Small Scale LNG – The regional solution for gas distribution

Small Scale LNG (“SSLNG”) is an effective solution for making natural gas available to energy users not currently connected to pipeline networks. It increases the market for natural gas by distributing LNG using a combination of both sea and land-based transport directly to the end-user.

The natural geographies for this concept are developing economies, where the availability of electricity and energy are key enablers for sustainable growth. In short, Small Scale LNG is an innovative and cost-effective means of getting gas to stranded customers, and thereby making the most environmentally friendly fossil fuel available to these markets.

Norgas focus areas

Opportunities for SSLNG are particularly prevalent in markets where other forms of energy are expensive, unavailable, or unreliable. Even in energy markets where competition is high, SSLNG can compete due to low energy unit costs and flexibility. According to the International Gas Union (IGU), global demand for SSLNG is expected to increase between 75-95 million tons by 2030, with 26% in power, 32% in marine bunkering and 42% in fuel for heavy road transportation.

SSLNG is a relatively new industry in contrast to large-scale LNG, yet it is expanding rapidly. Initiatives to create “virtual LNG pipelines” to access isolated areas and create a more flexible supply can increase and generate additional demand for LNG. They also can reduce emissions, using LNG as a substitute to other, less clean, fossil fuels.

Key Markets for Small Scale LNG

  • Gas where there is no gas – Stranded customers– too small or too far away from pipelines and currently using other expensive fuels like diesel and naphtha.
  • Gas where it is needed yesterday – Developing countries– where speed of getting clean energy supply in place will impact economic growth
  • Gas when it is needed in its liquid form, providing lower emissions – Transportation market
  • Gas when emission legislation makes conventional fuels more expensive – ECAs

The four major end uses of SSLNG are: marine fuel (bunkering), fuel for heavy road (and rail) transport, power generation in off-grid locations and captive power for industry and commercial use. As technology enables more flexible supply, other markets will emerge.


The Small Scale LNG supply chain

From the LNG source the LNG is moved by ship to regional satellite/hub terminals. There it will be stored, and re-gassed and piped to the customer; a power plant or an industrial energy user. From the hub terminal the LNG can also be distributed with trucks and ISO containers to supply inland energy users.

The LNG does not have to be sourced direct from an LNG production plant. Conventional import terminals for LNG could be equally used for re-export of LNG. Using conventional ship-to-ship transfer, LNG can also be sourced directly from a LNG carrier or a floating storage and re-gas terminal (FSRU).