Historically the main function of Liquefied natural gas "LNG" has been to facilitate the transportation of gas from gas producers such as Algeria, Indonesia, Malaysia and Qatar to the world’s gas markets over long distances when it was uneconomic to transport the same volumes of gas via pipelines. For example Algeria, in 1964, was the first international LNG exporter, supplying LNG by ship to the UK gas market where the LNG was regasified and consumed by UK gas consumers. Since 1964 the LNG market has grown into a major industry, with 19 LNG exporting countries and 30 LNG importing countries, involving around 10% of global natural gas production.
However, in recent years a new market for LNG has begun to emerge with LNG being used as a liquid fuel in road, rail and marine transportation. Whilst the technology for using LNG as transport fuel has been around for some time, a combination of environmental concerns and simple economics in relation to other liquid fuels has facilitated the growth of its use in the global transport fuels market. In particular we expect to see LNG increasingly used as a transport fuel in the following markets:
- Large truck market – This is especially true in markets such as the US and China where large haulage trucks are required to travel long distances making LNG a very economic proposition.
- Marine shipping – With changes to the environmental emission regulations concerning marine shipping, especially in the Emission Control Areas (ECAs) in Europe and North America, many ship owners are seriously considering the use of LNG as an alternative to either ultra low sulphur fuels or the installation of scrubbers.
- Rail – Whilst it is still early days for the use of LNG as a fuel in rail transport both the environmental and economic arguments are compelling.
Despite the potential environmental and economic benefits of LNG as a liquid fuel, its on-going development and growth will be highly dependent on the development of cryogenic supply infrastructure.
However, it is our view that, with the number of countries involved in LNG either as importers or exporters growing to nearly 50, that the environment is now right for the development of marine bunkering to lead the way in developing the cryogenic LNG chain. Since with both the economic and logistical arguments for LNG marine bunkering now more compelling than other, marine bunkering has reached a tipping point with a number of major LNG players, suppliers, infrastructure owners and operators are developing LNG marine bunkers or seriously considering it. Where LNG bunkering leads, road, rail and Off-Grid markets will follow, as shown by MJMEnergy’s in-house artist Derek West.
The above information was sourced from the first chapter of the LNG in Transportation report published
by Cedigaz in 2014.
For more information about this report please visit: mjmenergy.com/publishing/cedigaz/LNGiT
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