(434d) Optimizing the Logistics of Compressed Natural Gas Transportation by Marine Vessels

Natural gas transportation over sea by ship currently accounts for about 1/3 of all gas transported. Liquefied natural gas (LNG) is the only technology employed to reduce the volume of transported gas sufficiently (roughly 600 times) for meaningful quantities to be transportable by LNG tankers. To accomplish this volume reduction, LNG relies on gas liquefaction by refrigeration to about -260°F. Even though LNG is a long proven technology, interest has been recently rekindled in compressed natural gas (CNG) as a potentially economical alternative for marine transportation of modest quantities of natural gas over relatively short distances over sea (Wood, et al., 2008, Marongiu-Porcu, et al., 2008, Wang and Marongiu-Porcu, 2008). CNG reduces gas volume about 200 times through compression (and possibly mild chilling but without liquefaction) (Sea NG Corporation, 2008, Enersea Transport LLC, 2008). As a result, LNG and CNG transportation systems have quite different structures: LNG requires a liquefaction terminal at the shipping point and a regasification terminal at the receiving point for storage and supply to consumption. To keep natural gas liquid during transportation, LNG ships insulate liquefied gas in what are essentially specially designed large thermos containers. CNG, on the other hand, requires only minimal facilities at the shipping and receiving terminals, while it relies on a fleet of significantly larger volume (capacity). CNG vessels are designed to keep gas pressurized during transportation, and may also serve as temporary storage facilities during the time gas is supplied to consumption. Therefore, the cost structures of LNG and CNG transportation systems are also quite different: Ship building accounts for about 40% only of all capital expenditures (liquefaction and regasification facilities accounting for more than half of the fixed cost) in LNG systems, as opposed to 80% or more for possible CNG systems. Operating expenditures are similarly quite different as well, because of the high energy cost of liquefaction compared to compression. Even though the preceding relative cost numbers are widely quoted, cost estimates for CNG transportation systems are based on rough calculations about CNG fleet capacities required to transport natural gas at a certain rate. The main purpose of this presentation is to suggest that capital expenditures on a CNG fleet can be substantially lowered through selection of the logistically optimal number of ships, ship capacities, and itineraries. The systematic design of logistically optimal CNG transportation fleets could have far-reaching implications in terms of reestablishing the relative advantages and disadvantages of LNG and CNG marine transportation systems. It could also render economically viable the delivery of natural gas to places for which such delivery would otherwise seem prohibitively expensive. Finally, it could influence the future development and use of natural gas resources and transportation technology. In this presentation, a brief overview of marine CNG transportation is provided first, followed by presentation of the main results of this work. Specifically, optimal logistics of CNG transportation fleets and itineraries are determined in terms of required rates of natural gas delivery and travel distances. General principles are uncovered, most important of which is that maximum capacity should not be the target for the design of CNG vessels. Rather, a large number of smaller vessels is preferable, by being closer to the theoretical limit at the continuum, namely a two-way pipeline. These results are illustrated using a number of examples and a case study on the Carribean island countries. Suggestions for future development involving full economic optimization are made.