Synthetic Natural Gas (SNG) is a blend of Liquefied Petroleum Gas (LPG) and Air that is a direct replacement source for Natural Gas. Working on the fundamentals of fuel interchangebility, the LPG-Air mix/blending is an invisible application of LPG not known to many.

The oppurtunities SNG, also known as Substitute Natural Gas, provides include:

Using it as an industrial back-up (during the Natural Gas shutdown/curtailments).

Using it a base fuel to serve area not under service of Natural Gas.

Using it to suppliment Natural Gas during peak demands known as peak shaving.

SNG is made by mixing the vapour LPG with air to a ratio of approximately 45% air and 55% LPG. Why mixing? Becasue LPG is a highly concentrated source of energy, with 2516 BTU’s per cubic foot gross heat content. Which is too rich to be used as a substitute for natural gas without dilution. If the Natural Gas and SNG have an indentical Wobbe Index, they will produce equivalent energies and will combust in the same amount of air. Thus the mixer blends in just the right amount of air and LPG; producing a mix of specific gravity 1.31 (1480BTU/Cu.Ft) and Wobbe Index that will match that of the Natural Gas.

This interchangeable use of SNG and NG makes it a powerful tool to startegically manage Natural Gas shortage.  In the coming posts we will discuss the details of this strategy and technical aspects of SNG.

LPG, the domestic gas used by people in remote areas and when mixed with air (SNG) used by industries for Natural Gas back-up is facing an unjustified price hike during the last month. The Express Tribune reports the details as follows:

Despite the decrease in the Liquefied Petroleum Gas (LPG) prices in the international market, the LPG producers on Saturday increased prices by Rs6 per kilogramme and now LPG is available for Rs69 per kg, industry sources said.

The prices of LPG in the international market decreased Rs4 per kg but the local producers increased the price by Rs6 per kg, said LPG Distributors Association Chairman, Irfan Khokhar.

He said that Jamshoro Joint Venture Ltd (JJVL) is the major producer of LPG in Pakistan and it has increased the prices, compelling other producers to increase the prices.

He said it was the second consecutive increase in the last one month, and the industry, due to the unjust increase, has earned Rs150 million.

“The government should take it seriously and provide relief to the people,” he said.

After many years of discussions, politics and negotiations Pakistan and Iran signed the gas pipeline deal last month. To see a historical perspective, see the below image from 2005. India is no longer part of the deal. Also note the US reaction, via Dawn.

Construction on the pipeline should begin this year and be operational by 2014, said Abdul Basit, a foreign ministry spokesman.

Iran and Pakistan signed an initial pact in June last year and reached agreement on pricing in September. Under the terms of the final deal signed Tuesday, Iran will supply 750 million cubic feet a day of gas to Pakistan for 25 years.

The pipeline has been on the drawing board since the mid-1990s, when Iran and India signed a deal to transport gas through Pakistan. Dubbed the “Peace Pipeline” because of hopes it would lead to a détente between rivals India and Pakistan, the $7 billion, 2,700-kilometer pipeline project was stalled as the two nations almost went to war in 2001.

India dropped out last year amid continued security concerns in Pakistan’s Baluchistan province, home to a militant Islamist separatist movement, and over disagreements between the parties on pricing.

The scaled-down project could still face further delays. Militants blew up another gas pipeline in Baluchistan in August, highlighting the difficulties Pakistan’s government faces in operating in the poor but resource-rich province. Some details of the Iran-Pakistan pipeline also remain unclear, including how much it will cost and how the countries will finance the project given U.S. opposition.

The World Bank will provide $250 million for ‘Natural Gas Production Enhancement and Efficiency Project’ to increase availability and affordability of electricity by improving access to natural gas fuel for power generation through gas sector efficiency enhancements.

According to an updated project report of World Bank, the proposed project would comprise design and implementation of energy sector policy, regulatory, institutional and investment measures to reduce unaccounted-for gas (UFG) from the current level of about 8 percent to closer to international norms (around 1 percent), which would involve: (a) pipeline replacement to eliminate leakages and reduce technical losses; and (b) modernised metering and control systems. The investment component may approximately cut UFG in half, or better, depending on the project’s impact on gas theft.

