Introduction

Energy is considered a vital factor for any economy. Its significance is established for socio-
economic development1. It is considered the backbone of almost all modern day human
activities, and accomplishments of human civilization have been achieved through the
efficient and extensive production of various forms of energy. 2 Realizing the importance of
energy, its demand is continuously increasing in the world and world energy consumption
will grow by 56 percent between 2010 and 2040. Renewable energy and nuclear power are
the world's fastest-growing energy sources; each is increasing by 2.5 percent per year.
However, fossil fuels continue to supply nearly 80 percent of world energy use through 2040
and natural gas is the fastest-growing fossil fuel3.By the middle of current century, energy
demand would be more than double as the world population grows rapidly and developing
countries expand their economies. All energy forecasts show that the world will rely on fossil
fuels (liquid fuels, natural gas, and coal) for the decades to come.
Pakistan is passing through the worst energy crisis. The country’s energy demand has grown
by 47 percent in the past decade, while its energy production has largely remained flat. Given
the limited domestic resource capacity, Pakistan's major energy needs for power generation
are met through imported fuel oil at a cost of US$ 14.5 billion per year 4. Despite this,
Pakistan is facing a huge shortfall in its energy supply. Another major source of power
generation is natural gas. Pakistan is endowed with huge gas reserves. It is 27th largest
producer of natural gas in the world and is already its largest consumer in South Asia. Supply
of gas against demand is also dwindling. The deficit in supply of gas against demand has
increased to 2,000 MMCFD. Natural gas is being used by five sectors of economy domestic
consumers, cement, transport, fertilizer and power. Natural gas is the life blood for fertilizer
industry in Pakistan as it constitutes the basic raw material for production of urea. On the
other hand, the share of natural gas in the overall power generation is 25.7% 5. This means
that its share in meeting the energy needs of our country is quite significant. Because of the
on-going energy crisis and dwindling supply, the government is forced to re-think over its
allocation of gas between power and fertilizer sector. Efficient and reliable energy supply is
required for accelerating the growth of any economy. There is a strong positive relationship
between sufficient energy supplies and GDP growth rate. On the other hand the positive
impact of use of fertilizer on crop production and agricultural productivity is also established.
Resorting to solutions like diverting gas supply from fertilizer sector to power generation
hurts an important industry critical for agriculture growth. In this context, government’s gas
distribution policy requires an in depth cost benefit analysis of providing gas to one sector
and limiting its supply to the other.
1 Khan & Ahmad (2008).
2 Khan, Begum, & Sher (2012).
3 International Energy Outlook (2013).
4 Economic Survey of Pakistan FY 2013-14, Ministry of Finance, (GoP: 2015) ,195
5 (Pakistan Energy Yearbook 2014)

Pakistan is an energy starved country and its energy appetite is expected to grow at an Annual
Compound Growth Rate (ACGR) of 4.37 to 6.09 percent over the coming 15 years. This
growth in energy demand is contingent on GDP growth and is expected to fall in the range of
116 to 148 Million Tons of Oil Equivalent (MTOE) by the year 2022. 6 The energy shortfall
for the year 2011 was 19777.988 Kilogram of Oil Equivalent (KoE). During the fiscal year
2012, primary energy supplies in Pakistan increased by just 0.3 percent at the time, when
demand has risen to 64.7 MTOe, compared to 64.5 MTOe in the fiscal year 2011. 7 Oil and
gas are two major components of Pakistan’s energy mix, and country’s current natural gas
production is 4 Bcfd (billion cubic feet per day). There is a demand-supply gap in the
country, which becomes severe, especially during winter season.
According to Government estimates, during the next 15 years the demand for natural gas
would increase to 13.27 Bcfd against domestic supplies of just 2.17 Bcfd because of
depletion of existing gas fields. So there would be a huge shortfall of about 11 Bcfd by the
year 2025.8 Pakistan made some policy blunders in the past while making natural gas a prime
energy source and allocated it to different critical sectors of the economy (households,
commercial industry, power, transport), as it never had a natural gas surplus. Moreover,
pricing of the natural gas was not based on the principle of scarcity and optimal utilization. It
was severely over allocated, underpriced and excessively misused. 9 Now the country is
witnessing severe gas crisis. Government has been actively pursuing different options to
fulfill its increasing energy demand, including pipeline projects (Turkmenistan-Afghanistan-
Pakistan-India Pipeline (TAPI), Iran- Pakistan gas pipeline), import of liquefied natural gas
and liquid petroleum gas.
6 Inter State Gas Systems (Pvt) Ltd. (2014)
7 Pakistan Energy Yearbook (2012).
8 Inter State Gas Systems (Pvt) Ltd. (2014).
9 Masood (2013).

