Techno-economic feasibility of liquefied natural gas in heavy industry applications

• Main Author: Salo, Olli
• Other Authors: Koskelainen, Antti, Insinööritieteiden korkeakoulu, Syri, Sanna, Aalto-yliopisto, Aalto University
• Format: Master Thesis
• Language: English
• Published: 2014
• Subjects: LNG; heavy industry; fuel switch; profitability; polttoaineenvaihdos; raskas teollisuus; kannattavuusanalyysi; Northern Finland
• Online Access: https://aaltodoc.aalto.fi/handle/123456789/13508

Heavy metal industry in Northern Finland is currently relying on imported liquefied petroleum gases and oil products in their production processes. Traditionally fuel chains have been outsourced to oil companies, which has made fuel procurement easy for the customer but reduces market openness and consumer’s options and negotiating power. Tightening environmental regulations and increasing costs of oil based products have turned the industry to look for alternative fuels. Most of the competitors in Central Europe are using natural gas in their processes. Natural gas pipeline is available only in Southern Finland, thus the only option to use natural gas is to import liquefied natural gas (LNG). The objective of this thesis is to review the technical feasibility of LNG in heavy metal industry applications and assess the economic viability of fuel switch from currently used fuels to LNG. The aim is to find out what kind of solutions are economically feasible and calculate an approximate end user price of re-gasified natural gas and net present value of fuel switch for different kind of consumers in terms of consumed volume and location. LNG is technically feasible fuel for most industrial processes currently using liquefied petroleum gases or oil products. Fuel switch requires investments to fuel transport and storage capacity and changes in fuel distribution and burner equipment. This thesis indicates that economies of scale have a major impact on the cost of imported LNG. All cost components in the fuel chain are heavily reduced when the size of operations is increased. From a consumer’s point of view, most profitable solution is to create a consortium, which has better possibilities to invest to a common LNG fuel chain including LNG carrier and import terminal. The fuel chain is optimized for the whole consortium, not for individual consumers, thus reducing the effects of individual consumption patterns and increasing security of supply and negotiation power of all consortium members. Raskas metalliteollisuus ...