It would reduce residential consumers’ gas consumption through pilot projects to replace old gas appliances (space heating and/or hot water) that have low efficiency (20-30 percent) with modern, efficient appliances (efficiency 50-70 percent), the report said.

To address the thermal efficiency issue concerning appliances in a broad way with impact beyond the pilot, it would design a gas usage optimisation strategy based on a combination of national priorities and economic costs and benefits, implementation efficiency, and conservation measures. It would enhance institutional capacity in petroleum sector governance, including the regulatory authority (Ogra).

The conflict between proponents of wind energy and those who oppose it is heating up in Texas. The growth of wind power has attracted powerful critics: the owners of natural-gas power plants.

The gas and wind factions have been clashing over the state’s operating rules for the past several months. The gas people say the playing field is tilted in wind’s favor; wind accuses gas of trying to snuff out the nascent wind energy sector.

The success of wind power in Texas has come at the expense of natural gas. If the wind build-out continues, by 2013 the amount of gas consumed to make electricity could fall by 18.5%, as gas plants sit idle for longer, according to Tudor Pickering & Holt, a Houston-based energy investment bank.

At the heart of the battle is a fight over the vicissitudes of wind itself. The wind industry argues that since it can’t control when the wind blows, it shouldn’t be held to the same rules that require everyone else to make payments when they fail to deliver promised power. The natural-gas generators say everyone should operate under the same rules, and lament that wind’s success is merely coming at the expense of another relatively clean energy source.

Similar fights are shaping up elsewhere. In the Midwest and Wyoming, fossil-fuel companies are questioning whether wind is getting too many advantages from government.

The lure of harnessing the wind has attracted big players. Wind-farm developers include NextEra Resources, a division of FPL Group Inc., the giant Florida-based power company, and E.On AG, the huge German power company. General Electric Co. is a major manufacturer of 400-foot-tall wind turbines and United Technologies Corp. recently entered the field.

Via: WSJ

Karachi Electric Supply Company (KESC) recently inaugurated its new 220 MW (megawatt) Combined Cycle Power Plant located in Korangi. The plant, owned and operated by the KESC, has been completed with an investment of Rs 16 billion. It consists of four latest, state-of-the-art high-efficiency gas turbines, one steam turbine and other plant equipmentNote that Abraj Capital assumed management control of KESC in late 2008. The current deficit of electricity in the system stands at around 3,500 megawatts. The KESC has started pre-construction activities for a new 560 megawatts combined cycle power plant at Bin Qasim which would be functional in one and half year

All the big shots, Prime Minister,  Sindh Governor Dr Ishratul Ebad Khan, Chief Minister Qaim Ali Shah, Education Minister Mazharul Haq and others were also present on this occasion. The Prime Minister said that a mix of moderate generation capacity projects like Duber Khwar, Jinnah Low Head Mianwali, Nandipur, 3 Chashnupp, 121 Mega Watts Allai Khwar, Bhikki Power Plant and Liberty Power Tech are some of the prominent power projects in thermal, nuclear and hydro sectors.

Prime Minister said that theft of electricity and non-payment of dues are the biggest reasons of bringing this sector under crisis. “It is a vicious cycle which affects investment in the system and needs to be broken through building better coordination among all stakeholders in the city of Karachi,” he added.

“During the calendar year 2009, we ensured commercial operations of Attock, Atlas and Nishat power generation plants adding 581 megawatts to our national grid”, the PM said, adding that the Cabinet in its meeting of 27th January, 2010 had approved eight RPPs of 1156 megawatts which are at advance stages of implementation and are being keenly pursued for attaining commercial operations within the existing calendar year.

He said he hoped that when the new IPPs and RPPs would become operational and add 1737 megawatts of power to the national grid, it would provide considerable relief to the people of Pakistan. He urged the KESC to become a role model, attracting more investment in power sector and further enhance its generation capacity to meet the power demand of Karachi city.

