Tuesday, May 27, 2014

The Logistics of Powering Industry Offshore with Clean, Economical LNG

By Greg Buffington

Crowley Maritime Corporation, through its wholly owned subsidiary, Carib Energy, has begun to transform how industrial companies in the Caribbean and Central America can power their facilities more economically and in a more environmentally friendly way. In September 2014, Crowley will begin delivering Liquefied Natural Gas (LNG) to industrial companies in Puerto Rico and the Caribbean, allowing these companies to become energy self-sufficient and gaining independence from their current utility providers, which typically use inefficient, costly and high-polluting fuels. The changeover to LNG for their boilers and power generation will afford customers, in most cases, the opportunity to reduce energy costs, which in turn will allow for investment in new, greener and more efficient equipment. Many customers are choosing to become independent of the electrical grid by installing Combined Heat and Power (CHP) as well as replacing high cost #2 diesel and dirtier #6 diesel with LNG, a more environmentally friendly solution for their energy plants.

Crowley acquired Carib Energy in May 2013, as both a strategic step into LNG and as a way to expand its growing petroleum and energy business. Florida-based Carib Energy, founded in 2010, was the first company to receive a small-scale, 25-year, LNG export license from the US Department of Energy (DOE). The permit allows for 140,000 metric tons of LNG transportation from the US into Free Trade Agreement (FTA) countries in the Caribbean and Central America. Carib Energy also has a pending application with DOE that would allow for Non-FTA exports of 365,000 MT. If granted, this license will also span 25 years.

Crowley, through its long-standing liner shipping and logistics business units, has established a logistical, maritime pipeline of natural gas flow from the U.S. to Caribbean and Central America industrial customers using US-sourced natural gas from the country's abundant, low-cost supplies.

As such, Crowley has recently announced the signing of a multi-year contract with Coca-Cola Bottlers of Puerto Rico to supply containerized, US-sourced Liquefied Natural Gas (LNG) to two of the manufacturer's plants in Cayey and Cidra, Puerto Rico. Carib Energy is also in negotiations with several other potential industrial customers that will soon convert to LNG in Puerto Rico and US Virgin Islands.

LNG is not a new fuel, having been in existence for more than 97 years, with the first US patents awarded in 1917. LNG is produced when pipeline natural gas is put through a cryogenic process that condenses the gas into a liquid form by taking the gas to -260F (-162C). It is in this liquefied form that Carib Energy can fill DOT ISO –IMO75 LNG containers to a capacity of 10,700 LNG gallons. The specialized LNG Tanks that Carib Energy has purchased will hold the LNG in a liquid state for 60 days from the time it is filled without any boil off which could cause a discharge. This is contrary to the large flat bottom tanks at the import terminals that have boil off that they must discharge daily.

In simplest terms, these LNG tanks act like a giant thermos bottle. There is a stainless steel inner tank that's wrapped with multiple layers of super insulation before being put inside a carbon steel tank, welded closed, and vacuum sealed. The vacuum process takes up to a week to pull all oxygen out of the void between the inner and outer tanks. This void area is the barrier that keeps the heat from the outside away from the inner tank holding the LNG. This allows the LNG to stay in this cold state without any possible build up greater than 70 psi, which would cause a discharge from the relief valves and a loss of LNG. In the event there ever was a discharge, the gas, which is lighter than air, would simply rise and quickly dissipate into the atmosphere.

The Crowley supply of LNG will come from existing utility peak shaving in the southeast and new, merchant LNG plants being built in northern and southern Florida by 2016. The LNG is produced, loaded and trucked in the LNG tanks from the liquefaction facilities for 240-400 miles before reaching Crowley's Jacksonville and Fort Lauderdale, Florida cargo terminals. The LNG ISO tanks will then be loaded and segregated in proper hazmat locations on Crowley vessels for transportation to Puerto Rico and other Caribbean islands, which will take three to six days. Once the vessel arrives at its destination port, the LNG tanks will be off loaded into designated areas to hold until Crowley's logistics group dispatches them to the customer's location.

Crowley customers will utilize multiple 15,000- to 18,000-gallon LNG vertical storage tanks at their plants depending on their daily volume consumption. They will also have onsite a regasification and pressure regulation skid and cryogenic LNG offloading pump. The LNG tank will be dispatched through daily remote monitoring of the LNG storage tanks, and with criteria and parameters that have been predetermined.

Crowley's logistics group will then pick up the LNG tank from its designated storage area at the port and have it driven to the customer's location. All drivers will go through training and certification according to DOT Hazmat regulations to certify they can carry an LNG container over road. Each driver will also carry a Crowley card that will identify this particular driver as holding certification to transport as well as certification to properly unload and discharge the LNG from the tank to the vertical on-site storage tanks.

The LNG tanks and the vertical tank installations are very clearly marked with complete instructions in both English and Spanish to ensure the drivers are able to follow complete and accurate instructions.

Once the driver does a complete discharge of the LNG, he will then close down all of the systems and give proper delivery documentation to the customer before returning to Crowley's port with the empty LNG tank. At that time, the ISO LNG tank will be placed on a northbound vessel and returned to Jacksonville where it will be driven to the LNG liquefier, refilled again and rotated back to the port. The average time for the complete rotation from fill to return to the liquefier is an average of 19 days.

To assure that customer's LNG needs are always met, Crowley will keep a 20 to 25 percent "safety stock" of full, LNG containers which can be made available in the event of a consumption increase or delay so customers do not experience an interruption of service.

The challenge for any company in the business of moving LNG in ISO tanks is the flange-to-flange logistics of inland, ocean and island movements in a timely manner to keep the flow of LNG constant to the customer. Crowley not only has the expertise but also the available assets in the U.S. and throughout the Caribbean and Central America to make this a successful business, while presenting savings and a greener energy alternative for customers.

Greg Buffington, who has more than 30 years of experience in the gas industry, was previously the founder and President of EFG Industries, a gas equipment distribution and LP Gas plant construction company. In 2010, he became the founding partner of Carib Energy, a company created to help move customers into a more friendly and more economical fuel. He can be reached at Greg.Buffington@crowley.com.