A look at Peru's 1st small-scale LNG facility

Friday, March 23, 2018

Operations of what is touted as Peru's first small-scale natural gas liquefaction plant are scheduled to begin by July 1.

To learn more about the project, BNamericas spoke to Louis Ravenet, CEO of US company Okra Energy which designs, builds and operates LNG facilities.

BNamericas: Why Peru?

Ravenet: There are a tremendous number of isolated, stranded gas suppliers in Peru that have been focused primarily on oil and they've been doing it for about 40-50 years. But with the changes in the global market for crude they've started looking at what - to them - was a nuisance: the gas that exists in their concessions. There's quite a lot of it in isolated pockets and it's really clean gas, of mostly high quality, about 96-99% methane.

The country's current liquefaction plant is in the far south and there are geopolitical barriers to building a pipeline.

Peru is a developing nation that's growing quickly with rising energy demands. It's trying to shift away from diesel, which is about double the price of natural gas.

So, early on we identified this opportunity to tap into the country's remote gas sources and execute on a decentralized, affordable, fast and inexpensive liquefaction strategy.

BNamericas: How long has development of the Peru plant taken?

Ravenet: It's been almost two years of planning and work, primarily because we're the first small-scale LNG developer in Peru. It's all new territory for the various regulatory government agencies and construction entities. Even importation of this first plant's modules presented a new learning experience for Peruvian customs agents.

BNamericas: What are some of the challenges you faced?

Ravenet: Doing business in Peru has been a learning curve. It is essential to understand what it takes to navigate the local regulatory and contracting waters, and to have strong legal support.

We gained an excellent local distributor, Lima Gas, which is transitioning from compressed natural gas to LNG, and acquired the western hemisphere's largest steel manufacturer as our anchor client. Another great partner is Flesan, an international procurement and construction company, which was willing to take on the task of building small-scale liquefaction, regasification and storage facilities - something completely new in Peru.

What really changed the government's perspective were the social, economic and environmental benefits: Instead of requiring 40 CNG trucks a day to supply the steel manufacturer, we are servicing its energy needs with only four trucks a day of LNG.

BNamericas: Could you highlight some project specifics, such as investment, capacity and other partners?

Ravenet: The total cost is US$20mn, self-funded, and capacity is about 100,000g/day of LNG. Our EPC partner is Flesan, with whom we also have signed a power purchase agreement to supply the plant.

The equipment is our own proprietary design and assembled and tested in South Carolina. Everything ships in containers, another competitive advantage as we build portable trains which allows for scalability and cuts construction time in half.

BNamericas: I understand that Okra Energy has plans for additional plants in Peru?

Ravenet: We have plans to develop two additional plants in Peru in the next 24-36 months and there are other gas suppliers that are interested in the rollout. One will be in the same location as the first, but for another client, and the second will be located in the south.

BNamericas: What about expansion beyond Peru?

Ravenet: We are approached from Ecuador and Colombia almost on a daily basis for export. There's also a lot of demand for gas in the Amazon region but logistics are key to developing that market. We've made the strategic decision to focus on supplying Peru at the moment.