A Global Update & Discussion on

September 25-26, 2000

Wyndham Canal Place
New Orleans, Louisiana

Developments in Non-Traditional
Uses of LNG
Presented by

LNG
LNG

Jeffrey P. Beale
President
H
H C H
H
CH·IV International
Millersville, Maryland, USA
 Developments in Non-Traditional
Uses of LNG
INTRODUCTION:

At a conference as this, one typically thinks of international LNG as the large export/import projects
such as India or Korea. In the States and many places elsewhere in the world, LNG peak shaving
facilities have played a major role in the development and use of LNG. However, as implied in the
title, this paper explores LNG from different perspectives on how else it might be utilized in
substantial quantity or benefit to justify the interests of this audience or their clients. At a time when
large energy companies are dealing in 450 mmscfd [3 million metric tonnes per year] liquefaction
trains, this paper focuses on the smaller markets, much smaller markets, but no less viable new
markets. These markets include vehicular fuel, propane replacement, rural energy development and
general gas marketing expansion. More than anything else, this paper attempts to stimulate thought
about other ways of thinking about the roles that LNG can play.

VEHICULAR FUEL:

Individuals and organizations that are used to speaking of LNG transfer rates of 55,000 gpm [12,000
m3/hour] are most likely find discussions of vehicular fueling rates of 10 to 50 gpm less than
enticing. Even less exciting is the prospect of fueling CNG (compressed natural gas) vehicles at 250
CFM [400 NM3/hour]. However, the sheer number of prospective vehicles, coupled with bottom-
line economics and nationalistic interests, could turn some heads. The recent increase in world oil
prices has had a direct increase in the differences of the “pump prices” between LNG and petrol and
diesel.

The United States is not alone as a country that imports a significant amount vehicle fuel in the form
of crude oil while it “sits on” substantial indigenous natural gas reserves. The negative balance of
trade offers a substantial incentive to develop a “real” NGV (natural gas vehicle) fueling
infrastructure using indigenous fuel. One of the problems has been that world-wide there are very
few real NGV programs. There have been any number of pilot and test programs involving 2 to 20
NGVs, but this is far from the scope required. Furthermore, most of these pilot programs are
promoted based on the clean-burning characteristics of natural gas. Natural gas will gain market
share in the vehicular fuel market not by its clean emissions, but by virtue of economics . . . bottom-
line economics.

Another difficulty facing those of us promoting natural gas as vehicle fuel is the common
misconception that NGVs are fueled by CNG. CNG can play a significant support role, but not until
a vehicular LNG supply and distribution infrastructure is established. This is stated for at least two
reasons:
1) The vast majority of vehicles that burn substantial quantities of diesel (or gasoline) cannot,
from a practical standpoint, carry enough fuel as CNG, while LNG can meet these needs.
2) The capital and operating costs associated with full scale CNG fueling stations dictate the use
of LNG to produce the CNG and not compressors. This claim is outside the scope of this
paper but further supported through various resources included on CH·IV’s website, such as:

www.ch-iv.com/cryo/lcng1.htm or www.ch-iv.com/cryo/scngppr1.htm.

