Indian firms opt for small-scale LNG units to enhance gas supply

Are small-scale Liquefied Natural Gas (SSLNG) units the new kid on the block in India’s energy sector? Slowly but steadily, gas is emerging the favoured fuel in India, and, with public sector entities setting up SSLNG units, the transition is expected to be easier.

Earlier this year GAIL (India) announced one such project; more recently, public sector giants ONGC and IndianOil joined forces to set up a unit. This technology essentially aims to connect isolated sources and consumers who are yet to be connected to the natural gas pipeline network. Besides, it is cost effective.

In March, GAIL said it was setting up India’s first SSLNG unit at its Vijaipur LPG plant in Madhya Pradesh. In June, ONGC and IndianOil entered into a strategic partnership to establish an LNG plant near ONGC’s Hatta Gas Field. The ‘non-binding MoU’ for a Technology Demonstration of a SSLNG plant at Hatta, Madhya Pradesh, if successful, may see a repeat in other areas by the two entities.

An official statement issued by ONGC said, “ONGC and IndianOil have signed a memorandum of understanding (MoU) to establish a small-scale Liquefied Natural Gas plant near the Hatta Gas Field in the Vindhyan Basin. The establishment of the Hatta LNG plant will significantly enhance the Vindhyan Basin’s status, upgrading it from a Category II to a Category I Basin.”

The Hatta gas field is situated in Batiyagarh tehsil of Damoh district in Madhya Pradesh. It is approximately 45 km from Damoh town.

Official sources told BusinessLine that the production of gas would determine the LNG quantity; however, the initial LNG plant capacity is planned for 32 tonnes to 35 tonnes, with 45,000 SCMD gas, according to the MoU. “The plant capacity may be increased later after peak production. The LNG plant will cater only to Hatta Field,” the official said.

IndianOil is making a DFR study of the block, according to another official, who added: “The cost of the Small Scale LNG plant will be borne by IndianOil. ONGC will sell gas to IndianOil. The LNG plant will be operated and managed by IndianOil and further sale of LNG to consumers.”

It will take around 15 to 18 months after approval of the Field Development Plan or signing of sale agreements for the unit to be commissioned.

Asked the reason for setting up the unit when gas could be ferried directly, the official said, “There are no major industries in the vicinity. Secondly, gas pipleines are approximately 300 km away. Long distance transportation through pipelines will adversely impact our economics and requires PNGRB compliance. Being an unconventional and tight reservoir, cascading is not recommended. Additionally, Modular LNG is a novel concept.”

Clarifying that there will not be any re-gasification facility at Hatta, but use technology -- Liquefaction to cater to off-grid customers -- the official said: “The LNG plant shall be maintained and operated by IndianOil. ONGC will just sell gas on an “as is where is basis.”

According to another source, “The MoU aims to monetise stranded gas fields by establishing SSLNG plants, convert the natural gas into LNG and supply to customers by LNG road tankers. Under the MoU, the Vindhyan basin field in Madhya Pradesh has been identified for undertaking the pilot project. ONGC has submitted the development plan for this field to the Directorate-General of Hydrocarbons for final approval, while IndianOil has also completed the feasibility study of the project.”

According to the source, “ONGC has shared a list of many small fields. ONGC possesses more than 100 stranded small gas fields, where laying long pipelines is not viable and the gas has been flared or untapped for many years. To monetise the field, IndianOil brings in expertise through small-scale LNG. “