Technology About Gas

Virtual Pipelines

 By Nicholas Newman
About gas

Virtual pipelines are scheduled shipments of oil from point A to point B, either by water, in ocean-going or coastal tankers and barges, or overland in containers by rail or road. Virtual gas pipeline operations supply markets that are either too small for normal LNG large-scale carriers or too geographically challenging to justify an investment in pipeline construction. Virtual pipelines supply gas to domestic customers, industry and electricity generation plants almost anywhere that is accessible by road or sea…

More recently, innovations in liquefaction technology and cost reductions have made possible the cooling of natural gas into liquid natural gas, which is 600 times smaller in volume. It can be safely transported in relatively small amounts without high compression. As a result, it is now possible for small-scale LNG-fueled power plants supplied by virtual pipelines to power factories, industrial parks and mines in remote locations. At a regional level, a bunkering facility can accept large LNG deliveries for subsequent bulk-breaking into smaller quantities to be distributed to customers across the region.

This feature provides an overview of some virtual LNG pipelines that are planned or currently operated in North America, Europe, Australia and elsewhere.

Some virtual LNG pipelines are planned or currently operated in North America, Europe, Australia and elsewhere

North America

Despite having 305,000 miles of interstate and intrastate gas transmission pipelines, the largest gas pipeline network in the world has supply issues as well as customers located beyond the reach of the existing gas grid. This makes virtual pipelines a necessity. For example, owing to capacity bottlenecks in the interstate gas pipelines linking the market of New England with shale gas supplies to the west, gas prices can reach highs of $25 per million British thermal units (MBTU) compared with a US average of $3.09/MMBtu for delivery in January 2017. In order to ameliorate pipeline capacity constraints and to moderate high winter gas prices, a monthly virtual pipeline consisting of three to four ocean tankers delivers LNG from Sabine Pass LNG export plant to Engie SA’s Everett terminal near Boston. It is then distributed by truck to towns and cities in New England.

In northern New England, industrial customers requiring a minimum supply of $750,000 of coal or fuel oil for heating and power generation, such as paper mills, prisons, food processors, breweries and universities without access to the gas grid, can now depend on gas. Their demand is being met by several companies including NG Advantage in Milton, Vermont and Xpress Natural Gas in Boston. Such companies have set up virtual pipeline systems to deliver cheap and abundant fossil fuels to customers outside utility service areas. More recently, Xpress Natural Gas of Boston has begun servicing Port Townsend Paper Corporation in Washington state, through a virtual compressed natural gas (CNG) pipeline consisting of about five truckloads of CNG a day. Each truck holds about 355 million standard cubic feet of gas. CNG is produced in a similar way to LNG but in this case, the reduction in the volume of gas is only 200 times. Port Townsend Paper Corp expects to cut its greenhouse gas emissions by 25 percent through its adoption of CNG.

Elsewhere in the United States

In the United States, virtual pipelines, comprising freight trains and river barges, transport crude oil from shale fields to refineries dotted along the East Coast and down to the Gulf of Mexico. These are now being joined by freight trains and barges which have begun to transport LNG across the continent and along its extensive waterways. For example, Alaska Railways and Florida East Coast Railroad (FECR) have begun shipping LNG in intermodal containers to customers. The FECR can ship from two rail-connected LNG plants at Titusville and Hialeah for dispatching intermodal LNG tank containers to the Florida port best suited to a particular customer’s needs.

Alaska Railroad LNG Transport

Marine LNG virtual pipeline

The shale energy revolution enabled a huge expansion in supplies of gas which, with the recent completion of the Sabine Pass liquefaction plant in Louisiana, has opened new market opportunities for existing barge and coastal shipping operators. For example, the shipping firm Totem Ocean Trailer Express (TOTE) is now operating two Marlin-class container ships powered by liquefied natural gas, which is the first of this kind in the world. They serve the Puerto Rico trade, operating between Jacksonville and Florida in the United States, as well as San Juan in Puerto Rico.

LNG America has an ambitious plan for a fleet of barges and marine terminals to deliver LNG to customers based along America’s navigable waterways, as well as to the offshore customers such as oil rigs. Already LNG America and Scandrill have signed a joint marketing agreement to provide LNG-fuel for Scandrill drilling operations in the Gulf Coast region. Among Scandrill’s rig fleet are eight bi-fueled units, with the two newest incorporating advanced technologies for reliably optimizing LNG/diesel substitution rates upwards of 60 percent.

The Atlantic virtual pipeline to Europe

The first ever virtual pipeline across the Atlantic was inaugurated in 2016. Gas from the Marcellus shale play in western Pennsylvania was delivered by pipeline to the Marcus Hook terminal near Philadelphia for shipment to Norway and Scotland. Ineos, a petrochemical company, realized its $2 billion investment in import terminals and storage facilities for imported U.S. ethane to be fed into “crackers” that convert the gas into ethylene, the feedstock for making a range of plastic products. Eight purpose-built LNG gas carriers, each able to carry 27,500 cubic meters of ethane, form a virtual pipeline to make the 3,800 mile Atlantic crossing to Norway and the 3,500 miles to Grangemouth in Scotland. Ineos is assured of a secure supply of competitively priced feedstock and fuel from America to replace declining output from the North Sea.

