manpreet singh sip_report

UNIVERSITY OF PETROLEUM AND ENERGY STUDIES

DEHRADUN

SUMMER INTERNSHIP REPORT

ON

“TO KNOW THE POTENTIAL OF LNG IN BOTTLING TO MEET THE

COMMERCIAL AND INDUSTRIAL DEMAND”

MBA (Oil & Gas)

Internal Mentor

Mr. Ranchodrai Yagnik

Submitted By:

Manpreet Singh

MBA(OIL&GAS)

UPES, Dehradun

RO20213089

500028078

July 2014

To know the market potential of bottled LNG to meet the commercial and industrial demand.

Page No. 1 o f t h e R e p o r t S u b m i t t e d b y M a n p r e e t S i n g h o f U P E S

ACKNOWLEDGEMENT

I take this opportunity to express my profound gratitude and deep regards to my guide Mr.

Hashmukh Shah (Managing Director of JEL) for his exemplary guidance, monitoring and

constant encouragement throughout the course of this project. The blessing, help and guidance

given by him time to time shall carry me a long way in the journey of life on which I am about to

start.

I also take this opportunity to express a deep sense of gratitude to Company Mentor Mr. Kiran

Baxi (Technical Director of JEL) who helped me making this project a successful endeavor, for

his cordial support, valuable information and guidance, which helped me in completing this task

through various stages. Last but not the least I would like to thank Dr. S. K Pokhriyal (HOD),

Ms. Somya Sharma, Mr. Pankaj M Prasad (Course Coordinator) for providing me the

opportunity to pursue internship at Jindal Energy Limited.

I am obliged to the staff members of JEL, for the valuable information provided by them in their

respective fields. I am grateful for their cooperation during the period of my assignment. I would

like to give special thanks to my mentor Mr. Ranchhodrai Yagnik to support me through the

entire period for the successful completion of the Project. It was a learning and wonderful

experience with you all.

Lastly, I thank almighty, my parents, brother, sisters and friends for their constant

encouragement without which this assignment would not be possible.

Thank you.



CERTIFICATE OF DECLARATION

This is to certify that the project entitled as TO KNOW THE MARKET POTENTIAL OF

BOTTLED LNG TO MEET THE COMMERCIAL AND INDUSTRIAL DEMAND, is

carried out by Manpreet Singh student of MBA (Oil and Gas Management), University of

Petroleum and Energy Studies, Dehradun and is being submitted in fulfillment of his SUMMER

INTERNSHIP PROJECT which is essential for the award of the Master’s Degree in Business

Administration from the University of Petroleum and Energy Studies. This report is an original

work of the student and it has not been submitted earlier in this Company/University or any other

Company/University/Institution.

(Manpreet Singh)



Contents 1 INTRODUCTION OF FUELS ........................................................................................... 11

1.1 GENERAL DETAILS ................................................................................................. 11

1.2 DIFFERENT TYPE OF FUELS ................................................................................. 11

1.2.1 PRIMARY FUELS ............................................................................................... 11

1.2.2 SECONDARY FUELS ......................................................................................... 11

1.3 COMBUSTION OF FUELS ........................................................................................ 12

1.4 EVOLUTION OF OIL & GAS ................................................................................... 12

1.5 ORIGIN OF HYDROCARBONS ............................................................................... 12

1.6 WELL FLUID .............................................................................................................. 14

1.7 API GRAVITY ............................................................................................................. 14

1.8 SULFUR CONTENT ................................................................................................... 14

2 INTRODUCTION OF NATURAL GAS ........................................................................... 16

2.1 GENERAL INFORMATION ..................................................................................... 16

2.2 COMPOSITION OF NATURAL GAS ...................................................................... 16

2.2.1 METHANE ............................................................................................................ 17

2.2.2 ETHANE ................................................................................................................ 18

2.2.3 PROPANE ............................................................................................................. 18

2.2.4 BUTANE ................................................................................................................ 19

2.3 NATURAL GAS ........................................................................................................... 19

2.3.1 VARIOUS FORMS OF NATURAL GAS .......................................................... 20

2.3.2 PROCESS INVOLVED IN NATURAL GAS BUSINESS ................................ 20

2.4 HISTORY OF OIL & GAS INDUSTRY ................................................................... 20

3 WORLD’S NATURAL GAS SCENARIO ........................................................................ 22

3.1 NATURAL GAS OVERVIEW ................................................................................... 22

3.2 GAS DEMAND AND SUPPLY SCENARIO – INDIA ............................................ 24



3.2.1 DEMAND SIDE .................................................................................................... 24

3.2.2 SUPPLY SIDE ....................................................................................................... 25

3.3 NATURAL GAS PROVED RESERVES ................................................................... 27

3.4 NATURAL GAS PRODUCTION: ............................................................................. 28

3.5 NATURAL GAS CONSUMPTION: .......................................................................... 29

3.6 NATURAL GAS TRADE ............................................................................................ 30

3.6.1 INTRODUCTION TO THE MARKET ............................................................. 30

3.6.2 MODE OF TRADING .......................................................................................... 30

4 MARKETING OF NATURAL GAS ................................................................................. 35

4.1 DISTRIBUTION THROUGH PIPELINES .............................................................. 35

4.2 EXISTING PIPELINE INFRASTRUCTURE .......................................................... 35

4.3 NATURAL GAS PIPELINE SHARE IN INDIA ...................................................... 37

5 INTRODUCTION OF LNG ............................................................................................... 38

5.1 GLOBALIZED LNG MARKET ................................................................................ 38

5.2 EARLY LNG MARKET SCENARIO ....................................................................... 38

5.3 LNG MARKET RECENT SCENARIO:- .................................................................. 40

5.4 LNG DEMAND SUPPLY SCENARIO ..................................................................... 41

5.5 BENEFITS OF LNG .................................................................................................... 42

5.6 ENVIRONMENTAL BENEFITS & IMPACTS OF LNG ....................................... 43

6 JINDAL ENERGY LIMITED ........................................................................................... 45

6.1 BUSINESS PLAN ......................................................................................................... 45

6.2 MANAGEMENT OF THE COMPANY .................................................................... 46

6.3 DISTRIBUTION PROCESS OF JEL FOR LNG CYLINDERS ............................ 47

6.3.1 MOVABLE LNG CYLINDERS .......................................................................... 47

6.3.2 LNG FIXED CYLINDERS .................................................................................. 48

6.4 KEY FEATURES OF SUPPLYING LNG BY MOBILE FUELER ....................... 49

6.5 ADVANTAGES OF UTILIZING LNG CONTAINERS OVER LPG

CONTAINERS (SAFETY & SAVINGS) .............................................................................. 49

6.6 LNG AS THE FUEL OF CHOICE FOR NON-DOMESTIC SEGMENT ............. 49

6.7 LPG CYLINDERS V/S LNG MICROBULK ............................................................ 50

6.7.1 CONVENIENCE................................................................................................... 51

6.7.2 QUALITY .............................................................................................................. 51



6.7.3 DISTRIBUTION OPTION .................................................................................. 52

6.8 SOME MANDATORY APPROVALS ....................................................................... 52

6.9 LNG REGULATIONS ................................................................................................. 53

6.10 SAFETY CONSIDERATION IN LNG PLANT ....................................................... 54

6.10.1 IMPORTANT SAFETY FEATURES OF PLANT ........................................... 55

6.10.2 SAFETY IN LNG CONTAINERS ...................................................................... 56

6.10.3 CONTAINERS TRANSPORTATION ............................................................... 57

6.11 FIRE PROTECTION SYSTEM DESCRIPTION .................................................... 57

6.11.1 INTRODUCTION................................................................................................. 57

58

58

6.11.2 SCOPE OF WORK............................................................................................... 58

6.11.3 DESIGN STANDARDS AND CODES – FIRE PROTECTION & ALARM

SYSTEM ............................................................................................................................... 58

6.12 LNG CYLINDERS ....................................................................................................... 59

6.12.1 CHART TANK CYLINDER SPECIFICATION .............................................. 59

6.12.2 INOXCVA TANK SPECIFICATION ................................................................ 60

6.12.3 KEY FINDINGS FROM THE LUXI NEW ENERGY EQUIPMENT GROUP

CO. LTD ............................................................................................................................... 61

6.12.4 COMPARISON OF EURO CYLINDER & PERMA CYLINDER ................. 62

6.12.5 MICROBULK SYSTEMS ADVANTAGE ........................................................ 63

7 OBJECTIVE & HYPOTHESIS ......................................................................................... 65

7.1 OBJECTIVE ................................................................................................................. 65

7.2 HYPOTHESIS .............................................................................................................. 65

8 RESEARCH METHODOLOGY ....................................................................................... 67

8.1 DESIGN OF SAMPLING PLAN................................................................................ 67

8.1.1 SAMPLING ........................................................................................................... 67

8.1.2 OBSERVATIONAL DESIGN ............................................................................. 68

8.1.3 STATISTICAL ...................................................................................................... 68

8.2 DESIGN OF QUESTIONNAIRE ............................................................................... 69

9 DATA COLLECTION ........................................................................................................ 69

9.1 ISSUES FACED ........................................................................................................... 69

9.2 MARKETING STRATEGY ....................................................................................... 70



9.2.1 AWARENESS ....................................................................................................... 70

9.2.2 KNOWLEDGE ..................................................................................................... 70

9.2.3 LIKING .................................................................................................................. 70

9.2.4 PREFERENCE ..................................................................................................... 71

9.2.5 CONVICTION ...................................................................................................... 71

9.2.6 PURCHASES ........................................................................................................ 71

10 RESPONSE ANALYSIS ..................................................................................................... 72

10.1 DATA ANALYSIS ....................................................................................................... 72

1. Which FUEL do you use for your Production/Process? .............................................. 72

2. How much quantity do you consume per month (in Kilograms)? .............................. 72




3. What is the cost per unit of the FUEL (in Rupees)?..................................................... 76




4. What is the monthly bill (in Rupees)? ........................................................................... 79




5. Is there any variation in your FUEL consumption (in Percentage)? .......................... 82



6. Is there any additional expenses you are bearing (in Rupees)? .................................. 83

6. Is there any additional expenses you are bearing (in Rupees)? .................................. 84

7. What is your Credit Finance Facility? .......................................................................... 84




8. What is the frequency of your FUEL booking (monthly)? .......................................... 86





9. Do you feel safe with your present FUEL? .................................................................... 89

10. Are you aware of LNG (Liquefied Natural Gas)? ...................................................... 89

11. After getting awareness of LNG (Liquefied Natural Gas) are you interested in using

it? 90

10.2 FEW CONCERNS SHARED BY THE RESPONDENTS ....................................... 90

10.3 TESTING OF HYPOTHESIS .................................................................................... 91

10.4 CONCLUSION ............................................................................................................. 97

11 VISITS DURING INTERNSHIP ..................................................................................... 101

11.1 PESO, VADODARA .................................................................................................. 101

11.2 GIDC, Sayajiganj Baroda ......................................................................................... 102

12 Bibliography ....................................................................................................................... 103