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 Developments in Non-Traditional
Uses of LNG
The successful use of LNG (or CNG) as vehicle fuel cannot impose unreasonable restrictions or
barriers on the end-users. Its use must be “transparent” to the currently used fuel while at the same
time providing economic incentive. It matters little what the dispenser price of the fuel is if it keeps
the vehicles from their performing their normal duties in a normal fashion. How, then, can fueling a
-260°F [-160°C] liquid ever be “transparent,” that is, look and operate very similar to conventional
fuels? Actually, that question is no longer
appropriate. Since late 1995, the technology to
fuel LNG vehicles transparently has been
available. So transparent is the state-of-the-art
that the LNG dispenser can now sit on a fueling
island like its petroleum-based cousins and be
fueled by the drivers. Take, for example, the
convenience store pictured at right. The “self-
serve” LNG dispenser is located remote from its
fuel storage tank and provides 24-hour a day,
seven-day a week public access. The gasoline
island can be seen behind in the background to
the left. LNG Vehicles being fueled at a Circle S Convenience
Store in Bloomfield, New Mexico
Simplicity and safety must be foremost in
discussing transparency. One key to the transparency
is that the LNG fueling hose is automatically and
instantaneously purged of LNG at the end of fueling
before the driver has had the opportunity to handle it.
The hose stays purged until after the hose has been
connected to the next vehicle. Personnel exposure to
LNG is virtually eliminated! The level of “training”
required to use the dispenser is of the same level as
the fueling with any traditional fuel dispensers. The
close-up at right of the dispenser shows the simplicity
of the system . . . no gauges, dials, digital sequencing
instructions, etc. The interface is simply a hose
holstering device and dispenser activation switch.
(The red button is the emergency shutdown.)

As mentioned above, a real NGV program stands on

its own economics. In other words, it means that a lot
of vehicles are burning a lot of natural gas at an
equivalent price less than conventional fuels. Some
examples of these target programs are: LNG Dispenser Interface
Dedicated Long Haul A term used when the same
vehicles run the same routes week after week. Many of these heavy-duty vehicles in the U.S.
consume 80 gallons [300 liters] or more of diesel a day. At 5½ days per week that is about
23,000 gallons of diesel per year. What are the cost savings per gallon needed to justify running
on natural gas? This information has been published in a number of places; suffice to say
dedicated long haul can offer real opportunities.

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 Developments in Non-Traditional
Uses of LNG
Centralized Fleet Fueling This practice is
commonplace in many areas where
different vehicles from different fleets use
the publicly accessible fuel stations. Many
times these fueling stations are very basic,
“no frills” facilities with simple card-lock
access system for fuel billing. An excellent
example of this type of facility is the CH·IV
LNG station installed for the City of
Edinburgh (Scotland) and British Gas.
Initially dustcarts (trash haulers) will fuel
from a key-locked LNG dispenser. The
Trash hauling truck operating from a centralized, public
station, however, can support a fleet much
fueling station
larger than total dust cart fleet. This
program is predicated on the fleet economics, however, clearly the city is justifiably promoting
the clean air benefits of the program as well, as depicted in on the side of their dustcarts.
LNG Corridor This evolving concept in the
U.S. involves a network of LNG fueling
stations developed over specific high
frequency routes such that over-the-road trucks
can move with a high level of confidence that
fuel will be available to them. The figure at
right depicts the current plans for this concept.
SuperCNG This is the name we have given to
a new approach to fueling a large quantity of
CNG continuously to a high population of
light duty vehicles (taxis and vans), a large
fleet of transit buses or other short range,
centrally fueled vehicles. Large scale CNG programs designed to operate with compressors will
realize substantial difficulties relating to continuous capacity, energy consumption during peak
hours and inability to fully fill CNG tanks. The SuperCNG station eliminates all of these
problems and more. The SuperCNG station is an optimum way of using LNG to produce CNG.
Mine Haul Trucks This market offers one of the
most exciting opportunities for LNG growth.
These monster fuel users (see picture, the step
ladder provides evidence of scale) operate 24-
hours per day and operate in a very small area. A
fuel station may be either in a fixed location or
“on wheels” allowing the fuel to come to the user.
This market has its special technical challenges;
however, the financial rewards to the mine
operator can be substantial.

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 Developments in Non-Traditional
Uses of LNG
PROPANE REPLACEMENT

Propane replacement is exactly that, whether

speaking about local gas distribution using
propane-air, “domestic” distribution as may
be found in ski resort areas or industrial fuel
applications. Propane replacement allows
for a fairly straight forward economical
analysis. Of course, not every propane
program is appropriate for replacement. It
has been shown in the States over the past
few years that as new LNG sources develop,
evaluations of propane replacement
programs follow closely behind. Assuming
that the economics bear out, LNG programs
are simpler to operate and more reliable, Industrial LNG Fuel Facility
especially in the very cold winter climates. LNG also provides for a “lighter than air” gas mixtures,
which are often seen as a safety enhancement. A picture of such a facility is shown above.

