Mediterranean

small scale LNG

becomes a reality

HigasSardiniaterminalin
Santa Giusta (Italy).

Mauro Evangelisti or many years, LNG has been used as fuel to generate

and Sara Evangelisti, F electrical power, provide domestic heating, and to provide
energy for industrial purposes. Usually, it is transported
from suppliers to users in large quantities by means of pipelines

Gas and Heat S.p.A., Italy, or very large gas carriers.

This industrial sector is frequently addressed by the business

look at the development community as large scale LNG.

In recent years, the use of LNG has also been envisaged for

of the Mediterraneans maritime propulsion, land transport, and the commercial and
industrial sectors. It has also been envisaged as a source of

first small scale LNG energy that can be easily deployed to stranded places that
cannot be connected to gas or electric power national grids.

storage terminal, located in This new industrial sector is often addressed by the business
community as small scale LNG.

Sardinia, Italy. On 27 January 2017, a Ministerial Decree for the authorisation

to build and operate a small scale LNG terminal in Sardinia, Italy,

87
 was granted by the Italian Ministry for Economic Development.
Once built, this will be the first small scale LNG terminal in the
Mediterranean area. Gas and Heat S.p.A, which specialises in the
design and in-house construction of cargo handling systems for
ships carrying liquefied gases, gained the permits for the special
purpose entity (SPE), Higas.
The maritime sector
Due to increasingly strict environmental regulations controlling
air pollution from ships (implemented through the International
Maritime Organization (IMO) Annex VI) and other local air
quality controls, as well as the potential for favourable price
conditions, the use of LNG as a fuel is expected to become more
widely adopted in the future.
Norway is currently leading the way (with Finland set to
follow), and is making significant investments in new facilities.
However, the construction of LNG vessel refuelling facilities is
also being planned in Rostock (Germany), Gothenburg (Sweden),
Turku (Finland), Teesport (the UK) and the Baltic States, set to
commence within the next two or three years. Furthermore,
France, Spain, Italy, Denmark and Greece also have plans for the
near future. For the time being, all LNG bunkering operations are
carried out via truck-to-ship, which requires the designation of a
specific bunkering area and the amendment of port regulations.
The land transport sector
The European Agency of Energy Regulators (ACER) forecasting
model shows that gas consumption in the land transport sector is
Figure 1. Gas and Heat gas fuel supply system.
Figure 2. Gas and Heat double wall vacuum insulated gas
fuel tank for an LNG fuel system.
88 March 2017
expected to play a significant role in the next decade, providing
that the appropriate conditions for market development exist
by 2025. The potential of CNG in road transport could hence
increase to 23.90 billion m, and LNG in road transport to
34.5 billion m, corresponding to 7.5% and 20% of the final
energy consumption in transport, respectively.
The construction of LNG terminals in the EU will be key for
the diversification of energy supply and for the adoption of
natural gas as fuel for vehicles.
LNG terminals
Permitting requests for small scale LNG storage terminals
have been increasing in the last few years all over Europe. The
Italian government too, being a Member State, is implementing
specific measures and regulations to create LNG storage
terminals and distribution points in Italy. In particular, the
Italian Ministry for Economic Development has set up a
national working group to develop an LNG strategy including
regulation, technical and economic aspects, as well as safety
and social impacts related to the use of LNG for maritime and
road transport.
In this framework, Italian company Gas and Heat has been
working in the last four years to design and build the first
small scale LNG terminal in the Mediterranean area, capable of
delivering LNG to energy-consuming small and mid-sized
plants, LNG-fuelled trucks and LNG-fuelled vessels, as well as
natural gas to the local grid.
It is important to note that supplying technologies for
small scale LNG does not mean simply downsizing
technologies applied in the large scale sector. Smart and
tailored innovations are required to generate the most
cost-competitive and sustainable solutions, increase efficiency
and safety, and eliminate unnecessary costs and complexities.
The chicken and the egg
conundrum
The main drivers to switch from oil to LNG are that LNG
is environmentally friendly and cost-effective compared to
traditional fuels.
Feeding and bunkering infrastructures are still in their
initial phase, while the European Community has implemented
its decision to support the use of LNG as fuel, with the
adoption of incentive policies and guidelines for both maritime
and automotive propulsion
On the other hand, since infrastructure availability is still
uncertain, shipowners are prevented from committing their
capital in using LNG as fuel
The result is a lack of investment, neither for bunkering,
nor for shipping sides. Obviously, there needs to be a solution.
In 2014, Gas and Heat, together with its partner,
CPL Concordia, established a new company called Higas, with
the aim to design and build the first small scale LNG storage
terminal in the Mediterranean area. The terminal was designed
to be located in Sardinia, where natural gas is not available. In
2015, a third partner was welcomed on board
Stolt Nielsen Ltd Co.
The statutory working scope of Higas has been focused on
the entire LNG supply chain for Sardinia along with all
complex variables, including the LNG sourcing, transport from
the loading terminal to Sardinia, the terminal there, and the
distribution to local onshore offtakers (both industrial and
civil).
 Sardinia Terminal layout
The main reason to site the terminal in Sardinia is because it The plant will store 9000 m3 of LNG, which is equivalent to
is the largest island in the Mediterranean Sea where natural approximately 4500 t of LNG. The terminal will be fed by a
gas is not available. The Regional Energy Plan for the period 7500 m3 LNG carrier built by Stolt Nielsen. The vessels cargo and
2015 2030 states that the objective, amongst others, is to gas fuel system will be designed and supplied by Gas and Heat,
guarantee regional users access to natural gas by 2020, at the which is also the engineering, procurement and construction
same conditions that the other Italian regions experience. Several (EPC) contractor of the terminal.
studies have compared the economic situation in Sardinia to The main features of the terminal are as follows:
the rest of Italy, and have concluded that the lack of accessibility z The LNG is stored in six cryogenic tanks, aiming to create a
to natural gas is one of the main weaknesses of the regions modular containment system, which can be easily subdivided
economy.
Sardinias lack of natural gas availability ensured that the
terminals business plan would be sustainable. Indeed, the major
input to the project feasibility study was the islands energy
demand. The actual offtaker forecast only considered bunkering as
a future additional opportunity.
Presently, Sardinia relies significantly on fossil primary
resources to produce electricity. The region is, in fact, an electricity
producer, with 14 535 kWh of gross electricity produced in 2012
and 2348 GWh exported.
The same is valid for the actual primary resources used to
produce civil and industrial heat. Approximately 60% of the civil
heat is produced by fossil resources, which are instead almost the
only source for industrial heat.
At the time of writing, 38 gas city grids were planned, but
only some of them in operation and few others under
construction. The Sardinian LNG terminal, located in the port area
Figure 3. Gas and Heat cargo tanks for liquid gas
of Santa Giusta, Oristano, will eventually be connected to grids in transportation lifting on board in Eregli, Turkey.
order to serve civil users.

