We Cover Conversion Equipment Cost!

LNG for the Asphalt production is a win-win for the Asphalt industry and the environment.  For asphalt production location at off grid locations there are a few liquid fuel options. Off grid plants most likely burn propane, diesel fuel, and waste oil. LNG is a better solution vs these competing fuels for various reasons.

LNG Vs Propane for Asphalt Production

The current price of propane delivered in for an Asphalt plant in the Mid Atlantic is in the range of $1.05-$1.15. Propane burns clean and does not have large negative impact environmentally, but LNG is superior to propane in terms of cost.

The average plant will burn 650,000-750,000 gallons of propane for their season which depending upon weather generally goes from March through December.  Let’s look at a Pennsylvania based asphalt plant that we are currently working with.

Case Study #1

Acme Asphalt plant located in central Pennsylvania is currently burning 725,000 gallons of propane a season. The average cost of propane delivered is currently $1.10 per gallon. The projected cost of energy for 2018 using propane is $797,500. The current propane cost is $12 per MMBTU.

By converting to LNG, the projected energy cost is now $599,046. The plant will burn 798,728 gallons of LNG at $.76 per gallon. The cost of delivered in LNG is $9.25 per MMBTU. The annual savings for this asphalt production plant is $198,454.

What makes this so attractive for Acme Asphalt is that the cost of the delivered in LNG also includes the equipment need to convert the plant from propane to LNG.  Pioneer LNG can offer cost of conversion equipment as a function of delivered in MMBTU when end users sign long term supply agreements. In addition, Pioneer LNG can offer multiyear hedging programs.

LNG vs #2 Oil for Asphalt Production

Some off-grid asphalt plants currently burn #2 oil for plant production. In addition to cost being advantageous by converting LNG vs #2 oil. Other advantages include:

  • Improves Plant Efficiency (hotter flame)

– Increased production rate- more tone per hour

– No burnout or flame temperature variation

– Quicker Startup

  • Burns Clean

– Lng burns cleaner than competing fuels

– No EPA emissions issues

– Bag filters stay clean. Overall maintenance cost reduction

In terms of cost LNG is far superior to #2 oil as well. The current cost of delivered in #2 oil as of May 2018 is $2.35 per gallon. There are more BTU’s in #2 oil vs LNG, but the cost per MMBTU (Million British Thermal Units) is significantly higher. With a price per gallon of $2.359, the cost of #2 comes to about $17 per MMBTU. A real-life example below:

Case Study #2

A Maryland based asphalt producer has a plant located in the I 83 Baltimore Suburban area. The plant burns on average 400,000 gallons of #2 per year. At $2.359 per gallon, annual costs at the plant are projected to be approximately $956,000. By converting to LNG that same plant would burn 672,000 gallons of LNG.

The BTU content is approximately 1.7 times greater from #2 oil vs LNG.  Delivered in LNG cost for this client is $10 per mmbtu (.826 per gallon). Total cost for plant to burn LNG for year is projected at $555,340. Total annual savings come to $400,660.

Because this plant would be converting from #2 to LNG there would be a capital outlay for piping burner tip conversion.  But costs would be a fraction of savings. Obviously, the cost savings, environmental, and operation benefits of LNG vs #2 oil are simply a no brainer for the asphalt producer. Fewer and fewer plants run on #2 oil. Many plants burn what is known as #5 oil or waste oil or RFO.

LNG vs Residual Fuel Oil (RFO)

A popular fuel of choice for off grid asphalt plants is known as Residual Fuel Oil. Also known as RFO or #5 oil is heavy oil and while it is generally a low-cost fuel it does have its faults. RFO is known as a dirty fuel and contains large amounts of Sulfur, nitrogen and heavy metals.

Of all options of liquid fuels for an high horsepower off grid user this would be the worst option for the environment and for the health of the people in close proximity of production. Because of the health and environmental problems of the heavy oils, they have already been restrictions in place for burning heavy oils. New York City for example was at one time largely heating by heavy fuels and been fully phased as of 2015.

A quote directly from the city “Just 1 percent of all buildings in the city produce 86 percent of the total soot pollution from buildings, more than all the cars and trucks in New York City combined. They do this by burning the dirtiest grades of heating fuel available, known as residual oil, or #6 and #4 heating oil.”

Another major organization making a stand vs heavy oil is the shipping industry. The International Maritime Organization is banning heavy fuel use for the shipping industry starting in 2020.

Because RFO is a dirty fuel, asphalt plants that burn RFO have increased plant maintenance. The fuel itself needs to be preheated. This is generally done with # 2 oil. In addition, plant down time and overall maintenance costs increase dramatically for plants burning RFO Vs LNG. The benefits are listed below.

  • Improves Plant Efficiency (hotter flame)

– Increased production rate- more tone per hour

– No burnout or flame temperature variation

– Quicker Startup

  • Burns Clean

– Lng burns cleaner than competing fuels

– No EPA emissions issues

– Bag filters stay clean. Overall maintenance cost reduction

Case Study #3

Waste Oil vs LNG

An asphalt producer in north central Pa was looking to see the benefits of of converting from LNG vs RFO.  Here is how the numbers worked out.

The plant consumed 400,000 gallons of waste oil and 30,000 of #2 oil used in preheating. The current price of waste oil for this plant is $.90 per gallon, current price of #2 is 2.359

Total Energy Cost at this plant is $410,770.

If this plant were to convert to LNG the price of LNG delivered would be $8.5 per MMBtu. The price per MMbtu includes infrastructure costs to convert to LNG.

Total plant energy cost would be $472,066. Therefore, there would be increase cost of $61,296. While the energy cost the plant goes up slightly, the plant maintenance cost goes down drastically as does plant down time.

This leads to more tons per hour for the asphalt producer and a much more environmentally friendly product. In the above examples the price of delivered LNG varies because of delivery costs associated with each plant.

Conclusion

The above examples demonstrate that LNG has many benefits for asphalt plants using delivered liquid fuels. Each case study shows the merits of LNG as the fuel of the future. If you are interested in getting a quote please fill out the below form.