Solving the energy conundrum via LNG

Recently while flipping through the archives section of a newspaper, I came across a 1968 print advertisement of the then Karachi Gas Company. The body copy of the ad confidently boasted, ‘Sui Gas is always there, whenever you need it. Turn on the tap and there is inexhaustible supply.’ It seems that two things were happening back then. Either our energy mandarins were too complacent about the inexhaustibility status of natural gas or were not far-sighted enough about the future. They did not foresee that by 1980s, consumption of natural gas in Pakistan would spread literally like a wild fire.

Initially gas catered primarily to domestic demand. Growing population along with rapid urbanization then led to a massive increase in the consumption needs of commercial and industrial customers too. And if this was not enough, the CNG sector showed a phenomenal growth with Pakistan becoming one of the top CNG consuming countries in a matter of few years. All these factors badly disturbed the demand-supply equilibrium of natural gas.

In order to augment gas supplies and bridge the ever widening demand-supply fissure, transnational pipeline schemes such as Iran-Pakistan-India which was later reduced to Iran Pakistan or IP, and Turkmenistan-Afghanistan-Pakistan-India Pipeline (TAPI) projects were embarked upon by the previous governments. These projects, however, moved at a snail’s pace generally due to security reasons and international sanctions.

A new type of gas field All this time, while the disequilibrium showed no sign of easing off, Pakistan’s policy makers thankfully started seeing the fast track import of LNG as the most viable short-term solution for Pakistan’s gas and energy needs. In 2004, for the first time, a strategy to provide Pakistan with an alternative energy resource was formulated. As the country found out to its dismay, at least six attempts to work out a feasible plan to import LNG were made, yet each fell by the wayside, for one reason or the other.

By mid-2010s, the natural gas situation was getting worse. Pakistan’s constrained demand for natural gas had reached 6 billion cubic feet per day while the local gas production hovered around 4 billion cubic feet per day. Long queues on CNG stations, gas-fired industries going out of business, power outages and the resulting growing public angst were the headline news. Something had to be done and done fast.

In 2013-14, to bring in LNG into the country, the government finally opted for an unbundled approach. This approach basically involved separating LNG re-gasification terminal from LNG procurement. The good thing was that the approach worked. A multi-pronged strategy that included a fast track import of LNG, installation of LNG terminals and laying of a dedicated gas transmission pipeline, was followed.

Pakistan was now seeing LNG on the horizon. To ensure this scenario, the stakeholders including the public and private sector companies had two challenges in front of it. One, to import LNG into the country and another to build an enduring LNG infrastructure. In April 2014, SSGC and Elengy Terminal Pakistan Limited (ETPL) inked an LNG Services Agreement that included the construction of Pakistan’s first LNG import terminal at Karachi’s Port Qasim by ETPL. The LNG Terminal with a capacity to re-gasify up to 600 mmcfd LNG, was built in a world record time of 335 days. A new type of gas field was taking shape in Pakistan and it was called LNG. The dream was finally turning into a reality.

March 26, 2015 marked a new dawn for Pakistan’s economy when the country became a member of the exclusive LNG Club. Exquisite, a Belgian flagged Floating, Storage, Regasification Unit or FSRU ship sailed from Qatar’s Ras Laffan Port into the shores of Port Qasim in Karachi, carrying 148517 cubic meters of LNG cargo. The first ever LNG cargo had arrived. Since then, 137 LNG cargoes have so far been received for onward transmission of RLNG to sectors that are in dire need of gas.

Dedicated infrastructure To effectively utilize the Elengy Terminal’s capacity to transmit 600 mmcfd RLNG to the required power, fertilizer and CNG sectors, a dedicated pipeline infrastructure needed to be set in place. In 2014, the federal government tasked SSGC and SNGPL to lay down a transmission pipeline from Karachi to Punjab to facilitate gas transportation to LNG-based power plants and CNG filling stations and commercial and industrial users.

The same year, SSGC started working on the biggest infrastructure development project ever undertaken in SSGC’s history. On the other hand, SNGPL got down to carried out a massive system augmentation of its own, comprising 1,044 km long pipeline of 16″ to 42″ dia.

Considering their vast magnitude, SSGC divided its project into two parts. The first stage saw SSGC engaging in the construction of loop-lines for supplying 400 mmcfd imported RLNG to SNGPL along with a swap arrangement to get indigenous gas from SNGPL. In order to boost gas pressure while it flows through the lines, two old compressors, each of 120 mmcfd volume, were relocated from the Company’s Dadu facility and brought to HQ-2 Daur. These compressors helped achieve the desired delivery pressure of 1,115 pound per square inch gage (psig) at Sawan. The LNG Project was well and truly on the roll.

