Natural Gas is an important commodity in the energy transition, not only because it is the cleanest burning fossil fuel but also because production assets and the transportation infrastructure are operational and able to solve near term supply demand imbalances. Liquefied Natural Gas, in particular, is advantageous because it enables natural gas, in liquid form, to be delivered over long distances. Moreover, with the implementation of the Paris Agreement and with major oil and gas companies publicizing their respective net-zero initiatives, LNG has gained market consensus as the transitionary fuel that will displace or reduce oil and coal utilization in the energy mix.
In terms of balancing energy systems thermal generation is reliable and able to respond quickly to supply demand imbalances caused by intermittent renewable generation. In this regard, thermal generation is complimentary to renewable generation.
Furthermore, technological advances and commercial viability of floating storage and regasification units (FSRUs) and floating storage, regasification and power units (FSRPs) has been proven to provide a quicker and potentially more flexible solution to traditional land-based LNG import facilities, specifically when managing the energy transition.
Given these factors, LNG import and LNG to power projects will play a crucial role in producing a sustainable low carbon future.
SPI has been involved with an number of LNG import projects to bolster power generating capacity and drive growth in the industrial sectors. Please find some examples below:
Brazil, a country that is known for an abundant renewable sector, also imports gas not only for power generation but also for use in the industrial sector.
In 2016 demand in the southern region of Brazil was being stymied by stagnant gas supplies from Bolivia via the gasbol pipeline. To provide incremental gas supplies and enable growth in the industrial sector, the team at SPI worked with a local gas distribution company, called ECOM, to develop a small-scale LNG import terminal to supply LNG to the southern states in Brazil. The project was cancelled due to the startup of the FLNG project in Argentina in 2019, which enabled some Bolivian gas to be diverted from Argentina to Brazil. Estimated CAPEX US$250million.
There have been a number of LNG-to-Power initiatives in South Africa that aim to bolster power generating capacity and increase gas penetration in the energy mix. In 2019, the South African government awarded a 1000MW gas to power project in Coega, Port Elizabeth; however, Transnet also released a tender for LNG-to-power in Richard’s Bay, Kwazulu-Natal. Further with the huge gas discovery in the Rovuma Basin, in northern Mozambique which have underpin several LNG export projects, South Africa could leverage existing infrastructure to import additional gas volumes via the ROMPCO pipeline or import LNG from the international market.
In 2019, SPI and its partners submitted a bid to import LNG from Richard’s Bay for delivery via a virtual pipeline to a proposed modular General Electric gas-fired power plant in Johannesburg on the site of an existing power producer. The project has an estimated CAPEX of X.
With an estimated 150TCF recoverable natural gas reserves in the Rovuma basin, the Mozambican government along with several oil majors have been able to underpin a number of LNG exports projects.
The development of these LNG project has enabled the Mozambican government to implement a domestic gas allocation to improve natural gas utilization in Mozambique and reduce reliance on imported fuels. However, the domestic gas supply sources are located in the north of the country, ca2500 from the capital, Maputo, in the south of the country. The lack of pipeline connectivity across the country means that demand centers in the south must rely on natural gas in the form of LNG to meet their demand for power and distributed gas.
In 2020, SPI and its partners entered a closed tender to build and LNG to power project. The project would have an FSRU, pipeline and transmission line to supply 1GW to a large industrial player in Mozambique. The proposed project consisted on an LNG import terminal and distribution infrastructure. The project had an estimated CAPEX of US$3.2billion
Aruba, a Dutch municipality in the Caribbean, used to receive significant revenues from the Refineria di Aruba (RdA) is seen in San Nicolas, importing crude from Venezuela and refining into products for international sale. Since declines in crude exports from Venezuela due to the collapse of PDAVSA, the RdA refinery has remained idle and has fallen into disrepair.
In 2020, the Aruban government decided to re-purpose the refinery and leverage the deep-water port in San Nicolas to be used for other clean energy solutions, such as LNG.
SPI participated in that tender proposing a hub and spoke infrastructure model to import LNG into Aruba and neighboring Caribbean islands. The project had an estimated CAPEX of US$x