Gas 2023 Issue

mentioned that the cost of new LNG projects had fallen due to technological advances and supplier competition. In another report by Rystad Energy in 2021, it was men- tioned that the cost of LNG projects had fallen to around $450 per ton of LNG produced, equivalent to $4.04/MMBtu based on an assumed energy content of 22.6 MJ/kg. The report stated that the cost reduction was due to the adop- tion of standardised designs, the use of modular construc- tion techniques, such as with the new ssLNG plants serving the Caribbean Basin’s maritime shipping industry, remote mining operations in northern Canada and Africa, and the application of digitalisation and automation technologies. Therefore, based on these industry reports, it can be assumed that the new bar for future LNG projects is around $4/MMBtu, or even lower. A recent PwC study noted that by 2030, if the price of LNG costs between $3 and $4 per mmBtu with oil above $90 a barrel, LNG demand will increase more than four times what it would be if LNG cost more than $9 per MMBtu, with oil between $50 and $60 a barrel. To better monetise these differentials, competitive LNG producers are well into the development of fuelling solutions of all scales and scope. For example, new crude supply tankers, cruise ships, and passenger ferries are being built to run on LNG instead of low-sulphur fuel oil. Ammonia Fertiliser production is already in short supply, leading to impending global food shortages. With the world’s popula- tion expected to reach 9 billion people by 2050, the problem is not going away soon. Natural gas is a common feedstock for the production of ammonia, which is primarily used in the production of fertilisers. Traditionally the process of produc- ing ammonia from natural gas involves three main steps: • Steam methane reforming (SMR) : The conversion of natu- ral gas into a mixture of hydrogen and carbon monoxide (CO) using steam and a catalyst carried out at high temperatures and pressures and further discussed in PTQ Gas 2023 • Gas shift reaction : In this second step, the mixture of hydrogen and CO is treated with steam and a catalyst to undergo the gas shift reaction. This reaction converts the CO into CO 2 and additional hydrogen • Haber-Bosch process : The final step involves the synthe - sis of ammonia from hydrogen and nitrogen, produced by air separation units. This process occurs at high temperatures and pressures in the presence of an iron catalyst. Benefits The process of producing ammonia from natural gas can be made highly energy-efficient, as it involves the use of waste heat and the recovery of excess energy. Throughout the global market, natural gas is widely available, and there are established infrastructure and distribution networks that make it easy to transport and use as a feedstock. The ammo- nia produced using natural gas as a feedstock is of high purity and quality, making it ideal for use in the production of fertilisers. Nevertheless there are challenges: • CO 2 impact: The production of ammonia from natural gas plants generates significant greenhouse gas emissions, which contribute to climate change

• Safety considerations : The Haber-Bosch process is car- ried out at high temperatures and pressures and can pose safety risks if not properly managed • Market volatility : The cost of natural gas can be volatile, impacting the cost-effectiveness of ammonia production. Alternatives As the world continues to seek sustainable solutions to meet the growing demand for fertilisers and other ammonia-based products, the industry will need to address these bespoke challenges and find ways to improve the sustainability of ammonia production from natural gas plants. Utilising refin - ery byproducts could serve as a supplement or alternative to ammonia production from natural gas. Refineries produce a variety of byproducts, such as the hydrogen and nitrogen used as inputs for the ammonia production process. By producing ammonia as a co-product, refineries can cre - ate additional revenue streams from these byproducts to fur- ther mitigate risks associated with fluctuations in oil prices and demand, with the following benefits and challenges: • Lower carbon footprint : Producing ammonia by the Haber-Bosch process using natural gas is energy-intensive and produces a significant amount of CO2 . However, pro- ducing ammonia from refinery byproducts can have a lower carbon footprint, as it utilises existing infrastructure and can potentially reduce emissions • Capital investment : Producing ammonia requires sig- nificant capital investment in equipment and infrastructure, which can be a barrier for some refineries. Additionally, the cost of retrofitting existing refineries to produce ammonia can be high • Safety considerations : Ammonia is a hazardous gas that requires specialised handling and storage. Refineries must ensure they have the appropriate safety protocols in place to mitigate the risk of accidents • Competition from traditional producers : Traditional ammonia producers, such as chemical companies and fer- tiliser manufacturers, may have a competitive advantage over refineries with their experience and expertise in pro - ducing ammonia. While the production of ammonia by petroleum refineries is a relatively new concept, some refineries have already begun producing ammonia as a co-product. US-based Phillips 66 recently started producing ammonia as a co-product at its Ponca City, Oklahoma, refinery. Chevron Phillips Chemical operates a petroleum refinery in Borger, Texas, that produces about 1,000 tons per day of ammonia. The refinery uses a proprietary process called Aromax to produce high-purity benzene, which is then used as a feedstock for the ammonia production process. This method of producing ammonia allows Chevron Phillips to use a waste stream from the refinery as a feedstock, reduc - ing waste and creating an additional revenue stream. Flint Hills Resources operates a petroleum refinery in Rosemount, Minnesota, that produces about 1,000 tons per day of ammonia. The refinery uses a process called Kellogg Ammonia Technology (KAT), which utilises natural gas as a feedstock. The KAT process is energy-efficient and pro - duces high-purity ammonia, sold primarily to the agricultural

Gas 2023