List of figures

Figure 1-1 Hydrocarbon formation ............................................................................................................. 13

Figure 1-2 Oil & Gas Scenario Region Wise Source: Bit Tooth Energy 2013 ........................................... 15

Figure 3-1 Demand Supply balance of natural gas from 2012-13 to 2029-30 ............................................ 26

Figure 3-2LNG value chain ........................................................................................................................ 31

Figure 3-3 transportation through road and railway ................................................................................... 32

Figure 3-4 Typical Capital Costs of 2.5 MMTPA LNG Project ................................................................. 32

Figure 4-1 Gas infrastructure for current scenario including existing/underconstruction pipeline network

and LNG terminals ...................................................................................................................................... 36

Figure 5-1 Global LNG imports since 1964-2012 ...................................................................................... 40

Figure 6-1 movable cylinder ....................................................................................................................... 47

Figure 6-2fixed cylinders ............................................................................................................................ 48

Figure 6-3LPG system from botteling to delivery is involved in five stages ,while in case of LNG

microbulk system there will be only three stages for distributions ............................................................. 50

Figure 6-4It shows that 1 LNG cylinder of 230 L will replace 6 LPG cylinders of 14.2 kg each .............. 51

Figure 6-5Quality of LNG will be consistent as supply will be from permanent dedicated cylinder. ........ 51

Figure 6-6LPG distribution is manual while LNG distribution in Mobile fueler is feasible which is more

convenient &requires less manpower. ........................................................................................................ 52

Figure 6-7the pressure vs. days for the perma-cyl & euro-cyl. ................................................................... 62

Figure 7-1evaluating the hypothesis ........................................................................................................... 65

Figure 9-1marketing strategy ...................................................................................................................... 70

Figure 10-1Research Methodology by CR Kothari (HYPOTHESIS TESTING OF MEANS) Page No.:

197 .............................................................................................................................................................. 92

Figure 10-2Research Methodology by CR Kothari (Table 2: Critical Values of Student’s t-Distribution)

Page No.: 377 .............................................................................................................................................. 93

Figure 10-3Research Methodology by CR Kothari (HYPOTHESIS TESTING OF MEANS) Page No.:

197 .............................................................................................................................................................. 97



List of tables

Table 2-1 Composition of natural gas ......................................................................................................... 17

Table 3-1Typical Composition of Natural Gas ........................................................................................... 22

Table 3-2 Consolidated segment wise demand for natural gas from 2012-13 to 2029-10 ......................... 24

Table 3-3 Consolidated segment wise demand for natural gas from 2012-13 to 2029-10 ......................... 25

Table 3-4 consumption amount of some countries in year 2012 ................................................................ 28

Table 4-1 Natural gas transmission infrastructure in India ......................................................................... 37

Table 5-1 India’s gas demand-supply gap projection ................................................................................. 41

Table 6-1 chart tank cylinder specification ................................................................................................. 59

Table 6-2 INOXCVA tank specification .................................................................................................... 60

Table 6-3luxi cylinder specification ........................................................................................................... 61

Table 10-1 calculation for the hypothesis testing we considered for wood ................................................ 91

Table 10-2 calculation for the hypothesis testing we considered for LPG ................................................. 94



ABSTRACT

The objective of the project is focused to design a Business model for LNG containers to

replace the LPG cylinders. This project report on above stated topic and area contains all the

detailed information and data for this business model.

The project is focused on 4 main segments (i.e. Industrial, Domestic, Commercial & Small Scale

Industries based in G.I.D.C area Dahod). The very first step of the project is to take the finding

the detailed demand of various Industries, Hotels and Hospitals each of the segments through the

market survey. Report contains the process & methodology adopted in order to calculate the

demand & changing that current fuel utilized in industries and all other sectors into equivalent

gas requirement. Based on such demand estimation, a detailed estimation and distribution of

natural gas is prepared.

Demand calculation was done through questionnaire which focused on technical parameters and

based on their basic consumption level.

The project gives a detailed view and description of project estimation and the process to follow

the project in successful manner.



1 INTRODUCTION OF FUELS

1.1 GENERAL DETAILS

Presently we can’t consider a life without energy, we have at most dependency over the energy.

There is various forms of energy like electricity, wind, solar, biomass, thermal, tidal etc. It may

be anything but it has become an important part of human life. Now we have been completely

dependent on fuels. Fuels are combustible materials, obtained in bulk, which produce by proper

combustion in air, large amount of heat that can be economically for domestic and industrial

purpose.

1.2 DIFFERENT TYPE OF FUELS

The fuel are classified as follows:

1.2.1 PRIMARY FUELS

Fuels which occur inside the earth. Fuels like Coal, Crude Oil etc. are the best example of the

primary fuels. Millions of years are required for the formation of the crude oil inside the earth. It

requires Time, Temperature, Pressure, Source Rock, and Cap Rock for the formation of crude oil

inside the Earth.

1.2.2 SECONDARY FUELS

Fuels which are derived from naturally occurring ones by a treatment process such as coke,

gasoline, coal gas etc.

Both primary and secondary fuels may be further classified based upon their physical state as

1. Gaseous Fuels.

2. Solid Fuels.

3. Liquid Fuels.



1.3 COMBUSTION OF FUELS

For any combustion three basic thing that requires are Fuel, Oxygen & Heat.

Figure 1-1 Three basic thing that requires for combustion

For any shorts of combustion all these three things should be present. And if any one of three is

not present fully combustion will not be there. It is an exothermic reaction between source and

fuel with the help of oxygen present, which produces heat & exhaust.

1.4 EVOLUTION OF OIL & GAS

In the evolution of Oil & Gas we consider first the existence and production of petroleum.

Petroleum is a combination of Petra (Rock) and Oleum (Oil) and it consists Hydrocarbons in

high amount, which is made of carbon and hydrocarbons. For the existence of hydrocarbons 5

major things are required that are Pressure, Temperature, Depth, Source rock and Cap rock.

Those all things together made oil inside the earth crust.

1.5 ORIGIN OF HYDROCARBONS

There exists various theory which explains the formation of the crude oil. There are mainly two

theories.



1. Organic theory.

2. Inorganic theory.

Organic theory tells that oil & gas are formed by the thermal decomposition of the organic

material. As organic matter consists mainly of carbon and hydrogen which are also a main

component in oil and gas. Over a long period of time this organic rich layer gets deposited until

oil formation zone where thermal maturation takes place to convert material into oil and gas.

Whereas, Inorganic theory says that water reacted with metallic carbides under high

temperature& pressure inside the earth surface which lead to the formation of acetylene along

with heavier hydrocarbons. The nebular matter form which solar system was formed is

considered to be a source of hydrocarbon as one of the hydrocarbons precipitated from it and

erupted from earth interior. Hydrocarbon could be in Gaseous or Liquid form depending on their

size of molecule and temperature available there. It can be in Liquid form like dark and heavy

liquid (Crude Oil) or it can be in the form of light oil (Motor Gasoline). Gaseous form of

hydrocarbon is associated gas o the free gas this gas is called as free gas. Solid and semisolid

hydrocarbon can be asphalt and tar which are found as last product of refined crude oil.

HYDROCARBON FORMATION

Figure 1-2 HYDROCARBON FORMATION



1.6 WELL FLUID

Fluid coming out of the drilled well is known as well fluid. It is basically a mixture of crude oil

& natural gas with few percentage of water also.

1.7 API GRAVITY

Specific gravity of crude oils and Petroleum products is generally expressed as degrees API

which is defined as:

0API = 141.5 --- 131.5 ………………….eqn 1.1

Sp.gr

Lower the 0API number; heavier is the crude oil and vice-versa.

0API > 33 that means crude is light crude.

If it is in between 23-330API it is considered as medium and below 23

0A as heavy crudes.

We know that every place has their different crude oil specification according to their quality

like sulfur content, heaviness, color etc. API behaves reverse than the density of any substance.

1.8 SULFUR CONTENT

It signifies the quality of the crude oil. Sulfur is a measure of ‘sourness’ and ‘sweetness’ of

crude.

Sweet grades < 0.5 % sulfur.

Sour grades > 0.5% sulfur.



Oil & Gas Scenario Region Wise:

Figure 1-3 Oil & Gas Scenario Region Wise Source: Bit Tooth Energy 2013



2 INTRODUCTION OF NATURAL GAS

2.1 GENERAL INFORMATION

Natural gas is a fossil fuel. It is one of the primary energy source and is recovered from oil or gas

fields consisting mainly of hydrocarbons. Naturally occurring natural gas was discovered and

identified in America as early as 1626, when French explorers discovered natives igniting gases

that were seeping into and around Lake Erie. The American natural gas industry got its

beginnings in this area. In 1859, Colonel Edwin Drake dug the first well. Drake hit oil and

natural gas at 69 feet below the surface of the earth. It occurs deep below the surface of the earth

in three principal forms- associated gas, non-associated gas and gas condensate. Associated gas

is found in crude oil reservoirs, either dissolved in the crude oil or in conjunction with the crude

oil deposits. Non- Associated gas occurs in reservoirs separate from crude oil wells. It is also

termed as dry gas.

a) Sometimes it is also obtained shale bed known as shale gas.

b) From coal seams known as coal bed methane (CBM).

c) It could also be present in the form of hydrates in oceans known as gas hydrates.

d) Mainly it is transported through interstate pipelines known as PNG (Piped Natural Gas).

e) It is could also be liquefied for transportation of large volume of gas mainly overseas in the

form of LNG (Liquefied Natural Gas).

f) It could be compressed at high pressure to form CNG (Compressed Natural Gas).

2.2 COMPOSITION OF NATURAL GAS

The main component of natural gas is the Hydrocarbons with some other components. Natural

gas is colorless, odorless fuel t ha t burns cleaner than many other traditional fossil fuels.

Gas condensate is the hydrocarbon liquid dissolved in saturated natural gas that comes out of

solution when pressure drops below dew point .Natural gas mainly consists of organic and

inorganic substances.in which Organic substance are Methane, Ethane Propane, Butane etc. And

inorganic substance are Nitrogen, CO2, O2, Sulfur, Helium, Mercury etc. The composition (%) is

as follows:



Table 2-1 Composition of Natural Gas

Organic Substance Composition %

Methane 82-96

Ethane

0-20

Propane

Butane

C5+

Inorganic substance Composition in %

Nitrogen 0-5

CO2 0-5

O2 0-0.2

Sulphur 4-50 ppm

Helium Traces

Mercury Traces

As already told Natural Gas consists of many components and each component has its own

properties and end uses today. We can extract these components from the natural gas through

various extraction processes and use them.

2.2.1 METHANE

It is the chemical compound with chemical formula CH4. It is the simplest alkane and the main

component of natural gas. In its natural state, methane is found below ground and under the sea

floor. It is the most abundant element in the natural gas and when burned in the presence of

oxygen the following reaction takes place.

CH4 + 2O

2 = CO

2 + 2H

2O



Mainly methane in natural gas is used for burning purposes. Pure natural gas, LNG and CNG

consist of only methane and about 95-99%.

