The Caribbean would be the perfect region for LNGification. It has not happened yet which is a shame as the immaculate pearl it evokes in our phantasies has been tarnished. But things are about to change, very dramatically so.
Many years back, when I had first contact with LNG I was told that it was merely a transport mode of Natural Gas. In that sense, it was never to be more than an opportunity to bring gas to places that were not accessible by pipeline. It was generally assumed that the pipeline option must have been considered technically, economically or politically impossible or unattractive.
Things have come a long way since then. LNG became much more than just the physical embodiment of Natural Gas at very low temperatures. Natural Gas in the form of LNG had allowed many countries to dramatically improve their environmental footprint by replacing costly and dirty oil derivatives for comparatively cheap gas. Japan is not the very least of them.
Some regions on the global map look perfect for LNG. Instead, they have must have been left out. The Caribbean is just one of them. Few other regions in the world evoke paradise so perfectly with its white beaches, coconut palms, and crystal clear water bathed in eternal sunlight with hot rhymes, rum, and eternal party. It’s a major tourism destination and frankly, many of the countries there make a handsome living by catering to the clichés and the visitors it draws.
All that makes it even more astonishing for me that the region still produces the bulk of its electricity from some of the worst hydro-carbonaceous fuels available on the planet. Its residual fuel burning big style and lots of diesel generation.
Aside from all the filth this produces, which by the way tarnishes the Caribbean’s image as an immaculate pearl, it’s also hugely expensive to the local economies. With extremely limited opportunities for hydropower, no nuclear plants and frequent hurricanes making windmills and solar difficult, those islands had little choice so far.
Why in hell has no one thought of bringing Natural Gas to them? The biggest reason of all was the size of a single island. Taken alone, most islands are closed ecosystems each of their own. And each of them is also way too small for a traditional LNG receiving terminal to make any economic sense. The amounts of gas required by an island such as Guadeloupe or Barbados are so small, a single regular LNG cargo would go a really long way.
Pipelines are difficult to lay as the region is seismically active.
In order to serve those islands with today’s standard LNG catering, they would have to be able to take reception of a full LNG tanker cargo and here we are talking about volumes of 138.000 m³ of LNG or more in a single batch. That requires a tank that can hold these volumes at once and this tank would even have to be significantly bigger again as operational flexibility would have to come out of it.
Rare is the place that requires power in an even band. All seasonality, all structure in demand would have to come out of that tank. That would make for a pretty big tank in some cases. Those monsters are hundreds of millions of USD in immobilized investment. No wonder very few places were big enough for it to make sense.
That means really big CAPEX which would be grossly out of proportion with what a small economy could afford. A catch eleven. You imagine such a beast on every one of the myriad islands? Not enticing.
Luckily for the Caribbean, things are about to change significantly. Mid and small scale LNG distribution was in its infancy for the longest time. Now it becomes a practical reality. And incidentally with the enormous rise of shale in the US, a reliable nearby and comparatively cheap and stable source of gas is available. How does it work?
For a start, LNG needs to lose its “built for purpose” smell. Inventing the wheel from the scratch every time someone wants to put an LNG project together is not going to cut it here (and in many other regions of the world). I have posted on the problems generated by really big mega infrastructure before. If one wants to develop a region of many smallish pockets of gas customers (as islands are), he needs to develop a standardized system by kicking a small pilot to life.
The pilot is typically a small customer with very stable needs. This will not cost too much, will not raise too many alarm bells with the big boys and will nicely prove the concept. The glossiest brochures and the fanciest movies or presentations will not beat the convincing power of the real thing swimming right before your nose.
Besides, no one wants to be first.
So, now there is a small vessel plying the waters of the Caribbean delivering small amounts of LNG to a stable customer such as a CCGT. Hardly exciting. Others always want to imitate when something obviously works. And they also want it bigger, better, more flexible, you name it. It’s like the spark that made amino acids to recombine and kick-started life on the planet. Its the genesis of a new LNG world.
Once there are a number of similar “milk runs” something nice happens. As all of them are in close proximity and the different bits and pieces of the (not yet existing) system are similar, cooperation starts to make sense. The different fields of the steel pan all produce slightly different sounds. So will the different islands of the Caribbean all have slightly different consumption profiles and needs. That means something that loosely works together springs into place.
On the supply side, there will be small and mid-scale liquefaction terminals in the US, Mexico, Colombia, possibly even Venezuela. Trinidad and the large GOM terminals will start developing the capability to serve those markets. And there will be bulk breaking of large cargos from Africa and the Middle East.
Transport will not only be conducted with small vessels but also with LNG barges which work like packets of LNG that can be pushed and towed where you need them. They will double function as transport and storage medium. If those barges are standardized in size they can be filled with LNG and laid up for short-term storage. The LNG still remains transportable as it’s still not in the shore-based tank. If it’s needed somewhere else it can be brought there with little notice and effort and cost.
The whole disorganized system will function not unlike the data packets internet protocols are sending around. It’s a bit like a network, or a mesh of LNG supply points, flexible LNG storage and transport and of course at the end the reception points which can be shore-based installations or also barges with power generational capabilities on top.
There is no limit to what can be done in time but someone needs to do the first step. The internet started out as a very few interconnected computers as well. Time and innovation brought about the incredibly big and complex internet we know today. It was a long and chaotic development, not a big bang. Not even a straight line. And very little planning.
Oh, did I forget? In a previous post, I have not left a good hair on US shale gas as LNG export ambitions. With this little exception. US shale gas could allow the Caribbean to break its addiction to dirty oil. The world would get one of its pearls to shine again. But as usual, the path is a stony one.
This could work for many regions. The Caribbean makes a nice start.