Central Asians are a strange region out of the Natural Gas world. They have lots of it. They would like to export it. But that’s very hard. In the meantime, something much more worthwhile could be done with it.
Natural Gas from Central Asia is the stuff that gives more than one energy company executive officer wet eyes and goosebumps. There have been many proposals to bring this gas to well-paying markets but very little has been achieved – so far.
The reason seems clear. Central Asia is landlocked and also far removed from any market that can swallow these volumes reliably – and of course, also pay vanilla prices. Besides, the whole region is festering with animosities and distrust. Not really an environment where huge infrastructure projects that require multinational cooperation are implemented on a daily basis.
To be frank, multinational pipeline projects are already a challenge in supposedly business-friendly environments such as the European Union.
You will retort that the Russians had also built huge gas pipelines all across Eastern and Central Europe and it had worked beautifully. True, but when and under what conditions? At the time, the Soviet Union held sway over Eastern and large parts of Central Europe. That was hardly a multinational project. It was much more Moscow central planning – no objection possible.
Projects of that magnitude are more complex today. For a start, they need to make economic sense. Yes, you understand quite well. Lenders to projects want to see clearly that they will recoup their investment – with a little something on top. Otherwise, they don’t lend. I don’t blame them. That was not one of the first and foremost concerns of Soviet planners.
But that does not shock me. What I have problems understanding is that many of today’s big or big-gish energy companies seem to have the same Soviet reflexes. Money and profitability do not matter – it seems.
There is also a lot of stuff to worry about today like transit country issues, security issues, NIMBY and NIMTO issues, lots of global politics, you name it. Looking at the complexity, it is surprising that any such project ever gets the nod. But that’s another issue I will deal with in another post.
Before I stray too far. The topic is not why some things don’t work or are bad options. The really interesting one is what to do with all that nice Natural Gas under Central Asians’ feet.
If export is a very difficult option, maybe it’s a better idea to use some of that gas domestically for better effect. I am not talking about home heating or industrial processes although those are valid targets as well. No, what I am talking about is using Natural Gas as a replacement fuel for light (gasoline) and middle distillates (diesel and kerosene) as well as heavy residual fuels. All those fuels are byproducts of crude oil processing and they are all expensive – and dirty.
If Central Asia imports refined fuels in order to keep their vehicles chugging, they pay a heavy penalty for mobility. If instead, they would use their own product – namely Natural Gas under their feet – they could stop importing a priced commodity or start exporting it. In any case, exporting fuels that stay liquid under ambient conditions must be much easier than exporting fickle gas.
But how realistic is the use of Natural Gas as a transport fuel in that particular area? I will stay clear of CNG which is a pretty well-known technology used with much success in countries like India. CNG is fuel for rather smallish vehicles – the vehicle tanks are pretty heavy compared to the energy content they hold which makes it an impossible option for vehicles that need range and all-day action.
My focus is on heavy trucking and other heavy-duty vehicles. The better option for them is LNG. It’s comparatively easy to handle (no high pressures) and has good energy density (one just needs 1,6 times as much volume for the same energy content as diesel. A vehicle tank a little bigger than d diesel tank gives the trucker the same reach as he is used to with diesel.
Surprisingly, most people I talk with think that LNG is a technically difficult fuel option. They think that they are dealing with space technology.
Far from it. LNG is as safe and as simple as a fuel as diesel or gasoline is today. The technologies are decades old and well-proven and costs can be boxed in very reliably. Fuelling a truck with LNG is not more difficult than fuelling it with diesel. Admittedly, the handle looks different and you have to wear gloves to prevent cold burn. But that’s nothing the average truck driver no matter where in the world would not readily understand.
The funny quirk might well be that converting their Natural gas into LNG would be more profitable for Central Asians than trying to export it. The market might be too small to swallow all the gas there is and it will take some time to reach critical mass but the crazy developments in the US show us how quickly it can go. Central Asian Natural gas is cheaper on the wellhead than US shale. Fuel is more expensive on the pump. That makes a lot of economic common sense to me. No need to run the numbers.
Slowly, the spark would spread and ignite the whole region for LNG as a fuel. There are solid, low-cost mid-scale liquefaction trains that could be deployed at strategic points in the region in order to build up a network of fuelling stations. It could all start with fleet vehicles like commuter buses and garbage haulers. China has been doing it for a while now and it looks great to me.
Usually, going green costs money. This time, greenery might save the Central Asians quite some cash and vastly improve their quality of life. When in life are you offered the opportunity to wear the badge “Savior of the planet” and you make money at the same time?
Should Central Asians stop looking at export plans altogether? By no means, they should look at more than one way to use their natural gas.