Usage:

a) It is used in industrial chemical process and may be transported as refrigerated liquid (LNG).

b) It is used in gas based power plant for power generation purpose.

c) It is also used as feedstock in various industries such as fertilizer industry, petrochemical

industry.

d) It is also used for industrial heating purposes.

e) It is used in transportation sector in the form of CNG.

f) It is also used in domestic sector for cooking, room heating etc.

2.2.2 ETHANE

It is the chemical compound with chemical formula C2H6. At standard temperature and pressure,

ethane is a colorless, odorless gas. After Methane, Ethane is the second-largest component of

natural gas. It is the simplest alkane and the main component of natural gas. It is extracted from

the natural gas and used as feedstock in petrochemical to produce ethylene.

Usage:

Petrochem, Propyl alcohol, LPG, hot air balloons, and heating etc.

2.2.3 PROPANE

It has chemical formula of C3H8 and is in gas form but can be liquefied under pressure. It is

available as liquid propane for industrial purposes and is also a major constituent of LPG

(liquefied petroleum gas). It is used as a feedstock for manufacturing propylene and can also be

used as a solvent, refrigerant or as a fuel for various purposes.

Usage:



a) It used as a fuel in hot air balloon, flamethrower etc.

b) It is used as a feedstock for steam cracking in petrochemical plant and for manufacturing propyl

alcohol.

2.2.4 BUTANE

It has chemical formula of C4H10 and is in the form of n-butane and also in the form of an isomer

in the form of iso-butane. It is gas at normal temperature and pressure but can be liquefied easily

under pressure. It is also present along with propane in LPG and is also used as fuel in lighters,

for cracking in petrochemical plants and is also used for refrigeration purposes.

Usage:

LPG, heating, refrigerant etc.

2.3 NATURAL GAS

Natural gas is a mixture of some important factors like methane ethane, propane and butane. It

has water content up to saturation limit only. The fully percentages are covered by other gases as

well like carbon mono-oxide, carbon dioxide, sulfide, nitrogen and sometimes helium also.

There are two types of natural gas one is free gas which comes alone out of the well when it is

being drilled with higher depth around more than 5000 meters and this gas is found at very high

temperature of more than 140°c and another is associated gas which comes out of the well with

the crude oil. It has to be separated from the crude oil and the water content. This Gas is in

higher percentage because it is difficult to get the free or dry gas always. First in the drilling

specification crude oil is there and at the time of exploration of crude oil we get natural gas as

well and the fulfillment of requirement is done after the natural gas processing in the Group

Gathering Station (GGS).



2.3.1 VARIOUS FORMS OF NATURAL GAS

a) Natural gas liquid (NGL).

b) Pipeline natural gas (PNG).

c) Liquefied natural gas (LNG).

d) Compressed natural gas (CNG).

2.3.2 PROCESS INVOLVED IN NATURAL GAS BUSINESS

The process of extracting natural gas from deep underground wells and making it available to the

customers is a long one and has many stages. The processes that take place are follows:

a) Exploration & Production- It consist of activities related to discovering underground oil

and gas reserves and their extraction from the well that is drilled to extract them.

b) Gas processing- The gas that is produced from well contains various impurities such as

NGL, water vapor, sulfur, CO2, sludge and other impurities. The gas is send to on field gas

processing plant or to some other plant for removing these impurities and to make gas

according to the requirement of the consumer.

c) Transportation- The gas is then transported either to consumers or to a storage or to

liquefaction plant depending upon the requirement.

d) Storage- The gas is stored in underground caverns or empty oil and gas wells for future use

or for peak shaving.

e) Distribution- It gives idea about the gas provider to the end users customers.

2.4 HISTORY OF OIL & GAS INDUSTRY

In the starting of 18th

century, industrial revolution changed the world scenario completely. It

had a great demand for the energy because of usage of lights and fuels for the machineries in the

industries. This intensified the search for oil (exploration) and it resulted in the development of

the technology for oil exploration. In 1880 to 1890 there was an oil boom in USA due to new

search of oil and gas fields. With the sustained development in economy the requirement in oil.



Largest companies in this business were in USA like John D. Rockefeller founded the Standard

Oil Company in 1870 and he proved his monopoly in this business in near future. In the starting

companies were highly concentrating on fuel oil kerosene and lubricants but later when with the

increase in number of cars and other motors which were dependent on motor spirit companies

shifted production focus towards Motor spirit and Diesel production for earning more and more

profits out of this.

After some years of revolution other engines like locomotives were converted from coal to oil

based engines and in aviation also ATF (Air Turbine Fuel) was introduced and it changed this

aviation industry completely. In 1948 the first platform was used to drill an offshore well in

Louisiana. With the development worldwide this industry starting developing at all places in the

world. In the starting of 20th

century there were some big discoveries in the world to sustain in

this energy field for long time. In India Mumbai High was the biggest discovery of ONGC in

1975 and it gave a big support to India to fulfillment of the requirement. Everywhere in the

world the sources of energy are depleting and it may create big issues to the world. With India all

over the world is trying to shift their focus to unconventional sources of energy but it is not

possible to shift suddenly. It also takes time but to sustain till that time is another issue. USA is

fully shifting their focus to Shale Gas, USA has big potential to explore the Shale Gas with new

technology implementation and investment by privet companies. India is also making the Shale

Gas policy in 2013 it was decided in budget introduced by finance minister in 2013. This time

whole world is dependent on different kind of energy sources like Shale, CBM (Coal Bed

Methane), Gas hydrates and of course the exploration by drilled wells. In the starting there was

complete regulation by OPEC countries but after some years when other countries also found the

oil and gas sources some OPEC power was reduced and there was some internal dispute also

there due to capping of their own production.



3 WORLD’S NATURAL GAS SCENARIO

Natural gas is most important fuel and it is widely accepted by various countries since it is a safe

fuel with comparison to other fossil fuel. It is non-toxic and non-corrosive too. The best part is

that could be easily transported in large volumes in form of LNG. There is no residue after the

combustion of natural gas.

3.1 NATURAL GAS OVERVIEW

Natural Gas is one of the principal sources of energy for many of our day-to-day needs and

activities. Natural gas is a major component of the world’s supply of energy. It is one of the

cleaner, safer, and most useful of all energy sources. Natural gas is a combustible mixture of

hydrocarbon gases. While natural gas is formed primarily of methane, it can also include ethane,

propane, butane and pentane. The composition of natural gas can vary widely, but below is a

chart outlining the typical makeup of natural gas before it is refined.

Natural gas is considered ‘dry’ when it is almost pure methane, when associated hydrocarbons

are removed. When other hydrocarbons are present, the natural gas is ‘wet’.

Typical Composition of Natural Gas

Table 3-1Typical Composition of Natural Gas

Methane CH4 70-90%

Ethane C2H6

0-20% Propane C3H8

Butane C4H10

Carbon Dioxide CO2 0-8%

Oxygen O2 0-0.2%



Source: Duke Energy , (www.arizonaenergy.org/Data/natural_gas.htm)

According to BP statistical review 2014

Consumption

World gas consumption grew by 1.4%, below the historical average of 2.6%. Growth was below

average in every region except North America. China (+10.8%) and the US (+2.4%) recorded the

largest growth increments in the world, together accounting for 81% of global growth. India(-

12.2%) recorded the largest volumetric decrease in the world.

Production

Global natural gas production grew by 1.1%, which was well below the 10-year average of 2.5%.

Growth was below average in all regions except Europe and Eurasia. The US (+1.3%) remained

the world’s leading producer, but both Russia (+2.4%) and China (+9.5%) recorded larger

growth increments in 2013. Nigeria (-16.4%), India (-16.3%), and Norway (-5%) recorded the

largest volumetric declines.

Trade

According to BP, the global natural gas trade grew by 1.8% in 2013, well below the historical

average of 5.2%. Pipeline shipments grew by 2.3%, driven by a 12% increase in net Russian

exports, which offset declines in Algeria (-17.9%), Norway (-4.5%) and Canada (-5.5%).

Among importers, growth in Germany (+14%) and China (+32.4%) more than offset a continued

decline in the US (-10.9%).

Global LNG trade increased by 0.6% in 2013. Increased imports in South Korea (+10.7%),

China (+22.9%), and South and Central American importers (+44.7%) were partially offset by

lower imports in Spain (-35.6%), the UK (-31.9%) and France (-19.4%). Qatar continued to be

the largest LNG exporter (32% of global exports) and accounted for the largest growth increment

Nitrogen N2 0-5%

Hydrogen sulphide H2S 0-5%

Rare gases A, He, Ne, Xe trace



(+2.7%). LNG’s share of global gas trade declined slightly to 31.4%, and international natural

gas trade accounted for 30.9% of global consumption.

3.2 GAS DEMAND AND SUPPLY SCENARIO – INDIA

3.2.1 DEMAND SIDE

India has developing market for natural gas but there is infrastructure constraint in the country

due to which proper optimization and transportation of natural gas is a major issue. In recent

years, the demand for natural gas in India has increased significantly due to its higher

availability, development of transmission and distribution infrastructure, the savings from the

usage of natural gas in place of alternate fuels, the environment friendly characteristics of natural

gas as a fuel and the overall favourable economics of supplying gas at reasonable prices to end

consumers.

Power and Fertilizer sector being the prioritized sector for the natural gas consumption, remain

the two biggest contributors to natural gas demand in India and continue to account for more

than 55% of gas consumption. India can be divided into six major regional natural gas markets

namely Northern, Western, Central, Southern, Eastern and North-Eastern market, out of which

the Western and Northern markets currently have the highest consumption due to better pipeline

connectivity. However, with the increasing coverage and reach of natural gas infrastructure in

India, this regional imbalance is expected to get corrected.

Consolidated segment wise demand for natural gas from 2012-13 to 2029-10

Table 3-2 Consolidated segment wise demand for natural gas from 2012-13 to 2029-10

MMSCMD 2012-13 2016-17 2021-22 2026-27 2029-30

Power

86.50

158.88

238.88

308.88

353.88

Fertilizer

59.86

96.85

107.85

110.05

110.05

City gas

15.30

2.32

46.25

67.96

85.61

Industrial

20.00

27.00

37.00

52.06

63.91

Petrochem/Refineries/Internal



Cons. 54.00 65.01 81.99 103.41 118.85

Sponge Iron/Steel

7.0

8.0

10.00

12.19

13.73

Total Realistic Demand 242.66 378.06 516.97 654.55 746.03

Source ‘Hydrocarbon Vision 2025’ report.

3.2.2 SUPPLY SIDE

The supply of natural gas is likely to increase in future with the help of increase in domestic gas

production and imported LNG. The expected increase in domestic production at present is

significantly lower than earlier projection due to steady reduction in gas output from KG D6

field. The capacity of RLNG terminals in India is expected to increase from 17.3 MMTPA in

2012-13 to 83MMTPA in 2029-30 assuming all the existing and planned terminals in India

would materialize. Natural gas availability through non-conventional sources like Shale Gas and

Gas Hydrates has not been considered in gas supply projections in the absence of clarity on key

variables like data as most of India remains unexplored, regulatory policy and lack of domestic

infrastructure.