Fertilizers, industry and power sectors are value-added sectors. There are 10 fertilizer units,
which are operational in Pakistan. Their total installed capacity is 6.9 million metric tons,
while the annual urea demand of the country is 6.5 million metric tons. Despite surplus
installed capacity, Pakistan needs to import urea fertilizer to cope with the local demand of
agriculture sector, as sufficient gas supply is not available to them due to the ongoing energy
crisis.10The basic chemical that is used to produce nitrogenous fertilizer is ‘Ammonia’, which
is obtained from hydrocarbon. And natural gas is considered to be the most efficient route for
the production of ammonia. Coal and heavy oil can also be used to produce ammonia. But
they are not efficient sources.11 Pakistan can become self-sufficient in urea production and
save a huge amount of foreign exchange, if fertilizer plants are provided non-stop gas supply.
With full capacity utilization, Pakistan could even export an extra urea and could earn foreign
exchange. On the other hand it is narrated that Pakistan could save an estimated amount of $3
billion, if the government diverts gas being supplied to fertilizer sector to power sector, as the
Pakistan's annual spending on the import of Furnace Oil stands at around $7.5 billion and in
case of suspending gas supply to fertilizer sector, the country would have to import urea
annually at a cost of $4.5 billion. Pakistan being an agriculture country cannot undermine the
significance of indigenous fertilizer industry.12

10 Rizvi (2014).
11 GSE Systems (2014).
12 Azad (2014).

Fertilizer industry constitutes around 3.4% of manufacturing of Pakistan. Pakistan is ranked 46th in the world in
terms of fertilizer consumption. Fertilizer consumption in five major crops production (wheat, cotton, sugarcane,
rice and maize) in Pakistan is about 87 percent. Fertilizer industry in Pakistan has overall production capacity of
around 7.5 million tons annually.13
Urea was the first organic compound to be synthesized from inorganic materials. It was first
separated from urine by Rouelle in 1773, hence the name urea. In 1782, Prout separated pure
crystalline urea. It was first synthesized by Friedrich Wohler (1800-1882) of Germany in
1828 by heating ammonium cyanate 14.

Ammonia gas was first produced by J. Priestly in 1754 by distilling ammonium chloride with
quick lime. Although, Ammonium Sulphate (NH4(SO4)2 arrived on the scene in the later
half of 19th century as a by product of the coke oven industry, synthesis of ammonia had to
wait. By 1905, the idea of passing air through an electric arc was successfully developed in
Norway to produce nitric acid. The path-breaking synthesis of ammonia in a reactor was
achieved by two Germans Fritz Haber and Carl Bosch in 1910. The key link in ammonia
synthesis was the search for a suitable and easily available catalyst. One of Bosch’s
colleagues was fortunate to find that red iron oxide was as good as the scarcely available
osmium. In recognition of their contribution, Haber was awarded the Nobel Prize in 1918 and
Bosch in 1931. In his acceptance speech at the Nobel Prize award ceremony, Carl Bosch
disclosed that more than 20,000 experiments were needed to develop a useful catalyst for
industrial use 15
Fertilizers are combinations of nutrients that enable plants to grow. The essential elements of
fertilizers are nitrogen, phosphate, and potassium. Almost all nitrogen fertilizer is derived
initially from anhydrous ammonia (NH3), which is made by reacting atmospheric nitrogen
and hydrogen from natural gas. The cost of natural gas accounts for 70% to 90% of the
production costs of ammonia. 16
Ammonia synthesis
Ammonia is synthesized from hydrogen (from natural gas) and nitrogen (from the air).
Natural gas contains some sulfurous compounds which damage the catalysts used in this
process. These are removed by reacting them with zinc oxide, e.g.
ZnO + H2S → ZnS + H2O
The methane from the natural gas is then converted to hydrogen:
CH4 + H2O  3H2 + CO
CH4 + 2H2O  4H2 + CO2
CO + H2O  H2 + CO2
Air is mixed in with the gas stream to give a hydrogen: nitrogen ratio of 3:1.
Water, carbon monoxide and carbon dioxide (all of which poison the iron catalyst used in
the ammonia synthesis) are removed. The carbon monoxide is converted to carbon dioxide
for use in urea production, and the carbon dioxide removed:
CO + H2O  CO2 + H2
The remaining traces of CO and CO2 are converted to methane and then the gases cooled
until the water becomes liquid and can be easily removed.

