Next-generation technology in small-scale LNG has potential to reshape the global shipping-fuels industry. Especially after IMO 2020 sulphur regulations, LNG should compete with diesel. This note outlines the technologies, economics and opportunities for LNG as a transport fuel.
This data-file tabulates a dozen data-points on LNG plant opex, from company disclosures, the technical literature and academic papers. Opex is a function of plant size, and tends to fall by $0.3/mcf for each 10x change in plant capacity.
This model provides line-by-line cost estimates for LNG as a shipping fuel, compared against diesel. We used industry data and academic studies to estimate the all-in costs for (a) trucking LNG (b) small-scale LNG and (c) LNG bunkering, to supply a relatively fuel-intensive shipping route.
After IMO 2020 regulations buoy diesel pricing, it should be economical to fuel newbuild ships with small-scale LNG; and in the US it should be economical to convert pre-existing ships to run on small-scale LNG.
When electric vehicles are widespread, how will we fuel them? Our model shows the economics can be compelling for powering fast-chargers using gas turbines.
The electricity would cost 13c/kWh, at $3/mcf input gas (e.g., in the US), 20% utilisation of the infrastructure and a c7.5% pre-tax IRR.
Carbon emissions are lowered by c70% compared to oil-fired vehicles. And the grid is spared the strain of sudden demand surges.
Is upside suggested for gas? Utilisation of the fast-charging infrastructure is much more important to the overall economics than the gas price. This means that greater EV adoption can accommodate considerably higher gas prices.
Our model is constructed as a sensitivity analysis, based on economic data from gas turbines (chart below), so you can flex the assumptions.
We have tabulated the costs of constructing an LNG-fuelling station for road vehicles across 55 distinct cost-lines, based on data from a dozen sites in Europe. Total capex will average €1M/site. Effectively, this is a $250/tpa re-gasification plant. Overall, we estimate distributing LNG to road-consumers will add $10/mcf to the costs of gas-fuel. Around 30% of the capex costs are specifically linked to LNG, and could be slim-lined for a CNG-only fuelling station.
This data-file tabulates the maintenance costs incurred by a fleet of 42x CNG-powered trucks, over 16M miles in the United States. Maintenance costs averaged 8c/mile, of which 1.6c/mile (i.e., 20%) was specifically attributed to running on CNG. Specifically, gas spark plugs must be replaced every 60,000 miles, niche maintenance operations are more expensive and in one instance, the truck engines were damaged by ‘wet fuel’.
The 240MTpa shipping-fuels market will be disrupted from 2020, under IMO sulphur regulations. Hence, this data-file breaks down the world’s 100,000-vessel shipping fleet into 13 distinct categories. Fuel consumption is estimated for each category. Distributions of weight and LNG fuel-equivalence are split for the four largest categories. We see 40-60MTpa upside to LNG demand from 2040, led by cruise-ships and large container-ships.
The data-file also includes helpful background on the marine fuels industry and consensus forecasts for LNG demand growth within it (below).
We estimate that a dual-fuel shale rig, running on in-basin natural gas would save $2,300/day (or c$30k/well), compared to a typical diesel rig. This is after a >20% IRR on the rig’s upgrade costs. The economics make sense. However, converting the entire Permian rig count to run on gas would only absorb c100mmcfd: not much of a dent in c1bcfd of flaring, as 2020 gas bottlenecks bite. This model shows all our workings.
This file will give a helpful overview of the different process technologies, which are used in LNG liquefaction: APCI, APX (Exxon), Optimised Cascade (Conoco), Fluid Cascade (Equinor), DMR, SMR, PRICO (Golar) and MMLS (Shell, small-scale). For each one, we summarise how it works, advantages and disadvantages, plus typical train sizes, energy efficiencies, examples and involved-companies. We also touch on applicability for FLNG and small-scale LNG.
A 2.5MTpa Floating LNG vessel using the Golar/PRICO process would cost c$700/tpa, or $1.1/mcfe. A $2.5/mcf liquefaction-spread is therefore needed for a 10% return. The key economic risk is ‘uptime’. This file contains our workings; including cost-estimates across 17-categories, such as compressors, heat-exchangers, vessel-costs, et al. Costs are compared for smaller-scale and onshore plants in later tabs.