Providing coverage of Alaska and northern Canada's oil and gas industry
February 2010

Vol. 15, No. 9 Week of February 28, 2010

Could LCNG cut cost of rural energy?

LNG barged to villages, converted to compressed natural gas could prove significantly cheaper than current fuels, proposal says

Alan Bailey

Petroleum News

Engineering firm PDC Harris Group has been pursuing a proposal for the trial use of liquefied and compressed natural gas, or LCNG, as an alternative to expensive diesel fuel and fuel oil for fueling furnaces, boilers and electrical generators in rural Alaska. The soaring cost of traditional fuels has been crippling the economies of rural communities, causing great hardship to rural residents who are dependent on these fuels for heating, cooking, lighting and transportation.

And, although some communities have been installing wind power systems as a means of alleviating high energy costs, traditional fuels still underpin base-load power generation.

PDC Harris Group originally came up with its LCNG concept as a potential project for funding under an Alaska Energy Authority state grant for rural energy, Michael Moora, general manager of PDC Harris Group, told Petroleum News Feb. 24. However, the existence of potential renewable energy sources close to the site of a proposed LCNG pilot project in the southwest Alaska town of Bethel disqualified the project from grant funding.

Presented white paper

Subsequently the vice mayor of Bethel has presented a white paper on the LCNG idea to a state legislative committee, to seek some seed money for the project, Moora said.

“The economics are clearly indicating an advantage for this fuel,” he said.

LCNG technology involves transporting natural gas as LNG to the community where it is needed. Then, by subjecting the LNG to pressure and raising its temperature, the LNG is converted to compressed natural gas, or CNG, for local storage, ready for distribution through a pipeline network to buildings and power stations.

The storage of natural gas in a rural village as compressed natural gas rather than LNG enables the use of conventional pressure vessels, without the need to maintain and operate the relatively complex cooling and storage system required for LNG storage, the white paper says.

“Compressed natural gas (CNG) is natural gas, pressurized and stored in welded bottle-like tanks at pressures up to 3,600 pounds per square inch,” the white paper says.

And, with a worldwide surplus of natural gas supplies and substantial U.S. natural gas resources, including gas shale resources in the Lower 48, natural gas prices are substantially lower than those of liquid fuels on an energy-equivalent basis.

“This (price) gap is expected to widen over the next decade as more unconventional sources of natural gas come on line,” the white paper says.

Commercially available

The hardware necessary to convert LNG to compressed natural gas is commercially available and the possibility of converting existing oil-fired and diesel-driven equipment in rural communities to the use of natural gas would make the implementation of an LCNG system relatively quick, while “maximizing the reuse of existing energy conversion systems installed in village homes, schools, community buildings and power generation utilities through the use of compatible, clean-burning natural gas,” the white paper says.

The PDC Harris Group’s proposed test in Bethel would involve delivering LNG by barge to the town, converting it to CNG and then using natural gas to fuel boilers and for space heating in four buildings owned by Orutsaramuit Native Council, the village tribal council for Bethel. The test would also entail using commercially available hardware and control software to convert an existing diesel generator for dual-fuel operation.

An LCNG-equipped barge, with cryogenic tanks designed for keeping LNG cold and liquefied during transit, would pull into a site on the Kuskokwim River in Bethel and transfer compressed natural gas into a shore-based storage facility.

“Our preliminary plan is to design a suitable storage and transfer system for a standard delivery barge, similar to those currently used by Crowley Marine,” the proposal says. “Fabrication will involve outfitting a new or surplus barge with cryogenic tanks, fill-system piping, off-loading piping and pumps and heat transfer equipment, sufficient to transfer and convert the LNG to CNG for storage in a pressurized cylinder at the village site.”

An alternative for the barge would be to obtain an existing, commercially available LCNG barge from Europe.

LNG sources

LNG for the project could come from existing LNG plants on the Kenai Peninsula or at Point Mackenzie, near Anchorage, the white paper says. But were the LCNG concept to work out, obtaining LNG from a future North Slope gas line might prove feasible for large scale use, it says. A proposed LNG terminal at Kitimat in British Columbia is another possible LNG source, and LNG is a worldwide commodity, Moora said.

Back in 2002, the state investigated the potential for delivering natural gas to Alaska rural villages, using LNG produced at an offtake point from a future North Slope gas line. At that time, Greg Bidwell, a petroleum economist with the Alaska Department of Revenue, concluded that this type of gas supply would be too expensive to compete with liquid fuels. However, Bidwell’s economic analysis assumed the construction and operation of an LNG plant and LNG storage facility next to the gas line in Interior Alaska, and the construction of LNG storage and regasification facilities at three remote, rural locations.

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