It was back in the 1950s that the first ever LNG carrier was utilised, transporting liquefied natural gas from Louisiana in the U.S. to Canvey Island in Great Britain. This marked the beginning of a new era in the oil and gas transportation sector, which has seen tremendous growth ever since. Now, we are witnessing a similar transformation in the industrial gas transportation sector, which is being shaped to follow the same successful format.
According to recent estimates, the total valuation of this sector is expected to increase by 5.6% to $46.67 billion between 2023-2028. This growth is driven by the increasing demand for cleaner energy sources and the economic potential of the hydrogen market. As the urgency to address the climate crisis grows, and the call for the dissolution of fossil fuel use becomes louder, new players are entering the hydrogen market, attracted by the significant economic opportunities it presents.
The potential for a hydrogen economy is vast, with an estimated market size of $242 billion in 2023, which is expected to grow to $410 billion by 2030. Baker Hughes Co. estimates that around 200 million tons of new natural gas will be added in the next five years. If we consider the projects that are in the pipeline, waiting for their final investment decision, it amounts to 300 million tons – a 70% increase from today’s figures. To produce hydrogen from natural gas, carbon capture storage is required, where the CO2 emitted during its creation is geologically sequestered, thereby reducing atmospheric emissions.
The transportation of industrial gases must be economically viable; the value of the molecule or gas needs to be high enough to absorb the cost of transportation to the end user.
For example, liquid hydrogen trailers can carry approximately 4,000 kilograms of gas, allowing the transportation cost to be spread over a larger quantity. In contrast, the same carrier in a gaseous state would only be able to transport about 300 kilograms, which is a significant decrease in efficiency.
The price point of the gas also plays a crucial role in determining the means of transportation. Helium, for instance, due to its unique properties and usage, commands a higher price compared to other gases like nitrogen. Helium extracted from distant locations such as Russia or Algeria can be economically shipped to the U.S. The feasibility of transporting gases in a liquid form rather than a gaseous state is also influenced by the increased density of the liquid, which allows for more molecules to be transported in the same volume.
In the U.S., the principles of gas transportation are exemplified by the movement of gases like argon and hydrogen. Liquid hydrogen, with its various industrial applications, and argon, heavily used in electronics, metal manufacturing, and the medical sectors, are transported long distances to meet demand. For instance, argon is regularly shipped from Houston to California via rail due to its widespread use.
However, the situation is different for gases with lower industrial value, such as nitrogen and oxygen. Transporting these gases over long distances is generally not economically feasible. Exceptions may occur, such as during inclement weather or other emergencies, when these gases may need to travel longer routes, temporarily increasing their price point. Under normal circumstances, however, nitrogen and oxygen are only accepted at lower price points due to their lesser utility.
The cost of electricity is another significant factor in the transportation of gases. The liquefaction of gas is an energy-intensive process, with one estimate suggesting that the energy required for the liquefaction of LNG is around 15% of the total energy content of the LNG produced.
This implies that regions with lower electricity costs are more suitable for the liquefaction of natural gas than those where electricity is more expensive.
For example, producing argon in Texas and then shipping it to California is more feasible than producing it directly in California, where electricity costs are higher. Similarly, for the Caribbean, it is more economical to import liquid argon from Houston than to produce it locally. For carbon dioxide (CO2), rail transportation is the most cost-effective method, as a company can send around 70 tons of CO2 per rail car, compared to 20 tons per truck.
Despite the promising developments, challenges remain. The biggest concern for the liquefaction of gas is the environmental impact. The Paris Agreement requires emissions to decrease by 45% from 2010 levels by 2023, which means that the use of gas must decline by 5% every year until 2030. The recent EPA methane emission standards might also impose further restrictions on oil and gas production, which is essential for hydrogen production. Climate activism poses another challenge, as seen by the recent pipeline closure of CP2 in the U.S., which could become the next Keystone XL.
A recent analysis by the Department of Energy maintains that for LNG to be a viable source of energy, the methane emissions associated with it need to decline. While these emissions can be challenging to measure, technological advancements may assist in monitoring and reducing them. The Oil and Gas Climate Initiative (OGCI) has recently increased their efforts in methane monitoring.
In conclusion, the potential for blue hydrogen is significant, and its role in the energy transition, particularly for developing countries, cannot be overstated. Improvements related to the logistical challenges of transporting these industrial gases will be crucial for the world to embrace the energy transition in both letter and spirit.
The author of this article, Rudy De La Fuente, from Industrial Gas Consultants, is an accomplished commercial and technology specialist in the industrial sector, with an emphasis on industrial gases, including hydrogen, CO2 and other application niche gases. Additionally, he is highly versed in carbon capture utilization, related to the industrial and chemical sectors. •