He said that the current deficit of electricity in the system stands at around 3,500 megawatts. “We are working on a fast track basis to get the required power deficit bridged and today’s occasion is a proof of the fulfilment of our promise to the people of Pakistan”, he added.

The KESC has started pre-construction activities for a new 560 megawatts combined cycle power plant at Bin Qasim which would be functional in one and half year, he said, and added that Karachi which was famous for being city of lights would be free from load shedding when this project becomes operational.

He said that the scope of the government’s economic management should be focused on implementation of such policies which catalyse the economic activities of the private sector. The government alone cannot take upon itself the responsibility of economic development. “We believe in private sector resource mobilisation, which is evident from the 1994 Power Policy, and the subsequent policies, that have primarily evolved around this policy”, he added.

“We all are aware that the mere opening up of the economy is not sufficient to attract foreign investors unless the policy framework is fully supported by institutional arrangements. We have to further transform the investment culture, both at the official and the private level so that it is not only investor-friendly but perceived as such”, he said.

He suggested that KESC may enhance its partnership potential with PPIB, Pepco, Wapda, Aedb and Nepra to attain optimum generation capacity which finally does not require Pepco to supply power to KESC. He congratulated the KESC management and Abraaj Group on launching the combined cycle power plant and said that he would urge them to continue further investment in Pakistan.

Minister for Water and Power Pervaiz Ashraf said that the government is committed to resolve the issue of shortage of power in the country. He appreciated the management of KESC for setting up new power generation plants that would help to overcome this serious issue.

CEO of KESC Tabish Gauhar said that KESC is one of the world’s largest integrated utility companies, responsible for generation, transmission and distribution of electricity to 2.2 million customers spread over an area of 6500 square kilometres covering the entire city of Karachi (with 18 million people) and stretching all the way to Uthal, Bela and Vinder in Balochistan and Gadap and Gharo in Sindh. It was incorporated nearly 100 years ago in 1913 and was privatised in November 2005.

He said that over last 18 months a record equity of $280 million had gone into KESC, including $206 million from Abraj Capital and the rest from the government of Pakistan proportionate to its 25.5 percent stake in the company. Another $220 million of equity will be injected over the next couple of years, taking the total to $500 million over a period of 3 years.

Abraj Capital assumed management control of KESC in late 2008. He said that over the last 18 months, 450 MW of additional generation capacity had been added to the network (including this 220 MW Korangi Power Plant). Another 560 MW Power Plant is under construction at Bin Qasim to be commissioned by 2012 and at least 3 MoUs worth 1000MW have been signed for coal based power plants, including one using indigenous coal from Thar.

He said on the transmission 6 new grid stations have been added to the network and another 3 are expected to be energised before the year-end. “In distribution, we have completed the first two phases of the 4-phase model town project to augment and strengthen our LT network by adding 500 new PMTs, 140 new feeders etc by the summer of this year”, he said, and added: “We have also upgraded our call centre to 350 agents, launched a series of new integrated business centres to provide one-stop solution to our customers, and also initiated a system of weekly Open Kutcharies for our customers across the 18 towns of Karachi”.

He said that over the past several months the KESC has been able to provide uninterrupted power to the major industrial zones of Karachi such as Korangi and Site and to various sensitive installations such as the Karachi Water and Sewerage Board, whilst following a fixed three hours load shedding schedule for the residential and commercial customers on working days (except on Sundays and public holidays when there is no load shedding at all).

“Due to widespread theft of power and non-payment of electricity bills, we are simply unable to provide power and best in-class service to all our customers”, he said, and added that the actions and inactions of the significant minority adversely affect the vast majority of the customers who are law abiding and pay their bills on time, in the form of load shedding and breakdowns.

He said that affordability is another issue for low salaried class and requested the government to seriously think about the pace at which tariff subsidies are being withdrawn and to also revisit the pricing regime for furnace oil, which has increased from Rs 5000/ton to Rs 50,000/ton over 10 years and natural gas, which has increased nearly 4 times over the some period.