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 Figure 4. General arrangement of 7500 m3 LNG carrier for Higas Sardinia terminal (courtesy of Marine Engineering Service).
when the users initial demand might be lower than total
capacity in use. Alternatively, it can be expanded when
bunkering might become a solid opportunity.
z The LNG is loaded onto tank trucks for inward distribution
to civil and industrial users, as well as to the micro gas
network with medium pressure users in the nearby area.
z The terminal is also capable of reloading the LNG to a
transport vessel for bunkering LNG-fuelled ships, as well as
loading satellite tanks located elsewhere.
z The terminal is located in a harbour area, where some
energy-consuming mid-sized industries are also closely
placed. In addition to this, the urban areas of Oristano and
Santa Giusta are a few kilometres away, and the existing
gas grids will be easily connected to the terminal. These
offtakers represent the ideal users of the boil-off gas
(BOG) that is naturally generated in the terminal LNG
containment system, thereby avoiding any energy waste
in reliquefaction and leading to relevant savings in both
CAPEX and OPEX.
z The containment system is designed as full containment
so that any vapour or liquid potential leakage shall be
collected into the secondary barrier and flared out, thereby
ensuring no gas leak is released into the surrounding
environment. The first barrier (in direct contact with the
LNG) is made of austenitic steel, whereas the secondary
barrier is made of concrete and perlite.
z The port of Santa Giusta, where the terminal is located,
boasts all of the necessary infrastructures to handle
mid-sized LNG carriers and bunker vessels while operating
for the terminal, ensuring compliance with all safety
requirements set by the fire brigade, port authority and
coast guard.
Building and operating permits
Prior to starting the construction of the plant, local and
national permits needed to be granted by the relevant
authorities. Presently, no harmonised permit realising path
exists in the EU and, therefore, specific country-based laws
needed to be followed.
Gas and Heat was charged by Higas with running the
preliminary risk assessment study (PRAS) and the
90 March 2017
environmental impact assessment (EIA) for the small scale LNG
terminal in Sardinia. The PRAS had substantiated the
application at the Regional Fire Brigade department for
obtaining the permit to build the plant (Nulla Osta di Fattibilit,
NOF), which was granted in June 2016. The EIA procedure was
concluded with the Regional Environmental Protection
department in July 2016. Finally, the procedure to obtain
authorisation from the Ministry to build and operate the plant,
under the jurisdiction of the Italian Ministry for Economic
Development, started on 17 May 2016 and was granted at the
end of October. On 17 January 2017, the Ministerial Decree,
issued by the Italian Ministry for Economic Development,
eventually completed the whole permitting procedure.
The experience gained by Gas and Heat in securing all of
the permits for the Sardinia terminal has been considered by
the involved authorities as the starting line for many similar
investments likely to come in the future. For this reason, the
companys assistance has been sought after by the Ministry
while drafting the pillars of the new law which will represent
the national rules on building and operating small scale LNG
storage terminals in Italy.
Conclusion
Despite the oil slump, investments in small scale LNG are
possible, providing some key factors underpin the project
properly. Furthermore, it must be considered that one single
terminal and the availability of LNG in a specific area will
generate a number of business opportunities in different
related sectors. For instance:
z The use of LNG as fuel will become more tempting to truck
fleet owners.
z Shipowners, particularly those of ferries in Italy, will
increase their investments in LNG-fuelled vessels (both
newbuilding and refitting of existing tonnage).
z Civil and industrial users will switch from oil/LPG to natural
gas, thus generating the need for building city grids and
containment/vaporisation satellites.
z Fuel stations able to deliver both LNG and CNG will be
built.
Nevertheless, it is important to note that other countries
will require different permitting realising paths.