Small-Scale LNG is Coming of Age
We are at a pivoting point in the “Age of Gas”. Even with what is described as a major downturn in the industry, I would argue that there is an historic opportunity for natural gas to play a much larger role in the global energy landscape, delivering economic and sustainability benefits. Global demand for gas is estimated to grow 65% between 2012 and 2040. An infrastructure gap is forming because in most developed economies, the infrastructure is more than 40 years old, and there is little to no infrastructure in many developing countries. To fill the gap, more flexible and scalable solutions will emerge to meet the growing demand.
At GE, we are able to lead at different scales in building the LNG infrastructure, from large LNG facilities to small. One strong opportunity that I am excited about comes with Small-Scale LNG (ssLNG), which allows customers to fast track gas supplies to gas-fired power generation, transportation, and industrial uses. This enables producers to ramp-up production quickly to the scale they need, while reducing their risk on larger, more complex investments.
Why do we need this now?
With the continued headwinds of commodity price pressure and increasing competition for markets among major producing nations, innovative companies cannot sit on the side-lines to see how it will pan-out. With the growing certainty in the demand for gas, now is the time to invest and grow, but in a more measured way, with smaller investments that are less risk. Small-scale allows you to make a smaller bet which you can ramp up quickly (or down) to closer match supply and demand. The flexibility and scalability that comes with modular ssLNG gives it a number of advantages:
• Producers can bring ssLNG modules into production incrementally over time, so production can start before their entire facility is built.
• Flexibility in scaling to bring on-line an economically viable plant now and scale as required per market drivers.
• Small-scale and modularity enables a lower-risk, speed to market that significantly reduces surprise costs, construction delays, complex system break downs and safety issues that often result in the field. Modules manufactured in a factory-controlled environment also help to reduce installation and commissioning labor costs, and environmental risks inherent in the field.
• Even though modular in design, systems can still be highly customized to meet customer evolving strategies and requirements. With ssLNG as their enabler, new entrepreneurs are entering developing markets to connect gas suppliers with LNG off takers. This new entrepreneurial dynamic is driving a faster pace of innovation and GE can provide systems capability, technology as well as project financing, to help bring those parties together.
New markets, pivotal shifts
When I look at bringing power to developing nations to help raise their economies and standard of living, I believe ssLNG has a key role to play. Rapid access to energy is needed across much of the developing world as populations grow, yet traditional large-scale development models have been challenged to deliver in many of these regions. There can be delays from a variety of technical, political, environmental and financial hurdles. Small-scale energy platforms with the advantage of lower capital intensity, faster implementation, and phasing to match load growth holds tremendous promise for communities, countries, and regions that are now taking a serious look at how gas can play a larger role in their energy mix. There is much more to discuss here and I will cover in more depth at an upcoming post.
A bridge to fueling the future
Natural gas is poised to capture a larger share of the world’s energy demand. While gas has been a part of the energy landscape since the Industrial Revolution, what's new and changing is the role of this unique resource in the global energy mix. Natural gas is shifting from a regional and often marginal fuel to becoming a bridging or destination fuel in many places. Small-scale modular LNG will be a key component of this transition, providing opportunities across both the developed and developing world in fueling the future of global energy supply and demand.