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CNG: An Alternative Transport for Natural Gas Instead of LNG

Asim Deshpande and Michael J. Economides, University of Houston.

Abstract Introduction

Natural gas is becoming one of the most Consumption of natural gas has been increasing
important resources of energy with its share in rapidly making it one of the most important
the world consumption expected to increase as energy resources in the world. In 2002 the
much as 50% by 2020. Currently, natural gas is consumption of natural gas was 89.5 Tcf
transported to the markets by pipelines and as worldwide, an increase of about 3% since 2001.
liquefied natural gas (LNG). Transporting the During the last decade the consumption of
natural gas by pipelines is convenient and natural gas increased by almost 25%1 . By 2020
economical for onshore purpose. For offshore natural gas is predicted to increase its world
transport of natural gas, pipelines become energy share to as much as 50% from the
challenging as the water depth and the present of 22%2 . Much of the increased
transporting distance increase. LNG, an consumption is seen to be in the electric power
effective mean of transporting gas for long generation.
distances overseas, constitutes 25% of the world The lower carbon emissions compared to
gas movement. But LNG projects require large oil and coal along with other reduced emissions
investments along with substantial natural gas of nitrogen oxides and particulates make gas
reserves and are economically viable for environmentally attractive. More important is
distances longer than 3000 miles. that the cost of power generation using natural
Compressed natural gas (CNG) gas is 50% less than using coal3 . These factors
technology provides an effective way for have led to future projections of increase of
shorter-distance transport of the gas. The annual consumption in power generation from
technology is aimed at monetizing offshore 5.23 Tcf in 2000 to 9.39 Tcf in 2020, an
reserves, which cannot be produced because of increase of 80%, in the U.S. alone 4 . Similar
unavailability of pipeline or because the LNG trends are seen in the developing parts of the
option is very costly. Technically the world such as Southeast Asia.
technology is easy to deploy with less This increased consumption of natural
requirements for facilities and infrastructure. gas along with the reduction of the market share
Economically for distances up to 2500 miles of existing sources such as coal and oil have
CNG can transport natural gas at prices ranging raised the specter of shortages in supply in the
from $0.93 to $2.23 per MMBTU compared to United States and other nations. With the
LNG, which can cost anywhere from $1.5 to emerging demand and with new ma rket
$2.5 per MMBTU depending on the actual opportunities expected to arise, the ways of
distance. At distances above 2500 miles the cost transporting the gas from offshore reserves and
of delivering gas as CNG becomes essentially overseas sources have generated considerable
the same as the LNG whereas the disparity in and renewed interest.
the volumes of gas transported by the respective Existing means of transporting natural
technologies and market demands play the gas consist primarily of pipelines and LNG.
deciding role for using the technology. Pipelines account for 75%, with LNG making
for the rest1 . Pipelines are the obvious means for
the onshore transport of natural gas. But for
offshore transport, as the water depth and
distance between sources and users increase, have renewed the interest in commercializing
pipelines become economically unattractive. the technology6 .
LNG provides then an appropriate way of One of the proponents of the CNG
delivering natural gas from offshore. However, technology in the early 1990s was Cran &
because of the large upfront investment, LNG Stennings Technology Inc. that proposed a well-
requires large reserves of natural gas near the known concept, “Coselletm ”6 . The idea seeks to
facilities to support a LNG project and get reduce the manufacturing cost of the gas
acceptable returns capital investment. New LNG containment system. Spooling small diameter (6
projects need approximately 0.5 to 1 Bcf per inch) coiled tubing into large carrousels
day of gas throughput to justify the investment 5 . achieves the purpose. The gas is pressured up to
One other requirement for LNG is the 3000 psi at ambient temperatures. Similar
need for a large demand at the user site. For methodology is used by others namely
example, a typical LNG import would require a TransOcean Gas, a Canadian enterprise, and
gas- fired power generating capacity of up to Knutsen O.A.S Shipping of Norway with
5000 MW3 . Such demand limits the potential varying characteristics of the containment
receivers of LNG to a handful of countries and system7 .
locations. Satisfying small demand markets and Another approach to CNG is espoused
monetizing small reserves are the two things Enersea Transport LLC 6,8. They developed the
that CNG transport of natural gas is intended to “VOTRANStm ” concept in which the natural gas
target. is compressed and cooled to lower
CNG technology can be used readily for temperatures6 . This reduces the volume of the
the transportation of gas from smaller and compressed gas compared to just compressing it
marginal fields with small throughputs of, e.g., at ambient temperatures. At the lower
100 MMscf/d3 . The technology is simple and temperatures of 0 to –40o F the process works at
can be easily brought into commercial lower pressures than at ambient temperatures6 .
application. Present ly no major CNG projects This paper is an attempt to optimize the
are commercially operated but recent transport of natural gas as CNG using the
developments in the ability to ship economically concept developed by EnerSea Transport LLC
large volumes of gas over long distances and and develop an understanding where the
ongoing work in engineering designs suggest technology stands from the economic
that the technology is at the threshold of been perspective compared to the LNG technology
applied commercially6 . for the transport of natural gas.

