Markets: Fear-to-be-first Factor Trips CNG

Shy customers a tougher problem for the promoters than technology

Compressed natural gas has been billed as a rival concept to floating and small-scale LNG for accessing stranded and marginal gas reserves but, like FLNG, the first such project has yet to happen.

An element of frustration was clearly evident among the sector’s players meeting at the Marine CNG Transport and Development conference in London last week.

Some of the companies present have been pedalling their solutions for more than 10 years and are decidedly keen to stress they can be ready to roll as soon as they are given the green light.

On the good news front, from their perspective, Poten & Partners LNG & Gas Consulting manager Graham Hartnell told delegates that FLNG has more complex technology issues to address.

He believes it is not LNG that constrains CNG and the opportunities lie in areas where it is difficult to put in pipelines.

While the Caribbean, Mediterranean and South-east Asia are often flagged as offering potential projects for CNG, he said he suspects the best bets are elsewhere in connecting local and regional sources of gas to markets that currently have no supply at all.

While all the developers are adamant that the technology is no longer a stumbling block, most agree that there is a ‘fear to be first’ factor among potential customers.

Sea NG’s vice president for the Mediterranean, Middle East and Africa regions Adam Hedyat quoted a client who had said: “I would like to be the first to be number two.”

Enersea Transport managing director Paul Britton said: “Companies believe CNG will work but don’t control both sides of the chain.” He said supply market match is the key. “The overall value chain is the biggest barrier for this (CNG) to be commercialised.”

Hedyat, whose company has been working to finalise a project to ship gas from Egypt to Greece, said one of the key challenges is dealing with the social and political aspects in different regions of the world.

He explained that in the Mediterranean gas supply is available but the problem is more with the conservative utilities and importers. In the Caribbean, the opposite situation applies.

The delay in getting a project to market has given many of the developers extra time to hone and tweak their designs and run up batteries of classification society approvals.

Enersea, for example, has recently decided to increase the size of the cylinders used in its Votrans CNG transport system, thereby reducing the number required by around 30% to store the same volume of gas and cutting the overall cost of the vessel.

Canada’s Sea NG has rejigged its design to integrate its coiled Coselle system into the hull of the vessel.

CNG developer Trans Ocean Gas said it is looking at converting 1000-teu container feederships for use in the marine application of its modular technology, which uses a multi-element gas container.

While the technology might be totally different, there are noticeable similarities between CNG and FLNG industry gatherings.

Developers working in such a small, evolving sector often appear all too familiar with each other.

Equally, everyone is playing their cards close to their chest and only speaking in veiled terms about possible projects.

“We’re all around the bonfire waiting for the match to be lit,” Trans Ocean Gas president Steven Campbell said, “and when it is it’s going to be a great fire.”