The nitrogen and hydrogen are then reacted at high temperature and pressure using an iron
catalyst to form ammonia:
N2 + 3H2  2NH3
Urea synthesis
Urea is made from ammonia and carbon dioxide. The ammonia and carbon dioxide are fed
into the reactor at high pressure and temperature, and the urea is formed in a two-step
reaction
2NH3 + CO2  NH2COONH4 (ammonium carbamate)
NH2COONH4  H2O + NH2CONH2 (urea)

The urea contains unreacted NH3 and CO2 and ammonium carbamate. As the pressure is
reduced and heat applied the NH2COONH4 decomposes to NH3 and CO2. The ammonia
and carbon dioxide are recycled.

The urea solution is then concentrated to give 99.6% w/w molten urea, and granulated for use
as fertilizer and chemical feedstock.17
 Natural gas

Desulfuriser
atmosphere
flue gases
Steam reformer
steam
Waste heat
Air Air reformer boiler water

steam
Waste heat
water
boiler

Shift converter
water
(CO CO 2)

saturated UCARSOL CO 2 removal UCARSOL

CO 2 stripper Methanation water

CO 2 Compression and
cooling

Urea plant
NH 3 unreacted gases
Mixer
and NH 3

NH 3 converter Synthesis Loop

cool to 30 oC

NH 3
impurities
Decompression NH 3 recovery
NH 3

Ammonia purge gas

Industry Urea plant

Figure 1 - Schematic representation of the ammonia synthesis process
 CO2 NH
3

Synthesis
urea, excess NH3,
carbamate, H2O
NH3, CO2
heat Decomposition Recovery cooling

urea, H2O

heat Concentration H2O H2O

urea

Granulation

Urea granule

Figure 2 – Schematic representation of urea synthesis

Natural gas is the key raw material for the production of nitrogen fertilizers such as ammonia
and urea. Due to the abundant availability of natural gas, the nitrogen fertilizer industry is
fragmented among several producers. Therefore, natural gas prices have a significant impact
on nitrogen fertilizer producers. An increase in gas price contributed to plant closure.
Similarly LNG prices would also effect nitrogen fertilizer industries.
In addition, the curtailment of gas to the fertilizer industry has lowered the capacity
utilization of plants and increased the price of fertilizer and the volume of urea imports
adversely impacting foreign exchange reserves and agricultural prices.
Liquefied natural gas (LNG) is attracting great interest as a clean energy alternative to other
fossil fuels, mainly due to its ease of transport and low carbon dioxide emissions, a primary
factor in air pollution and global warming. It is expected that this trend in the use of LNG
will lead to steady increases in demand over the next few decades.
Shale Gas, Pakistan has to meet its demand for natural gas. Although Pakistan was also
looking into pipelines, with the Turkmenistan-Afghanistan-Pakistan-India (TAPI) and Iran-
Pakistan (IP) pipelines on the table, in the short-run it seems that imported natural gas
through Liquefied Natural Gas (LNG) may be a faster option.
It is heartening to note that the government of Pakistan has now signed a 15-year agreement
with Qatar, to import nearly 3.75 million tons of Liquefied Natural Gas (LNG) per year. This
long-term deal has been greatly appreciated by the energy-starved business community of
Pakistan.
Since Pakistan is primarily an agricultural economy, its fertilizer sector plays an essential role
in enhancing our agricultural output, to produce numerous high-volume export goods, like;
Textiles, Wheat, Sugar, etc. For many years now, the robust fertilizer industry has been
suffering due to insufficient supply of Natural Gas – which is used as an important raw
material for producing fertilizer. The first consignment under the Qatar LNG agreement had
brought in approximately 141,000 Cubic meters of LNG at the LNG Terminal established in
Karachi, from where it is being injected into the supply network of Sui Southern Gas
Company Ltd. Following the first consignment, the second shipment of LNG has also arrived
at the Port Qasim in Karachi, on 8th March 2016.
The import of LNG from Qatar is stated to be the cheapest source of Gas and offers an instant
solution for the energy starved country. The LNG price agreed with Qatar is only 13.37% of
International Crude Oil prices. It is more economical than the gas imported through TAPI
Gas Pipeline and even cheaper than the indigenously produced gas. Pakistan’s total gas
production is around 4 billion cubic feet per day (bcfd), while the national demand stands at 6
bcfd.18
13“Business Climate in Pakistan-Challenges and Remedies” ICMAP
14. Church, R.J. Chemistry and processing of urea and ureaform. In Sauchelli V(Ed).
Fertiliser Nitrogen – Its Chemistry and Technology. ICS Monograph No 161. Reinhold
Publishing, USA, 247-279.(1964).
15. Timm. B.and Danz, W. History of nitrogen fixation processes. In Sauchelli, V.(Ed).
Fertiliser Nitrogen – Its Chemistry and Technology. ICS Monograph No 161. Reinhold
Publishing, 40-57.(1964).
16 Kenkel, 2010
17 https://nzic.org.nz/ChemProcesses/production/1A.pdf
18 Komal Sarwer Malik ; LNG for fertiliser industry, Pakistan, Dailytimes , MARCH 16,
2016.

