LNG trucking expands as option in absence of pipelines
Though the liquefied natural gas industry is mostly focused on projects that produce millions of tonnes per year and LNG ships that transport almost 70,000 tonnes per load, a growing volume of the gas is moving in 20-tonne deliveries.
Trucks are hauling 40-foot-long insulated LNG tanks around the U.S., Canada, Mexico and especially China. The “pipeline on wheels,” as they are called, have been delivering LNG to Hawaii to displace costly synthetic gas made from naphtha. The pilot project started in 2014 and has been expanded.
FortisBC, which recently completed a $400 million expansion of its small 1971 gas liquefaction plant across the Fraser River from Vancouver, said July 16 it had signed a two-year contract to ship 53,000 tonnes per year to China — delivering almost 60 of the specialized shipping units per week. Pricing was not disclosed.
The 40-foot tanks can each carry about 12,000 gallons of LNG, which, when regasified, is about 1 million cubic feet of gas.
The LNG will go to smaller commercial and industrial customers in China that are not connected to a gas pipeline, potentially displacing coal or fuel oil, Doug Stout, vice president of market development at FortisBC, told Bloomberg. The company has been selling smaller shipments of LNG to China on a spot basis since 2017.
The expansion at the Tilbury liquefaction plant and marine terminal took the facility’s capacity from 35,000 to 250,000 tonnes per year. The July contract is with Chinese LNG distributor Top Speed Energy.
Such shipments are a growing component in the global LNG sector, especially when the customers are small or unconnected to a pipeline grid, Alex Munton, an analyst for Wood Mackenzie, was quoted by Bloomberg on July 17.
China’s ENN Group last year opened a new LNG import terminal in Zhoushan, at the mouth of the Yangtze River. It’s the first in the world built to load the majority of its LNG into trucks instead of reheating it to a gas for pipeline distribution, according to a late-2018 Bloomberg report.
The facility is designed to take in up to 3 million tonnes of LNG per year, with 2 million destined for loading into tanker trucks. The operation includes 14 loading bays, and the privately owned distributor started with a fleet of 400 trucks to serve the market during the 2018-19 winter.
The trucked LNG market is unregulated in China, allowing nimble sellers to benefit from rising prices during peak demand, while pipeline gas prices remain set by the government.
“We haven’t seen this kind of volume in trucked LNG anywhere else in the world,” Xizhou Zhou, head of China energy research for IHS Markit, said last year.
Trucks delivered about 19 million tonnes in China in 2017, about 12 percent of the country’s total LNG consumption, according to Wood Mackenzie estimates.
In North America, two companies have carved out a niche by using tanker trucks to deliver the fuel to industrial and agricultural customers in Mexico.
Houston’s Stabilis Energy is tapping into a growing market in Mexico, supplying LNG to industrial customers and greenhouses, the Houston Chronicle reported this spring. Its $55 million plant in the South Texas town of George West can produce 120,000 gallons of LNG a day. The plant also supplies fuel to portable LNG-powered generators at remote drilling and fracking sites in Texas, and at fracking sand mining sites out of reach of pipelines and power grids.
Mexican gas company Enestas serves customers outside of local power grids and miles away from pipelines. Gold, silver and lithium mines in Mexico use the company’s gas-fired generators to power equipment and provide heat in deep mine shafts, the Chronicle reported. Industrial-sized greenhouses designed for growing peppers, cucumbers and other vegetables in the mountains of Central Mexico burn gas to keep crops warm at night.
Enestas expects to sell 10 million gallons of U.S. LNG to its customers in Mexico in 2019 — equal to more than 800 million cubic feet of gas.
Up the U.S. East Coast, New Fortress Energy has proposed building an LNG export terminal in New Jersey, filling the storage tanks with gas liquefied at a plant in Pennsylvania and trucked to the dockside facility.
The U.S. Army Corps of Engineers, the lead permitting agency for the project, released company plans in mid-July that said the terminal, just across the Delaware River from the Philadelphia International Airport, would receive as many as 15 trucks an hour — around the clock — to fill an oceangoing tanker every two weeks.
The gas, produced from Pennsylvania’s Marcellus Shale, would be liquefied at a plant about 200 miles away in Bradford County, also proposed by New Fortress Energy. Rail might be another option to move the LNG to the waterfront terminal.
Communities along Canada’s north shore of Lake Superior could start burning gas by late 2020, as the Ontario government this spring decided to provide $27 million (Canadian) toward building an LNG plant in Nipigon for distributing gas to communities struggling with high energy costs. The provincial funds will cover about half the cost of the plant.
Residents in Marathon, Terrace Bay, Schreiber, Manitouwadge and Wawa — total population, about 11,000 — suffer under price spikes on fuel oil, propane and electrical power. An earlier feasibility study estimated trucking LNG into the towns would save municipalities, homeowners and business more than $6 million annually.
Northeast Midstream, an Ontario energy developer, will take gas from a nearby pipeline and liquefy it. Trucks will deliver the LNG to depots in each community, where it will be warmed back to a gas and distributed by short pipelines into individual homes, public and commercial buildings.
Press reports said longer pipelines were not a good option in the area’s rugged topography.
The promise of lower home heating costs are the main selling points for Terrace Bay Mayor Jody Davis. “In the wintertime, over the past several years, heating bills in some of our homes have been up to $1,000 per month” for diesel, fuel oil or propane.
Larry Persily is a former Alaska journalist, state and federal official who has long tracked oil and gas markets and projects worldwide. He is the incoming Atwood Chair of Journalism at the University of Alaska Anchorage School of Journalism and Public Communication.