LNG Virtual Pipelines: alternative systems
TOGY talks to Osvaldo del Campo, CEO and President of Galileo Technologies, about virtual pipelines networks in Argentina.
What are the advantages of developing virtual pipelines in Argentina?
For many years we have been insisting that conventional gas pipelines have reached their limits in Argentina and many other places in the world. Nowadays in Argentina, it is impossible to connect new users without subsidies. Half the population does not have access to gas. It is not possible to connect all users to the network through conventional methods, since these have reached their maximum expansion levels. We need to find new innovative solutions and it has to happen now.
Constructing many new pipelines will take years. Producers need to monetise natural gas. Argentina is lucky to already have some of the infrastructure in place. Considering the current rhythm of investments, in a couple of years, we might be able to reach self-sufficiency and will have an excess of natural gas.
It is important to think about how to connect the rest of the system and how to make the most out of the existing resources. There are many exploratory wells and wells in remote areas that could be easily monetised. This is our aim, together with taking natural gas to different industries, power plants and populations that are outside the connected system.
The Virtual Pipeline is already operational and it is a reality. Virtual pipelines are the most efficient way for distributors to expand their coverage. We are supplying the Anchoris power plant with gas from wells that had been abandoned or put out of operation for different reasons. However, this is only the tip of the iceberg. We are already in talks with the Mendoza provincial government to bring natural gas to areas that are currently supplied with LPG.
Is the Anchoris power plant cost-competitive?
It is one of the cheapest plants in the system in terms of marginal costs in thermal energy because it uses natural gas during the whole year. It is not subject to the restrictions of gas pipelines and the plant can operate continuously throughout the whole year, which is a great advantage. Moreover, Anchoris is located in an area of great demand that can only be supplied through virtual pipelines.
Until now, the concept of distributed energy was associated with inefficiency. When you wanted to put a small power plant in an area with no pipeline, you could only use diesel. The use of virtual pipelines allows for a distributed energy plant to have the same cost structure as a main plant. It is a very important alternative.
How efficient is your virtual pipeline approach?
What we call Distributed Production of LNG is a very efficient system. In the US, we are working with a company that connects wells in the Marcellus Formation with industries. That is the same thing that we are doing here. We are supposedly competing with the most efficient natural gas pipeline network in the world. We are sometimes a better alternative.
For the producer to monetise its gas, it has to be compressed and Galileo does that. The gas then has to be treated, channelled, measured, injected, transported and so on. This entire chain generates a cost in which we can be very competitive in many cases.
Is there a limit in the distance that virtual pipelines can cover?
No, and the best example is [the province of] Corrientes, which is currently developing a connection plan through LNG. It is a province with relatively low annual gas consumption and one of the warmest areas in Argentina. The Gas Nea pipeline is nearby, but crossing the Paraná River to reach the city of Corrientes would cost millions of dollars. It is impossible to think of connecting a rice producer who is 50 kilometres away from the pipeline.
Galileo provides a solution that does not imply the construction of a natural gas pipeline network. We believe that any new user connected to the Argentine system does not [have to be connected] to a regular pipeline.
Moreover, we are expanding our platform. This 3.0 technology can transform fossil fuels and biogas into LNG whenever we want and without any technological adaptations. Nothing needs to be modified. We have the technology to condition the gas before it is transformed into LNG. Once it enters the virtual network, natural gas and biogas are the same.
Source: The Oil & Gas Year (TOGY) – 2017 Edition