Compressed Natural Gas The CNG Technology


Compressed Natural Gas (CNG) as a mode of The technology is relatively simple. Natural gas,
transport of natural gas is now pursued with originally at certain temperature and pressure is
renewed interests. Earlier attempts in the 1960s compressed to higher pressures and chilled to
to commercialize the technology were made lower temperatures. Specially designed ships,
with technical difficulties and along with the which have a containment system made of
requirement of heavy investments made the stacked horizontal or vertical pipes transport the
commercial application of the technology cold compressed gas. The technology can be
unfeasible6 . divided into three parts namely, compression,
With present developments in materials refrigeration and transportation. Transportation
and their applications and CNG’s promising includes the loading, the voyage using the CNG
outlook in handling and marketing associated carriers and unloading.
gas and the exploitatio n of stranded reserves,
Compression of the natural gas compression ratio, r, is found to be between
For the study a ship capacity of 3.5×106 1.42 to 2.58 which is well within the ratio of 4
ft3 (currently under design) is considered. The which is allowed per stage 9 suggesting that
containment pressures and temperatures are single stage compressors are suitable for the
chosen so that the compressed gas is above the operation.
critical point, which would avoid a liquid phase. The brake horsepower required per stage
The gas under consideration has a specific is determined from10
gravity (to air) of 0.65 and has a critical point   k −1 
  
pressure of 670 psia and temperature of 375 R (-  q g T s   k η    p d   kη  
BHP = 0.0857 Z av      − 1
85o F)9 . The gas prior to compression is taken  E   k − 1   p s  
to be at 1000 psig and 60o F8 . The containment 
temperatures for the compressed gas are where BHP = brake horsepower per stage
considered to be at 0, -20 and -40o F. Using the qg = Volume of gas, MMscf/d
real gas law the standard volume of natural gas Ts = suction temperature, o R
is calculated at each of these temperatures and Zs = suction deviation factor
for a range of pressures. Figure 1 shows the Zd = discharge deviation factor
standard volume of natural gas compressed into E = efficiency (usually taken 0.8 for
the considered volume for each temperature. reciprocating compressors)
η = polytropic efficiency
= 1.0 for reciprocating efficiency11 .
1600
1400
k = ratio of gas specific heats Cp /Cv
1200 ps = suction pressure of stage, psia
Volume, MMscf

