WHERE DOES LPG COME FROM?

Oct 16 - 22, 2006

LPG is a derivative of two large energy industries: natural gas processing and crude oil refining. When natural gas is drawn from the earth, it is a mixture of several gases and liquids. Methane, which is sold by gas utilities as "natural gas," constitutes about 90 percent of this mixture. Of the remaining 10 percent, 5 percent is propane and 5 percent is other gases such as butane and ethane. Before natural gas can be transported or used, the gases (which are slightly heavier than methane, the major component of natural gas) are separated out. Depending on the "wetness" of a producing gas field, gas liquids generally contain 1%-3% of the unprocessed gas stream. Some LPG is also trapped in crude oil. In order to stabilize the crude oil for pipeline or tanker distribution, these "associated" or "natural gases" are further processed into LPG. Worldwide, gas processing is a source of approximately 60% of LPG produced.
In crude oil refining, LPG is the first product produced on the way to making the heavier fuels such as diesel, jet fuel, fuel oil, and gasoline. Roughly 3% of a typical barrel of crude oil is refined into LPG, although as much as 40% of a barrel could be converted into LPG. Worldwide, crude oil refining is the source for the other roughly 40% of LPG supplies, although the ratio between gas processing and refining varies among regions.
LPG production from these sources is a natural derivative. That means production of LPG is assured since the primary motive for gas processors and refiners is to produce fuels other than LPG, and inevitably LPG is first produced. Although tied to the production of natural gas and crude oil, LPG has its own distinct marketing advantages and can perform nearly every fuel function of the primary fuels from which it is derived.
In Pakistan, there are many gas fields which are used to extract LPG.

USES OF LPG

The initial stage of switching from traditional fuels or kerosene to LPG in developing countries typically involves the use of a cylinder attached to a simple burner. As familiarity with LPG grows and incomes rise, the user may install a modern cooker inside the home, possibly with the gas supplied by rubber pipe from a cylinder placed outdoors or in a separate room. Later, hot water and/or a refrigeration system may be added. In remote rural communities, LPG can also be used to power electric generators, although diesel is generally a more economic option. Further, LPG can be used in conjunction with renewable technologies for decentralized power generation, to meet loads that may be beyond the capacity of the renewable system or as back-up fuel where intermittence may be a problem.
Internationally, LPG is being consumed as a fuel in the following sectors:

  • Domestic (household) sector as cooking, heating and in nominal quantities as lighting fuel.
  • Commercial sector such as cooking fuel in hotels and restaurants.
  • Automotive sector as fuel for taxis, vans and private cars.
  • Industrial sector as cutting and heating fuel.
  • Agriculture sector for crop drying, etc.
  • Other industrial uses such as manufacture of petrochemicals.

LPG AND CNG

Product Differentiation
LPG and CNG are all viable fuels with varying levels of infrastructure.
While LPG and CNG are both used in the automotive sector, there are considerable differences:

PARAMETERS

CNG

LPG

Emissions

Average 70% lesser than petrol / diesel

Average 90% lesser than petrol / diesel

Power

Reduces by about 20% as gas carburetors are often used

Same as petrol / diesel vehicles

Volume of Fuel tank

Large tanks avg. 6 times that of petrol / diesel for same mileage: additional weight and eats up boot space

One third that of CNG

Filling time

Many times compared to petrol / diesel depending on quality of compressor

Same as petrol / diesel

Conversion cost

Taxi / car: PKR 25,000

Taxi / Car: PKR 6,000 14,000

Safety

High pressure can be a safety concern

5-7 bar, comparable to conventional fuel.

Handling

Requires special equipment

Ease in handling as close to liquid fuels

Dispensing

Requires special equipment. A compressor alone costs PKR 20 million and a complete station could cost up to PKR 30 million

Average LPG stations cost PKR 3.5 million only.

Transportation

Dependent on pipeline networks

Easily transported by road tankers like liquid fuels.

Distribution

Dependent on pipeline networks

Supplies delivered by road tankers liquid fuels.

Network Establishment

Longer lead time due to pipeline laying

Easy to develop, lead time of hardly three months for each facility

Initial investment in infrastructure

Average USD 250,000 and upwards for just a dispensing station with compressor of suitable capacity

Average USD 65,000

Global experience

4,600,000 vehicles

Over 9 million 2 times more vehicles on road in cities across the world.