Reliance gas demand drives Hazira expansion

Vol 15, PW 1 (14 Jul 11) Midstream & Downstream

In January last year cheap gas from Reliance’s D6 block flooded the Indian market and crippled demand for spot R-LNG from the Hazira LNG terminal leading to a temporary shutdown.

How times have changed! This month (July) Reliance’s hunger for R-LNG shows no sign of easing as it tries to buy as much spot R-LNG as it can from Hazira, operated by Shell and Total, to compensate for dwindling D6 gas production. “Shell is seriously examining expanding Hazira’s capacity to reflect this soaring demand,” says a source with close links to the Anglo-Dutch major.

“Hazira’s capacity can be ramped up gradually from 3.67m t/y to 5m t/y by ‘de-bottlenecking’.” Our source refuses to divulge the timeframe for the proposed Hazira expansion, but an industry source believes ‘de-bottlenecking’ at Hazira already began earlier this year and could be completed by mid-2012.

When it was commissioned in 2005, the Hazira LNG terminal had only 2.5m t/y capacity; this increased to 3.67m t/y in 2008 through ‘de-bottlenecking’. “De-bottlenecking is the cheapest way to increase LNG terminal capacity,” explains our source.

“R-LNG production can be increased by modifying or replacing old equipment, adding new equipment and improving operating efficiency.” Is there a limit to LNG terminal capacity expansion through ‘de-bottlenecking’ “Yes, Hazira was originally designed with a view to expand capacity to 5m t/y,” we learn.

“But if capacity must be expanded further, say to 7.5m t/y, then Shell will have to embark on a ‘Greenfield’ expansion.” Shell’s Hazira terminal is spread over 36 hectares of land on the Gujarat coast with two 160,000-cubic metre LNG storage tanks.

Two more tanks of similar size could easily be added at Hazira, if necessary, but Shell has no such plans at present.