1000 at 0F pd = discharge pressure of stage, psia


Z + Zd
800 at -20F
600
400
at -40F
Z av = s
200
2
0
0 1000 2000 3000 4000 Table1 show the estimated horsepower
Pressure, Psig required for compressing the gas to the
pressures considered
Figure 1- Volumes of natural gas at standard conditions
compressed into 3.5×10 6 ft 3 at different pressures and Pressures BHP
temperatures.
psig
From Fig. 1 it is clear that any physical 1400 7750
optimization effort based on just the mass of gas 1600 11000
to be transported does not give any definitive 1800 13950
results. There is no combination of pressure or 2000 16600
temperature that would maximize the mass 2200 22100
(moles) of gas transported as CNG. 2400 25000
Optimization of the process is then done based 2600 27550
on cost analysis.
Reciprocating compressors were chosen Table 1- Calculated BHP for compressing
for this study because of their capability to gases to the required pressures
handle large volumes, high discharge pressures
at relatively high efficiency (75 to 85%)10 . The
gas is compressed at pressures ranging from The discharge temperature of the compressed
1400 to 2600 psig. The throughput of gas to be gas depends on the type of aftercoolers used.
compressed is taken as 500 MMscf/d. The Using air-cooled aftercoolers the discharge
temperatures are around 100 o F11 . Usage of 0.0763= Air density in lbm/ft3 at
seawater in the aftercoolers can reduce the standard conditions
discharge temperatures to 60 o F11 . SGg = Gas specific gravity
Compressors with air aftercoolers cost in
the range of $550-600 per installed BHP 11 , C ps + C pp
while compressor, using seawater as cooling Cp =
medium cost $1000-1300 per installed BHP 11 . It 2
is mainly because of the need for special Cps = Stored gas specific heat
materials such as Cu/Ni and coatings for the Cpp = Purchased gas specific heat
prevention of corrosion of the steel parts of the
heat exchangers11 . To estimate the power requirements for
It is assumed that the operating costs the refrigeration process, a conversion factor h
remain constant for both air-cooled and water- is used. The factor ranges from 1.89 to 1.63
cooled unit s. Thus, on an annual basis, using a depending upon the number of stages used in
unit power cost of $0.025/kw.hr 10 , attaining the refrigeration12 .
1 BHP × 0.746 kw/BHP × $0.025/kw.hr × 8760 To obtain the cost of refrigeration, a
hr/yr = $164/yr/installed BHP. multiplying factor f 2 is used. The factor ranges
Maintenance costs involving spare parts are from 1.2 to 1.412 . Using the following equations
assumed to be $100,000. the power requirements for the refrigeration and
Refrigeration the cost of refrigeration per unit BHP are
To estimate the chilling requirement to estimated12 .
cool the compressed gas to 0 o F, -20 o F or -40 o F
the following equations are used12 , BHPch = Qch × h

Qch =
Q $ / BHPch = $ / BHP × f 2
12,000 BHPch= Chiller compressor size
Table 2 shows the factors used for each
Qch = Heat duty in tons of refrigeration stage of refrigeration used and the cost of power
1 ton refrigeration = 12,000 BTU/hr. per ton of refrigeration.

