How ExxonMobil is helping unlock LNG’s potential for India
Bill Davis, Lead Country Manager for ExxonMobil South Asia, discusses how virtual gas pipelines can help address the rising demand for cleaner energy.
ExxonMobil’s office here in historic Delhi has a great view. I’m not talking about a view of the magnificent Humayun’s Tomb, which is nearby. Instead, we look out on the local bus depot. What makes the view great? It’s that we can see a major energy success story: natural gas at work for Indians.
Much of the city’s road-based public transport runs on compressed natural gas (CNG) – even the iconic three-wheeled auto-rickshaws (elsewhere called ‘tuk-tuks’), which used to run on diesel. It’s a win for all Delhi residents. That’s because by converting such heavily used vehicles from diesel to CNG, their emissions can be reduced in terms of nitrogen oxides and particle emissions. And drivers quickly embrace the economic benefits of a fuel which is cheaper than diesel.
This is a success story for LNG Projects in India worth repeating all over the country, not just in the sphere of mass transport, but also in industry, power and domestic use such as cooking – anywhere gas can do good. ExxonMobil wants to help make it happen.
Speed and scale
India’s transformation on the world energy stage is a study in speed and scale. The country’s population of 1.3 billion is expected to grow to over 1.5 billion this decade, overtaking China as the world’s most populous nation. Not only will there be more Indians, but Indians will be doing more as the nation’s economy harnesses its productive potential and living standards advance. All this will require large-scale energy solutions that can get the job done, starting now. Natural gas is one of the fuels that will be doing some of the heavy lifting.
Where will that gas come from? Well, with India’s growing natural gas demand outstripping domestic gas production, LNG is playing an increasingly important role. Today, more than half of India’s gas needs are met with LNG from overseas, up from 31% in in 2012(1). While efforts are underway to sustain domestic production from major fields like the Mumbai High, as India grows, annual demand for LNG is expected to increase from 30 to 40 million tonnes as early as 2030. That’s a lot of gas, and a lot of growth. Fortunately, with the right investments here and around the globe, LNG can deliver for India.
“Demand for LNG is expected to increase from 30 to 40 million tonnes as soon as 2030.”
Virtual pipelines, real benefits
So what can be done to extend the benefits of LNG in India? The familiar narrative goes that growth in India’s LNG imports is being held back by a lack of pipeline infrastructure connecting coastal LNG regasification terminals to the major demand centres inland. That’s only part of the story.
Today, India has around 17,000 km of pipelines, the majority on the west coast. Significant pipeline network expansions are underway. However, building pipelines takes time, with outlays often costing billions long before the first molecule can flow. Additionally, although pipelines make economic sense, serving geographic concentrations of gas demand, they often leave dispersed demand unaddressed.
That’s where innovation in the form of ‘virtual pipelines’ comes into the picture. A ‘virtual pipeline’ moves LNG in insulated containers via road, rail and barge. That means that they can be quickly deployed, providing accelerated access to gas without waiting for a completed physical pipeline. And virtual pipelines can help serve a broader geographic distribution of customers.
Another feature of virtual pipelines is their advantaged capital profile, which is ‘pay as you go.’ This reduces upfront cash needs, creating a capital-efficient pathway to expansion. And since a virtual pipeline infrastructure is mobile, it’s a highly flexible system that can adapt efficiently to change. For example, if a pipeline is eventually built to serve an area jumpstarted by virtual pipelines, the virtual pipeline equipment can be redeployed to the next area needing gas.
Lastly, virtual pipelines can leverage India’s technological capabilities and drive a new ‘Made-In-India’ industrial sector to supply the necessary tanks and equipment. All these advantages can add up. And while the pipelines may be ‘virtual,’ the benefits for India will be real.
That’s why at ExxonMobil we think it’s time to get started. We recently joined forces with Indian Oil Corp and Chart Industries to develop the concept in India. When combined with ExxonMobil’s experience in supplying LNG from projects around the globe, the stage is set for a winning combination.
Building a bridge to renewables
We know that gas-fired power generation can play a critical role in decarbonizing and modernizing India’s power sector. Gas also has a role to play in extending the scope for renewables. Where renewables alone face challenges of intermittency, gas/renewables bundled power could deliver increased reliability, resilience and grid stability. That’s the kind of power needed for the future India, to build a stronger foundation for delivering on the country’s ambitious emissions goals.
A journey with a worthwhile destination
Whenever I look out the Delhi office window at the bus depot, I’m reminded that this story of LNG is all part of India’s energy journey. Delivering on LNG’s promise in India will require the right conditions to foster investment and growth. LNG needs a level-playing field, with enabling regulations, equitable tax structures, and market dynamics that recognize the benefits LNG brings as a cleaner, reliable and diversified energy source in the energy mix. And it will also take a good measure of determination from all the stakeholders—from the government to the LNG industry to the end consumers—to get to where we want to go. Though the journey may be a long one, we at ExxonMobil are convinced that it will be worth the trip.
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(1) US Energy Information Administration (EIA)