LNG, or Liquefied Natural Gas

LNG, or Liquefied Natural Gas WHAT IS LNG? Liquefied natural gas (LNG) is essentially natural gas in liquid form, having been reduced to a liquid state by a process of cooling to a temperature of minus 162°C. In the course of its transformation to a liquid, the ambient gas undergoes a volume reduction of approximately 600 to oneIt can then be easily loaded aboard specially designed tankers for transportation.

While in transit, LNG is maintained in a liquid state by means of highly efficient insulation systems surrounding the cargo compartment. Nevertheless, small amounts of LNG inevitably vaporise or ‘boil off’, since no system can be 100% perfect. This boil-off actually serves a useful purpose, as it helps to auto-refrigerate the remaining LNG and keep it in its liquid state. Boil-off is also used to supplement bunker oil to fuel the tankers.

Once it reaches the receiving facility, the LNG is transferred to special storage tanks, where it is kept in liquid form at near atmospheric pressure and temperatures of minus 160°C. It remains in storage until required for redelivery.

CHEAPER The production and transport of LNG are far simpler and cost less energy than any other fossil fuel.

In the ten year period between 2005 and 2015, LNG production capacity will double from 150 Million mT to over 300 Million mT creating additional supply into in the market. This, combined with the discovery of affordable methods for extracting unconventional gas and the limited use of natural gas as a feedstock, means pricing for natural gas and LNG offers a significant advantage over crude oil linked products. The industry view is this will continue for the foreseeable future as long as these unconventional resources continue to be accessed and additional capacity from the US, China and Australia offsetting any tightening in the market due to Asian demand.

In addition to the unit prices, further pressure will come from carbon taxes (white and green certificates) resulting from the lack of progress towards the EU 20/20/20 regulations which will force these businesses to review their energy choices away from oil products. This is also combined with efficiency savings as gas appliances can offer 3-5% higher efficiency than equivalent oil fired products.

CLEANER LNG is odorless, non-toxic and non-corrosive. When exposed to the environment, LNG rapidly evaporates, leaving no residue on water or soil. If spilled, LNG would not result in a slick because 100 percent of it evaporates, leaving no residue behind.

Composed primarily of methane, the main products of the combustion of natural gas are carbon dioxide and water vapor, the same compounds we exhale when we breathe. Coal and oil are composed of much more complex molecules, with a higher carbon ratio and higher nitrogen and sulfur contents. This means that when combusted, coal and oil release

higher levels of harmful emissions, including a higher ratio of carbon emissions, nitrogen oxides (NOx), and sulfur dioxide (SO2). Coal and fuel oil also release ash particles into the environment, substances that do not burn but instead are carried into the atmosphere and contribute to pollution. The combustion of natural gas, on the other hand, releases very small amounts of sulfur dioxide and nitrogen oxides, virtually no ash or particulate matter, and lower levels of carbon dioxide, carbon monoxide, and other reactive hydrocarbons.

Natural gas, as the cleanest of the fossil fuels, can be used in many ways to help reduce the emissions of pollutants into the atmosphere. Burning natural gas in the place of other fossil fuels emits fewer harmful pollutants, and an increased reliance on natural gas can potentially reduce the emission of many of these most harmful pollutants.

LARGE STOCKS The worldwide stocks of natural gas are considerably greater than the stocks of accessible crude oil (access to shale gas has added 40% to world gas reserves which are estimated at over 130 years).

It makes LNG less dependent on oil-producing nations.

FLEXIBLE DISTRIBUTION Liquefied natural gas is just as easy to transport as petrol or diesel, because it does not depend on an underground pipeline network.

This means it is an interesting alternative for industrial companies in areas that do not have access to the natural gas grid and currently rely on other fuels. Stocks can be added by transporting the gas via rail, waterways and motorways.

LNG FOR INDUSTRY Gas is used in industrial processes for energy and heat processes. Whilst gas via pipelines is the most common delivery method, LNG offers the opportunity for businesses located off the natural gas grid to utilize this energy source. In addition, LNG provides flexibility to companies connected to the natural gas grid where additional demand or peak requirements can be more effectively met through this type of delivery mechanism.