Of course, the basic replacement concept is not limited to propane. Other fuels because pure energy
economics, air quality penalties, or other drivers may be subject to partial or wholesale replacement.
There are a variety of potential natural gas users that due to these special circumstances could benefit
from a small baseload supply of LNG. For example:
A paper mill that is experiencing boiler stack emission excursions from its heavy fuel oil during
the middle of the day must reduce output to stay below allowable emission levels. With the
introduction of natural gas in a co-burn role the boiler can maintain 100% plant capacity.
Unfortunately the closest gas pipeline is too far away to justify installation of a lateral. Enter
LNG in the form of a small storage and vaporization system.
A synthetic woolen mill burns natural gas to generate electricity. Historically the plant has been
on a fully interruptible gas contract with propane back-up. A review of annual operating costs
showed that trucking LNG from an import supply to provide year-round fuel was the best choice.
The fuel facility, owned by the LNG supplier, not the mill owner, now receives an average of
over one LNG truck per day, year-round.

RURAL ENERGY DEVELOPMENT AND DISTRIBUTION OR “HUB & SPOKE”:

Imagine a developing country, state, territory seeking the ability to rapidly expand its electric grid
into the “wilderness” just like rural electrification in the United States earlier in this century. The
problem is, oil is expensive (and probably imported) and/or the closest refinery is extremely far
away. Coal is out of the question for a variety of reasons. Hydro, wind, solar, geo-thermal power are
impractical or uneconomical. Yet the country has substantial, indigenous natural gas reserves.
That’s the good news - the bad news is that gas pipeline infrastructure is non-existent, not
economically viable, or environmentally destructive.

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 Developments in Non-Traditional
Uses of LNG
What can be done? This is the basis of the “Hub & Spoke” concept is depicted below, where a new
natural gas liquefaction plant (the HUB) is built; over-the-road LNG transportation is provided to
support the (new) remote, gas-fired power plants (the SPOKES). The program can be extended to
include vehicle fuel and satellite gas distribution systems with the same impact.

VAPORIZERS
LNG SEND-OUT PUMP
TRAILER UNLOADING STATION
ELECTRIC POWER PLANT

LNG RECEIVING, STORAGE & VAPORIZATION

COOLING TOWER

REFRIGERATION
PLANT
M
TRANSMISSION GAS
GAS METER
PIPELINE FILTER /
KNOCK-OUT
DRUM

MOLE SIEVES
(CO2 / H20 REMOVAL)

COLD FLASH
LNG STORAGE TANK
BOX VALVE
NATURAL GAS LIQUEFACTION FACILITY

HUB
INDUSTRIAL
UTILIZATION
INDUSTRIAL FUEL FACILITY
TRAILER UNLOADING STATION

LNG STORAGE & TRUCK-OUT

SPOKES
LNG STORAGE TANK

TRUCK LNG TRANSPORT TRAILER

LOADING PUMP

LNG
DISPENSER(S)

LNG FUELING
LNG STORAGE TANK MODULE

CNG
DISPENSER(S) CNG FUELING
MODULE

TRAILER UNLOADING STATION

SATELLITE GAS DISTRIBUTION SYSTEM
NGV FUELING STATION TRAILER UNLOADING STATION

GAS MARKET EXPANSION:

Base-loaded, satellite LNG storage and revaporization systems can be used to expand gas distribution
franchises in advance of the installation of gas pipelines. As the gas pipeline network expands to
supply these LNG-supplied systems, the LNG facility can be relocated to the next distribution target;
and so on; and so on.

