production and transportation of NG. Conversely, there is no specific agency set-up to promote the automotive use of CNG in Nigeria. The Nigeria Gas Company, established in 1988, has the mandate to efficiently gather, treat, transmit and market the country’s NG and its by- products to the domestic and regional markets. Financial incentives: CNG programmes must offer incentives to all stakeholders for successful adoption. For example, Argentina offered credit lines to vehicle owners and removed restrictions relating to proximity of refuelling stations to encourage investment and competition, as companies could site their stations in locations considered feasible without any restrictions Pakistan offered custom duty and tax exemptions as major incentives to refuelling station operators. In contrast, there is no known form of government support for the promotion of CNG as transportation fuel in Nigeria, It important to note that CNG programmes must not rely on excessive government subsidies as can be seen from New Zealand where the programme was over-reliant on government incentives and, as

Vol.27 Jul - Oct 2016 NGV Transportation

such, their removal resulted in the collapse of the market. Price gap between NG and conventional fuels: As seen in the countries examined, the price differential is a key success factor and ranged between 33% (USA) and 75% (Iran). The fastest growth is in Iran, where the price differential is the greatest, while Pakistan, having the highest saturation, has CNG priced at 50% of equivalent gasoline. NGV penetration in India is less than 5% and this could be due to the long period of subsidy for gasoline and diesel, which depressed the potential price differential. Similarly, a price gap range of 6 to 37% between gasoline and NG in Nigeria does not appear to be compelling, as the subsidy on gasoline erodes the long-term economic benefit of CNG. Catalysts for the adoption of CNG in Nigeria are a market operator-set price per energy equivalent of a litre of gasoline, in a deliberate manner to encourage conversion, along with a dual pricing structure similar to Argentina, where credit lines cover conversion costs, to be repaid with savings from the use of CNG. The operator offers vehicle conversion as a service through wholly owned and operated workshops and offers a soft loan scheme to encourage conversion. The minimum cost of

22

conversion is 200,000 naira (N) (USD 1,000) and private vehicle owners are required to make a down payment of a minimum of N40, 000 (USD 200) or 20% of cost, while owners of vehicles used for commercial purposes, such as taxis, are required to make a down payment of a minimum of N80, 000 (USD 400) or 40%. The loan repayment is through a price adjustment mechanism during refilling. Vehicle owners who pay fully for conversion buy at N55 per energy equivalent of a litre of gasoline, while those who take the financing option pay N80. These prices translate to price gaps of 37% and 6%, respectively, when compared to gasoline. Whereas the price gap of 37% might seem attractive, paying outright for conversion is not easily affordable for a majority of the population. On the other hand, the price gap of 6% for vehicle owners who take the financing option for vehicle conversion is marginal and insufficient to stimulate the market. The market outcomes, since the commencement of the CNG pilot in 2008, support this argument. NG infrastructure development: making national interest, a priority ahead of regional infrastructure is a critical success factor, as seen in Argentina, Pakistan and Brazil. The Argentine and Pakistani successes are in part due to their well-developed NG transmission and distribution networks. In Brazil, meanwhile, national pipelines were developed ahead of the Blue Corridor initiative. The situation is different in Nigeria as the country embarked on the development of the regional and international export markets ahead of domestic use, as demonstrated by the 687 Km West Africa Gas Pipeline that runs from Nigeria to Ghana and Nigeria Liquefied Natural Gas Limited (NLNG)


that has exported over 5 tcf of liquefied natural gas (LNG since 1999. These facilities were developed ahead of the domestic distribution network and indicate that Nigeria prioritized the export market ahead of domestic supply. Nigeria has a paltry 1250km gas transmission pipeline for its 923,768-km2 landmass. However, a number of private companies are developing transmission and distribution pipelines to complement this. An example is the 128km SouthSouth Gas Pipeline System, which links the Calabar Cluster of Industries to the existing grid. With respect to refuelling stations, Nigeria has seven public CNG-refuelling stations in Benin City, within the Niger Delta region, where oil and gas are produced. In addition, there is a ‘mother station’1 with an attached refilling station, in Lagos. There are indications that some companies have private refuelling infrastructure. The low vehicleto- refuelling infrastructure ratio (VRI) suggests that further growth can be accommodated in the NGV population within the geographical location of the stations. The NGV fleet of 2,210 is largely retrofitted and mainly light-duty vehicles. Policy implications and lessons for Nigeria Based on the outcomes of the case study, potential policy interventions that might encourage market development emerged as follows: Pricing reform: There is an urgent need to address both retail and wholesale prices of natural gas. Wholesale prices are set below world prices and need adjustment to encourage supply into the domestic market. With respect to the retail market, a holistic approach to the pricing of petroleum products is required

