The CEO of Galileo Technologies, Osvaldo del Campo, participated in the Meeting with the CEOs within the framework of the Expo Argentina Oil & Gas 2022. There, he spoke of the potential of the Distributed Production of LNG in unconnected wells to meet gas consumption in the region and in the oil industry.
Natural gas as a starting point for the energy transition
We define ourselves as an energy transition technology company, and we have been in the energy transition since before it was called this way. The most effective model to advance towards the energy transition is the transition to CNG, a model that we started 30 years ago. Later, we continued with hydrogen: we built the first hydrogen filling station in Latin America in 2005. Today, we continue with biogas-renewable natural gas, which is a very strong issue, because the emissions of methane will monopolize the discussion for the next few years. We also introduced the Virtual Gas Pipeline concept and took it to its maximum expression (or transport capacity) with LNG. Today, everyone talks about virtual gas pipelines as a generic name and it is a brand created by us, which makes us proud.
Distributed and modular LNG production for different scales
At Galileo we develop the technology to build large LNG production plants and the most economical solution in the world to do so in a modular way. In turn, we have the microscale technology that allows us to produce LNG in small places and use that LNG in multiple applications. In the United States, we are producing LNG in remote and abandoned wells in Pennsylvania and bringing that LNG to 80 peak shaving plants in the Northeast to smooth out peak demand in the winter.
LNG as a clean fuel for the upstream
At the same time, the oil industry has reached very high levels of efficiency in fracturing, rock helps, but it is also necessary to be energy efficient and, fundamentally, ecological. In the Permian and southern United States, we are producing LNG to supply the oil industry itself.
There is a boom in demand for small-scale LNG to be used (as fuel) in fracturing equipment or for power generation for drilling rigs or auxiliary equipment. That LNG, many times, provided a win-win formula, since, instead of obtaining it from a pipeline gas, we produce it from a flaring that is being mitigated or from an associated gas that otherwise could not be caught.
Here in Argentina the same thing will happen. The needs are the same, the cost structures are similar and also the motivations that led the United States to migrate all its infrastructure to the use of gas in the last 2 or 3 years.
The limitations were in the engine conversion technology and the availability of LNG technologies to fuel them. But now eFrac is coming, which requires power to be generated from natural gas, and there is the availability of our LNG technologies. So all we need is to join forces to increase competitiveness and reduce the cost of the well.
There are wells in Neuquén that are operating today and that otherwise would have been flaring. We are capturing and transporting that LNG to other types of applications from remote wells that would never have been connected because the infrastructure never existed in those places to do so. So, that brings a new gas to the system, which was off the radar, and gives a fundamental planning tool to the producer, without depending on something as rigid as the midstream, as well as a cheap fuel for the operation itself in a virtuous circle.
Containerized LNG as a regional response
Argentina has to look at two things when it comes to natural gas. The first is the regional market. I disagree on the issue of large LNG plants; I think that competing against hyper-amortized assets like those owned by Qatar or any other, beyond the window of opportunity that we have now, is complex and I think there is a huge regional demand. Much of what Galileo is doing in LNG takes place in Brazil, because that country is looking towards onshore, which was previously totally abandoned.
We recently finished a very large plant in Azulão, in the heart of the Amazon, which produces 600,000 m3/day and is going to reach 1,000,000 m3/day. That LNG is transported to a thermoelectric plant that is more than 1,000 kilometers to the north, where there is a very large demand. But the south of Brazil has the same problem: it doesn’t have pipeline capillarity.
So, if Argentina wants to export its gas and injects it only through pipelines, it will have limitations. Currently, we export little, but we are arriving by truck to the south of Brazil at a price equal to or lower than that of the Brazilian pipeline. That opens up a lot of possibilities and I think we can think of a gas transportation project, without using the hard and limited existing infrastructure.
No solution completely replaces the other, the virtual LNG pipeline complements. We understand that the potential demand for non-connected gas, or what we call containerized LNG, is huge in the region.
The other issue to consider is peaking, which can also be synergized and say: I store, I use the same liquefaction infrastructure to store, I flatten the curve, I give the producer the possibility of thinking of a flatter, more constant demand throughout of the year, not so stressful in winter -which is a bit of what is being done in the United States- and also to use that capacity to produce in times of valley and be able to export.
I believe that this is the path we should choose: the technology is available. We have a very interesting regulatory framework that has been developed in recent years and that allows us to develop plants, build plants, transport LNG in all its routes and even offer it on the international market. We have to take advantage of that, and time will align everything.
If we can develop our own model, and we have the conditions to do so because we have the gas, just like we did in other countries, we can generate our own model to serve the region. We are talking about many millions of m3/day of potential consumption in the south of Brazil, in Uruguay and Paraguay, in many applications. If we work on the basis of modular, scaled and elastic technologies, we have many chances that the projects can be carried out.