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Home / Issue Archive / 2008 / April #4 / Mini LNG Plants Offer Safe and Cost Effective Solutions

№ 4 (April 2008)

Mini LNG Plants Offer Safe and Cost Effective Solutions

An Interview with Vladimir Kudravets, Commercial Director, Promtechnokom


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Oil&Gas Eurasia: In what cases it would be appropriate to build small LNG plants?
Vladimir Kudravets: Production of liquefied natural gas (LNG) is based on significant change of volume occupied by gas (approximately 600 times). LNG mini-plants are plants having capacity not exceeding 250 tons of LNG/day, which corresponds to inlet gas capacity of 130 million cu.m per year.
Expediency of construction of this or that plant is determined for each particular case. Generally, the only factors, which limit implementation of LNG projects are:
–    limited output (not exceeding 250 tons of LNG per day);
–    availability of minimal transport infrastructure (motor road, railroad) or possibility to build such an infrastructure construction;
–    impossibility to transport for long distances by railway (up to 3,500 km) and motor roads (up to 1,500 km) due to sharp increase of the transportation constituent of the total cost.
At the moment, our company works on implementation of several totally different projects. For the purpose of convenience, all of them may be grouped by types. The first group includes projects on integrated field development with a possibility to transport produced gas as liquid (such being the case, the construction of gas pipeline is not planned) for sale in the domestic and/or foreign market. The second group includes projects on utilization of associated gas resulting in production of LNG, liquefied propane/butane mix and gas condensate. The third group includes projects on gas supply to the remote regions. In the fourth group there are projects on supply of reserve fuel to gas-fired heat power plants. The fifth group includes projects providing a solution to the problem of limited access to gas transportation system.
Thus, we have individual approach to each project, ensuring integrated solutions to needs of our customers.

OGE: What are their advantages compared to larger LNG plants?
Kudravets: Among main advantages of small plants for production of liquefied natural gas one should mention, first of all, a small space required for plant construction. It is possible to build a small LNG plant on the area not exceeding 10,000 sq. m (which is by 30 to 50 times less than the area occupied by a larger plant). Second, much lower capital (approximately by 40 percent) and operating (approximately by 20 percent) expenses. Third, simplicity of the technology. In case the output  exceeds 250 tons of LNG per day, more complex technologies are used based on MRC – the mixed refrigerant cycle. Fourth, reliability and ease of operation. The applied technology is based on action of the heat-exchange apparatus, in which cooled nitrogen liquefies the supplied methane. Fifth, safety of a plant, the operation of which is based on the nitrogen expander cycle, is much higher compared to the safety of plant using the MRC technology.  

OGE: How can economic efficiency of mini-plant construction be estimated?
Kudravets: It is really easy to estimate it. For example, there are small remote oil-and-gas fields, where it is necessary to solve the problem of associated gas utilization. Taking into consideration that most of these fields are located in the northern areas, cost of 1 km of gas pipeline construction can be estimated in the sum of approximately $0.5-1 million. Thus, it is necessary to invest at $100 million in the construction of the gas pipeline run 200 km long. Construction of small LNG plant with the whole infrastructure will be approximately 2.5 times cheaper.
Use of LNG mini-plants appears to be efficient for realization of projects in the area of provision of gas supply to the remote regions. Almost ten years ago (in 1999), specialists of the Promgaz designing company (the chief designer of the Program for Provision of Gas Supply to the RF Regions in 2005–2007) made calculations, which showed that it would be economically sound to provide energy supply to more than 50 percent of remote settlements using LNG.

OGE: Do you know any successful projects on construction of mini-plants in Russia?
Kudravets: It may sound as a paradox, but despite the fact that our country leads the world natural gas production, and the world LNG market today is the most dynamically developing market of hydrocarbon energy resources (on average, its growth is 7-7.5 percent a year), in Russia there are only three small local production plants operating in Leningrad, Sverdlovsk and Moscow regions. The total annual LNG production does not exceed 8,000-9,000 tons.

OGE: Why, do you think, until now mini-plants are not being built on a larger scale in the country, and what should be done to change the situation in the nearest future?
Kudravets: Firstly, at the moment, there are only few Russian companies operating in the market of equipment used for LNG production. At best, only one-two of them may implement a cryogenic project on a “turn-key” basis. Second, usually oil companies utilize associated gas by construction of an expensive gas pipeline system. Provision of gas supply to remote regions is arranged in same way. Other options are considered only on paper, if at all. Third, the government control of gas prices at times makes an on-site processing unprofitable. Fourth, the lack of systematic approach with regard to solving of problems pertaining to associate gas utilization, which would be of interest to both the oil companies and to the ultimate consumers, i.e. petrochemical plants, population, generating companies.   
Among factors positively affecting development of small-size LNG production facilities in Russia I would mention:
–    deregulation of gas prices;
–    program enabling enforcement of environmental law to achieve 95 percent utilization of associated gas;
–    economic expediency of measures ensuring energy supply to Russia’s remote regions using LNG.

OGE: Is that right that Promtechnokom is ready to offer the use of nitrogen expander cycle technology  for construction of LNG plants?
Kudravets: It is so indeed. This technology is simple and reliable and is based on the fact that the nitrogen liquefaction temperature is lower than the methane liquefaction temperature.  Cooled nitrogen is supplied to the heat-exchange apparatus, gas is supplied there as well, and liquefied natural gas is produced. Then the cooling agent is supplied to the compressor, turbine and to the heat exchanger again. Thus, this technology is a closed cycle of operation of the cooling agent – nitrogen.
The offered technology ensures 100 percent liquefaction of the supplied gas; it is economically more efficient compared to other existing technologies.
– Could you tell us the experience of which companies or institutions formed the basis of technologies offered by Promtechnokom for construction of plants and storage vessels?
Promtechnokom is an official partner of Cryonorm Projects BV, the European leader in production of integrated systems for natural, associated and technical gas liquefaction, storing and regasification. The company supplies integrated cryogenic systems for natural and technical gas for more than 40 years. It has realized over 30 various projects for such world leading companies as Air Liquide, Technip, Foster-Wheeler and others.

OGE: What can Promtechnokom provide in respect of storage vessels delivery: vessel design, search of a manufacturing company, anything else?
Kudravets: Our company is not only an equipment supplier, but an integrator which performs turn-key projects, offering services on feasibility studies, engineering services, equipment delivery, contract supervision, precommissioning, and further maintenance.  
The main task of Promtechnokom is to promote technical renewal of the Russian industry in order to achieve the highest level of economic efficiency, technological reliability and ecological safety of production.
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