to develop a framework that will accommodate the dynamics that exist for gasoline and create headroom for NG to thrive concurrently. There may be lessons from India here, in terms of the gradual removal of subsidy on the pump price of gasoline. Government support for the establishment of refuelling infrastructure: Although the current VRI is low, stations are limited in number and concentrated in Benin City. To stimulate private sector involvement, NNPC could establish CNG stations in strategic locations, following the example of Argentina. As seen in the analysis, refuelling infrastructure is critical to market development, as the most successful markets have a VRI that is within the range recommended by the International Gas Union or even higher. Establishment of standards for both vehicles and refuelling stations: Establishment and enforcement of adequate guidelines, codes and standards – including proper measures for the safety of vehicles and refuelling infrastructure – aid adoption and instil confidence in the market. Promotion of bi-fuel NGVs: Emphasis on bi-fuel

1 A mother station’ is used to fill large volumes of CNG into mobile storage trailers.

NGV technology, rather than dedicated CNG vehicles, could help in accommodating the shortcomings of both NGVs (e.g. limited vehicle range, leading to more frequent refuelling) and infrastructural development (e.g. inadequate refuelling stations), as bi-fuel vehicle can run on either NG or gasoline/diesel. Alignment of stakeholders’ interests: The importance of alignment of stakeholders’ interests came to the fore in the analysis. Analyses indicate that Nigeria will benefit from alignment of and cooperation between stakeholders. Promotion of NGVs: as seen in the countries studied, creating awareness helps in creating gas demand, which in turn stimulates development of NG infrastructure. Hence, Nigeria may benefit from increased public awareness of the social, environmental and economic benefits of NG as a transportation fuel. Introduction of financial incentives: all the countries studied had financial incentives, either from government or industry, for vehicle owners and/or CNG-refuelling station owners. Although the operator in Benin offers some incentives, the conditions do not appear to be particularly compelling. The experience of Pakistan suggests


SPECIAL REPORT that incentives to corporations to invest in the CNG programme may have a greater impact. Conclusion Though the motives, applications, political will, regulatory environment, institutional capacity, level of infrastructure and energy market dynamics of the countries examined are diverse, concerns for ambient air pollution, energy security and economic considerations are also issues that resonate with Nigeria. Analyses indicate that lack of coordination in implementation is a principal impediment to the market development of NGV in Nigeria. The absence of legal backing, the lack of government support, insufficient price advantage, misplaced priority and non-alignment of stakeholder interests evidence this. Furthermore, comparison of the role of the Nigerian government in the implementation approach with those of the countries studied indicates a wide gap. Hence, there might be a need for the Nigerian government to play a more central role – to set strategic goals, formulate policies, establish the necessary legal and regulatory frameworks and assign responsibilities to relevant agencies – in order to develop the market and encourage entry of both local and global players. The key lessons for Nigeria are in the areas of government involvement, implementation coordination and attractive NG retail pricing and strategic refuelling infrastructure development. The experience of Pakistan, which has the highest NGV penetration rate in the world, suggests that incentives to corporations to invest in the CNG programme may have higher impact than consumer incentives. While the conclusions reached may be useful for other countries with similar situation, they may not be transferable to

Vol.27 Jul - Oct 2016 NGV Transportation

countries with different dynamics in the energy markets. For a detailed analysis of the case studies, please see Ogunlowo O.O., Bristow A.L. and Sohail, M. 2015. Developing Compressed Natural Gas as an automotive fuel in Nigeria: Lessons from

international markets, Energy Policy 76, January 2015, 7–17, Available at: http://dx.doi. org/10.1016/j.enpol.2014.10.025.

NTM

By Olefumi Ogunlowo, M Sohail, Abigail L. Bristow

OLUFEMI OGUNLOWO Olufemi Ogunlowo holds a BSc (First Class Honours) degree, Civil Engineering (1991/92) from the University of Ibadan, Ibadan, Nigeria and MSc (Distinction) in Water and Waste Engineering, (1997/98) from Loughborough University, Loughborough, Leicestershire, UK. He is the owner and Group Managing Director of Strategic Outsourcing Limited and BMC Consultants Limited; offering business strategy advisory and business process outsourcing. He is passionate about development in Africa in general and Nigeria in particular. He is currently undertaking, at Loughborough University, a doctoral research programme which aims to investigate the adoption of CNG as transportation energy source towards sustainable development in Nigeria. e: o.ogunlowo@lboro.ac.uk

