Compressed Natural Gas for Indonesia

Abstract

Abstract While Indonesia has traditionally been a major exporter of liquid natural gas (LNG) to Japan, Korea, Taiwan and China, compressed natural gas (CNG) should be seriously considered, especially for the transportation of fuel within the Indonesian archipelago itself. CNG is an alternative that has been proposed in recent years but has yet to be implemented on a large scale because the emphasis for investments has primarily been on LNG and because CNG applications have not been well delineated. Some people still believe that LNG and CNG are competitors. They are not. The key is to find the areas, both geographic and volumetric, of least-overlapping applications. It has often been stated that CNG is more attractive for shorter distances and smaller offshore markets which are not connected to pipelines or large LNG accepting facilities. For short distances, less than1000 km, LNG cannot compete with CNG for any volume of gas. Even at longer distances (e.g., 2,000 km), until the recent collapse of gas prices, CNG is still more attractive at volumes of up to 10 Bcm/yr (or 350 Bcf/yr), assuming that offshore pipelines are not economically or physically feasible. For smaller volumes, such as 1 to 2 Bcm/yr, and long distances, CNG is the only solution to bring natural gas to many markets. We have also found that higher prices of natural gas, either at the source (cost) or at the destination (sale price), increase the volume of gas at which CNG is more attractive than LNG. Indonesia is an obvious place for such applications and we present cases for the transportation of natural gas as CNG from Borneo and Sumatra to Java and Bali. We quantify the volumes of gas that delineate CNG's superiority and show the impact of gas prices on the indicated gas volumes to be transported.