The total supply of natural gas is expected to grow at a CAGR of 7.2% from 2012 to 2030

reaching 400 MMSCMD by 2021-22 and 474 MMSCMD by 2030.

Consolidated segment wise demand for natural gas from 2012-13 to 2029-10

Table 3-3 Consolidated segment wise demand for natural gas from 2012-13 to 2029-10

MMSCMD 2012-13 2016-17 2021-22 2026-27 2029-30

Domestic

Sources 101.1 156.7 182 211 230

LNG Imports 44.6 143.0 188 214 214

Gas Imports (Cross

border Pipelines) 0.0 0.0 30.0* 30 30

Total 145.7 299.7 400 454 474

* TAPI pipeline projected to get commissioned in 2017-18



Demand Supply balance of natural gas from 2012-13 to 2029-30

Figure 3-1 Demand Supply balance of natural gas from 2012-13 to 2029-30



3.3 NATURAL GAS PROVED RESERVES

The total amount of proved reserves in the world according to BP Statistical review 2013 is

6743.5 trillion cubic feet. According to BP Statistical review 2014 the proved natural gas

reserves of some countries are as per below

Country Proved Reserves (tcf) Share of total(%)

Iran 1226.7 18.0%

Russian Federation 1134.3 17.6%

Qatar 896.2 13.4%

Turkmenistan 634.8 9.3%

US 339.3 4.5%

Saudi Arabia 299.0 4.4%

United Arab Emirates

221.2 3.3%

China 118.9 1.8%

India 49.2 0.7%

Here we can see, Iran has largest proved reserves in the world of about 1226.7 tcf, followed by

Russia having 1134.3 tcf, then by Qatar, Turkmenistan and US, Saudi Arabia, U.A.E, China,

India. As mentioned in the table India does not have large amount of proved natural gas reserves

only about 49.2 tcf which accounts for 0.7% of total world reserves.



3.4 NATURAL GAS PRODUCTION:

Natural gas consumption is increasing because of its properties and being environment friendly.

Today many countries are switching from their existing fuel to natural gas because of it. The

consumption amount of some countries in year 2012 are given in the table below (according to

BP Statistical review 2014)

Table 3-4 consumption amount of some countries in year 2012

Country Production (tonnes) Share of total (%)

US

627.2

20.6

Russian Federation

544.3

17.9%

Iran

149.9

4.9%

Qatar

142.7 4.7%

Canada

139.3

4.6%

Norway

97.9

3.2%

China

105.3

3.5%

India 30.3

1.0%



US is leading in the world natural gas production having 627.2 tonnes, followed by Russia, Iran,

Qatar and Canada. India has annual production of about 30.3 tonnes of natural gas in 2013 but it

is expected to rise this year because discovery of a new gas reserve in KG basin by Reliance

Industries Ltd. Though this much indigenous production is not enough to meet India’s growing

demand due to which LNG imports are increasing in India to meet some of its demand.

3.5 NATURAL GAS CONSUMPTION:

Natural gas consumption is increasing because of its properties and being environment friendly.

Today many countries are switching from their existing fuel to natural gas because of it. The

consumption amount of some countries in year 2013 are given in the table below (according to

BP Statistical review 2014)

Country Consumption (bcm) % of Global

US 737.2 22.2%

Russian Federation 413.5 12.3%

Iran 162.2 4.8%

China 161.6 4.8%

Japan 116.9 3.5%

Saudi Arabia 103.0 3.1%

Canada 103.5 3.1%

India 51.4 1.5%

US is also leading in consumption of natural gas along with its production followed by Russia,

Iran, China and Japan. India has only 51.4 bcm of natural gas consumption in year 2013 whereas

its production was only 30.3 tones the difference was met through LNG imports.



3.6 NATURAL GAS TRADE

3.6.1 INTRODUCTION TO THE MARKET

a) Henry Hub: Henry Hub pipe line is New York Mercantile Exchange natural gas futures

price-point. It consists of 14 interconnected pipelines and also a salt cavern for storage. It is a

distribution hub owned by Sabina Pipeline LLC in Erath, Louisiana on the natural gas

pipeline system. It connects four intrastate and nine interstate pipelines with it and has

transportation capacity of 1.8 billion cubic feet per day. It acts as a delivery point for future

contracts of New York Mercantile Exchange (NYMEX). NYMEX Henry Hub delivery

order contracts began trading in 1990, delivered in the future is a possible 18 months. Henry

Hub settlement price is used as a benchmark for the entire North American natural gas

market.

b) National Balancing Point (NBP): It is a virtual trading location used for natural gas trading

in UK for exchange, sale and purchase of natural gas. It acts as pricing point as well as

delivery point for future contacts of natural gas for Intercontinental Exchange (ICE).

c) Title Transfer Facility (TTF): TTF is virtual trading point of natural gas for the

Netherlands. TTF is operated by independent subsidiaries of Gasunie, gas transport services

BV, physical short-term gas and gas futures contract is trading at APX-ENDEX. Which

handles natural gas future contracts and physical short term contracts. At TTF natural gas is

traded at Euros per Megawatt-Hour.

3.6.2 MODE OF TRADING

Natural gas is traded either in gas form through pipelines or in the form of LNG.

Liquefied Natural Gas (LNG):- Liquefied Natural Gas (LNG) is a liquid mixture obtained by

refrigerating natural gas to -162°C under atmospheric pressure. The economic value for storage

and transportation of LNG is high because one cubic meter of LNG generally can contain 620

standard cubic meters of natural gas.



Other favorable characteristics that make natural gas a superior fuel when compared to oil and

coal are the low carbon emissions and high calorific value. LNG forms an important part of the

natural gas trade. At present, it consists of around 15% of natural gas trade, but this trend is soon

going to change, as more countries are turning towards LNG trade to secure their energy

requirements.

Trade involving LNG is widely expanding and optimization of value is being sought by all

parties involved. In due course of time many more speculative participants have emerged, who

are willing to invest large sums of capital on the industry’s future needs.

LNG has a value chain which is as follows:

There are five main basic components

a) Exploration and Production.

b) LNG liquefaction.

c) Transportation.

d) LNG regasification.

e) Storage.

Figure 3-2LNG value chain

LNG can also be transported through road and railway carriages



Figure 3-3 transportation through road and railway

LNG Economics: The typical size of investment for setting up a LNG import & export facility,

with a capacity of 5 mmtpa is $2.5 to 3 billion for the gas treatment & liquefaction plant and

$500 million for an import terminal and regasification plant. Though it is also very important that

all the elements of the chain i.e gas production, liquefaction, transportation and end consumer)

are tied up simultaneously, in order to ensure the bankability of the project.

Typical Capital Costs of 2.5 MMTPA LNG Project

Figure 3-4 Typical Capital Costs of 2.5 MMTPA LNG Project



Trading through pipelines

Pipelines are the best economical and cost effective way to transport the natural gas.In the recent

era 70% of the natural gas is being transported through pipeline and remaining 30% is in the

form of LNG. There are mainly three types of pipeline system.

a) Cross border pipeline system.

b) Cross country pipeline system.

c) Distribution pipeline system.

Overview of LNG trading

Global LNG flows fell by 1.6% from 241.5 MT in 2011 to 237.7 MT in 2012.This was mainly

because of supply issues in Southeast Asia and domestic and political challenges in MENA.

Qatar and Nigeria were able to cover up production to offset for these losses. For the demand the

growth in Japanese demand (+8.5 MT at 2011) was offset by cargoes diverted away from the

United Kingdom. Although in Europe, LNG consumption fell since pipeline gas was more

affordable.

Only 3.73 MTPA of effective capacity was added in 2012 .The Marsa el Braga asset in Libya

failed to supply a single cargo due to civil war occurred in 2011, now it is assumed to be de-

commissioned. Angola will be joining in the list of LNG exporters in 2013.The number and

geographic reach of countries that have started importing LNG over the past four years has

grown rapidly. From 2008 to 2012, Canada, Brazil, Chile, Kuwait, Indonesia, Thailand, and the

UAE have begun importing LNG joining the existing 18 importers. Thus far in 2013, Singapore

and Israel began receiving commercial cargoes and Malaysia has received a commissioning

cargo. These countries were not considered to be potential LNG importers a decade ago – and

the United States has shown a slow LNG imports by now. These changes reflect the flexibility of

the LNG chain.

Variations in regional demand patterns and the participation of so many new importers created a

large curve in import in 2012 relative to 2011. Seven countries like (UK, Italy, France, US,

Belgium, Spain, and Canada) observed imports fall by 1.0 MT, whereas six countries (Japan,



India, Turkey, Brazil, China, and South Korea) noticed imports increase by 1.0 MT. Even

observing an increase in interregional trade, still there is no “Global” LNG market with a single

price pattern.



4 MARKETING OF NATURAL GAS

4.1 DISTRIBUTION THROUGH PIPELINES

There exists various modes of transportation available for natural gas, among all pipeline is one

of the convenient and most economical ways of transportation. Hazira-Vijaypur-Jagdishpur was

India’s first cross country gas pipeline. The project was started in 1986 after the incorporation of

GAIL to supply gas to the fertilizer plants located in the state of Uttar Pradesh .This pipeline was

laid down in 1980.And it was commissioned in 1997. The length of this pipeline is 3474 Km.

4.2 EXISTING PIPELINE INFRASTRUCTURE

Currently for Natural gas transmission India has a network of more than 13000 km. The design

capacity of this gas transmission pipeline is of around 337 MMSCMD. In coming five to six year

it is expected that this pipeline network will expand upto around 28000 kms and the design

capacity will be around 731 MMSCMD. All major demand and supply centers will be connected

via natural gas grids.

Gas infrastructure for current scenario including existing/underconstruction pipeline network and

LNG terminals is shown below.



Figure 4-1 Gas infrastructure for current scenario including existing/underconstruction pipeline network and LNG

terminals

Pipeline network design capacity in India is expected to touch 763 MMSCMD by the end of

2029-30.Natural gas sector in India is at the verge of rapid growth because of increase in demand

of gas, increase exploration efforts, projected upcoming LNG terminals, and initiative taken by

government for the development of nationwide pipeline grid. However, there is a greater need of

providing a proactive environment in order to support the fast development of gas infrastructure.



This proactive enabling environment involves providing the correct pricing signals for

investment and support policies by government in the sector.

4.3 NATURAL GAS PIPELINE SHARE IN INDIA

Natural gas transmission infrastructure in India

Table 4-1 Natural gas transmission infrastructure in India

Source MOPNG



5 INTRODUCTION OF LNG

5.1 GLOBALIZED LNG MARKET

In order to provide the economic means for the transportation of natural gas over long distances

from remote gas reserves to the market, LNG is the best method of practice. In coming years

Australia will emerge as a largest supplier of LNG globally. With so many projects of LNG

under construction and due to large investments in the production of LNG, has made a dramatic

shift in the economy of the countries. A total of approx. $120 billion has been invested in LNG

production. Countries like Qatar (RAS Gas) & Australia are exporting LNG to India and by this

trade of LNG they are enjoying the benefits.