Q = M s × C p × ∆T stages h f2 $/BHP ch $/BHP ch*


1 1.89 1.2 1361 2268
Q = Heat duty in BTU/hr. 2 1.71 1.3 1334 2223
Ms = Gas flow rate lbm/hr 3 1.63 1.4 1369 2282
= 1.03×106 lbm/hr
Table 2- Cost of chilling in $/BHP for both air-
Cp = Average gas specific heat cooled and water-cooled compressors for
∆T = Difference in storage temperature and number of stages used.
delivery temperature
From Table 2 it can be concluded that two-stage
refrigeration is the most cost-effective.
Transportation
Q g × SGg × 0. 0763
MS = The transportation of the CNG is capital
24 intensive requiring 85-90% of the total capital
requirements for the process8 . The onshore
Ms= Gas flowrate lbm/hr infrastructure for loading the compressed gas
Qg = Gas flowrate MMscf/d into the ship onshore requires mainly the
compressor and accessories. The chillers are on
board the transporting ships. With the chillers
on board, the need for special loading Distance No. of ships
infrastructure to handle chilled fluids is reduced, miles
and the offshore loading of the gas using buoys 500 3
becomes relatively easy8 . 1000 4
The size of transporting ships depends 1500 5
upon the expected natural gas capacity. The 2000 6
ships carry the chilled compressed gas in a 2500 7
boxlike structure called CNG module 8 . The 3500 8 to 9
5000 11 to 12
design of the module consists of horizontal or
vertical stacking of pipes. The pipes are Table 3- Number of ships estimated for a range
designed to be 42” diameter and made up of of voyage distances
carbon steel8 . The stacking of the pipes depends
upon the volume of gas to be transported. For Cost of the Technology
relatively small volumes such as 700 MMscf of To optimize the study a cost analysis was done
natural gas, vertical arrangement of pipes is for the range of containment pressures and
found suitable 6 . The pipe infrastructure is temperatures. The criterion to optimize is the
enclosed in insulated surrounding. lowest cost sustained to transport the considered
Unloading of the gas is done using a capacity of CNG. The costs include
fluid displacement mechanism. The displacing compression and refrigeration of the gas and the
fluid is a mixture of ethylene glycol and water.8 cost of the ships with the containment system,
The gas can also be unloaded offshore keeping the CNG module. This is done for a range of
the requirement of onshore facilities to distances. An unloading rate of 1000 MMscf/d
minimum. is assumed. Table 4 shows the optimum cost, in
Ships, with chiller and fluid dollars per Mscf, with the optimum containment
displacement on board, cost up to $230 million8 . pressure and standard volume transported at
The number of ships required for a certain those conditions at a given temperature.
transport distance depends upon the loading The results in Table 4 are for air-cooled
rate, voyage distance and time required for a compressors. Using water-cooled compressors
ship to make a complete cycle of loading gas on and with the containment conditions remaining
the ship, transporting it, unloading the cargo at same, the unit cost of delivered gas is raised by
the buyer side and returning to the point of $0.01/Mscf. This translates into an increase of
origin. Table 3 shows the estimated number of $8,000 to 12,000 for each cargo of CNG
ships required for transporting distances of 1000 unloaded on the supplier side.
to 5000 miles8 .
Keeping aside the difference in standard
volumes, a proper comparison between the two
technologies warrants a review of the
requirements and the respective costs involved
At T = 0o F
Distances Cost Pressure Volume
for both.
miles $/Mscf psig MMscf For any LNG project to be economically
500 0.96 1800 880 viable a throughput of 0.5 to 1 Bcf/d of natural
1000 1.23 1800 880 gas is required. Typically a LNG plant of 3
1500 1.51 1800 880 MMtpa needs a gas at rate of 400-450