LNG
LNG stands for Liquefied Natural Gas or Liquid Natural Gas, and as the name implies, it is
traditional natural gas which has been cooled to the point of liquefaction. Liquefied natural
gas is odorless, colorless, non-corrosive, and non-toxic. It is also much more dense than
gaseous natural gas. In fact, liquefied natural gas takes up about 1/600th the space that the
same amount of gaseous natural gas would take up. To help get a sense of the scale reduction,
imagine taking a beach ball and compressing it to the size of a pingpong ball. The
considerable reduction in volume makes LNG much more efficient to transport and store than
regular natural gas.

Though many Americans know little to nothing about Liquefied Natural Gas, it has actually
been a part of the US energy landscape for over 100 years when the first facility in West
Virginia was built to store natural gas in its liquid state. In 1914, a patent for LNG was filed
and then three years later in 1917 the first commercial production of LNG began.

LNG Properties

Chemical Formula CH4  (Methane)

Liquid Density 426kg/m³ or 26.5943lb/ft³

Gas Density at 25°C or 77ºF 0.656 kg/m³ or 0.04095lb/ft³

Boiling Point -161°C or -257.8°F

Specific Gravity (Air=1) 0.554

Limits of Flammability 5.3% to 14%

Auto Ignition Temperature 595°C or 1103°F

How Is Liquid Natural Gas Created?

LNG consists primarily of methane and it is created when natural gas is cooled to -260°
Fahrenheit. During the cooling process the other components of natural gas such as water,
carbon dioxide, nitrogen, oxygen, sulfur compounds, and other hydrocarbons are gradually
removed, thereby leaving almost pure methane. This is important because many of the
compounds removed during the liquefaction process could potentially damage downstream
facilities. Additionally, some of the compounds would also run the risk of freezing rather than
liquefying.

Though Liquefied Natural Gas is considerably denser than gaseous natural gas, it is
nevertheless much lighter than water by volume. In fact, it weighs less than half the weight of
water and will float if it is spilled on water. The lightweight yet highly energy dense nature of
this gas makes it very efficient to transport, usually in large, ocean-going tankers which have
double hulls for extra insulation designed to help keep the liquid natural gas cold.

What Is Liquefied Natural Gas Used For?

Once Liquid Natural Gas has been shipped, the majority of it is re-gasified into natural gas
and then distributed using conventional means such as pipelines. However, some
municipalities have begun using this gas to power vehicle fleets. Since LNG burns cleaner
than regular gasoline, it reduces vehicle maintenance needs and cuts greenhouse gas
emissions by as much as 30%-40%. Additionally, Liquefied Natural Gas fuel allows more
energy to be stored onboard the vehicle in a smaller space.

If the LNG is re-gasified then it can be used in the traditional ways in which natural gas is
used. Natural gas can be used to heat homes, office buildings, schools, hospitals, and other
structures, or to provide fuel for cooking and household appliances such as water heaters,
clothes dryers, air conditioners, space heaters, and more. Natural gas is also often used in
dehumidification and on-site power generation.

Within the industrial sector, natural gas is also used as the dominant fuel source in the
production of thing such as metal, paper, petroleum, chemicals, stone, clay, glass, clothing,
and food processing. In addition, natural gas is commonly used as a raw material in products
such as plastics, paints, fertilizers, dyes, antifreeze, and photographic film.

Another final major area in which natural gas plays a role is the generation of electricity. Due
to environmental concerns as well as the abundance of natural gas, most of the United States’
recent power plants have been built to run on natural gas.

What Advantages Does LNG Offer?

As discussed above, Liquid Natural Gas is very efficient to transport. That makes it possible
for natural gas deposits that are isolated from infrastructure such as pipelines, to have their
product recovered and transported via tankers. LNG tankers are also very safe. In fact, it is
estimated that Liquefied Natural Gas tankers have sailed over 100 million miles without a
single major accident or shipboard death; though, some on-site, land-based accidents have
occurred. Nevertheless, LNG is not flammable nor explosive as a liquid. When it begins to
vaporize it is potentially flammable and explosive, but only within the range of 5% – 15%
natural gas in air. At less than 5% there is not enough natural gas to burn, while at more than
15% there is not enough oxygen to burn.