M SOHAIL M Sohail BEng, MSc, PhD (UK), Fellow ASCE (USA) is a Professor of Sustainable Infrastructure and the Director of Research and Enterprise at Water Engineering and Development Centre. He has published over 110 journal papers, books and conference papers and has international experience of more than 30 countries. He is also a Fellow of the American Society of Civil Engineers, a member of the editorial panel of an Institution of Civil Engineers journal, has served on several scientific committees and refereed several journals and research submissions for esteemed journals. e: M.Sohail@lboro.ac.uk

ABIGAIL L. BRISTOW Abigail L. Bristow BSc (Econ), MA, PhD, FRSA, FIOA is Professor of Transport Studies in the School of Civil and Building Engineering, Loughborough University. Her main research interests are the externalities generated by transport systems particularly noise and carbon emissions. Research on carbon emission reduction includes: studies exploring ways of achieving significant reductions in passenger transport emissions by 2050 and freight transport emissions in London by 2050; transport in the hydrogen economy; cost effective carbon mitigation and the potential role of personal carbon trading in delivering emissions reductions. e: a.l.bristow@lboro.ac.uk

24


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FEATURE ARTICLE

WE SEE THE LNG

SUPPLY

BUT WHERE IS THE

DEMAND?

T

hose who have seen the first instalment of the famous “Hellboy” series will remember the scene where professor Broom sees Kroenen coming down the stairs and asks the all important question “I see the puppet but where is the puppet player?”. Kroenen was merely a puppet with just the modicum of a

Vol.27 Jul - Oct 2016 NGV Transportation

free will. The real string-puller behind this particular puppet was Rasputin who aimed at unleashing Armageddon on earth. The twist in the scene was that Kronen was built up over quite some time as an independent character, a player in its own right. The viewer of the film was under the impression that he had his own

26

agenda that merely matched with the plans of someone else. Only in this moment we all became aware that Kroenen was a mere automaton that executed the will of his master - Rasputin. In LNG, we have stared at the supply side for LNG for a decade now as if it was the mythical snake Ka, from the jungle book and we just could not take our eyes off it anymore. The picture was so fascinatingly bleak, horrible, dangerous - anyone with a stake in the LNG game just shivered when thinking of those suppliers. And anyone not yet having put his foot in the water but with some kind of curiosity of LNG just spoke of suppliers in a hushed tone. LNG suppliers are a bit like Kroenen from the film, fascinating in their horror to look at but everyone always knew that there was no meaningful interaction possible with those folks. It was their way - or the highway. If you have ever been in a negotiation with Qataris (or indeed anyone else) more than 30 months ago, you know what I am talking about. However, understanding the movements of the puppet


FEATURE ARTICLE

just requires looking down the soul of the string puller and as much as we wanted to ignore it, the final string puller is always the market. If there is no one to buy what you have, your wares are worthless. Everyone is a bit taken aback on how quick the gods of LNG were to fall. Having the prospect of “forever buyers” that would scoop up whatever drop of LNG that would be produced at virtually any price pushed projects, that are more expensive and more outlandish than anyone could ever have imagined just a decade ago. Decades of cost reductions on the liquefaction side were wiped out seemingly overnight and production cost for LNG ballooned to obscene amounts. The world is awash in LNG now and those last crazy 10 years have firmly implanted the notion that LNG must be something super-expensive in our minds. Luxury fuel for luxury buyers except that, those luxury buyers have become a luxury themselves. A luxury to sellers of LNG as in a moment, they all seem to have disappeared with the wind. Not long ago, the buyer was something project developers did not spend a lot of time on.

The queue was long so one just picked those that offered the juiciest deals. Yes, selling LNG actually was that easy - once upon a time. Now, there is so much of the stuff that soon there will be orphan cargos en masse. And all those with no home will gravitate to the one place that can absorb large volumes of LNG at virtually no notice if only the price is right - North Western Europe. However, even if we assumed that all cargos with no home will find a place to get discharged in North Western Europe, this also means that demand is real low as NWEurope will only offer the lowest price that any LNG cargo can ever hope to fetch which is way below the full cost basis for many of the LNG cargos about to become available. Europe has a pipeline option - a real and credible one. What’s really missing is a market that offers premium prices as they existed just 24 months ago. Many Australian producers are in excruciating pain with anything below USD 10.- per MMBtu. That’s a steep price for some clean energy for sure and that’s also a price that will never be able to compete