2000 1.79 1800 880 MMscf/d5 . This translates into gas reserves of 5
2500 2.34 1800 880 to 8 Tcf for a project life of 20 years, depending
3500 2.90 1800 880 on the amount of condensates in the gas5 . CNG
5000 4.01 1800 880 projects, on the other hand, do not require such
At T = -20 o F amount of reserves for the same throughput 12 .
Distances Cost Pressure Volume Fields with modest reserves and ga s rates can
miles $/Mscf psig MMscf support CNG projects10 .
500 0.95 1600 950 For LNG projects, the liquefaction plant
1000 1.2 1600 950 is the most capital intensive. They make for
1500 1.47 1600 950 almost 50% of the total investment for a LNG
2000 1.75 1600 950 project13 . Taking an industry estimate of
2500 2.02 1600 950
production cost of $200/ton of LNG per
3500 2.56 1600 950
annum14 , a project handling 500 MMscf/d (3.8
5000 3.57 2000 1120
million tonnes of LNG per annum) requires an
At T = -40 o F investment of 750 million. A CNG plant with
Distances Cost Pressure Volume loading facilities including compressors,
miles $/Mscf psig MMscf pipelines and buoys costs $30 to 40 million8 .
500 0.93 1400 1030
The lower investment along with simplicity of
1000 1.13 1400 1030
the operations helps, in effect, in faster planning
1500 1.46 1600 1160
2000 1.72 1600 1160
and commissioning of a CNG project.
2500 1.86 1600 1160 For CNG the shipping of the compressed
3500 2.53 1600 1160 gas is the most capital intensive. The ships cost
5000 3.33 1600 1160 approximately $230 million8 while for LNG the
ships cost approximately $160 million15 .
Table 4- Optimum unit cost of transporting the Offloading of the LNG requires special
gas as CNG presented in $/Mscf facilities namely a regasification terminal.
Regasification facilities cost $500-550 million
CNG vs. LNG depending upon terminal capacity13 . CNG
In comparing CNG with LNG the same offloading facilities consisting of separators,
transporting ship real- volumetric capacity is scrubbers and heaters cost from $16 to 20
used. However, in making the comparison it is million8 .
worth remembering the disparity in the actual Overall for CNG the total investment
standard volume of the gas transported. For the can range from $1-2 billion mainly depending
same ship volume, LNG transports 2.1 Bcf of upon the number of ships required. For LNG the
natural gas compared to a maximum volume of investment can range from $1.5 to 2.5 billion
1.2 Bcf transported as CNG. depending on the market needs and number of
ships required. Figure 2 shows the cost
components for a typical LNG project. The The next step is to estimate and compare
same is shown in Figure 3 for the CNG project. the unit price of gas delivered as CNG or LNG.
For LNG the typical chain value per MMBTU
of gas is 15 : Exploration and Production: $0.5-
1.0/MMBTU, Liquefaction: $0.8-1.2/MMBTU,
Regasification and Storage: $0.3-0.5/MMBTU.
Unloading Shipping of LNG is a function of
11%
distance of transport and the discount factors.
Assuming the ships for transporting LNG are
Liquefaction
newly built the unit cost of shipping range from
50% $0.4-1.5/MMBTU for distances from 500 to
Shipping
39%
5000 miles16 . Thus, the total cost of producing
and transporting LNG can range from $2 to $4.2
per MMBTU for the distances considered.
For CNG, keeping the same unit cost for
exploration and production, the chain value per
MMBTU is: Exploration and Production: $0.5-
Figure 2- Cost components for a LNG 1.0/MMBTU, Processing and Transportation:
project $0.88-3.82/MMBTU for distances from 500
miles to 5000 miles. This translates into a unit
cost of $1.38 to $4.82 per MMBTU.
Taking a gas price of $0.75/MMBTU for
Unloading
both CNG and LNG and liquefaction cost of
6% $1.0/MMBTU with regasification cost of
Compression $0.4/MMBTU, the unit price of LNG delivered
and loading is shown in Table 5.
5%