Russia is switching from natural gas-based power plants to nuclear-based power plants. As they

are holding the large amount of natural gas reserves so it’s a great opportunity for them to export

LNG. Countries like JAPAN are shifting to gas based power plants from nuclear- based power

plants and along with this Europe countries are mainly focusing on the environmental pollution.

So, Europe will need a huge quantity of Natural Gas as it is a cleaner & greener fuel. In effect of

these changes in Europe & JAPAN, demand of LNG will increase.

India being the developing country needs a huge amount of LNG in order to satisfy the needs of

various sectors like fertilizer industry, power industry, Petro-chemical industry and also for the

domestic purposes.

LNG trade is increasing at great pace in India. For the year 2013-14, GAIL has ordered 26

barges/tankers of LNG only & for the year 2014-15, GAIL has ordered 36 barges/tankers as

there was the increase in the demand of natural gas from the last year. So, this shows that the

demand of LNG is increasing day by day.

5.2 EARLY LNG MARKET SCENARIO

In the late 1980s Henry hub adoption and a liberalized gas market rise taken place which was the

effect of unraveling of regulatory complexity and competitive production base in North America.

In the late 1990, after the liberalization and privatization programme UK developed the National

Balancing Point (NBP) for the reference. The sustainable Europe policy was driven to create a



competitive gas market. The trading hubs already established, began to succeed after 2008

financial crisis. At that time there was the combination of lower demand and a glut of LNG

which led to develop liquidity for husband a reference price of gas in North –West Europian

market took over. Countries like Japan, South Korea, Taiwan, India, China, Thailand have

aggregately accounted for the majority of LNG global imports since 1970.Asian LNG trades has

been based on Japan Crude cocktail (JCC) mechanism for the past 25 years. There has been

regular complaints regarding the price rise of LNG in pacific basin since 2011.Henery hub plus

formula is used for the shining of LNG import contracts since 2011.

Global LNG imports since 1964-2012

First importer of LNG was UK & France in 1960.Since late 1970 Asia also dominated the trade

of LNG globally. Asian imports were reduced in 2009 due to the financial crisis of of 2008 .

After the disaster of Fukoshima, LNG imports was increased for japan Factors responsible

Factor responsible for tightening of Asian LNG market are as follows.

Since 2003 onwards, Indonesian LNG imports were underperforming.

Due to continuous rapid growth in Asian natural gas demand as the most of the countries are

developing countries.

Delay in project start up dates of LNG.

As the Japan was shifting from the nuclear based to gas fired power generation systems led to

the tightening of Asian gas market.



Figure 5-1 Global LNG imports since 1964-2012

Source:-cedigaz various issues, GIIGNL(2012)

5.3 LNG MARKET RECENT SCENARIO:-

In the world fuel mix LNG contributes to 2 to 4 % of Energy.



5.4 LNG DEMAND SUPPLY SCENARIO

At present scenario due to India is the fourth largest consumer of LNG after US, China and

Russia. The primary energy consumption of India has been doubled between the time span of

1990-2011. It is projected that Indian natural gas market is one of the fastest growing market in

the world .As the power sector and fertilizer sector is growing with the great pase, So there was a

increasing demand of 23-38% of total energy consumption between 1999-2009 . India & China

has represented 12% share combindly in 2012 .India started importing LNG from Qatar in 2004

to meet the domestic natural gas demand gaps. India became the sixth largest LNG importer in

2011 which was the 5.3% of the total global imports. From 2001-2011 the gas consumption has

grown at the annual rate of 10%.

Table 5-1 India’s gas demand-supply gap projection

YEAR 2015 2020 2030

Gap in demand & supply

in (MMTPA) 14.175 22.05 40.95

It is expected that LNG imports will increase at the continuous annual growth rate of 19% over

the financial year 2013-15.And this increase in import will only meet the shortfall. Unless &

until huge LNG regasification capacity is planned.



Existing and Projected LNG Regasification capacity

5.5 BENEFITS OF LNG

Principle use of LNG is to transport natural gas to the global markets where it is regasified and

then distributed by the pipelines to the customers. LNG in foreign countries is used to run the

heavy duty vehicles. Due to high cost of manufacturing of cryogenic cylinders its used is not

much in fashion for domestic purposes. But initiatives are taken by many cryogenic cylinder

manufacturing companies like INOXCVA, CHART INDUSTRIES, LUXI CHINA and

TAYLOR WHARTON etc. So the use of LNG is going to increase in the coming future for

domestic purposes as well.

Some of the advantages are listed below.

As the natural gas expands 600 times in order to reach its gaseous state. So, by the virtue of

this property, large amount of natural gas can be transported & stored at low pressure.



Consumption is less i.e. to carry out the same amount of work as compared to LPG & other

fuel resources like coal & wood because of the fact that LNG has 14% high calorific value as

compare to LPG.

LNG is much and much safer as compared to the LPG as the density of LNG is less than

density of the air but in case of LPG it’s not.

LNG can be used in all types of the burning devices but minor changes are required to be

made.

LNG is much and much cleaner & greener fuel as compared to other sources.

LNG is much suitable for the operations & processes like steam recovery, process operations,

cooking purposes & heating purposes in the steel industry. Paper & ceramic industry.

In comparison with black products like fuel oil, diesel, LPG it is much and much economic

source of energy.

Maintenance cost is reduced in cost of LNG is very less as it is a cleaner and greener fuel.

5.6 ENVIRONMENTAL BENEFITS & IMPACTS OF LNG

Benefits

LNG can play an important role to satisfy the growing energy demand in an eco-friendly manner

as it is a clean burning fuel. We can say that LNG is a fuel for 21st century. It has been

recognized that LNG is the cleanest burning fuel and less amount of CO2 emissions are

produced. Liquefied natural gas produced 25% less CO2 emission.

LNG on combustion produce no unburned residue, and also releases CO2 as compared to other

fossil fuels. LNG requires no cleanup incase if it spills on water or land as it leaves no residue.

Compared to diesel, typical emissions savings associated with natural gas are:

a) Reduction of Well-to-Wheel greenhouse gas between 11% and 20%.

b) Nitrogen oxides emissions reduced by 80%.

c) Reduction of Particulate emissions by 75%.

d) Greenhouse gas emission reduced by 15%.

e) Nitrogen oxides emissions reduced by up to 50%.



f) Particulate emissions reduced by up to 10%.

Impacts

a) Around 140% more greenhouse gases are produced by LNG as compared to regular natural

gas.

b) Emissions from 500,000 cars is equivalent to projected emission of the plant and

regasification i.e. 2 million tonnes.



6 JINDAL ENERGY LIMITED

JEL is in the process of setting up of its very first LNG hub at Dahod for storage and distribution

of Liquefied Natural Gas. LNG will be procured from M/s. Petronet LNG, Dahej Terminal

through M/s. Indian Oil Corporation Limited (I.O.C.L) in road tanker. It will be unloaded and

stored in storage tank at LNG hub. LNG will be then filled in containers of 230L/450L capacity

and distributed to customers. It is also planned to refill LNG containers of 450 L at customers

end by utilizing mobile fueler tank.

JEL intends to set up such 15 LNG Hubs with all infrastructures initially in Gujarat State and

Madhya Pradesh in first phase & thereafter expanding their activities in the neighboring states

like Karnataka, Maharashtra, etc.

The company has already decided & identified the suppliers of LNG Storage Tank, Mobile

fueler Tanks and containers of 230L/450L for Dahod LNG hub and purchase orders will be

placed after due approval from CcOE.

6.1 BUSINESS PLAN

Jindal Energy Limited (JEL) is a public limited company registered with the Registrar of

Companies of Maharashtra State under Companies Act 1956, having its registered office at

Mumbai and Administrative Office at Hotel Surya, Sayajiganj,Vadodara. The main objective of

company is to create distribution network throughout the country for the distribution of LNG as a

substitute to LPG to industries, commercial units, residences and automobile users.

To fulfill the objective, JEL has acquired the industrial plots at Dahod and Sanand (both in

Gujarat State) and Pithampur (Dist. Dhar, M.P.). To initiate the business activities, JEL is

planning to set up an LNG Hub at Dahod, Gujarat State.



6.2 MANAGEMENT OF THE COMPANY

The Management of the Company is being governed by the Board of Directors headed by Shri

Hasmukh R. Shah. The operations of the company are being looked after as under:

1. Shri Hasmukh R. Shah (Director on the Board & CEO): Shri Hasmukh Shah is the

founder Director and CEO of the company. He holds a Bachelor’s degree in Electrical

Engineering from M.S. University of Baroda in 1974. He is ex-chairman of IEEE Power &

Energy Society of India Council and associated with many technical institutes and social

organizations. He is having long standing experience of 40 years in Business Management.

The overall project is being managed by him.

2. Shri N.K.Khosla (Director): He is a graduate in mechanical engineering having passed

B.Sc. Engineering (mechanical) degree from NIT, Kurukshetra in 1975. He has a work

experience in Oil and Gas industry of more than 34 years in the fields of technical services,

procurement, project management, materials management, inspection, H.S.E etc. Mr. Khosla

super annuated in 2012 as Executive Director (Panipat Naptha Cracker Project) and

Executive Director (H.S.E) corporate, of Indian Oil Corporation Limited. Headed project

execution of several refinery and petrochemical projects of IOCL. He lead Health Safety &

Environment function of all divisions of IOCL i.e refineries, marketing, pipelines,

petrochemicals and R&D center. Presently proprietor of Project Development Centre,

Vadodara providing consultancy services in project execution and other areas of

expertise. He is looking after the project and safety part of LNG Hubs.

3. Shri Sohan Bir Singh (Director): Shri S.B. Singh is appointed as a Technical Director of

M/s. Jindal Energy Ltd. He holds the degree of B.Tech. (Electrical) in 1974 from the

Institute of Technology, B.H.U. He is also life member of Indian Project Management

Association. He has worked at very senior levels in reputed multinational organizations such

as EIL, Linde. He worked in capacity of General Manager at Linde. At present, he is

looking after the Project Management Strategy and Statutory Approvals for the Project.



4. Shri Kiran H. Baxi (General Manager): Shri K.H. Baxi is a General Manager (Projects) of

JEL. He graduated in Chemical Engineering from M.S. University of Baroda in the 1972.

He is having wide experience of about 40 years in the field of Petrochemical Industries and is

Ex-General Manager of Gujarat State Fertilizers (Polymers Unit). He is looking after process

requirements and project engineering works.

6.3 DISTRIBUTION PROCESS OF JEL FOR LNG CYLINDERS

Jindal Energy Limited is planning to provide the LNG in cylinders to the customers at their door

step. The cylinders are of mainly two types:-

Movable LNG Cylinders.

Fixed LNG Cylinders.

6.3.1 MOVABLE LNG CYLINDERS

Stage I

1. Pilot Project shall be set up at Dahod (Gujarat).

2. LNG shall be supplied by IOCL from terminal to JEL

LNG hub located at Dahod.

3. IOCL shall provide all technical back up for storage,

unloading and other activities.