Changing supply scenario The first stage resulted in the injection of RLNG into the system which, in turn, contributed to an improved gas supply situation in the North. CNG stations started opening up and gas supply to power and fertilizer sector too improved. Winters too were less excruciating than in the past.

This was however a job only half done. In order to effectively utilize the entire 600 mmcfd RLNG capacity of the LNG Terminal in Karachi, both the gas utilities started placing a dedicated infrastructure for transmitting the full volume to the power, fertilizer and CNG sectors in the northern part of the country. The second stage involved laying down a dedicated 42′ dia, 342 km line from Karachi to Sawan. The project was in every way a race against time as the Government had set before SSGC a very stiff target of less than two years for the completion of the task.

The massive amount of tendering for the procurement of factors of production surpassed anything that SSGC had ever undertaken. Logistical issues came at every stage especially when it came to shifting turbo compressors from the Port in Karachi to eventual destination in HQ-2 Daur in Nawabshah. And then there was the most agonizing issue of land acquisition for laying down gas pipelines. Planning, therefore, had to be the key to the eventual success. Tasks needed to be clearly identified. Scheduling of tasks was imperative and execution had to be top notch and in compliance with international standards. In short, it required more than just sincerity towards the job to pull it off.

One Massive project The pipeline construction job was a major challenge, more so, since the project teams had to travel through diverse terrains including swamps, semi-arid zones, and agricultural lands and rivers crossings. Considering the diverse condition each segment had to offer, the project was divided into four segments or sub-projects on the basis of convenient landmarks, terrains, logistics and way points available along the route. To facilitate pipeline laying job on river crossings, China Petroleum Bureau was outsourced to work on the horizontal directional drilling for boring through the 2-km river bed at the Indus River Crossing.

The tranquil countryside of Daur, some 27 kms away from Nawabshah is home to HQ-2 Daur, one of the nerve centres of SSGC’s transmission network. Daur became the project’s centre point. More than 800 company and outsourced engineers and workers made HQ-2 Daur their base camp for the entire duration of the project. The workforce remained involved for more than a year in civil and installation works of six compressors shipped from the USA in order meet the SNGPL’s demand of 1,115 psig pressure at Sawan. Each of these compressors had a volume of 200 mmcfd each.

An attempt to close in on the gap The massive infrastructural development heralded a new era of sustainability. From January 27, 2017 onwards gas supply in Punjab dramatically improved after another 200 mmcfd consignment was added to the system with the completion of the 2nd stage of the RLNG transmission project. Improved gas supplies to Punjab’s power, fertilizer and CNG sectors helped bridge the demand-supply gap substantially.

The massive RLNG transmission project that SSGC and SNGPL undertook has in fact opened LNG floodlights. It marks the continuation of Pakistan Government’s plan to encourage local and foreign investors to not just import LNG but to build a network of related infrastructure in strategic locations.

The public-private partnership aimed at bridging energy shortfall is finally working. A second LNG terminal has commenced operations to handle another 600 mmcfd to meet needs of three LNG-based power projects in Punjab that have 3,600-megawatt power generation capacity. Fertilizer, power and CNG sectors are being shifted to LNG. Already, Italian energy giant Eni has secured a long-term contract for the supply of 100 mmcfd of LNG to Pakistan. In the meantime, SSGC and SNGPL have started planning out a new pipeline from Karachi to Lahore which will add another 1.2 billion cubic feet per day (bcfd) of LNG to meet the growing demand of domestic, commercial, industrial, power and CNG sectors.

Silencing the Detractors LNG project has sailed on despite being surrounded by a bevy of detractors who questioned its viability right from day one. Detractors made every effort to build a controversy around the LNG purchase contract that the government entered into with Qatar in 2016. Every effort was made to take LNG back to Supreme Court by raising objections over the terms of agreement. The critics lambasted ‘high’ price, conveniently missing the point that spot market prices fluctuate drastically, and if they are higher at one point in time, they can be much lower at another. Yet despite a bevy of critics whose understanding of the complicated LNG market is murky at best, LNG consignments have continued to pour in. SNGPL reported that despite current cold wave in the northern part of the country, primarily due to injection of RLNG into its system, low pressure complaints have diminished to a great extent. The Company admitted perhaps for the first time in many years that it ensured better load management due to LNG.

The actions of the public and private sector have given way to the realization that LNG is the only viable solution to take Pakistan out of the energy conundrum. An energy starved nation not too long, Pakistan is busy solving the energy conundrum. Some years ago, this scenario would have been difficult to see if LNG had not been introduced in Pakistan’s energy mix.