Consider Natural Gas

March 27, 2013
Switching to the fuel may make sense even for sites far from pipelines.

For a processing plant with high energy demands, switching to natural gas or adding to existing fuel supply capabilities could save money on operating costs, extend the life of plant equipment and provide greater flexibility in the face of market volatility.

But is using the fuel viable if a plant doesn't have ready access to a natural gas pipeline? That's the question many chemical makers must consider as operating costs rise and they contend with air-quality issues from the combustion of No. 2 fuel oil, whose emissions are higher than those from natural gas.

Many plant owners rely on a financial analysis for a go/no-go decision. However, it often provides a flawed perspective. A comprehensive feasibility study considers everything from equipment-specific requirements and regulatory expectations to cost of construction — and can yield some surprising and positive results.

In many cases, a natural gas product, such as compressed natural gas (CNG) or liquefied natural gas (LNG), that easily can be transported from a remote location and stored on site offers significant benefits. With the historically low prices of natural gas due in large part to shale gas development, associated natural gas products like CNG and LNG have become more economically attractive.

The first step in a comprehensive feasibility study is to gather information about the facility's current process heating requirements from available documentation and discussions with plant engineers and operators.

It's important to determine existing equipment-specific consumption for average and peak periods. Engineers then can convert annual usage rates (gal/yr) into daily and hourly ones. Multiplying these by the average heating value (Btu/gal) of the No. 2 fuel oil establishes the amount of energy that natural gas must provide and thus the amount of gas necessary, allowing for a proper comparison.

[Related: U.S. Heads Toward Energy Independence]

The calculated annual and daily LNG of CNG consumption rates then can be used to determine the projected range of annual and weekly LNG tank-truck deliveries necessary for the plant — and then to give a preliminary estimate of on-site tank storage or daily on-site trailer requirements.

Another important aspect of any prospective plant modification to a new fuel source is an assessment of regulatory requirements of federal and state agencies.

By strict interpretation, the Code of Federal Regulations (CFR) Title 49 Part 193 — Liquefied Natural Gas Facilities: Federal Safety Standards applies only to pipeline- and distribution-company operated LNG plants, not facilities used by ultimate consumers of LNG or natural gas. However, every state imposes additional restrictions and might mandate requirements for the siting, construction and operation of a proposed LNG facility. Note that CNG facilities are regulated under CFR Tile 49 Part 192 at the federal level.

Because of the possibility of varying interpretation, we recommend assuming that all the code requirements set forth in federal and state regulations apply. In many cases, the interpretation and enforcement of the federal standards is the responsibility of the state public utilities authority — which would dictate conservative measures for feasibility studies, to be followed up with active agency engagement in the project planning and execution phases.

Often, switching to natural gas offers clear environmental advantages. The combustion of natural gas produces considerably less CO2, SOx, NOx and particulate matter than the firing of No. 2 fuel oil. In one recent case, we found that switching to natural gas would require a review of the plant's air permit information because each of its stack's estimated particulate matter, SOx, NOx, hydrocarbon and CO emissions in t/yr are registered with the state. Yet, the switch to natural gas in that particular case could reduce CO2 generation by as much as 28%.

A feasibility study also should evaluate some site-specific considerations. In most cases, a plant operator already will have selected a preferred site for the proposed LNG facility that includes enough room to hold necessary equipment and appurtenances such as multiple cryogenic storage tanks and impoundment systems, a boil-off gas system, truck unloading stations, vaporization equipment and a cryogenic piping system. Upgrades to the site might include improvements to vehicle access drives to allow increased traffic and modifications to the fire protection system to ensure adequate water supply and pressure, as well as appropriate supervisory controls and data acquisition (SCADA) equipment, metering and security systems in accordance with federal and state guidelines.

Compared with LNG, installation of a CNG facility would require a similar feasibility study but likely would need less on-site natural gas process equipment.
With the basic information described above, engineers can estimate the order-of-magnitude cost range associated with the design and construction of the new facility and the estimated payback period.

The switch from No. 2 fuel oil (or other liquid or solid fuel) to natural gas as a plant's primary fuel source likely will require modifications to existing state permits and new building/construction permits.

At the federal level, there could be impacts based upon recent and ongoing regulatory developments at the Environmental Protection Agency, specifically with respect to the Mandatory Reporting of Greenhouse Gases and Title V Greenhouse Gas Tailoring Rule.

[Related: Prospects Brighten for Chemical Industry]

Using a plant's reported annual fuel consumption data, engineers can compare CO2 generation rates for both No. 2 fuel oil and natural gas for mid-range and nominal values. As mentioned earlier, the conversion to natural gas likely would significantly reduce CO2 emissions and offer the potential opportunity to trade on the carbon market.

However, within the context of the current federal regulatory and political climate, the voluntary carbon market is the only trading option at this time and the economics aren't favorable. Future developments in the creation of a mandatory carbon market could enhance the economic viability of this option.

Often, a forgotten element of a proposed conversion is the impact on current operations. The main plant access roads likely would be congested during construction. After construction of natural gas facilities on the plant site, multiple trucks could be delivering product on a weekly (or even daily) basis, with the exact schedule to be coordinated between plant operations and the trucking carrier.

Additionally, a plant likely would need to maintain a capability to utilize its current fuel source, e.g., No. 2 fuel oil, as a secondary fuel; this will require operators to periodically adjust combustion equipment to accommodate fuel switching. The existing firewater main may need modification to support the requirements of the natural-gas process equipment safety systems and also may require addition of storage and associated pump(s) to provide adequate firewater pressure or supply.

The next consideration is impact on operations staff. LNG poses highly specialized issues and requires personnel trained pursuant with Chapter 49 CFR Part 193 to operate and maintain the facility. Staff can receive such training or the plant can subcontract out the operations and maintenance of the LNG facility to an experienced contract energy company. Note that CNG facilities have less of an impact on plant operations staff.

One favorable aspect of a plant upgrade or retrofit for the local community is the additional dollars realized in the local tax base. On the other hand, abutters and other local citizens may raise questions about increased truck traffic or safety concerns. In the latter case, the well-documented excellent safety record of LNG plant operation and overland transportation of the commodity speaks for itself.

The conversion to or the addition of natural gas fueling capability is a process that requires a measured and methodical approach from a fiscal, schedule and public perception standpoint. Assess the permitting issues, technical challenges and other obstacles that may impact the ability to move forward. The political and regulatory climate clearly plays into this assessment. A full understanding of who the stakeholders are — within the organization and outside — also is important. Communication, education and outreach programs are the next step to inform the identified stakeholders about the project plan.

Once you're ready to move forward, the following design and contractual tasks can begin:
• developing a preliminary site plan;
• performing initial thermal radiation and vapor dispersion modeling;
• assessing truck routing and site access logistics;
• firming up supply and transport options, specifically with wholesale LNG/CNG suppliers; and
• determining the preferred procurement strategy.

In the current environment, the switch to natural gas can provide significant short- and long-term benefits to plants — even ones not near any natural gas transmission or distribution systems. Take the time to perform a comprehensive study of all aspects of the conversion. The results might surprise you.

STEVEN T. CARTY, PE, PMP, is a Rocky Hill, Ct.-based program manager with Kleinfelder. STEPHEN J. LYNCH, PE, is a Boston, Mass.-based platform discipline lead with M+W Automation. E-mail them at [email protected] and [email protected].

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