4. From the LNG hub storage tank of 60 KL, JEL will fill

LNG in movable 230 L containers (PESO approved).

LNG from Lorry Tankers will be unloaded through

unloading pump to LNG storage tank with temperature

-162o C, 10.5/6 kg/cm

2 gauge pressure & 100-175 lpm

flow rate. The operating pressure of storage tank will be

3 kg/cm2g.

Figure 6-1 movable cylinder



From storage tank, liquid containers/micro bulk fueler, filling will be done through pump.

The suction pressure of pump will be 3 kg/cm2g & discharge will be 10.5 kg/cm

2g.

5. Individual cylinders of 230 L will be filled in LNG hub.

6. These cylinders are moved by LCV to the usage point.

7. The empty cylinders go back to the LNG hub for refilling.

6.3.2 LNG FIXED CYLINDERS

Stage II

After stabilizing operation of filling LNG in 200L cylinders at hub and supplying it to customers

in Phase I, we will plan supply to medium scale consumers such as hotels, hospitals, small

industries, commercial houses, etc. by mobile road fueler for which following operations shall

take place.

Figure 6-2fixed cylinders

1. Mobile fueler of capacity 2000L / 3000L will be filled at LNG Hub from main storage tank.

2. LNG cylinder of 450 L are kept at customer end and refilled by mobile fueler. This operation

will be very safe as cylinder is not movable. Hence, the durability of cylinder will be better.



6.4 KEY FEATURES OF SUPPLYING LNG BY MOBILE FUELER

a) Bulk distribution of product.

b) Elimination of cylinder exchange.

c) Convenience.

d) Safety as low pressure vessel.

e) Filling by submerged transfer pump so no cooling time required and fast delivery time.

6.5 ADVANTAGES OF UTILIZING LNG CONTAINERS OVER LPG CONTAINERS

(SAFETY & SAVINGS)

a) 1 LNG container (230L) = 6 Nos. LPG cylinders (14.2 kg each).

b) Contamination from recycle in LPG cylinders is eliminated & the availability of high quality

product is guaranteed in LNG cylinders.

c) In fixed cylinders of LNG there is no cylinders handling and reduced job related injury.

d) Lower operating pressure in LNG compared to LPG.

e) Minimal risk of gas leaks.

f) Efficient use of storage space.

g) Reduced labour cost.

6.6 LNG AS THE FUEL OF CHOICE FOR NON-DOMESTIC SEGMENT

LNG is natural gas liquefied to –162o C.

LNG needs to be stored at this temp. At this temperature 1 unit of LNG is equal to 600 units

of natural gas.

LNG can be stored in small vessels in cryogenic containers (double-walled vessels with

vacuum insulation).



LNG has calorific value of 13054 Kcal while LPG has 11450 Kcal, i.e. LNG has 14% more

heat content.

LNG is much safer than LPG. LNG being lighter than air dissipates easily in the air, while

LPG being heavier settles down and hence is a safety concern.

LNG storage is atmospheric while LPG storage is at 4kg/cm2 pressure so more unsafe.

6.7 LPG CYLINDERS V/S LNG MICROBULK

Figure 6-3 LPG system from botteling to delivery is involved in five stages ,while in case of

LNG microbulk system there will be only three stages for distributions



6.7.1 CONVENIENCE

Figure 6-4It shows that 1 LNG cylinder of 230 L will replace 6 LPG cylinders of 14.2 kg

each

6.7.2 QUALITY

Figure 6-5Quality of LNG will be consistent as supply will be from permanent dedicated

cylinder.



6.7.3 DISTRIBUTION OPTION

Figure 6-6LPG distribution is manual while LNG distribution in Mobile fueler is feasible

which is more convenient &requires less manpower.

6.8 SOME MANDATORY APPROVALS

Some of the necessary approvals / licenses as per SMPV Rules: 1981 & Gas Cylinders Rules:

2004.

a) Vendor approval for fabrication of pressure vessel / containers.

b) Approval of design drawings from PESO approved manufacturer and stage wise inspection

Reports by a recognized 3rd

party agency.

c) After installation of facility, 4 copies of “as-built‟ site layout, foundation drawings,

P&I drawings and fabrication drawings of each pressure vessel.

d) Test and inspection certificates under SMPV rules from a competent person as per PESO

rules

e) “NOC‟ from District Authority.

f) Form “E‟ & “F‟ under gas cylinder rules for filling and storage of cylinders



6.9 LNG REGULATIONS

It is decided to follow International standards, codes, practices and procedures for designing,

construction, equipment’s, operations, maintenance, fire protection system of the proposed

system.

The various standards which we are planning to follow are as under:-

1. NFPA 59A

This is a standard for the production, storage and handling of LNG. This is an industry standard

issued by National Fire Protection Association (NFPA). NFPA 59A covers general LNG facility,

process systems, LNG storage containers, piping systems, vaporization facilities and

components, instruments and electrical services, fire protection, safety and security. It also

mandates alternative requirements for vehicle fuelling for industrial and commercial facilities

using ASME pressure vessel containers. It also includes requirements for LNG facilities to

withstand substantial earthquakes. The NFPA standard for level of design means that the LNG

facilities are strongly fortified for other events such as wind, earthquakes and blasts.

2. BS-EN 1251 – 3:200

This standard is for cryogenic vessels – transportable vacuum insulated vessels of not more than

1000L volume and covers operational requirements. The standard provides detailed information,

guidelines, laid down procedures for handling, filling and local transportation of cryogenic

vessels – capacity less than 1000L.The scope includes putting into service of filling, withdrawal,

and transport within the location, storage, maintenance, periodic inspection and emergency

procedures.

3. ASME BOILER & PRESSURE VESSEL CODE

ASME section provides rules for the fabrication design, and inspection of pressure vessels and

boilers. A pressure component designed with this standard will have a long, service life and it

will ensures the protection of human life and property.

4. BS-EN-13458-2



British Standards for cryogenic vessels, design, fabrication, inspection and testing standards.

5. EN-1251-2 : 2000

This is a standard for designing, fabrication, inspection and testing of cryogenic vessels

transportable vacuum insulated vessels of not more than 1000L volume.

6.10 SAFETY CONSIDERATION IN LNG PLANT

1. LNG is being first time introduced in India for domestic / small non-domestic consumers by

supply in containers.

Since LNG is a non-toxic, flammable cryogenic liquefied gas, it is essential to comply with

strict safety and fire procedures and practice in its storage, filling and transportation

operations. At present, there are no national standards for LNG containers filling and

distribution. The LNG distribution in containers is first time in India. So, M/S JEL shall

follow international standards for the same.

Hence, Jindal Energy Limited (JEL) has decided to implement its LNG hub pilot plant project

by following prevailing standards, codes, procedures in construction, design, storage, cylinder

filling and operation in USA and European Countries.

2. JEL is committed to follow and maintain highest level safety standards during various stages

of project, commissioning and operation and distribution of material. Hence JEL has

conducted various safety studies through renowned consultants and submitted the reports to

PESO as supporting documents to the approval application for project implementation.

The various technical reports prepared are as follows:

HAZOP Study Report

Quantitative Risk Assessment

Standard Operating Procedure

Fire Protection System



3. The procedures of procurement of cryogenic containers for filling LNG shall also be

followed as per guidelines of PESO. The containers shall be procured / imported from the

world renowned suppliers such as CHART, TAYLOR WHARTON, TGL, CRYOLAR,

INOX etc. Only after prior approval of PESO.

6.10.1 IMPORTANT SAFETY FEATURES OF PLANT

Safety in our LNG plant shall be insured by four elements that provide multiple layers of

protection both for the safety of plant workers and safety of communities that surrounds LNG

facilities.

1. Storage of LNG: It is the first and most important requirement for containing the LNG

product. The LNG storage tank shall be full containment container in which inner vessel is

self-standing having material of construction S.S. 316 and surrounded by a separate self-

standing secondary container of carbon steel designed to contain LNG in the event of spill

from the inner primary container. Since this is a multi-layer tank, no leakage is envisaged

and system may be considered full- proof.

2. Safeguard systems offers a third layer of protection: The objective is to prevent /

minimize the frequency and size of LNG release and prevent having from potential

associated hazards such as fire. To provide this level of safety protection, LNG operations

use technologies like high level instrumentation with alarms, and multiple back up safety

systems which include emergency shutdown systems (ESD). ESD systems can identify

problems and shut off operations in the events of certain specified faulty conditions or

equipment failure occurs and which are designed to prevent a limit the significantly the

amount of LNG and LNG vapors that could be released. Fire and gas detectors and

firefighting systems all combine to limit effects if there is a release.

3. The LNG facility in charge should take action by establishing necessary operating

procedures, training, emergency response systems and regular preventive maintenance to

protect people, property and environment from any release.

4. Finally, LNG facility shall be designed as required by regulations to maintain separation

distances between the equipment’s, provisions of roads for vehicle movements, provision of



emergency escapes, ventilation at filing and storage areas, minimum distance between

periphery of equipment’s and boundary of premises, etc.

6.10.2 SAFETY IN LNG CONTAINERS

LNG container is a double layer vessel. They are designed with International standards of

pressure vessel with appropriate material of construction. The inner and outer vessels are

constructed of SS 304. Inner vessel support system, foot ring and the works protective ring

designed to withstand many years of service in Industrial, chemical and medical applications.

The salient features of design are as follows:

i) The insulation system is provided by multilayer spiral wrapped insulation of the inner vessel,

a high vacuum between the vessels, and an inner vessel support system which is a designed

to minimize next communication between the vessels while providing safe support during

handling.

ii) The cylinder has 2 safety relief devices to protect the inner vessel and 2 safety devices to

protect outer vessel from over pressurization.

iii) Pressure Building System: An internal automatically controlled pressure building system is

provided with these cylinders to maintain the desired gas pressure wile continuous gas

withdrawal is taking place. This system is automatically controlled by the pressure building /

economizer regulatory, but can be insulated by actuating the pressure building valve directly

behind the regulator. Gas withdrawal is accomplished through an internal vaporizer that will

provide continuous flow rates. If higher flow rates are needed, external vaporizers can be

added.



6.10.3 CONTAINERS TRANSPORTATION

Cryogenic Liquid Cylinders are portable cryogenic pressure vessels, tested, rated and approved

over the road transportation under US DOT 4L specifications.

When transporting it, the following suggestions complied with:

1. Safety precautions in loading and unloading shall be taken.

2. Do not roll the cryogenic containers by the handling ring as by holding the liquid level

indicator is plastic protective cover.

3. Container should be stored and operated under vertical condition.

4. Never lay, store or ship a container on the side.

5. After loading, heavy duty nylon straps should be used to fix the containers securely in a

truck.

6.11 FIRE PROTECTION SYSTEM DESCRIPTION

6.11.1 INTRODUCTION

The Fire Detection and Alarm System are the Primary function of detecting incipient fire,

and Fire Protection System to extinguish the Fire which will covers the total Storage plant

area.

