CNG Players Gearing Up for Take-off

Marine CNG proponents believe a concrete project is now ‘within touching distance’

By Lucy Hine

In the past few years, there have been several false starts but speak to the main proponents today, who remain almost the same bunch as they were several years ago, and many feel that the business is now within touching distance of seeing a real project off the ground.

Craig Young is operations manager at the Centre for Marine CNG based in St. John’s, Newfoundland, which currently stands as the nearest thing the sector has to an industry body.

“We keep getting closer and closer but if you travel halfway to an object, you never quite get there.” he said.

But while Young appreciates that there needs to be that all –important next step, he is quietly optimistic. “Interest seems to be more focused now,” he said. “It is not just academic.”

A number of companies are getting into some of the detailed economic and commercial aspects of compressed natural gas (CNG) now, he says, since the technical issues are well defined and established.

“You have companies doing pre-Feed [front-end engineering and design] or detailed feasibility in the context of a real project,” he added.

Young recognizes the sticking points of trying to bring all the players together. “Gas-supply agreements are difficult at the best of times and to layer in multi-jurisdictional complexities with new technology – it’s a challenge,” he said. “I think the only constraints are commercial agreements, so it comes down to the economics.”

Today’s economic climate certainly makes for a very different environment for CNG developers, who are promoting projects against a backdrop of seriously depressed spot-gas prices. Young acknowledges that there is a cost to transport in the technology. “It is not cheap by any means but it certainly does make sense in some applications,” he said.

The difference now, he believes, is that the proponents are better at finding the most suitable applications for CNG. He thinks that initially developers were focusing on large-scale projects involving long-distance transport, which is flawed for this technology.

“It has its own niche and is a regional solution where you are a little bit outside of the normal market forces,” he explained.

Delivering into Boston is not a reasonable market solution for CNG, he says. However, for utilizing flared or stranded gas or where there is existing infrastructure that is when it could work.

Young says the limiting distance for CNG is highly dependent on source gas prices and what the market can bear.

“If we had $10 to $12 gas right now, that radius would expand,” he said. “Once you are getting up to 1,000 or 1,200 nautical miles, you are really kind of stretching the limit of the technology.”

He does not think floating liquefaction (FLNG) and CNG are chasing the same reserves bases. Young believes that FLNG is generally targeted at larger reserves and says there are many technical questions that have yet to be satisfied, which limits its applications at present.

He acknowledges that projects, including one he was working on most recently, do compare the two but added: “I think marine CNG as a technology is perhaps better defined and understood and there is a realization as to where those limits lie and FLNG (floating liquefaction) is still working those out.”

The centre has not held its previously annual conference since 2007, which, to an outsider, might send a negative message on the business. “We didn’t want to rehash its same topics,” he said, explaining that previous meetings had gone as far as they could on discussing the technical issues associated with the business, which are now well understood. “We were waiting for the first project announcement before we could move forward. I continue to be optimistic that next year will be the year we will see this happen.”