Natural Gas is the cleanest burning fossil fuel allowing companies off grid to switch from crude oil related products to reduce their carbon footprint. By using LNG, natural gas can be delivered to each location and then regassified to provide gas when required by the process.

This allows the flexibility and efficiency of using natural gas without the investment or development of additional pipeline connection to meet the natural gas grid. By switching from heating oil or heavy oil to a gas appliance, a reduction in combustion CO2 of over 30% can be achieved (source – Atlantic Consulting).

Converting to LNG is simple with the only investment required by a customer is the conversion of the equipment to run on this fuel. All technical, safety and regulatory matters

will be supported by the team at Prima LNG and with on-site time kept limited to minimize disruption. All equipment is pre-installed to allow maximize efficiency and key connection and commissioning on site simple.

LNG AS A FUEL LNG as an alternative for diesel or heavy fuel oil in the truck and maritime markets is now becoming a reality. With new regulations promoting the use of cleaner and lower noise emitting energy sources combined with the high energy density of LNG, gas burning engines are now developing rapidly in the market.

MARITIME INDUSTRY The first gas powered ferry begin in Europe in 1998 in Norway with an estimated 7% of all shipping in this region using LNG today. Key drivers for this is the new ECA zones being created within coastal and inland waterways.

Strict IMO regulations regarding reduction in SOx and NOx will come in place from 2015-6 with LNG seen as the most efficient route to meet this and future requirements.

Under the revised MARPOL Annex VI, the global sulphur cap is reduced initially to 3.50% (from the current 4.50%), effective from 1 January 2012; then progressively to 0.50 %, effective from 1 January 2020, subject to a feasibility review to be completed no later than 2018. The limits applicable in ECAs for SOx and particulate matter were reduced to 1.00%, beginning on 1 July 2010 (from the original 1.50%); being further reduced to 0.10 %, effective from 1 January 2015. (source ​www.imo.org​) TRUCK FUELING EU legislation requires a reduction in greenhouse gas intensity of the fuels used in vehicles by up to 10% by 2020. This has led to the development of the Blue Corridor program to support the building of a core of LNG and CNG fueling stations across Europe. For the end user, LNG as a fuel can provide multiple benefits 1) Economical reasons Higher purchase cost for CNG/LNG trucks and buses are compensated by return of investment due to a favorable or more stable fuel price, if the proper, steadily favorable fiscal policy is kept in place (Benelux: 15 ct/lit cheaper than diesel).

Favorable fuel taxation is essential and customer awareness is crucial for broader market acceptance. CNG and LNG are sold in kg therefore the related cost advantage of natural gas vs. liquid fuels is not transparent due to a wrong labeling.

2) Environmental reasons CNG/LNG is the cleanest fossil fuel with the best carbon to hydrogen ratio (CH4) reducing

27% CO2 vs petrol, 12% vs diesel and savings of up to 97% are possible when using renewable sourced methane.

Harmful substances and air pollutants, such as fine particulate matter are absolutely avoided with Nox emissions extremely low (even 50% below EUR VI) New Euro VI regulations mean that HGVs have had to lower their emissions, resulting in more and more Fleet Owners considering the benefits of LNG and dual fuel.

3) Noise Noise & vibrations are halved in Natural Gas Trucks vs traditional fuelled trucks (72dB (A) versus 82dB (A)); LNG trucks meet the “PIEK standards” resulting in a substantial contribution to the reduction of noise, in case of, for example, city distribution (supermarkets) 4) Safe fuel CNG/LNG is a very safe fuel, compared to other fuels safety is assured due to its physical properties, but also due to the stringent safety requirements for the vehicle fuel systems: Natural gas is lighter than air, not accumulating on the floor in unlikely case of a leakage; Natural gas auto ignition temperature is higher than for most other fuels, namely 580°C (i.e. almost 2 times as much as gasoline); Natural gas flammability range is quite narrow, generally between 5-15% by volume of air; Natural gas fuel systems, icl the tank, are approved according to the most stringent international safety regulations, i.e. ECE R110, assuring the proper design, installation and mechanism.