27

with some Middle Eastern producers on a cost basis alone but we should not forget that those plants have been built for operations that last far longer than the usual 20 years. LNG liquefaction plants stop operating because feed gas runs out like the old Indonesian plants in Arun and in Bontang or even like the much newer Egyptian plants. Assuming that the feed gas keeps coming, plants can operate well beyond their 40th anniversary with very little in terms of rebuilding or even major refurbishment. This means that many of the newer projects have a vested interest in amplifying demand now so they can reap the rewards after some lean years of operation which some IOC players with very unhinged portfolios are already doing. The question is - is there enough of it? In their despair, sellers of LNG hope for FSRU’s as some sort of quick fix opening up new markets such as Pakistan or Lithuania. And it’s true to a certain extent - floating solutions can really provide some sort of entry ticket into a hitherto inaccessible market but it’s not going to meaningfully dent the biblical

Vol.27 Jul - Oct 2016 NGV Transportation


FEATURE ARTICLE wave of LNG coming mainly from Australia and from the US. Just for perspective - even without the new supply from the US the world would be in LNG shock mode right now. The planet has not yet absorbed LNG that was once meant to go to the US when this was touted to become the biggest LNG receiving market ever. We all know the story - shale killed that but it’s so easy to forget. It was mainly Fukushima which had absorbed this overhang quickly. And this overhang was mainly coming from Qatar, Nigeria, Equatorial Guinea but also the new trains in Algeria and Angola as well as LNG from places like Norway, Egypt, Trinidad, Peru and even some Asia produced cargo. It all concentrated upon Japan after Fukushima since it did not find a home in the US anymore. As cruel as it sounds, Fukushima came at the perfect moment as the LNG world was already quite aware that shale is going to make the US LNG market dissolve into thin air and urgently needed an exit strategy. But this blessing (for LNG at least) was nothing but a curse in disguise as it just

temporarily absorbed LNG that was already here and additionally it spawned one of the most grandiose LNG building programmes ever. Australia and the US became LNG superpowers in their own right and threw tsunamis of LNG on an already pretty impressive bow wave caused by the default of the US as a buyer. And now, after the shock of Fukushima wanes, Japan rebalances its energy portfolio and goes for more coal in order to replace nuclear baseload with coal baseload. This brings LNG consumption down,

RUDOLF HUBER Rudolf is an entrepreneur and consultant active in the “methane based fuels and energy” industry. He is the founder of countless initiatives all with the aim to promote a methane based economy and affordable environmental protection. He is a professional business developer and negotiator who is involved in all aspects of the LNG business. He is also very actively promoting green technologies that work well with methane based technologies. Rudolf has helped secure first Regasification capacity for his former employer EconGas at the GATE terminal in 2007 and holds a Masters degree in Commercial and Taxation law from the Jean Monnet faculty in Paris. He also runs a number of blogs, among them www.lng.guru and www.lng.jetzt.

Vol.27 Jul - Oct 2016 NGV Transportation

28

slowly but surely. The advent of LNG resellers from Japan is potent proof. All this LNG joins forces now to submerge the planet. And all the new markets we can see now - the Pakistan’s, the Jordan’s, the Egypt’s, the Lithuania’s and Poland’s and Ghana’s and whatever else is cooking up right now are not going to soothe the immediate pain. Markets need time to absorb and to change. Let them swallow 20 bcm - even 30. What’s that compared to a wave of 3 digit bcm without a place to go to every year? We have made this situation over close to a decade - expect the consequences to be felt for close to a decade as well. But maybe this extreme overhang is needed in order for LNG to go to the next stage and go from mere “pipeline gas replacement” to be the fuel of the planet. The target is diesel, gasoline and bunker fuels. Maybe it needed a calamity in order to not only extend the geographical reach of LNG but also to jump into a new paradigm. The golden age of gas is still to come. But dont tell IEA. NTM

By Rudolf Huber


SPECIAL REPORT

INTERVIEW WITH MR. IGOR PALKA How is India’s waste treatment tied to Natural Gas production? India’s waste treatment to Natural Gas production has been improving in the past. An organization in South India - Clean Kerala Company Limited (CKCL), formed under the State Local Self Government Department, is planning to engage the services of agencies for production of natural gas from municipal solid waste. The gas is to be bottled as compressed natural gas (CNG) which could be used for cooking purposes or as fuel in vehicles. Methane gas produced at solid waste treatment plant is being converted and used in hotels for cooking purposes in Bangalore, India. Innovative and scientific methods are sought to be integrated in the municipal solid waste management system for utilizing by-products of waste treatment at plants to be set up at various locations in the State

