Liquefied Natural Gas (LNG) is currently the world’s fastest-growing energy source. By 2030, global LNG demand is expected to be almost double what it was in 2012, says a recent study by global consulting firm EY. Wärtsilä is responding to accelerating demand in Europe’s northernmost regions by building a brand-new LNG terminal in Tornio, Finland.
The EY report highlights the growing importance of natural gas in the world’s energy mix. According to the latest annual World Energy Outlook, published by the International Energy Agency (IEA), natural gas is the only fossil fuel whose share in the global energy market is growing – from 21% in 2010 to a projected 25% in 2035. Meanwhile, LNG growth is expected to be even stronger.
These projections bode well for Wärtsilä, which is one of few companies with the capacity to provide a complete range of LNG services, covering every stage of the gas chain – from the initial gas exploration and drilling processes, to production and liquefaction, as well as transportation, storage, regasification and delivery of LNG. Wärtsilä’s technology for gas solutions is ideal for producing electricity.
Largest of its kind
The brand-new Tornio terminal, which deals with the latter part of this process – namely storage, regasification and delivery, is set to be up and running in 2018. The terminal will be the largest of its kind in the Nordic region, supplying LNG to energy-hungry customers in the Finnish and Swedish mining, steelmaking and shipping industries.
“This represents a major industrial investment in this area of southern Lapland, known as Sea-Lapland,” says Timo Mahlanen, Senior Business Development Manager, Wärtsilä Power Plants. “The Tornio terminal will support the region’s transition from oil to gas and help reduce CO2 and sulphur emissions, in response to the stricter environmental demands in the north of Sweden and Finland.”
LNG is the clear, colourless, odourless, non-toxic liquid that forms when gas is cooled to -162ºC. Compared with other fossil fuels, LNG is clearly more sustainable, has 25% less carbon footprint, when used in the power sector compared with fuel oil, and 50% less carbon footprint compared with coal, 99% less sulphur oxide (SOx) and 85% less nitrogen oxide (NOx).
Remote reserves accessible to markets
The popularity of LNG is largely due to its accessibility. Although compressing and cooling gas until it becomes liquid, and then shipping it to customers, is considerably more costly than sending it down a pipeline, the fact is that LNG takes up 625 times less volume in its liquid form than it does as a gas. This makes it possible to transport it to customers who cannot be reached by a traditional gas pipeline, thereby linking remote reserves with markets – and remote markets with reserves.
The growth of LNG is also creating new business opportunities. Russia, which currently supplies less than 5% of the world LNG market, aims to have a 20% share by 2030. In the US, the shale-gas boom looks set to transform the country from a net importer to an exporter of gas, with experts saying that American LNG exports could reach 75 billion cubic metres by 2018. Meanwhile, the global LNG carrier fleet is growing too. In 2013, 16 new giant tankers entered the global fleet, followed by a further 31 last year.
Once the LNG tankers reach their destination, the LNG needs to be stored and, in some cases, returned to gas form, before it can be distributed to the end customer. This is where terminals such as the one in Tornio come into play.
“The Tornio terminal will provide a complete range of LNG services,” explains Leif Enlund, Area Manager Sales Proposals. “This includes storage in a 50,000 m3 tank, regasification, pipeline distribution, ship bunkering, trans-shipment, as well as truck and container loading to facilitate the re-distribution of the LNG in its liquid form.”
Wärtsilä was awarded the contract to develop the Tornio terminal by ManGa LNG Oy, a Finnish consortium consisting of four companies with local business interests: steel producers Outokumpu and SSAB, Finnish energy company EPV and Skangass, a Norwegian gas delivery company.
“Outokumpu will use the LNG in its stainless steel factory, while EPV will use it at a local power plant,” Mahlanen explains. “Meanwhile, SSAB will transport the LNG by truck to its steel mill located in Raahe and Skangass will provide LNG to other potential customers in the region, as well as for ship bunker fuel.”
The Tornio terminal represents a significant industrial and environmental milestone – both for Lapland and Wärtsilä.
“Our customer wanted one single supplier to provide a turnkey solution, including all the Engineering, Procurement and Construction (EPC) work and Wärtsilä was really the only company with the capacity and expertise to take it on,” Enlund says, adding that Wärtsilä has also been awarded an exclusive ten-year contract to provide all the service and maintenance for the terminal.
There is little doubt that the future of the LNG market looks bright – not only for land-based operations, but also at sea. For example, as more and more coastal areas, including the waters surrounding the Nordic countries, are converted into Sulphur Emission Control Areas (SECAs), demand for more sustainable fuels will only continue to grow. As LNG contains next to no sulphur, far fewer particulates and less carbon, it is one of the fuels that complies with the limits enforced by the SECAs.
EY predicts that global LNG capacity could double between now and 2025. Based on the LNG projects that are currently under way around the world, more than one third more LNG capacity will be added by as early as 2018 – representing a volume equivalent to China’s current consumption of LNG and pipeline gas combined.
“It’s our belief that oil has had its time and that time has passed,” concludes Mahlanen. “Gas will be the next leading fuel, for both land and sea transport.”