LNG IN EUROPE For the EU, the main reason for pursuing the option of LNG imports has always been security of supply, but the economic benefits are becoming increasingly apparent.

Indeed, the LNG option strengthens the negotiating position of European gas buyers vis pipeline exporters, while at the same time acting as a trigger for market creation and price reduction. Unfortunately, the current drop in LNG import volumes has given critics ammunition to highlight its vulnerabilities. To address this issue, a concerted effort and unreserved commitment to LNG are needed on the part of the EU, its Member States and terminal operators, especially in Poland, where the impact of the first Eastern European LNG terminal will largely depend on the transition of the domestic gas market.

SAFETY AND REGULATION SAFETY Natural gas is nothing new. It has been transported for decades, and new technologies make continuous growth possible.

The LNG industry's highest priority has always been safety and security, which is reflected in the industry's enviable safety record. LNG is not stored under pressure and it is not

explosive. Although a large amount of energy is stored in LNG, it cannot be released rapidly enough if released into the open environment to cause the overpressures associated with an explosion. LNG vapors (methane) mixed with air are not explosive in an unconfined environment. A major incident resulting in a large release of LNG could result in a fire, but only if there is the right concentration of LNG vapor in the air (5% – 15%) and a source of ignition.

Ship Safety More than 135,000 LNG carrier voyages have taken place without major accidents or safety or security problems, either in port or at sea. (The International Group of Liquefied Natural Gas Importers (GIIGNL) – 2011).

LNG ships are double-hulled, with more than six feet of void space or water ballast between the outer and inner hulls and the cargo tanks. The double hulls help to prevent leakage or rupture in the event of an accident. LNG ships are also equipped with sophisticated leak detection technology, emergency shutdown systems, advanced radar and positioning systems, and numerous other technologies designed to ensure the safe and secure transport of LNG. Terminal Safety LNG import and export terminals are designed with multiple layers of protection and must meet rigorous safety regulations. They are equipped with spill containment systems, fire protection systems, multiple gas, flame, smoke and low- and high-temperature detectors and alarms, automatic and manual shut-down systems, video surveillance systems, and highly trained personnel.

REGULATION The storage of LNG in safe cryogenic tanks and to use it as a fuel is already regulated by European standards such as: EN 13645 EN 13458 With its high experience in flammable gas, Prima LNG and the different Business Units of SHV group have developed a standard for LNG satellite plants in order to comply with these regulations, but also to set a high level of safety.

Local regulations, when existing, are also taken into account. Prima LNG can also assist you to get the local approval from authorities, if needed.

Technical standards As part of its expertise, Prima LNG has developed a European standard for LNG satellite plants - based on the Europeans norms and standards and with a specific focus on the following points: Safety first Low methane emission concept Easy usage for the end customer Prima LNG and the different Business Units of the SHV group worked with third party specialists in order to challenge this design and to launch this activity in the most sustainable way possible.

LNG U REPUBLICI HRVATSKOJ Projekt LNG terminala na otoku Krku strateški je investicijski projekt u svim fazama razvoja i realizacije, što znači u obje planirane faze, plutajućeg i kopnenog.

Europska unija ulože 101,4 milijuna eura bespovratnog novca u izgradnju plutajućeg terminala za ukapljeni plin na Krku, a o čemu u Bruxellesu potpisan i ugovor.

Europski novac, iz Instrumenta za povezivanje Europe-CIF, čini oko trećine ukupne cijene projekta procijenjenog na 383,6 milijuna eura.

Nedvojbena je činjenica da se važnost izgradnje LNG terminala na Krku ne mjeri isključivo u tržišnim kategorijama, nego i u sigurnosnim i geostrateškim kategorijama.

Naime, trgovina LNG-om potiče rast tržišta prirodnog plina te povećava sigurnost i konkurentnost opskrbe.

Također, uz moguću promjenu geopolitičkih odnosa, a tu prije svega moguću opskrbu tržišta EU plinom iz različitih izvora, projekt izgradnje našeg LNG terminala postaje važno pitanje energetske politike u gravitirajućem geopolitičkom okruženju Hrvatske.

Hrvatski Centar Obnovljivih Izvora Energije (HCOIE)