Vol.27 Jul - Oct 2016 NGV Transportation

Is methane production from waste very widespread in India? There has been a significant increase in Municipal Solid Waste generation in India, during the last few decades and the management practices have been changing for the betterment of health and amenity of the cities. In the present study, various physico-chemical parameters of the Municipal Solid Waste were analyzed to characterize the waste dumped at Gazipur landfill site in Delhi, India, which shows that it contains a high fraction of degradable organic components. The decomposition of organic components produces methane. Based on the waste composition, waste age and the total amount dumped, a first-order decay model was applied to estimate the methane generation potential of the Gazipur landfill site, which yields an estimate of 15.3 Gg/year. This value accounts to about 1–3% of existing Indian landfill methane emission estimates. Based on the

30

investigation of Gazipur landfill, the government estimates Indian landfill methane emissions at 1.25 Tg/year or 1.68 Tg/year of methane generation potential. The production of Methane from lingnocellulosic agricultural crop waste is also initialized in India, there is also a production of biogas from Municipal Solid Waste & domestic sewage. Are there many recycling plants in India that generate methane? India is one of the most increasing urban population. The rate of waste generation is directly proportional to the population increase. This creates an additional burden on the Solid Waste Disposal Sites. There are many recycling plants, most of them are from Water Waste Recycling plants like Methane recovery in Waste water treatment & Methane generation Project, Methane extraction and energy generation project (West of India), Methane Extraction & Fuel Conservation Project in


SPECIAL REPORT Tamil Nadu (South of India) to name a few. Are there any sewage treatment plants in India that generates power from the wastewater? There are indeed many. Delhi the capital of India has the first hydropower plant to generate electricity from sewage. The Delhi Jal Board has commissioned the first-ever hydropower plant in the national capital which will produce 20,000 kWh of electricity per year. This is the first plant which will be run through hydraulic turbines propelled by treated effluent coming out of a Sewage Treatment Plant. Second Haryana - a state in North India-Haryana Urban Development Authority has taken measures to utilize methane gassewage treatment plant to meet its electricity requirement. Are there any new upcoming energy from waste projects currently being developed in India? There are six waste to energy plants to be set up under Swachch Bharat Mission- Clean India Mission. In a significant step towards generating power from garbage under the Swachch Bharat Mission, six waste-toenergy plants with installed capacity of about 74 MW will be commissioned including two in the national capital. Solid Waste Management is a crucial component of Swachch Bharat Mission. The official said for making solid waste management projects viable, there is a proposal to provide market development assistance and the government will also make it mandatory for the state electricity boards to procure power from these units. Central Electricity Regulatory Commission is also working to determine the tariff for the power generated from wasteto-energy plants to boost their financial viability. In order to

improve the scope for waste-toenergy projects, the official said Power Ministry is in the process of amending the Electricity Act2003 to include a provision for State Electricity Discoms to mandatorily purchase all power generated from municipal solid waste. Could you name some local companies that are involved in waste-to-energy projects in India? A2Z Group of Companies, Ramky Enviro Engineers Ltd, Bermaco/WM Power Ltd, Cicon Environment Technologies, Hydroair Tectonics Limited, SELCO International Limited to name the few. How supportive is the Indian government of waste-to-energy projects in the country? Are there any incentives or subsidies provided by the government for waste-to-energy projects? The Indian Government is very supportive by providing Financial assistance by way of interest subsidy for commercial projects, on the capital cost for demonstration projects that are

31

innovative in terms of generation of power from municipal/ industrial wastes, and also for power generation in Sewage Treatment Plants, Financial incentives are given to municipal corporations for supplying garbage free of cost at the project site and for providing land and also to the state nodal agencies for promotion, co-ordination and monitoring of such projects, Financial assistance is given for carrying out studies on waste to energy projects, covering full costs of such studies and also given in terms of training courses, workshops and seminars and awareness generation. Tell us your opinion on the future outlook of India for energy generation from waste. Looking at the demand for energy supply in future and exploring various sources for generation of power, the waste-to-energy or respectively waste-to-resources theme will gain more and more importance over the next few years. We could witness this in other parts of the world already and we will do so here in India, too.

