1. Liquid Natural Gas: Small-Scale Commercial Impacts & Opportunities
Tim Miller
Engineering Manager

2. The Bottom Line PA LNG benefits ALL industries in our state
Natural gas is better than diesel or fuel oil
Cheaper, Cleaner, Local
With small-scale LNG, cheap natural gas can be delivered to PA customers who have been ignored by the pipelines and utilities
PA is a prime location for LNG plants
Cheap gas supply
Under-served market
PA LNG benefits ALL industries in our state
Hybrid business model, can cut out middle men and offer price stability
Not dependent upon NYMEX prices

3. Frontier Natural Resources, Inc.
Independent natural gas producer
Based in Bellefonte, PA
Marcellus assets in central PA
Small-scale LNG producer
LNG plant operating in Northern PA
Producing about 5000 gal/day LNG

4. What is LNG? Liquefied Natural Gas
Methane (natural gas) cooled down to -260 °F
Cryogenic liquid
Methane becomes 600 times smaller in liquid form than in gas form
Higher energy density than CNG (compressed natural gas)
Allows natural gas to be transported via truck/trailer
Great option for areas where there are pipeline bottlenecks or pipeline is not available
Provides natural gas options for fuel consumers without pipeline availability

5. The Benefits of LNG Cost Savings Environmentally Friendly
The current rack price for diesel in PA is about $1.90/gal
This equates to $13.67/mmBTU
Natural gas wellhead price is around $3.00/mmBTU
LNG wholesale prices in PA are around $7.00/mmBTU
Natural gas is substantially cheaper than diesel, even with liquefaction costs included
Environmentally Friendly
Cleaner burning
Fewer CO2 emissions
No contamination if spilled
Domestically Produced

6. How It’s Made Natural gas must be cooled to the point of liquefaction
Cooling is mostly performed via expansion
Joules-Thompson Effect
Expansion of natural gas directly, or some other coolant gas (nitrogen, propane, ammonia, etc.)
Compression is necessary in order to gain pressure for expansion
Seems counter-intuitive, but it works
Natural gas is cooled to about -260 F
Gas condenses into a liquid
Stored in special cryogenic tank until ready for delivery to market

7. Making LNG: The Process
Mole Sieve – Cleans gas by stripping out non-hydrocarbon molecules
CO2, H2O, etc.
Gas stream needs to be majority methane (dry gas) to begin with
Compression – Increases pressure of gas in preparation for expansion
Some sort of external cooling necessary to remove heat added during compression
Ambient coolers, water coolers, etc.
Expansion – Rapidly cut pressure to create cooling
Power Generation – A lot of energy necessary to drive this process
Large electric generators necessary if not connected to power grid
Storage – LNG is stored in a vacuum-insulated tank
Keeps LNG cold much longer than normal tank

8. Small-Scale LNG
I hear about LNG in the news. Is this the same thing?

9. NO.
But it’s similar

10. This is the LNG in the news
Credit:

11. This is what we are talking about

12. Traditional LNG – Large Scale
Massive LNG plants built along the coast
Create LNG and load onto tankers for shipping across the ocean
Used as a method to send natural gas from abundant markets (Africa, Middle East, Australia etc.) to underserved markets (Europe, Japan, etc.)
Involves billions of dollars of investment on each side of the ocean
America building new LNG plants
Gulf Coast, Cove Point Maryland
When you hear about LNG in the news, this is usually what they are talking about

13. Credit: www.2b1stconsulting.com/lng/

14. Small-Scale LNG Land-based LNG is moved via truck
Serves local or regional markets
Virtual Pipeline
Method of transporting natural gas without a pipeline
Similar to CNG (Compressed Natural Gas)

15. Our LNG Facility Mansfield, PA Produce about 5000 gal/day of LNG
600 MCF/D of feedstock gas, of which 70% makes it to market
Larger plants have greater efficiency
Purchase gas from Tenaska Resources
Dresser-Rand LNGo Plant
Power – process is powered by an 800 KW natural gas generator

16. Water Cooler
Generator
Mole Sieve
Process Module
Compressor

17. LNG Markets Wholesale distributers Asphalt plants
Oil and gas – drilling rigs, frac fleets
Mining – rock quarries, coal mines
Manufacturing – paper mills, etc.
Transportation
Any business that burns diesel or fuel oil
LNG is “re-vaporized” prior to being burned in a furnace or engine
Vaporization is simple – just let it warm back up on its way to the furnace
Notice that all of the above markets are end-users except for one
Small-scale LNG allows us to cut out the middle men

18. Market Challenges – The Chicken or The Egg Dilemma
Limited LNG supply
UGI LNG plant in Temple, PA – primarily used for peak shaving
Nearest merchant plants in Indiana and Massachusetts
Market is still developing
Additional supply will help encourage market
Funding
Very difficult to get funds necessary to build an LNG plant
“Take-Or-Pay” contract
The mythical unicorn of the investment world
$5 million to $20 million necessary to build a small-scale plant
Funding partner is necessary – if you can find them

19. A Competitive Advantage
Cheap feedstock gas
Wellhead gas prices in Northern PA are discounted by as much as 25% compared with NYMEX due to oversupply and pipeline bottlenecks
Feedstock gas in Northern PA is significantly cheaper than other regions
Market proximity
Nearest LNG merchant plants in Indianapolis and Boston
Over 350 miles from Pennsylvania
Reduced transportation costs
Pennsylvania LNG is Cheaper and Closer!

20. LNG at the Wellhead – Taking Competitive Advantage to a Whole New Level
Stranded gas – Marcellus shale wells with no pipeline access
Cost of feedstock gas is substantially cheaper
Lifting costs = $0.60 to $1.00 per MCF
Gas cost is not dependent upon NYMEX price
Steady OPEX over time
With LNG made from the wellhead, we can offer long-term, fixed- price supply contracts to end-use customers!
No middle man between producer and consumer

21. Questions
Thank you for your time Tim Miller Engineering Manager