LNG more viable than coal

While the dominance of coal as a feedstock in India is here to stay, the fuel shortages due to certain loopholes have started raising alarms. In such a scenario, LNG appears to be a more workable alternative.

India is already among the world´s largest energy consumers. Urbanisation, industrialisation, and the government´s commitment to 24 x7 energy access for all imply that our need for power will continue to grow. As Power Minister Piyush Goyal observed recently, ´I am confident that in the next seven years or so, India will be able to double its electricity generation from one trillion units to two trillion units.´ As a result of substantial reserves, coal dominates the country´s energy feedstock portfolio. The coal-fired generation accounts for around 60 per cent of India´s energy. The remainder is generated by a mix of oil, gas, nuclear, hydro and renewables.

While coal will remain important for the foreseeable future, use of other feedstocks will grow. Power generation from coal has suffered from fuel shortages due to cancellations in coal block auctions and other supply-side challenges. Additionally, the volume of fuel required to meet demand forecasts means alternatives to coal are necessary.

Natural gas will become increasingly important. Demand is forecast to reach about 713 million cubic metres (mcm/d) per day by 2029-2030, up from 227 mcm/d in 2012-2013. This includes the fertiliser sector as well as power generation.

Natural gas offers several attractions. Compared to the average emissions from coal-fired generation, natural gas produces half as much carbon dioxide, less than a third as much nitrogen oxides, and one per cent as much sulphur oxides- according to the US Environmental Protection Agency.

Power generation typically requires a lot of water, which as India faces another poor monsoon, is a serious consideration. The burning of natural gas in combustion turbines requires comparatively little water. However, natural gas-fired boiler and combined cycle systems do require cooling water.

Of the three fossil fuels, natural gas offers power station operators the shortest start-up time.

This means a gas-fired power station can quickly provide extra electricity when there is an increase in demand.

Currently, India has circa 24,000 MW of gas power stations constituting nearly 10 per cent of the nation´s generation capacity. Insufficient gas supplies pose problems for India´s gas power stations. To tackle this, the government recently approved a policy framework for mixing imported gas with supplies from domestic fields to fuel 14,000 MW of gas-fired generation capacity which is inactive due to lack of fuel. The framework should also benefit power plants with a combined capacity of 9,000 MW that are running at sub-optimal levels because of fuel shortages.

India holds less than one per cent of the world´s natural gas reserves, and tapping them has not progressed as desired. Lower than anticipated output from the KG-D6 block in the Bay of Bengal is not expected to change in the short term. As a result the country is seeking to increase significantly the amount of imported gas.

Importing gas via overland pipelines is not viable in the short term. Challenges include the need for greater stability in Afghanistan and the improvement of security in Pakistan, in addition to other issues concerning financing of the project and gas pricing. Successful completion of the Turkmenistan, Afghanistan, Pakistan, India (TAPI) pipeline will help, but gas is not expected to flow until 2018 at the earliest. This makes importing liquified natural gas (LNG) attractive. India is the world´s fourth largest LNG importer; according to Moody´s India´s LNG imports are set to grow more than double over the next five years to 24 million tonne per annum by 2020 from 10.7 million tonne in the financial year ended March 2014. Historically, the majority of India´s LNG, 80 per cent in 2012 and 2013, comes from Qatar; with the remainder sourced from Yemen, Nigeria, Egypt, Australia and Algeria.

The drive for LNG has two main infrastructure implications. One is the need to develop the gas distribution network, the cost of which has been estimated at `35,000 crore. The other is the need to increase the number and capacity of terminals that are able to receive and re-gasify tanker-borne LNG. India´s LNG import and re-gasification capacity is forecast to increase from current operational capacity of 17 million tonne per annum to around 55 million tonne by 2024-25. Existing receiving terminals are located at Dahej, Hazira, Dabhol and Kochi on the west coast. There are plans for new facilities at Mundra on the west coast and two facilities on the east coast.

Earlier this year, IOCL awarded the engineering, procurement, construction (EPC) contract for the first east coast terminal at Ennore to a Black & Veatch led consortium with KSS Petron India. In addition to onshore import terminals, there will be a role for ship-borne floating LNG (FLNG) infrastructure. A number of floating storage and regasification units (FSRU) are in advanced planning stages; our own Indian professionals have major roles in FLNG EPC Projects for Golar and Exmar.

Creating east coast terminals will help facilitate diversification of India´s LNG suppliers. Australia is likely to have a greater role. As a result of the development of shale gas reserves, GAIL has import agreements with two US exporters. These alone could amount to 11 per cent of India´s projected LNG imports, and further US-India export agreements are likely.

Co-locating new infrastructure offers a synergy between regasification terminals and gas turbine power stations by utilising LNG´s ´cold energy´ to chill gas turbine inlet air. This makes both regasification and gas turbine power stations more efficient and cheaper to operate.

The combustion turbine´s inlet air provides the heat energy to vaporise the LNG using a glycol circulation loop connecting LNG vapo¡risers and coils in the com¡bustion turbine air inlet ducts. This gives a significant increase in power station output and efficiency.

This synergy was demonstrated on a project near Ponce, Puerto Rico. Black & Veatch provided engineering and procurement services for a 507 MW combined cycle power station and integration with a 160,000 m3 storage capacity LNG terminal.

LNG for Smart Cities
India plans to create 100 Smart Cities in the next five years. Among the smart cities´ attributes is a 24 x 7 electricity supply derived from ´clean´ fuels. LNG can help meet these aims.

LNG has become a global commodity on a scale previously unprecedented. With the maturation of the market, LNG offers a reliable source of fuel. Natural gas has half the CO2 emissions of a conventional coal-fired power station.

The Smart Cities Mission envisages solar energy, including rooftop solar, playing a meaningful role in providing energy for the new urban centres. Renewable energy generally and especially distributed generation such as rooftop solar can have a profound impact on daily demand curves. The ability of gas-fired power stations to ramp-up more quickly than those using other feedstocks means they are a viable baseload option- able to respond quickly to increases in demand- for smart cities using power from renewable sources.

This article has been authored by Anand Pattani, Managing Director, Black & Veatch India. Additional reporting by Alap Shah, Turbine Technologies Manager, Black & Veatch.