Vol.27 Jul - Oct 2016 NGV Transportation


SPECIAL REPORT

INDIA’S LEADING TRADE FAIR FOR WATER, SEWAGE, REFUSE AND RECYCLING SEPTEMBER 28–30, 2016 HALL 5, BOMBAY EXHIBITION CENTRE MUMBAI, INDIA WWW.IFAT-INDIA.COM | Munich, May 2, 2016 Press Release Active Learning Center IFAT India 2016 promotes young talent • • •

Next event: September 28 to 30, 2016 New ‘Active Learning Center’ combats skills shortage Exhibitors can apply online

Fun and excitement—that´s the idea behind the new Active Learning Center at IFAT India, India´s leading trade fair for environmental technology. This year for the first time, there will be a special area dedicated to training, live demonstrations and skills contests, running for the entire period of the show. The aim of the Active Learning Center is to promote talent and combat the shortage of skilled workers in the Indian environmental sector. The next IFAT India takes place from September 28 to 30, 2016 in the Bombay Exhibition Centre (BEC) in Mumbai. Application documents for exhibitors are now available online. The Active Learning Center consists of three parts. In a ‘University Challenge’, teams of students from national universities will be putting their knowledge to the test. The task presented to them is to design a “smart city” with intelligent resource management. A second component is “Products in Practice”, where leading experts will give live demonstrations of specific products and machines, on which young people will then be put to the test. A further

Vol.27 Jul - Oct 2016 NGV Transportation

skills competition is aimed at professionals with a few years work experience; it consists of practical training exercises, for example on the themes of maintenance, process control and safety at work. The special characteristic of the Active Learning Center at IFAT India is that the program is specifically tailored to the needs and requirements of the Indian environmental sector. It is being organized in cooperation with the DWA, Germany´s Association for Water, Wastewater and Waste. The environmental market in India has great potential, as underlined by the success of IFAT India in 2015. A total of 136 exhibitors (a rise of 10 percent on the previous time) took part in that event. And 4,142 visitors came to Mumbai to find out about the latest solutions and products in the segments of water, sewage, refuse and recycling. Further information: www. ifat-india.com About IFAT India: IFAT India is India’s leading environmental trade fair for technology and services in the water, sewage, refuse and recycling segments. The last event, covering approximately 5,000 square meters of exhibition space, attracted 136 exhibitors from 11 countries, and 4,142 trade visitors from 17 countries. The trade fair takes place annually in the Bombay

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Exhibition Centre (BEC) in Mumbai—the dates for the next event are September 28 to 30, 2016. IFAT Worldwide: MesseMünchen supports the environmental technology sector by organizing not only IFAT, the world’s leading trade fair for the sector, but also a range of other international environmental trade fairs at locations around the globe. These comprise IE expo in China, IFAT Eurasia in Istanbul, IFAT India in Mumbai and IFAT Africa in Johannesburg. MesseMünchen: MesseMünchen is one of the world’s leading trade-show companies. It organizes some 40 trade shows for capital and consumer goods and key hightech industries in Munich and abroad. Each year more than 30,000 exhibitors and some two million visitors take part in events held at the MesseMünchen trade-fair center, the ICM – Internationales Congress Center München and the MOC VeranstaltungscenterMünchen. In addition, MesseMünchen organizes trade shows in China, India, Turkey, South Africa and Russia. MesseMünchen has a global business presence with affiliates in Europe, Asia and Africa and more than 60 foreign representatives serving more than 100 countries.


PALMEX THAILAND 2016 is the only specialized Palm Oil event in Thailand that brings together an intermational congregation of both upstream and downstream palm oil companies and also its supporting industries gathered in the major palm oil producing city of Surattani, Thailand to showcase the latest developments in the palm oil industry.


EVENT & EXHIBITION

3RD WORKSHOP

LNG ROADMAP - LNG AS A DRIVING FORCE FOR CROSS-BORDER COOPERATION WITHIN EUROPE


T

he importance of liquefied natural gas (LNG) as an energy carrier and in particular as an alternative transportation fuel grows over time. The increasing number of the satellite units using LNG for the non-grid natural gas supply, the LNG refueling stations being in operation worldwide as well as the liquefied methane powered vehicles and vessels are showing rapid growth in the small-scale LNG market. As the pioneer locomotives in LNG mode drive their first miles in the USA and Canada, at the same time the number of the LNG powered vehicles in China are expected to hit the 250,000 mark [1]. Meanwhile, many European countries take small-scale LNG into consideration as an environmental friendly and economically viable energy supply solution. European legislation is an another driver for the establishment of LNG as transportation fuel. The introduction of the Directive 2014/94/EU of the European Parliament and of the Council on the deployment of alternative fuels infrastructure requires from all the EU 28 countries a design and implementation of national action plans, where an appropriate number of LNG refueling and bunkering facilities accessible to public should be put in place in the next 10-15 years at least along the Trans-European Transport Core Network [2]. The tightening of requirements on the sulphur emissions in both Baltic Sea and North Sea being into force since January 2015 makes LNG to a good alternative for marine diesel oil and scrubbers, since emissions set free by firing of heavy fuel oil

