Bio-LNG at Norway’s Skogn plant will double in 2022
A deal involving mixed-refrigerant technology from Finnish company Wartsila means biogas liquefaction at Skogn – the world’s biggest bio-LNG plant – will be doubled to 50 tonnes/day in 2022.
Wartsila has built bio-LNG liquefaction facilities in Sweden as well as delivering earlier biogas liquefaction facilities at the Skogn plant in Norway.
The equipment for its latest installation is due in May 2022.
The company expects to launch 30 more bio-LNG liquefaction plants over the next five years, each with an output of anything between 6-150 tonnes/day, said Maria Ortiz, the company’s biogas solutions sales manager in an email.
“Wartsila’s latest mixed refrigerant technology … is extremely reliable, and offers the lowest operating costs for liquefying biogas,” said Ortiz.
Bio-LNG is a small but growing sector, with rising demand in Europe’s truck and marine fuel markets.
Biomethane production was estimated to be about 3 billion cubic metres (bcm) in Europe in 2019, and could reach 95 bcm by 2050, according to a white paper from the European biogas association.
Wartsila has delivered four bio-LNG plants in northern Europe with capacities from 11 to 25 tonnes/day and has two more under construction, including one 300 tonnes/day project, said Ortiz. Located in Cologne, Germany, this plant will open after the Norway project, also in 2022.
The bio-LNG market could be further boosted by expanding biogas-to-power markets as Europe migrates to more renewable energy use, including in transport.
“The plan is full expansion around the EU zone,” said Ortiz, explaining that Nordic countries have had the most interest in developing a bio-LNG market to date.
National governments’ green agendas, coupled with low gas grid coverage in countries like Sweden, have made local bio-LNG production and truck transport systems more attractive. Enablers have included road and carbon tax exemptions, local investment in projects and government grants, among other incentives.
The stability of these economies and legal systems have also made the region an attractive area to test such a nascent market, said Ortiz.
Bio-LNG projects and supportive measures are also now being developed elsewhere in Europe. “Countries like the Netherlands, Italy and Germany have a quite interesting outlook,” said Ortiz.
For now, the price of bio-LNG relative to conventional LNG is a barrier to accelerating market expansion, including in many parts of Europe. Market participants say that on average bio-LNG is about four times as expensive as conventional LNG.
The price means that buying standard LNG mixed with a percentage of bio-LNG is how many suppliers hope to further open the market. Expansion could make production costs cheaper and prices more competitive over time, seeing more uptake in road and sea traffic.
Titan LNG – an LNG bunker supplier in the northern port area of Amsterdam, Rotterdam and Antwerp – is one of several companies planning to or already supplying bio-LNG to ships, with support from the European Union.
Energy majors such as Shell and Total are investing in more bio-LNG this decade, including in hubs like Rotterdam and Singapore. In the US, Sempra plans to supply more bio-LNG for marine fuel.
Although independent truck and shipping suppliers face logistical challenges mixing bio with conventional LNG for end customers, larger companies are investing in this infrastructure at key ports. At least one Titan LNG bunkering vessel is equipped to deliver both bio and conventional LNG.
As Europe works to design new legislation to meet stricter climate change targets for 2030, many legislators want the premium paid for new and lower-emission fuels to weaken.
Doing so, either by including shipping in Europe’s EU ETS market or mechanisms such as subsidies and taxes, could be feasible, although there are challenges when it comes to bringing fuel sold at international transport hubs under the trading scheme.
A variety of mechanisms that bring down bio-LNG’s price relative to other fuels would make bio-LNG more attractive for fleets based in Europe. International fleets with LNG-propelled tonnage could also buy more bio-based product.
Another sign that bio-LNG markets are on the verge of fast-moving expansion is the increasingly strong presence of competitors. In northern Europe, Shell has partnered with Nordsol and Renewi to build the first bio-LNG liquefaction facility in Amsterdam. Large LNG suppliers will seek routes to bio-LNG supply and support competition on a growing scale.
Nordsol boasts of fast-moving and affordable technology, and like Wartsila, is another company preparing to vie for more opportunities as supply grows by partnering with existing gas facilities.