The Domestic LNG Tanking Industry Is Emerging with High Development Certainty

LNG tank container is a relatively new LNG carrier device in China, which provides a beneficial attempt for China to innovate LNG transport mode and solve the imbalance between supply and demand of natural gas in the north and south regions, and helps to build an all-round and multi-channel natural gas transport system. However, there are still many bottlenecks in its large-scale development. The development of the industry still needs the support of the natural gas pipeline network, terminal construction, and policies and regulations.

Advantages of LNG Tank

Compared with the traditional LNG transportation and storage mode, the LNG tank has many advantages. First, flexible storage and transportation. LNG tanks are suitable for both water and land and storage and transportation. They can be used as temporary storage facilities as well as direct multimodal transport to end-users. Second, it has a wide radiation range and can reach remote areas not covered by the pipe network without restrictions of land and sea transportation. Third, that is high utilization efficiency. Container trucks can realize the swing transport, reduce the empty driving and drivers, and improve the utilization efficiency.

Development Status at Home and Abroad

LNG tank has a long history of development in the world, especially in Europe, North America, and Southeast Asia, has realized commercial operation, the application field mainly focuses on LNG transport, storage and as LNG fuel tank.

In 1999, Japan started using 30-foot cryogenic ISO storage tanks for road, rail, and ship intermodal transportation of LNG to remote areas for power generation. Japan has formed a relatively complete system in the manufacturing and processing of LNG tanks for railway use, technical specifications for transportation safety, and relevant laws and regulations, which ensure the safety, efficiency, and stability of LNG railway transportation.

In 2014, American Caribbean Energy began to use 40-foot LNG tanks to supply LNG to pharmaceutical, food processing, and beverage manufacturers in Central and South America, the Caribbean, and Alaska. By the end of 2018, the number of its LNG tanks had increased to 75, with an annual supply capacity of 47 million cubic meters of natural gas.

Generally speaking, the application of LNG tanks abroad mainly focuses on LNG transportation, storage, and use as LNG fuel tanks. The application scale is still small, generally around dozens of LNG tanks, and the main users are offshore island users, industry, power generation, and residents.

LNG tank has a certain development advantage in China's natural gas market due to its "suitable storage and transportation" and strong flexibility. However, due to the lack of targeted safety standards, the development has been tepid. In the past two years, the domestic LNG tank industry has issued some policies to achieve a big leap in the LNG tank transport industry. With the gradual implementation of relevant policies and regulations, the development of LNG tank transport may usher in a new era of development.

In September 2018, The State Council issued the Opinions on Promoting Coordinated and Stable Development of Natural Gas. According to the opinions, it is necessary to actively develop small-scale LNG shipping in coastal areas and inland rivers according to market demand, and introduce and improve relevant regulations, policies, and standards for multi-modal transportation of LNG tanks and tanks.

In June 2019, The National Development and Reform Commission and the National Energy Administration issued the Notice that areas that fail to meet their gas storage targets should increase their spare LNG tanks or other means in advance to fulfill their gas storage responsibilities.

In October 2019, LNG tank projects in Wuhu of Anhui, Jining of Shandong, Huangshi of Hubei, and Xingtai of Hebei were listed as the first batch of pilot projects in China.

It can be seen that the authorities are successively issuing standards and policy documents to support the development of the LNG tank.

Driven by environmental protection policies and clean heating in northern China, the natural gas consumption has exploded in the past two years, and LNG point supply has also ushered in unprecedented development opportunities. On the supply side, due to the slow growth of domestic natural gas production, imported resources have become the main support point to meet the consumption growth. According to the General Administration of Customs, China imported 96.56 million tons of natural gas in 2019, including more than 60.25 million tons of LNG. In the first three quarters of this year, natural gas imports reached 76.83 million tons, including LNG imports of more than 47.9 million tons.

The Main Bottleneck of LNG Tank Development

A 40-inch LNG tank has a capacity of about 20 tons, which is lower than LNG tank trucks and cannot be compared with LNG carrier ships. A regular LNG carrier can carry 60,000 tons, while LNG tank containers can carry only a few thousand tons even in a full ship.

LNG tank and tank transportation mode to truly achieve commercial operation, first of all, the gas source should be cheap. It's not a mainstream thing, it's like drinking bottled water, it's certainly not as cheap as drinking a VAT of water. A 40-inch tank can hold less than 20 tons of LNG and requires a volume ratio of 1:3 to be operational, one at the filling place, one in transit, and one at the end-user. Therefore, the industry needs to have a mature large-scale operation mode, and the transportation link should be broken through, forming a closed-loop from charging, transportation, stacking to end-users. At the same time to improve the turnover rate of cans, otherwise it is difficult to make money.

In general, there is a certain inevitability in the development of LNG tanks in China, and it will also exist in the development of the energy industry for a long time to improve the energy supply system. Although the current development situation is difficult, with the continuous improvement of the legal and regulatory system and the continuous update of the industry development model, LNG tank containers are expected to break through the bottleneck and establish a sound market mechanism. Besides, how far the LNG tank can go depends on the external policy environment, market demand, and the internal operating mechanism of the industry.

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