EVENT & EXHIBITION are too high [3]. Border regions, which form a tight web on the Europe’s map, offer an enormous potential for regional cooperation through the usage of LNG. Goods logistics and public transportation in the metropolitan areas, the number of companies in both these sectors choosing LNG for powering of transportation means is increasing. Many industrial companies rely on LNG as a stable energy source, which could be used for base load of peak shaving, especially in the processes requiring constant quality of energy supply (metal industry, glass melting, power generation etc.) or combined heat, power and cold usage (food industry, warehouses etc.). Gas- und Wärme-Institut Essen e. V. (GWI) is situated in the German federal state of North Rhine-Westphalia and provides scientific and technical applied research in the area of fuel gas technologies for the introduction of LNG into the European markets. For this purpose, GWI can draw from its own experience as well as that of its German and international partners and the respective industries. A favorable geographic location offers an advantage to Central Europe to implement an LNG infrastructure, which underlines the significant role of the cross-border cooperation for this process. In cooperation with the Energy Agency of the federal state North-Rhine Westphalia (EA.NRW), GWI organized the 3rd Workshop “LNG Roadmap - LNG as a driving force for cross-border cooperation within Europe”, which was a follow-up event having gathered in 2014 and 2015 more than 100 guests each from Germany, Austria,

Belgium, France, Norway, Great Britain, Poland, Czech Republic, the Netherlands and Switzerland. GWI and EA.NRW jointly hosted the workshop in Duesseldorf/Germany, one of the Europe’s hubs, to bring together experts on LNGapplication, representatives of municipalities, logistics and transportation companies from all over Europe and discuss the current challenges, which have been facing by the implementation of the smallscale LNG infrastructure in Europe. Amongst the participants, there were also relevant parties from gas trading, plant and appliance manufacturers and operators, shipping companies, shipyards, consulting companies and political representatives. During the workshop, panel discussions were initiated, which aimed the introduction of both the national platforms supporting the LNG implementation in Germany and the Netherlands as well as several joint commercial and R&D projects in logistics of LNG and its end usage. Projects in Lithuania, Greece, the Netherlands and Germany were reviewed during the panel discussion and on the margins of the workshop. Some German companies presented their concepts and success stories of industrial LNG application. Already since many years, dozens of Polish and German industrial companies have established small-scale LNG on their sites and this way of energy supply has proved to be efficient. As initial infrastructural projects in the transportation sector are still relatively expensive, there is a need of their financial support and even funding due to the establishment of the small-


EVENT & EXHIBITION

scale LNG on a broad basis. One of the accents of the workshop was put on the topic of project funding. Such kind of funding programs like Horizon 2020 and Connecting Europe Facility enable big joint projects in road and water transportation. During the event, the participants could get to know some companies developing small-scale LNG infrastructure in Europe, who took part in the exhibition, organized by GWI and EA.NRW in parallel. For those, who wanted to touch the LNG technique with their

Vol.27 Jul - Oct 2016 NGV Transportation

own hands, an LNG powered road tractor from IVECO was demonstrated (s. figure). The 330 hp vehicle captured attention of the guests. The workshop “LNG Roadmap” enjoyed a high interest of the European representatives from energy and transport economy sectors. This event constitutes a forum in which an exchange of views and experiences in the area of the cross-border LNG infrastructure development can be discussed. The followup workshop will be held in the first half of 2017.

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Sources:

[1] D. Peters-von Rosenstiel, „LNG in Germany: Liquefied Natural Gas and Renewable Methane in HeavyDuty Road Transport.“, Deutsche Energie-Agentur GmbH (dena), Berlin, Sep. 2014 [2] The European Parliament and the Council of the European Union, „Directive 2014/94/EU of the European Parliament and of the Council of 22 October 2014 on the deployment of alternative fuels infrastructure (Text with EEA relevance) “, Oct. 2014 [3] International Maritime Organization (IMO), „Sulphur oxides (SOx) – Regulation 14“ Contact: Alexey Mozgovoy Project Manager Gas Supply Gas- und Wärme-Institut Essen e. V. T. +49 (0)201 3618-250 E. mozgovoy@gwi-essen.de NTM

By Ryan Pasupathy


The 6th Edition of Thailand’s Most Successful Oil & Gas and Petrochemical Exhibition!

