Establishing the Netherlands as core to LNG imports and distribution across Europe, Gas Access to Europe (Gate) LNG Terminal is critical to increasing security in the supply of gas, as well as meeting ever-increasing demands for LNG across the region.
Providing and delivering to European energy suppliers since its completion in June 2011, Commercial Manager , Stefaan Adriaens has ambitious plans for Gate’s expansion.
We spoke with Stefaan to see what Gate has in store…
So, what is happening at Gate at the moment?
The original idea at the final investment decision in 2007 was for Gate to be a baseload import and regasification terminal. From the start of operations in 2011 we already had large scale LNG capabilities, capable of dealing with the largest LNG ships in the world. Everything then was focused on the large scale elements of a terminal. Since then LNG prices have changed and LNG became more expensive then the gas prices in the gas grid, so this import model didn’t work well…
What we have done is looked into, identified and found a new model to see if it is better importing and re-ex35- Import and exportporting LNG. Called Gate 2.0, it’s much like a software update.
An LNG terminal firstly needs a certain annual number of ships to service the industry, which will keep everything cold. So we invested in an additional compressor to minimize the number of ships needed, and logistically this was very beneficial.
We then modified our existing jettie, so they could accept small scale LNG ships, so then they could import and export LNG. That was last year, and this year we created truck loading facilities. Our third dedicated small scale project will be operational half way through 2016.
What was nice was that we saw an almost immediate effect and difference from what we used to have. In the first half of 2013 we only had one ship in six months; now that is not where we wanted to be. That summer we gradually introduced newer services, and by the second half of 2013, we had an additional 22 ships. We are seeing that grow at the moment – continuing year to date we have completed more ships than in the whole of 2013.
We are busy with this increase, and next we are focusing on increasing truckloads. We launched tank truck loading in January, and have recently loaded our 100th truck but we have a capacity of 5,000 trucks yearly.
What are the current drivers behind expanding small-scale LNG projects?
It is always a combination of three elements. A regulatory push is important, and in general environmental issues. Of course LNG has to be readily available, and as the market was smaller a few years back this is improving with its steps taken nowadays. Another big element to consider is economics.
You also have to make the distinction between markets and importantly between regions, for example the differences in marketplaces between Europe and China.
In Europe you have the marine market, inland barges, LNG fuelled trucks and at the moment the biggest market for LNG, off grid applications. Each of these markets has its own dynamics in terms of regulation, availability and economics.
For example, if you look at the marine market and new legislation with fuel emissions, you can 1) install scrubbers which around 150 or so ships are going to opt for, 2) use LNG as an alternative fuel which currently around 120 ships are planning, or 3) use the more expensive MGO which so far most ships are opting for.
In Scandinavian countries, with pioneering companies such as Gasnor/Shell, Skangass/Gasum and AGA/Line, who have figured out how to deliver smaller particles of LNG for ships, we can see more initiatives and terminals; and with more LNG becoming available, it therefore as an industry becomes easier day by day.
Economically it is beginning to work, with people typically saying 5-7 years payback time from the use LNG. I would say the elements are strengthening each other. But this marine market is still very small though, with the overall market for green shoots at around 0.2-0.3mn tonnes per year at the moment, so this is very small.
It is better to be small but steady than have too much too soon, and all kinds of erratic movement. We have to always think logistically and put safety first. The LNG market is growing, and has increased at a steady pace since 2000. In 2000 we had the first ship on LNG and by 2008 there was a fleet of ten. By 2016, another 8 years later, it’ll be times ten, at around 100 ships. And then by 2024, in another eight years, they’ll be 1,000 LNG ships is my personal forecast. Then, that will be a nice, healthy market.
In China on the contrary, much growth in LNG trucks (around 70,000 trucks and buses run on LNG), and with the supply of such trucks prices get more competitive. So there are increasingly bigger and better options coming in the market, and opportunities for manufacturing of the trucks nowadays as well.
How does Gate work alongside Dutch and European energy policies?
It fits very well with these energy policies. The Netherlands is changing from a country managing production to one managing production in decline, and one that needs to get round this. That is why the country wishes to become a gas roundabout. For that you need an international connection to the international market, and that is where our LNG terminal construction comes in.
The security and supply has to be acknowledged as well. The environmental pushes by the EU have been very supportive for us. Because we qualify for EU subsidies, it really helps with the projects. It helps us gain traction and speed when developing a project when you have that buy in.
What will Gate look like at full capacity?
When I make my way to work every day, I pass a large crude oil terminal, and they have 35-40 million tonnes of throughput annually. In metric tons their 39 tanks holds the same amount of crude oil as all the LNG in terminals of Europe put together. It would be pretty good to be as big as that.
Of course, that isn’t very realistic. A realistic master plan would be that we could add additional truckloads. And next, to build another fourth small scale LNG jetty, now that would be very nice. If we could have an additional three tanks, to add to our original three tanks that would also be great. We are also starting to look at LNG transported by railway connections. It would be great to have all of that. We would really be a proper LNG hub if we made all of that.
Every European terminal is trying to make new roles for themselves, and be the next new LNG hub. We could also do with a small flavour of bio LNG. We are already a zero emissions terminal, so to further improve on that would also be really good.
We certainly in Europe have to look at the security of the supply of natural gas. The role of LNG could actually extend with the current situation. The infrastructure of the LNG industry is very, very expensive, but the investment is there.
You need to have a good dialogue with the market, and with your customers, as they determine your overall outcome really.