Within Europe

Like America, Europe has an extensive gas pipeline network, although it still does not reach all potential gas customers. Plans are underway to extend the use of gas beyond the existing gas grid by capitalizing on the continent’s extensive coastal waters, rivers and canal networks as well as by road and rail tankers to meet the small-scale LNG needs of customers.

In Northern Europe, Skangass already operates an LNG virtual pipeline network serving Scandinavia’s coastal communities. It also provides bunkering services for the increasing numbers of ships in and around the Baltic to comply with tighter environmental regulations.

In Southern Europe, a parallel effort is underway with the EU’s Poseidon Med program encompassing Greece, Cyprus, Italy, Slovenia and Croatia. This program seeks to supply LNG for small-scale power generation and provide bunkering services to the growing number of marine customers in the Mediterranean.

Similarly, the River Rhine, the 766-mile navigable artery emptying into the North Sea at the Hook of Holland, is the center of major plans to distribute relatively small cargoes of LNG into Europe’s interior by barge. Already, VEKA DEEN is planning to operate a 125-meter-long inland barge carrier designed to carry between 2.250 to 3.000 cubic meters of LNG. The cargo will satisfy demand from the increasing number of small-scale LNG terminals and LNG bunker facilities being constructed or planned for along the Rhine. Such developments will require a virtual inland LNG barge pipeline to operate up and down the river. To meet this market opportunity, Shell has ordered construction of 15 inland LNG fueled barges designed to carry mineral oils to customers along the Rhine.

Veka Deen LNG trailer bunker tanker 90m

Likewise, the major channel and North Sea break-bulk hub reception ports such as the Gate terminal Rotterdam and Zeebrugger LNG terminal are developing facilities to load LNG into virtual road, rail and barge tankers for onward transmission to customers based along the coasts and waterways of Europe.

In May 2016, the German Federal Railway Authority approved the first LNG tank car for use on European railways. The transport capacity of gas rail tank cars ranges from 22 cubic meters to 122 cubic meters. This enabled Skangass to sign a deal to lease 20 LNG freight cars from German logistics operator VTG Aktiengesellschaft, which will be able to transport about 1,500 cubic meters of LNG, equal to 30 highway trucks. Potential markets include operators of LNG powered bus or truck fleets, as well as energy intensive factories seeking to generate their own heat and power.

Australia

In Australia, Mobile LNG (MLNG) and SUB161 are setting up virtual LNG pipeline networks to serve customers beyond the gas grid including, multiple remote communities, mines, railways, buses, trucking and power generation users. For instance, MLNG is planning to build a $1 billion virtual gas pipeline distribution system using intermodal ISO LNG tanks delivered by road, rail or ship from four LNG hubs. ISO tanks of either 22,000- or 44,000-liter capacity can deliver according to customers’ needs by quantity and frequency. Each hub will facilitate LNG production, distribution, refueling and regasification facilities. The Darwin hub is expected to cost at least $250 million with a proposed production capacity of 400 tons per day of LNG. Already, the Fortescue Metals Group operated Solomon mine is buying power from 125-megawatt LNG-fueled power plant.

MLNG Virtual Gas Pipeline

Substituting LNG for diesel is expected to reduce the import bill by AUS$636 million a year and cut greenhouse gas emissions by 500,000 metric tons, reports Mobile LNG.

Elsewhere in the World

The oversupply of LNG and its consequent fall in price has encouraged many countries that were too small to invest in expensive regasification facilities to consider buying LNG to switch to gas. In the Caribbean, there are plans for break- bulk hubs in Jamaica and Trinidad to deliver to small-scale industrial communities throughout the region. Already EDF is starting plans to switch its power plants Martinique and Guadeloupe to gas. This project will require 2 x 25,000 cubic meters mid-scale floating storage and re-gasification units (FSRU) and dedicated 25,000 cubic meters LNG carriers. The islands’ power plants will be served by small floating re-gasification plants offshore. In Southeast Asia and in South Africa, LNG purchases are under active consideration following the possibilities opened up by virtual pipelines.

Virtual pipelines offer access to customers beyond the gas grid and the flexibility to supplement peak demand for remote pipeline grids. These advantages are set to underpin a new period of expansion across the globe.

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about the author
Nicholas Newman
Freelance energy journalist and copywriter who regularly writes for AFRELEC, Economist, Energy World, EER, Petroleum Review, PGJ, E&P, Oil Review Africa, Oil Review Middle East. Shale Gas Guide. https://nicholasnewman.contently.com/