Worldwide gas industry goes full throttle
As the world transitions to low-carbon energy sources like LNG, gas markets are diversifying further into hydrogen, ammonia, methanol and petrochemicals.
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Natural gas is the most hydrogen-rich carbon source available on earth. Its uses continue diversifying in parallel with its cost varying throughout the world, such as $3.92 per MMBtu in North America compared to over $12 per MMBtu in Europe. Its demand is nonetheless going to increase everywhere, as the circular economy transitions to net-zero emissions (NZEs) by 2050.
But it’s not just hard-to-abate sectors that are facing a long road to net zero. Sectors that have sites in remote locations, such as mines, need to overcome the hurdles of access before they can consider how they begin to reduce their emissions footprint.
Traditionally, diesel has been seen as the fuel of choice, due to its inherent energy density, reliability, availability, and relative cost advantage. Natural gas emits up to 40% less CO2, 80% less NOx, and 99% less SO2 than diesel, making it a good bridging solution for companies seeking to take the first step on their journey towards decarbonisation.
Because of these bespoke aspects, natural gas will be the fastest growing fossil fuel from 2020 to 2035. It is the only fossil fuel expected to grow beyond 2030, peaking in 2037 before being replaced by renewable solutions. In addition to producing fewer emissions than other fossil fuels, some of its other benefits include being environmentally safer to store than other fossil fuels. At its current level of consumption, natural gas has enough recoverable resources to last around 230 years according to certain estimates.
In spite of the current costs of hydrocarbon-based gas resources in 2022, natural gas technology has become much more accessible and dependable, providing more flexible energy options for industrial operations. For example, many natural gas generators needed for rapidly expanding mining operations throughout the world now offer a significantly lower total cost of ownership than ultra-low sulfur No 2 diesel and highly de-rated propane counterparts.
Technology enhancements from the wellhead to the end-user create efficiencies that translate to cost savings in nearly every aspect of the LNG lifecycle, from installation to maintenance to fuel cost. This explains why the U.S. Energy Information Administration (IEA) forecasts that U.S. natural gas marketed production will increase to an average 104.4 bcf/d in 2022 and then further increases to a record-high 106.6 bcf/d in 2023.
Major gas producers including Qatar and Australia are expected to report increasing year-on-year production as demand primarily increases in the industrial sector, where currently over 8% of the world’s gas production provide feedstock for the petrochemical sector. Other expanding sectors include:
- Midstream (pretreatment)
From the wellhead to the processing facility (e.g., refinery, steam cracker, LNG plant, etc.), opportunities are expanding for technology suppliers at the upstream-to-midstream interface. Tighter specifications around contaminants removal before entering the pipeline (to the processing facility) range from sulfur to mercury removal of produced gas.
For example, the more than 700 in-the-field gas plants in the Canadian province of Alberta vary in complexity from simple gravity based separation of gas and liquids, to Claus based sulphur recovery units (SRUs), amine units (Figure 1), tail gas treaters (TGTs), sour water strippers, etc. In the gas processing industry, H2S, SO2, CS2, mercury and other contaminants need to be removed to meet pipeline specifications.
Figure 1. Typical amine unit flow diagram.
The gas treatment technology to achieve specifications are generally well understood, but the challenges to achieve quality specifications by removal of harmful components requires midstream sulfur removal infrastructure involving absorption, extraction, oxidation, dehydration, and conversion processes to yield elemental sulfur as discussed in the accompanying articles in this issue of GAS.
LNG related applications are becoming a big part of the industrial and transportation sector’s transition to net-zero emissions (NZE’s). Incentives for LNG market expansion take on various forms throughout the world, such as with investments in certain LNG plants categorized as sustainable and “green” under rules proposed by the European Commission in March 2022.
This recognition is an important metric for investors favoring green investments that need massive amounts of private capital in meeting climate change targets. LNG combustion yields exceptionally low emissions, including emissions (SOx, CO2, etc.), allowing for easier permitting and favored by investors.
Regulations are shaking up markets once dominated by distillate and heavy fuel oil, predicating the opportunity for LNG to fill the void. In addition, petroleum refiners may see more value converting middle distillate to petrochemicals, rather than diesel-range products. This development will open opportunities to replace diesel/distillate, such as maritime shipping, with LNG.
LNG liquefaction is an energy intensive process, compelling the industry’s focus on improving liquefaction processes to improve production while also saving energy. Refrigerant composition is a major key variable and as much as half of energy consumption (e.g., fuel gas) can be reduced by changing operating conditions and refrigerant composition.
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