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 Developments in Non-Traditional
Uses of LNG

It very well could be a strategic mistake for gas companies to ignore LNG for market expansion
purposes. It would appear to this author that the non-traditional uses of LNG could play a significant
role in achieving the following objectives:
• Expansion of natural gas in traditional residential, industrial and commercial markets,
including as a replacement for electricity in end-use applications.
• Addressing emerging markets for natural gas in cogeneration, power generation, Natural
Gas Vehicles (NGV), and propane replacement.

The above listed LNG uses are but the tip of the proverbial iceberg. Combination programs that are
based on more than one market can dramatically improve over-all economics. Take for example,
combining the need for a new LNG peak shaving facility with vehicular fuel. Peak shavers are built
to support the peak demand periods in the gas distribution system. Significant capital is invested in a
program that is only needed a few days of the year. By adding a relatively small expansion of the
liquefaction and storage capacities a large year-round LNG vehicle market can be served.

ADDITIONAL BACKGROUND:

As one of the stated objectives of this paper is to stimulate thoughts about alternative uses of LNG, it
might also be assumed that the reader has a limited perception about these smaller uses of LNG. The
author can personally relate this to his early LNG experience, as it was limited to large LNG import
facilities. For example, LNG storage tanks were thought to be very large with the product
maintained at very low pressures. Likewise, LNG facilities require extensive real estate and very
wide buffer zones. With these early perceptions in mind, it might be appropriate to present a little
wider perspective.

LNG Storage A major

deviation in thinking in terms of
design basis for “base-loaded”
small LNG production
facilities, such as with the “Hub
& Spoke” concept is in the
storage capacity. Instead of
needing well over 135,000
cubic meters for ship
loading/unloading, these
facilities may need only 5 to 10
days of production hold-up. In ASME LNG Storage Vessel
part because the end-use facilities will also have storage capacity, but most particularly because their
export is nearly constant, with individually very small volumes. This may result in the installation a
few shop-fabricated LNG tanks (such as the one pictured above) instead of a large field-erected LNG
tank.

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 Developments in Non-Traditional
Uses of LNG
LNG Distribution Overland LNG
distribution is achieved with transport
trailers much as with gasoline or diesel.
Typically 11,000 gallon [40,000 liter]
trailers like the one pictured leaving a
fuel station carry the LNG. In some
circumstances, these trailers can be
coupled into “road trains” of two or
more trailers. As the LNG demand
grows in a given geographic area it is LNG transport completing delivery.
conceivable to see 30,000 gallon rail cars moving LNG from large liquefaction plants to over-the-
road transport depots, again much as with petroleum products today. In some areas of the world,
barging of LNG might be the best answer.

The LNG Facility As a result of utilizing much smaller LNG storage tanks, much smaller land
parcels are required for the safe siting of these facilities. For example, Chapter 10 of NFPA 59A
(“Standard for the Production, Storage and Handling of LNG”) specifically addresses these small
tanks. For example, the separation of the tank containment for a 70,000 gallon [260,000 liter] LNG
tank need only be 75’ [23 meters] from the facility’s property line.

SUMMARY

Currently in the U.S., there is more activity in small tank LNG projects than there has been since the
early 1970s when a number of satellite peak shaving facilities were built. This author’s company,
CH·IV International, has been contacted by a variety of organizations from all over the world over
the past 24 months. Clearly the interest in LNG is extending well beyond the import / export trades.
As stated at the beginning, one purpose of this paper was to stimulate thought about other ways of
using LNG. A number of topics were touched upon and probably many equally interesting uses were
inadvertently missed. However, this author believes that the non-traditional uses of LNG can create
their own market niches, distinct and separate from the conventional LNG roles. It will be very
interesting to watch how aggressive gas companies address this rapidly growing energy demand with
this safe, clean, versatile and, in most cases, domestically available fuel.

To learn more about LNG, LNG production, vehicular LNG and the other non-traditional uses of
LNG, please contact:

CH·IV International
1120C Benfield Boulevard
Millersville, MD, USA 21108
Phone: 410-729-4255
Fax: 410.729.4273
Email: Mville@ch-iv.com
Website: www.CH-IV.com

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