This will address the scope, design requirement, and system operation detail for the Fire Protection,

Detection & Alarm System (FPDAS) required suppressing the fire at LNG storage area at plant in

Dahod India as per NFPA

The proposed Site has Fire Water Pump Room, Cylinder filling way, Skid loading way and

storage area of total approx. Site area 7388 sq. m.



6.11.2 SCOPE OF WORK

The plant site is located in Dahod in Gujarat India. The scope of work shall be consists of

following system which will be requirement as per NFPA under the occupancy classification

Group H storage as per NBC:

a. External hydrant system

b. Stationary fixed Water Monitor system

c. Portable Fire Extinguishers,

d. Flammable Detection and Alarm system

e. Fire Water pump room

6.11.3 DESIGN STANDARDS AND CODES – FIRE PROTECTION & ALARM SYSTEM

The Fire Protection and Alarm Systems shall be designed in accordance with the latest editions

of applicable NFPA codes, P&G Fire Protection Standards and Local fire codes.

NFPA 14

Standard for the Installation of Standpipes and Hose Systems

NFPA 59

Standard for the Installation Utility LP gas plant system

NFPA 20

Standard for the Installation of stationary pump for Fire protection

NFPA 22

Standard for the Installation of water tank for private fire protection

NFPA 72

Standard for the Installation of Fire Detection alarming and communicating system

IS 2189:1999

Selection, Installation and Maintenance of First Aid Fire Extinguishers – Code of Practice

UL (Underwriter Laboratory) listed

FM (Factory Mutual) approved



6.12 LNG CYLINDERS

In order to check the feasibility & the viability of the cylinders, we mainly targeted the three

international companies which manufacture the cryogenic cylinders according to the

internationally prescribed standards. By comparing the specification of the cylinders of all the

three companies, we have tried to check that which cylinder will be more feasible from the

techno-economic point of view. List of specifications of cylinders of these companies with the

table is provided as follows:

6.12.1 CHART TANK CYLINDER SPECIFICATION

Table 6-1 chart tank cylinder specification

Gross & Net Capacity for the medium pressure 230L cylinder is 240L &230L respectively.

Gross & Net capacity in gallons for the same 230L cylinder is 63.4 &60.8 gallons respectively.

Maximum Allowable Working Pressure for 230L medium pressure cylinder is 235 psig &

16.2bar. Design specification used for the manufacture of cylinder is DOT. Gross & Net

Capacity for the high pressure 450L cylinder is 450L & 420L respectively. Gross & Net



capacities in gallons for the same 450L cylinder is 118.9 & 111.0 gallons respectively.

Maximum Allowable Working Pressure for 450L high pressure cylinder is 350 psig & 24.1 bar.

Design specification used for the manufacture of cylinder is DOT.

6.12.2 INOXCVA TANK SPECIFICATION

Table 6-2 INOXCVA tank specification

INOXCVA manufacture model no. LCL20020 are with the following specification.

Maximum operating pressure is 20.4 kg/cm2 (g)

or 20 bar (g).operating Temperature is -162

0c .

Design temperature is -1960c & plus 40

0c. Gross capacity of the cylinder is 200 L. Net Capacity

of the liquid in cylinder is 67kg & 60kg. Net Capacity of gas is 93 Nm3

& 83.5 Nm3.



6.12.3 KEY FINDINGS FROM THE LUXI NEW ENERGY EQUIPMENT GROUP CO.

LTD

Table 6-3luxi cylinder specification

Luxi New Energy Equipment Group Co. LTD

Type CDPW 200L CDPW 450 L

Nominal capacity (L) 200 450

Usable capacity (L) 180 405

Filling Medium LNG LNG

Max filling weight (kg) 76.7 172

Nominal pressure (Mpa) 1.59 1.59

Calculating pressure Mpa 3.18 3.18

Design temperature °C -196 -196

Insulation type High vacuum multi-layers

spiral wound insulation

High vacuum multi-layers

spiral wound insulation

Material 06Cr19Ni10/SUS304/304 06Cr19Ni10/SUS304/304

Evaporation rate (%/d) ≤2.3 ≤2.1

Empty weight (kg) Without pressurized

devices≈184

Without pressurized

devices≈290

Surface treatment Polish Polish



From Luxi New Energy Equipment Group Co. Ltd , Jindal Energy Limited as per the business

plan has targeted the cylinder of nominal capacity 200 L & 450 L . The usable capacity for the

200L & 450L is 180L & 405L respectively. The maximum filling weight of cylinder for 200L is

76.7 kg & for 450L is 172kg. Evaporation rate for the 200L & 450L cylinder is less than 2.3 &

2.1 percent.

6.12.4 COMPARISON OF EURO CYLINDER & PERMA CYLINDER

Comparison can be made between the EURO cylindert & PERMA cylinder on the basis of

following graph.

Figure 6-7the pressure vs. days for the perma-cyl & euro-cyl.

The graph shown above is plotted between the pressure vs. days for the Perma-cyl & Euro-cyl.



MICROBULK EURO-CYL

Projected time for EURO-Cylinder to reach pressure up to 350psi (24) bar is 9 days. So from this

we came to conclusion that the design pressure of euro-cylinder (micro bulk) is 350psi. So

during the time when the usage of LNG will not be there, then due to the concept of boil-off,

LNG will start evaporating. Due to the effect of this evaporation, the pressure inside the cylinder

will start to increase & in 9 days it will reach to the design pressure. So, this concept of boil-off

can act as a limitation to the LNG in cylinders.

MICROBULK Perma Cylinder

Projected time to reach the pressure up to 250psi (g) in case of micro bulk perma cylinder is 15.1

days. This shows that the design pressure of the microbulk perma-cylinder is 250psi or 17 bar.

So, in case of no usage of LNG in cylinder & by the virtue of the boil off concept of LNG, it will

start evaporating. The pressure inside the cylinder will start to increase and will reach to the

maximum limit i.e the design pressure 17bar within 15.1 days.

Conclusion from the above inference for the perma-cyl & euro-cyl is that it is safe to keep the

cylinder not in use for 9 days in case of euro-cyl & 15.1 days for perma-cyl . After this period of

time, it is not safer as the due to increase in pressure & due to expansion of gas any accident or

hazard may occur.

This graph & data for comparison of MICROBULK Euro & Perma-cylinder is taken from the

website of Option Energy Pvt Ltd.

6.12.5 MICROBULK SYSTEMS ADVANTAGE

Microbulk Systems consists of three things.

1. ORCA Delivery

2. PERMA-Cylinder Storage



3. Cyl-Tel Remote Monitoring

ORCA Delivery

Fast, Reliable , Accurate Filling

Provide Better Gas Management

Onsite refilling reduces your cost

PERMA-Cylinder Storage

Achieve a higher purity gas supply

Eliminate cylinder handling.

Installed & dedicated to your application.

Cyl-Tel Remote Monitoring

Eliminate Product run-out.

User friendly content read out.

Guarantee a continuous gas-supply.



7 OBJECTIVE & HYPOTHESIS

7.1 OBJECTIVE

To explore the market potential of LNG in cylinders for commercial and industrial

requirement in Dahod District, Gujarat.

7.2 HYPOTHESIS

It is considered as the most important instrument in research. Most of the experiments in the

world are carried out with the objective of testing the hypothesis. The hypothesis may not be

verified completely, but in exercise it is accepted if it has survived a critical testing.

A hypothesis can be defined as, in simple terms a meager assumption to be verified or negated.

Figure 7-1evaluating the hypothesis

Figure:http://www.a2lc.com/Portals/16856/images/statistical-analysis-trial-graphics-litigation-court-resized-

600.jpg



In my project I have considered the following things:

a) A Null Hypothesis and an Alternative Hypothesis:

Ho : µ = µ Ho = LNG in cylinders is feasible.

Ha : µ ≠ µ Ho = LNG in cylinders is not feasible.

b) The Level of Significance:

I have considered the significance level at 5 %, which implies that Ho will be rejected when the

sampling result (i.e., observed evidence) has a less than 0.05 probability of occurring if Ho is

true.



8 RESEARCH METHODOLOGY

8.1 DESIGN OF SAMPLING PLAN

Based on the requirement I have selected the following research design:

1. Sampling involves different methods used to select the necessary information.

2. Observational involves detailed understanding of the conditions under which the

observations will be made.

3. Statistical involves details of the number of items from which the data has to be collected.

8.1.1 SAMPLING

a) In the first stage I have selected Dahod District, Gujarat to carry out the survey and have

considered to apply the following steps:

i) Type of Universe: The sampling universe will be restaurants, hotels, industries and hospitals

that consume LPG, Coal, Wood, Fuel Oil etc. in Dahod District, Gujarat. It is a finite

universe.

ii) Sampling Unit: It consists of only one location which is Dahod District, Gujarat.

iii) Sample Size: The sample size targeted in Dahod District, Gujarat was 80. Relevant sample

size is 60.

iv) Parameters of Interest: Parameter of interest in the project is the consumption pattern of LPG,

Wood, Coal, Fuel Oil etc so that the feasibility for the same can be easily calculated for the

same amount of LNG.

b) We have considered the concept of quota sampling from Dahod District, Gujarat.



8.1.2 OBSERVATIONAL DESIGN

The following things have been kept in mind while interviewing the respondents:

a) Full attention while filling up the survey.

b) Direct decision making in consumption of fuels.

c) Direct decision in making payments.

8.1.3 STATISTICAL

a) Collection of primary data from interviewing the respondents directly face to face.

b) Collection of primary data through two different methods:

i) Questionnaire.

ii) Interview.

c) I have basically tried to use the first method stated above in all of the case but there were

some instances where we adopted the second method to collect information.

d) I have carefully chosen the respondents for our interview as his being knowledgeable

regarding the usage and consumption pattern of LPG, Wood, Coal, Fuel Oil etc.

e) For successful data collection I filled the survey in-front of the respondents so that I get

quality data.

f) Sometimes I have to move in various departments to get the required data. I have moved to

finance department, production department and purchase department to get valuable and best

information.

As far as secondary data is concerned I have not gone through any previously acquired data for

LPG, Wood, Coal, Fuel Oil etc consumption in Dahod District, Gujarat. This is a totally new

project as no other consumption details for the specified place has been carried out earlier. We

have considered the primary data for the analysis.



8.2 DESIGN OF QUESTIONNAIRE

The questionnaire we used to get our data and to complete our survey is as follows

9 DATA COLLECTION

For the collection of data following two methods have been adopted:

1. Questionnaire.

2. Interview.

A very important criterion was kept in mind while choosing the sample which is availability of

open safe which is absolutely essential for LNG installation for its safe discharge into air.

9.1 ISSUES FACED

i) Presence of more than one respondents in a room. It made the survey very difficult to

complete in time as there were different views in some cases.

ii) Unavailability of higher authority to give us the data.

iii) Rejection to give time to fill up the survey.



9.2 MARKETING STRATEGY

Figure 9-1marketing strategy

Figure: http://websitedesigntactics.com/wp-content/uploads/2011/08/Hierarchy-0f-Effects-Pyramid1.jpg

9.2.1 AWARENESS

Today it is very important that customer should know about the product and to know the product

it very important to advertise for the product. But it does not always guarantee that the customer

will be aware and is ready to consume/use the product.

