Some small things solve big problems. A battery, a button, or a pacifier are small things that solve big problems for humanity.
No one wants to call their business “small” and there are no agreed size criteria of Small Scale Liquefied Natural Gas business but, any LNG plant that serves peaking for regional peak demand, that is only used for trucking LNG to nearby customers and non-conventional sized LNG bunkering ships could be considered small scale LNG plant. Hence when you look at how they serve, just like an AAA-sized battery, a button, or a pacifier does, you will see pretty big financial, supply security, and environmental benefits they have been providing.
Since the first trials at the beginning of the 20th century (first test site: 1917 West Virginia, US, first commercial site: Cleveland, Ohio, 1941) the small scale LNG plants have become an essential part of the US natural gas system. While building pipelines all over the US, clever minds had to find a financially sound solution to the peak demand on maybe 10-15 days of the year especially when heating demand required huge amounts of pipeline capacity whereas that capacity would be underutilized throughout the year, causing inefficient investments.
Underground storage can serve in such cases but it is not always possible to build underground storage close to demand centers and yet again the investment scale is vast and does not always avoid extra and underutilized investment for pipelines. This is where LNG peaking comes into the picture. A typical gas consumption and supply portfolio covering it is shown in the below chart.
While you can use pipeline contracts for your base load, due to both supply and demand side fluctuation risks storing natural gas either underground or using LNG plants as storage are the most preferred solutions. In Europe, most of the top peaking problems are solved by big LNG import plants’ storage capacity and vaporization ability (which has caused them to be called underutilized, useless investments, while they are not!). In the United States, the solutions were more diversified. The import plant(s) in North East helped while over 100 other small scale LNG plants, half of which have on-site liquefaction whereas others receive LNG by trucks, were built starting from the 1960s (Carlstadt, NJ 1965 plant is still in-service). The main idea was simple and clever: Build the LNG peaking plants with storage at the tail of pipelines, liquefy and store during the year and be prepared to meet the surge in demand when extreme cold weather strikes, thus effectively covering the demand gap during the 10-15 days of peak usage and at least preventing any discomfort due to freezing homes.
The majority of small-scale LNG plants in the US continue to function as peaking plants. Although the average days of peak shaving ability varies a lot, on average being 5-7 days on the intrastate/LDC pipelines, and 10 days on interstate pipelines according to PHMSA data, it is clear that the vaporization equipment being low cost compared to storage and liquefaction, extra vaporization capacity was built in for though days, and as a backup. The median (and average) storage capacity of these plants on interstate pipelines is around 2 bcf which is more than half of a conventional LNG ship size, or a quarter of a typical import plant, whereas the intrastate and LDCs’ customer loads vary and average storage capacity is slightly lower, showing different load requirements of regions they serve and the capacity of capillaries of the vital systems.
This financially sound solution still serves in the US, with some plants also being used commercially, too. As the importance of air quality, and environmental issues caused by using other fuels (let’s name them coal, fuel oil, etc.), and the effect of the remains of the fuel on some industrial consumers’ products became unacceptable, many industrial entities gladly transitioned to cleaner alternatives such as LNG, compressed natural gas (CNG), liquefied petroleum gas (LPG), and other environmentally friendly solutions. In Europe, some of the import terminals served the trucking market which serves off-grid customers, too. In the last 10 years, after the climate change initiatives and regulations got more robust, ship owners started switching to LNG as a fuel (even most conventional LNG ships did not use LNG, because it was a valuable product) and small scale LNG business started serving them by bunkering ships (ship-to-ship), shore fueling (shore-to-ship) and by trucks (truck-to-ship).
With the global LNG market becoming more liquid, the availability of LNG will increase and it will find more uses, in a wider geography, in and out of the US. Even today number of LNG fueled trucks is increasing whereas aerospace companies are testing LNG to go beyond Earth. With the addition of Renewable Natural Gas (RNG) and Responsibly Sourced Gas (RSG) to the mix of sources of LNG, physically or virtually but for sure prudently, achieving net zero targets will be possible.
So what is ahead? The US has addressed the efficiency need of pipelines by designing LNG peak shavers at the tail of the pipelines starting from the 1960s. I believe US could benefit from building new small scale LNG plants even more and while the demand in the coastal areas is increasing it is getting harder and harder to build pipelines and power transmission lines. Another important benefit will come for these plants serving regional industrial energy demand which is off-grid or suffering from new pipeline capacity additions or power resilience related issues. Believe it or not, in the greenest states, there are huge industrial plants that rely on coal or fuel oil, contributing to local pollution concerns and exacerbating broader environmental issues.
Natural gas will stay in the energy source mix for a very long time. As humans our priority should be replacing the most pollutant element of the mix, coal, first. When I graduated the Electrical and Electronics Engineering in 1996, storage for energy was the biggest issue to be resolved. It is a challenge that persists to this day. I believe small scale LNG plants are here to serve as batteries, both for our planet and for endeavors beyond our terrestrial boundaries.