Synthetic Natural Gas (SNG) opens up new opportunities for the development of the LPG market after 2025

There is often talk or speculation that "Fit for 55" poses a threat to the LPG market and forecasts a decrease in its share over the next 5-10 years. The gradual reduction of greenhouse gas emissions and the transition from gas boilers to heat pumps and photovoltaics will certainly reduce the demand for LPG in the residential sector. However, for industry, a rapid transition from gas to electric energy is not feasible, so it is necessary to create conditions for the LPG market similar to those for the gas market, including subsidies for electricity production.

According to data from the Institute of Thermal Technology, it is projected that the demand for gas for electricity production in Poland will increase from the current 3.3 billion cubic meters to 5.9 billion cubic meters by 2030, reaching 7.6 billion cubic meters by 2035, and then declining to 6.8 billion cubic meters by 2040. The need for gas for heat production and cogeneration in Poland will rise from the current 1.9 billion cubic meters to 4.5 billion cubic meters by 2035, gradually decreasing to zero by 2050. After 2035, green gas (biomethane, hydrogen, biogas) will begin to replace natural gas. The total projected increase in natural gas consumption by 2035 to 7 billion cubic meters only applies to electricity production and cogeneration heat production.

If it is possible to replace even 1 billion cubic meters of natural gas in electricity generation forecasts by 2035 with LPG for electricity production, it would represent an equivalent of 720,000 tons of LPG. After the ban on Russian LPG imports is introduced, discussions with relevant industry associations and the Ministry of Energy regarding equal subsidy conditions for electricity production from LPG will be possible.

We invite interested parties to the 2024 Gas Fuels Forum, where Świętosław Kariuk, Sales Manager at I-Maximum sp. z o. o., will deliver a presentation on "SNG - an opportunity for the development of the industrial LPG segment," discussing in detail the new possibilities in the LPG market. For more information, please visit the website: https://forumpaliwgazowych.pl/

At the end of 2022, there was significant demand for backup gas delivery systems for glassworks, mainly relying on diesel oil and liquefied petroleum gas (LPG). In 2024, with the decrease in natural gas prices, the demand for projects to replace it significantly diminished. However, the gas crisis clearly demonstrated the necessity of reserve fuel in the industry. Companies that understood this earlier and installed LPG (SNG) delivery systems by autumn 2021 could recoup their investments within a few months of plant operation.

The chart below illustrates the prices of various available energy sources for industrial consumers, taking into account transportation costs. Source: http://i-maximum.com

As of today, heating oil remains a backup fuel for many glassworks. However, such an approach is inconsistent with the commitments arising from the "Fit for 55" legislative package - a set of European Union regulations aimed at reducing greenhouse gas emissions by 55% by 2030. Additionally, it is economically impractical due to the high costs of heating oil over prolonged use.

Liquefied Natural Gas (LNG) could offer a solution to the issue of backup energy sources, but the investment costs and logistical challenges of gas delivery undermine the attractiveness of this type of fuel.

«For example, to power a 30,000 kW gas burner steam boiler for 24 hours, 54 tons of LNG would be needed, equivalent to 2 LNG tanks with a capacity of 50,000 liters each. The cost of a comprehensive LNG delivery project "turnkey" with regasification terminal and installation will exceed 2 million euros. Similar equipment and implementation of the entire project on LPG will cost between 500 to 600 thousand euros. A project using SNG could cost up to 1 million euros, depending on the type of SNG blender, air compressor, and Peak Shaving system selection.”

LPG represents an optimal solution from an ecological perspective and requires smaller installation investments, 2-4 times smaller than those needed for LNG. However, using propane (without air admixture) requires the replacement or adjustment of gas burners and compressor gas systems in internal combustion engines. SNG systems address issues related to reducing and replacing natural gas consumption. By blending propane with air (PROPAN+AIR), we resolve energy companies' challenges associated with the need to halt technological processes and replace gas burners in steam boilers, as well as adapting piston engines in gas power plants.

SNG, or Synthetic Natural Gas, is a gas obtained by blending air with LPG, which has the same calorific value as methane (natural gas). The SNG gas mixture can be used in burners as a direct substitute for natural gas without the need to change or replace the burners. SNG systems are widely used in Asia, South America, and North America. In some countries, the use of SNG systems is mandatory in natural gas pipeline projects to avoid potential emergency situations such as gas cutoffs, pressure drops, and gas calorific value reduction. In Europe, attention was first drawn to SNG during the sudden rise in natural gas prices in 2021-2022.

The components of the installation include:

1. Aboveground or underground LPG tanks. You can find out more about these in our “What is an LPG tank?” guide.

2. LPG liquid pump ensuring stable pressure; it is recommended to use two pumps, one as a backup.

3. LPG vaporizer where the transformation from liquid LPG to gas occurs. Choosing an autonomous vaporizer that doesn't require electrical power, such as the KBV model, is recommended.

4. SNG mixer (SNG-blender) with an automatic mixing option – the main element of the system where LPG is mixed with air.

5. Air compressor with a tank.

6. SNG buffer tank if needed.

In the end, synthetic gas is delivered to the existing gas network.

In Poland, the first manufacturer of gas mixers has emerged - the company I-Maximum sp. z o.o. , which invites you to the presentation of its new SNG-blender production near Warsaw on April 26, 2024.

Details about the study visit: http//i-maximum.com/presentation2024

I-Maximum's mission is to accelerate the transformation of businesses to Synthetic Natural Gas (SNG) based on LPG and air, with plans to replace LPG with bioLPG in the future. Our company offers comprehensive services including design, sale of equipment, and installation of gas systems based on LPG and SNG for industrial and agricultural enterprises. Additionally, we custom-produce gas blenders (mixers) with operating pressures up to 40 bars, designed for various types of gases, including hydrogen, biogas, natural gas, LPG, and others.

Global natural gas prices have stabilized since the gas crisis of 2021-2022. However, the ongoing war in Ukraine and the threat of conflict in Europe make the energy market extremely delicate and unpredictable. The conclusion of the transit agreement between Ukraine and Russia at the end of 2024 is likely to cause significant changes in gas prices, although media speculate about possible alternative transit options with agreements made by European countries. Nevertheless, entrepreneurs and policymakers should remember that Russia does not always act in accordance with established rules, often causing energy crises.

Below is a chart based on TTF and Argus (daf Brest) quotations for the years 2021-2023.