Likewise, the issue of Circular Debt plaguing the entire energy sector is affecting them, too. “We have over Rs 50 billon in receivables from various government and public sector entities and, in turn, approximately Rs 35 billion in current dues to various suppliers including Wapda and SSGC.

The issue needs to be resolved as a matter of priority. He said that over the last 18 months, it had paid over Rs 100 billion to various suppliers including Wapda, SSGC, PSO, Gul Ahmed, Tapal, and Kannup. He said that gas supply is another major concern, as the KESC received at least 40 percent less gas than committed in this winter. “We will require an additional 130-150 mmcfd of gas for the new 560 mw power plant due to be commissioned in 2012″, he said.

Federal Minister for Petroleum and Natural Resources on Friday told National Assembly that the government was making serious efforts to end the load shedding of gas from next year. During question hour, he informed the house that the government was giving incentives to the oil and gas exploration companies for ending load shedding from the country.

Pakistan and Iran are expected to sign an agreement on Iran-Pakistan (IP) Gas Pipeline Project in Turkey during March 8-10, 2010. After signing of the project between the two countries, it would be completed within a period of 3-4 years. This would resolve all issues relating to gas load shedding in the country due to smooth supply of gas from Iran on regular basis, he added.

Responding to a question, he said the government is working on a project to import Liquefied Natural Gas (LNG) to meet the domestic requirements. It would also be instrumental in checking shortage of gas. He said that the load management of natural gas was formally observed for the first time on December 1, in 1982. However, due to lack of proper planning in the past the problem could not be resolved. Load management of gas could only end permanently after matching of supply and demand.

Government of Pakistan awarded a contract to GDF Suez to supply 3.75 million tons per annum of liquefied natural gas (LNG) for a period of 20 years. This is the country’s first gas import project and efforts are still being made to allow Shell to import additional 2.5 million tons during the same period.

The project envisages supply of up to 500 million cubic feet per day of gas. The price of LNG imported from GDF Suez will be $1.8 billon lower than the rates offered by Shell in the first six years, the import price will be around $9.3 per MMBtu said, G A Sabri, senior petroleum ministry official.

GDF Suez will start supplying the gas to Pakistan by Oct. 2011 according to the initial six-year contact. . The company may also supply 1.5 million tons of LNG annually for the following 14 years under the contract, G.A Sabri said.

Via Ibrahimsajidmalick.com

There are some new techniques which help to tap into natural gas reserves but there is public concern about damage to environment. A mounting backlash against a technique used in natural-gas drilling is threatening to slow development of huge gas fields.

The U.S. energy industry says there is enough untapped domestic natural gas to last a century—but getting to that gas requires injecting millions of gallons of water into the ground to crack open the dense rocks holding the deposits. The process, known as hydraulic fracturing, has turned gas deposits in shale formations into an energy bonanza.

The industry’s success has triggered increasing debate over whether the drilling methods cause damage to the environment.

Today, the industry estimates that 90% of all new gas wells are fractured. Shale—a dense, nonporous gas-bearing rock—won’t release its gas unless it is cracked open, and other types of formations also produce more gas when fractured. Easier, more porous formations, which don’t require fracturing, were tapped in earlier decades and have largely dried up.

As the industry has honed its techniques, hydraulic-fracturing operations have become more complex, requiring far more water and chemicals—millions of gallons per well, rather than tens or hundreds of thousands of gallons in the past.

Environmentalists and some community activists fear hydraulic fracturing could contaminate drinking-water supplies. They point to recent incidents that they say are linked to fracturing, including a water-well explosion in Dimock, Pa., and a chemical spill here in Shreveport.

The industry says fracturing is safe and argues that there have been only a handful of incidents among the large number of wells that have been fractured over the past 50 years. “Hydraulic fracturing has been used since the 1940s in more than one million wells in the United States. It’s safe and effective,” says Exxon spokeswoman Cynthia Bergman.

Even if the industry can make its case, it still must deal with the public-relations and political fallout from some of the questionable incidents.

Via: Wall Street Journal