Transport
17
Distance cost Unit cost
Shipping miles $/MMBTU $/MMBTU
89% 500 0.4 2.55
1000 0.5 2.65
1500 0.6 2.75
2000 0.7 2.85
2500 0.8 2.95
Figure 3- Cost components for a CNG 3500 1.1 3.25
project 5000 1.5 3.65

From Figures 2 and 3, one of the main


attractions of CNG is that the bulk of the Table 5- Estimated unit cost of transporting the
investment is in movable assets, while for LNG gas as LNG.
a very large of the investment is in fixed assets.
The investment breakdown lowers the CNG
investment risks, by providing a way to recover
most of the investment and allow its deployment
in other projects or applications.
Table 6 shows the comparison of the required in the larger number of ships that are
unit price of the delivered CNG with that of require.
LNG. One factor in the choice between CNG
and LNG is the pace of the project deployment.
Distance LNG CNG Typically LNG projects worldwide require at
miles $/MMBTU $/MMBTU least 4 to 5 years from the planning stage to the
500 2.55 1.63-1.66 delivery of first cargo. CNG projects can be
1000 2.65 1.83-1.92 commissioned in a period from 30 to 36 months
1500 2.75 2.14-2.19 beginning with the project design, planning and
2000 2.85 2.39-2.45 construction of the required infrastructure and
2500 2.95 2.52-2.98 delivery of the first cargo 8 . Clearly, technology
3500 3.25 3.16-3.51 such as CNG would be inherent for faster
5000 3.65 3.92-4.57 application and monetization of reserves with
smaller volumes and unattractive options of
Table 6- Comparison of unit price of delivered LNG or pipeline.
gas as CNG with LNG for the considered What is clear is that CNG is eminently
distances competitive withy LNG, for the considered
conditions in this study. Whereas LNG has a
strong point in its capability to transport larger
volumes of gas in each trip, its inability to
market stranded reserves makes CNG very
attractive for smaller reserves and smaller users.
LNG is more suitable for the long distance
transports of gas.

Commercial Opportunities
What are the worldwide potential applications
of CNG, especially in light of many recent
announcements for LNG projects, all expected
to remedy the otherwise looming natural gas
shortages?.
As determined earlier for distances up to
Figure 4- Plot of unit price of delivered gas as 2500 miles, or even longer, CNG is potentially a
CNG and LNG against considered distance. very successful means to transport natural gas.
Figure 5 is a map of the world showing regions
with large commercial possibilities for CNG6 .
Figure 4 shows a plot of the comparison These include the major markets of North
of the unit price of gas delivered as CNG and as America, Asia and Europe. Considering present
LNG. From Table 6 and Figure 4 it is clear that market prices of natural gas and LNG’s
for distances up to 2500 miles CNG can deliver advantage to transport more gas, LNG stands a
the gas in amore cost-effective manner than better chance for distances between Australia,
LNG. With increasing distance the price of the Indonesia and Nigeria and the United States or
gas delivered as CNG becomes equal or exceeds the same countries and Japan or the emerging
the cost of LNG. The main reason for the CNG huge market of China. However, CNG would be
cost escalation is the substantial investment an obvious option for the Pacific Coast of
Russia to Japan and China, Algeria and Libya
to Europe, Atlantic Canada and the Northeastern way for containment and transport of gas.
Part of the United States, the Cook Inlet and the Simple loading and unloading requirements
Northwestern Coast of the United States. Even provide an advantage in using the technology
announced projects such as Trinidad to the for offshore purposes.
United States and (potential) Venezuela to the Economically, 90% of the investment is
United States should seriously consider CNG in transportation making CNG projects less
instead of LNG. risky. This gives the flexibility to move assets
around as per needs in case a project fails to live
up to its expectations.
One drawback is the smaller volume of
gas transported. LNG transports two to three
times of the amount of gas that CNG can
transport based on present concepts.
The main advantage of CNG is the low
cost at which it can transport gas over distances
up to 2500 miles in which CNG is more cost-
effective than LNG. CNG’s ability to market
small reserves is an additional major benefit.
Figure 5- Scope of applying the CNG The technology has a wide scope of
technology worldwide6 commercial application linking major markets
such as North America, Japan and China and
Europe.
One way of applying the CNG
technology is in conjunction with LNG6 . It can Acknowledgements
work as a complement for a LNG project The authors wish to thank Messrs. Paul Britton
because CNG can serve as a temporary solution and Charles White, Enersea Transport LLC and
for reserves that can eventually support a LNG Mr. De La Fuente, Paragon Engineering for
project. Such an application would “accelerated their extensive help in this study. Also, the
cash flow and economic return for the professionals at Toromont Process Systems
exploration costs”6 . Monetizing the reserves provided substantial technical and economic
earlier can both help and in the process, through information.
production behavior can prove their viability to
support a long-term LNG project. Also CNG References:
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13. Stone, J.B., ExxonMobil: “Applying
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