The Edit 6th ion of

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Thailand Oil & Gas Today Magazine

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Vol.27 Jul - Oct 2016 NGV Transportation


Vol.27 Jul - Oct 2016 NGV Transportation

38


ANALYSIS OF NATIONAL POLICIES AND ITS IMPACTS ON

NGV GROWTH IN JAPAN

T

he NGV industry in Japan was initially kind to operators but is looking a lot like it has reached its peak capacity. Though there has been significant growth since the industry took flight in 1990, growth has steadily decreased following the year 2000 and is expected to continue on to plateau till 2020 unless policies are made to effect change. Initially NGVs in Japan were promoted as the solution to Japan’s air pollution problems and to promote alternatives to petroleum products. This resulted in some initial growth and support for many companies to switch their heavy vehicles such as trucks and buses as well as passenger service vehicles to run on CNG instead of gasoline. This move was supported by the Government policies such as the Kyoto Protocol and other smaller initiatives which required countries to pledge to reduce their greenhouse gas

emissions. Natural gas was, and still is available in large quantities in Japan as they are big importers of LNG (though somewhat less in more recent times – following nuclear restarts across the country). This combined with the fact that there were numerous NGV OEM’s (Original Equipment Manufacturers) present in the country at the time. The country did however, unfortunately for NGVs, end up with a larger autogas vehicle market which seems to be a major reason why NGVs did not take off better. This competition with the autogas industry would have significantly affected NGV growth as those considering more environmentally friendly alternatives had more than one option. Autogas vehicles run on LPG and this ended up being more favourable to the Japanese market which can be seen simply by looking at the numbers – in 2013 they already had more than 280,000 autogas vehicles on their roads whereas they only

39

had 43,600 NGVs on their roads in 2015. Looking forward however, a study conducted by the Tokyo Institute of Technology and the Japan National Institute of Advanced Industrial Science and Technology carried a diffusion model scenario to see the outcomes of NGV growth in the country based on 3 separate scenarios that develop from 2020 onwards. In scenario 1 they assumed that the NGV market is close to Saturation. In scenario 2 they assumed that NGV diffusion would be similar to that of historical diesel vehicle diffusion rates (based on information provided by Isuzu Motors). In scenario 3 they assumed that the diffusion rate would be one-tenth of annual increase as in scenario 2. The model is based on the ‘Bass Model’ which is a model that describes the popularizing process of industrial products – in this case NGVs. The study by Yu Zhue et al at the Tokyo Institute of Technology and the

Vol.27 Jul - Oct 2016 NGV Transportation


Figure 1: Results of diffusion level of NGV in Japan under the scenarios of 1,2 and 3

Japan National Institute of Advanced Industrial Science and Technology came to the conclusion that in order to grow NGV use, the following actions need to be taken: “The top priority is decrease of natural gas price. The price gap between liquefied natural gas (LNG) and oil in Japanese market is widening throughout the deeper shale gas revolution. The second requirement is strong energy policy initiatives by both national and local government like Tokyo Metropolitan when Japan is facing great opportunities like 2020 Tokyo Olympic Games. Following suggestions were considered as examples. Firstly, Tokyo would launch incentives to strongly push forward NGV’s market share to introduce, for example, creating subsidies to business enterprises for buying heavy duty NGV or giving tax incentives for passenger

Vol.27 Jul - Oct 2016 NGV Transportation

vehicles. Secondly, The Tokyo Metropolitan Government would authorize significant investment on construction of infrastructure (gas station) for NGVs. Additionally, new design and introduction for NGV in light vehicle and passenger vehicle market should significantly be discussed. Such activity based on different types of customers’ preference should be considered as soon as possible because NGV model for Japan passenger vehicle market is definitely rare during recent years.” The Japanese understand the importance of moving towards cleaner energy use and are pioneers in many new technological advancements. It is a consensus by those in the industry that various steps are required to further push the use of NGVs in the country. To further increase the diffusion rate of NGVs in the country it is necessary to lobby

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to get government support as subsidies and preferential taxation, combat the various restrictions for NGV and CNG stations through deregulation and development of related law and standards for the industry, encourage automakers and let them develop OEM to increase interest in NGVs and establish small CNG station networks throughout the country to facilitate easy access refueling. Japan is an NGV case study on how the lack of continued support and competition from alternative fuels can result in the industry plateauing early. It remains to be seen if the industry can be rescued by local stakeholders to breathe new life into the industry and if it can take off as predicted in the models discussed above. We can only watch and wait as Japan tries to shock their NGV industry back to life. NTM

By Ryan Pasupathy


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