Liquefied Natural Gas also allows for convenient storage of natural gas during off-peak
times. This is called “peak-shaving” and it refers to the storage of surplus natural gas in LNG
form during periods of lower energy consumption. Once energy demands rise, then it can be
regasified and used to help meet the higher demand. This helps prevent energy shortages.

Why Is Liquified Natural Gas Growing So Rapidly In Popularity?

LNG is growing rapidly in popularity due to the reasons mentioned above, such as the
multitude of uses and the advantages that it offers; however, it is also growing in popularity
due to the overall rise in natural gas production. Thanks to advances in drilling technology as
well as discoveries of new natural gas sites, the US is radically increasing its production of
natural gas. This growing glut of natural gas has resulted talks about exporting the surplus
overseas in the form of Liquid Natural Gas which offers new economic opportunities for the
country. Facilities such as the Sabine Pass terminal, located in Louisiana, as well as the
Freeport LNG terminal, located in Freeport, TX, have already received approval to begin
exporting Liquid Natural Gas.

Just as the technology for natural gas recovery has advanced, so too has the technology of
natural gas liquefaction. This further coincides with ever-increasing demand for fuel in
developing nations, leading to a confluence of events which has created a sort of perfect
storm for LNG.

As the uses, benefits, and technologies associated with LNG further increase, it seems very
likely that far from scaling back or fading, this gas will only grow in popularity and profile.
The US, and the gulf coast region in particular, are very well suited for this development
thanks to existing structures, infrastructure, and production capabilities. This makes
Liquefied Natural Gas a potentially very important source of future economic growth and
sustainability.
http://www.elgas.com.au/blog/493-what-is-lng-liquefied-natural-gas-methane
http://setxind.com/midstream/liquid-natural-gas-and-why-it-is-popular/

http://goldenpassterminal.com/index.cfm/page/15

Functions
A conventional terminal has four functions:
 Berthing of LNG tankers and unloading or reloading of cargoes,
  Storage of LNG in cryogenic tanks (-160°C),
 Regasification of LNG,
 Send-out of this gas into the transmission grid.

Berthing and unloading

On arrival at the terminal, LNG tankers (length 200 to 350 m) are moored to the unloading berth.
Articulated arms are connected to the LNG carrier to unload its cargo and transfer LNG to the
terminal storage tanks.
The LNG flows through pipes specially designed to withstand very low temperatures (-160°C). This
operation takes at least 12 hours. A volume of boil-off gas is sent back from the terminal storage to
the LNG tanker in order to maintain the pressure inside its cargo tanks.

Storage
LNG is stored in cryogenic tanks (designed for low temperatures) capable of withstanding
temperatures of -160°C to maintain the gas in liquid form. The outer walls of the storage tanks are
made of pre-stressed reinforced concrete. They are insulated to limit evaporation.
Despite the high-quality insulation, a small amount of heat still penetrates the LNG tanks. This causes
slight evaporation of the product. The resulting boil-off gas is captured and fed back into the LNG
flow using compressor and recondensing systems. This process prevents the occurrence of venting
natural gas from the terminal under normal operating conditions.
During maintenance periods, boil off gas can no longer be recovered and is burnt off by the flare
stack. It is preferable to burn the methane than to release it into the atmosphere (reduced impact on
the greenhouse effect).

Regasification
The LNG is then extracted from the tanks, pressurised and regasified using heat exchangers.
Each tank is equipped with submerged pumps that transfer the LNG to high-pressure pumps. The
pressurised LNG (at around 80 times atmospheric pressure) is then turned back into a gaseous state
in vaporisers.
A number of technologies are used at the terminals operated by Elengy:
 Open-rack vaporisers that use seawater (with possible synergy with the neighbouring
combined cycle gas power plant at the Montoir terminal),
 Vaporisers fed by a closed hot water loop from the Air Liquide plant next to the Fos Tonkin
terminal,
 Stand-alone "submerged-combustion" vaporisers (a water bath heated by natural gas
burner).

Send-out into the national transmission grid

Once returned to its gaseous state, the natural gas undergoes several treatments. Before it is sent
out into the national transmission grid (GRTgaz), natural gas, which is odourless, is artificially
odourised with a tiny amount of tetrahydrothiophene (THT), giving gas its characteristic odour
familiar to everybody. This is a safety measure since it means that any gas leak can be detected by
its odour.

https://www.elengy.com/en/lng/what-is-an-lng-terminal.html