Interest in developing small-scale LNG technology across North America is growing because of technological improvements, the need for natural gas supplies to reach remote locations, and the potential for this technology to lower the emissions of greenhouse gases and other air pollutants. The technology, while niche, has multiple applications in marine bunkering, transportation, power generation, oil and gas exploration and production, mining facilities, and remote locations generally.

IHS Markit analyzed various factors affecting the development of small-scale LNG in North America.

• The International Maritime Organization's (IMO's) 2020 regulations may bolster the usage of LNG as a fuel in marine bunkering and promote greater investment in supporting infrastructure. Small-scale marine bunkering projects in North America are still in the early stages of development, with some projects moving forward, and the long-term prospects for LNG bunkering are promising.

• LNG uptake in road transportation faces immense challenges, including competition with diesel and the need to build supporting infrastructure across North America. Price differentials indicate that LNG is losing much of its price competitiveness at the pump, with LNG lagging other alternative fuels in its fueling network infrastructure coverage.

• However, growing small-scale LNG demand from the Caribbean, South America, and remote locations in North America is an attractive prospect. LNG could viably replace diesel generators in these areas.

• Peak demand and elevated electricity prices are driving developers' interest in small-scale LNG to meet utilities' performance obligations. Following the extremely cold 2013/14 winter, the PJM and ISO New England regional transmission organizations introduced high-performance penalties on utilities that fail to meet their dispatch obligations during scarcity situations.

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Figure 1: Small-scale LNG in North America, a niche market and growing.

Ankita Vijay is a Senior Analyst with the North American Natural Gas team.

Posted 27 January 2020.

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.