9.2.2 KNOWLEDGE

The customer initially gets familiarized to the products via the various channels of

advertisements. Consumers expect very easy access to product knowledge. The easy access to

product information is made sure by the advertiser.

9.2.3 LIKING

This ensures that your product is being liked by the customer. It is necessary to find out the traits

of the products which needs to be advertised so that it is being liked by the customers.



9.2.4 PREFERENCE

It is the point where the exceptionality of your product comes into play.

9.2.5 CONVICTION

Here the urge for the customer to go for the product is checked. The customers are allowed to

test the different aspects and features of the product. Consumers are now confident that their

purchases are going to be good.

9.2.6 PURCHASES

The above mentioned stages will induce the customer to vouch for the products. This has to be

an easy and simple step or else might make the customer revert back from buying your product.



10 RESPONSE ANALYSIS

10.1 DATA ANALYSIS

1. Which FUEL do you use for your Production/Process?

Inference drawn from the above shown graph is that the targeted customers mainly rely on the

LPG followed by Wood, Coal & Fuel Oil. So, this shows that there is a huge demand of LPG in

the market. Wood is also contributing to 32% of the total fuel consumption.

2. How much quantity do you consume per month (in Kilograms)?

a) Wood

Wood 24 32%

Coal 4 5%

Fuel Oil 3 4%

LPG 43 58%

Others 0 0%

0 - 10,000 20 83%

10,001 - 20,000 2 8%

20,001 - 30,000 0 0%

30,001 - 40,000 1 4%

40,001 - 50,000 0 0%

50,001 - 60,000 0 0%

> 60,001 1 4%



The reason behind asking this question was to know the consumption level of the industrial

customers on monthly basis by the virtue of which we can estimate the total demand of the LNG

to be supplied in future.

As the main customer of wood was the small-scale agro based industries & largely they were

relying on the wood only followed by coal & biomass.

As per the feedback from the industries, we came to know about the problem faced by them

while using wood as a fuel. They were mainly concerned about the calorific value of the wood

as it is quite low (3890kcal/kg) & in case of wet wood it was again decreased to 2220kcal/kg.

Secondly, they were concerned about the environment as it generates the smoke which adds to

the global warming & the problem of residue disposal was also there.

83% of agro-based industries were consuming wood up to 10 tons/month as a boiler fuel in order

to generate the steam. 8% of the agro-based industries were using more than 10 tons/month of

wood for the boiler fuel. There was the variation of +/- 10% due to seasonal demand in the

consumption of wood.


b) Coal

0 - 10,000 3 75%

10,001 - 20,000 0 0%

20,001 - 30,000 1 25%

30,001 - 40,000 0 0%

40,001 - 50,000 0 0%

50,001 - 60,000 0 0%

> 60,001 0 0%



75% of the targeted industries were using 10 tonne of coal per month coal as fuel for the generation of

heat to carry out several operation in the industry. 25% of the companies are using coal in the range of 20-

30 tonne/month.

As coal generates a huge amount of smoke as well as coal residue is the main issue. So it was the

main area of concern from the environmental point of view. Coal handling & storage is the

another factor about which they were worried.

Their response toward LNG usage was positive as it is pollution free & has a very high calorific

value i.e 13096kcal/kg as compared to other fuels used by them.


c) Fuel Oil

Fuel Oil was consumed by very few industries & restaurants only. The total number of customer

who are using fuel oil was 3 only. Even the consumption in liter was also vey less. One of the

customer was using 1300 liter i.e. (1161kg) of diesel per year, which was very less. So, this

much quantity can be easily procured by the company.

0 - 10,000 3 100%

10,001 - 20,000 0 0%

20,001 - 30,000 0 0%

30,001 - 40,000 0 0%

40,001 - 50,000 0 0%

50,001 - 60,000 0 0%

> 60,001 0 0%




d) LPG

98% of the targeted customer were using LPG as a fuel. Industries targeted was mainly small

scale steel industries, Powder Coating Industries, Restaurants and Hotels & Hospitals. 42

customers of total targeted were using LPG which shows that the demand of the LNG was very

high as compared to the other fuels.

After analyzing this data, we came to the conclusion that demand of gas is quite high. So, this

shows that the LNG in cylinders can get a good response, provided that factor like price &

distribution channel remains appropriate.

0 - 10,000 42 98%

10,001 - 20,000 1 2%

20,001 - 30,000 0 0%

30,001 - 40,000 0 0%

40,001 - 50,000 0 0%

50,001 - 60,000 0 0%

> 60,001 0 0%



3. What is the cost per unit of the FUEL (in Rupees)?

a) Wood

Price of the fuel is one of the important point of concern. Price of the wood used by all the agro-

based customers was in the range of Rs. 4-8/kg excluding the cost of transportation & storage.

Price per kg as compared to gas was very low, but LNG was leading over the wood due to its

anomalous properties like calorific value, safety, pollution free gas & leaves no residue after

combustion.

Total number of customer who was using wood as a boiler fuel was 24. They all were concerned

about the environment & even the quality of the wood they were procuring was not good. Wood

procured by them was wet wood whose calorific value was quite low. So the efficiency of the

system was decreased & the consumption of wood was increased, which leads to increase in cost

of the fuel.

0 - 20 24 100%

21 - 40 0 0%

41 - 60 0 0%

61 - 80 0 0%

81 - 100 0 0%




b) Coal

Coal was procured by the company at the price Rs5.8/ kg excluding all the charges of

transportation & storage. Price including the transportation, handling & storage was more than

Rs10/kg. Mainly, the two agro-based companies named M/s Mishkat Agro & M/s Natural Foods

were using the coal as fuel. They were concerned about the pollution created by coal dust & the

smoke created after the coal combustion while the steam generation.

Coal Handling & Storage was one of the major issue which was faced by the company. The

quality of the coal they were getting was not upto the mark. So, they have shown the positive

response toward the usage of LNG.


c) Fuel Oil

0 - 20 4 100%

21 - 40 0 0%

41 - 60 0 0%

61 - 80 0 0%

81 - 100 0 0%

0 - 20 0 0%

21 - 40 0 0%

41 - 60 2 67%

61 - 80 1 33%

81 - 100 0 0%



Cost per unit of the Fuel Oil mainly lies in between two ranges; one is in between Rs 41-60 &

second in between Rs 61-80 per liter. 67% of the customer lies in between the range of Rs 41-60

per liter & 33% of the customer lies between the second range of Rs 61-80 per liter.

The number of customer targeted using fuel oil is three only. So, this will not create much effect

on the demand of the LNG.


d) LPG

All the customers using LPG as a fuel too carry out their operations are falling in the single range

only i.e. in the range of Rs81-100/kg.

As the demand of LPG is highest in Dahod area as compared to other fuel i.e. wood, coal and

fuel oil so we can estimate the demand of LNG by checking this consumption provided that the

price factor of LNG does not vary much as compared to the demand of the LPG cylinders.

Jindal Energy Limited is expecting to provide the LNG in cylinders at the price 20% less than

the price of the commercial LPG cylinder. Another factor which attract the attention of

customers for using the LNG as an alternative to LPG is that the calorific value of LNG

(13096kcal/kg) is 14% higher than the calorific value of the calorific value of the LPG(i.e.

11056kcal/kg). So, this leads to less usage of the LNG as compared to the LPG to carry out the

same amount of work. This property of LNG compensate the cost & it shows that LNG is

feasible to use the over LPG.

0 - 20 0 0%

21 - 40 0 0%

41 - 60 0 0%

61 - 80 0 0%

81 - 100 43 100%



4. What is the monthly bill (in Rupees)?

a) Wood

In case of using wood as a fuel, 88% of the industries have the monthly bill less than Rs75000.

4% of the industries have the monthly bill in the range of Rs 75,001-150,000. 4% of the

industries have a monthly bill in the range of Rs 150,001-225,000 & only one company i.e. 4% is

having the monthly bill more than the Rs 300,001.

Replacing wood by providing LNG is a major challenge as they are getting the wood at a very

low price. They all are agreed with the special qualities of the LNG, but the only matter of

concern is the gap between the price of Wood they are using & the price of the LNG which we

will be providing.


b) Coal

< 75,000 22 88%

75,001 - 150,000 1 4%

150,001 - 225,000 1 4%

225,001 - 300,000 0 0%

> 300,001 1 4%

< 75,000 2 67%

75,001 - 150,000 1 33%

150,001 - 225,000 0 0%

225,001 - 300,000 0 0%

> 300,001 0 0%



67% of the companies using coal have the monthly bill less than Rs 75000 & 33% of the

companies have the monthly bill in the range of Rs 75001-150,000. Out of all targeted

companies only 4 companies were using the coal as a fuel. They were highly interested to use the

LNG as a fuel as it has a great efficiency and pollution free source of fuel.


c) Fuel Oil

3 companies were using the fuel oil, diesel etc. The monthly will for these companies was very

less i.e. less than 75000.


d) LPG

< 75,000 3 100%

75,001 - 150,000 0 0%

150,001 - 225,000 0 0%

225,001 - 300,000 0 0%

> 300,001 0 0%

< 75,000 35 81%

75,001 - 150,000 6 14%

150,001 - 225,000 1 2%

225,001 - 300,000 0 0%

> 300,001 1 2%



Monthly Bill for the 81% companies using LPG as source of fuel is less than Rs 75000. Only

14% companies have a monthly bill in the range of Rs 75,001-150,000. Mainly, the companies

like Ashok Steel Ltd., Raj Steel Ltd, Dahod Steel, Powder Coating (Expansion of Ashok Steel)

were adding much to the demand of the LPG & they were ready to use the LNG when it will be

available economically to them.

5. Is there any variation in your FUEL consumption (in Percentage)?

a) Wood

Variation in fuel consumption i.e. in the consumption of wood for all the 25 companies using

wood was in the range of 0-20 %.

Mainly the variation in the consumption of wood occurs seasonally. As few companies were

using wood for heating & drying purposes in the rainy season only. So in that case the

consumption of the wood was more as compared to the other seasons.

0 - 20 25 100%

21 - 40 0 0%

41 - 60 0 0%

61 - 80 0 0%

81 - 100 0 0%




b) Coal

As only three companies were using coal along with other fuels in order to carry out their

operations in the plant. So all the companies’ consumption variation lies in the range of 0-20%.

If we estimate the variation, on an average it comes to be +/- 10%.


c) Fuel Oil

As only three companies were using the fuel oil, so the variation noticed was negligible. If in any

case variation is there, it is less than 10 percent.

0 - 20 3 100%

21 - 40 0 0%

41 - 60 0 0%

61 - 80 0 0%

81 - 100 0 0%

0 - 20 3 100%

21 - 40 0 0%

41 - 60 0 0%

61 - 80 0 0%

81 - 100 0 0%




d) LPG

91% of the companies targeted using LPG as a fuel source has consumption variation in the

range of 0-20%. Rest of the 9% companies left have the fuel consumption variation in the range

of 21-40%.

6. Is there any additional expenses you are bearing (in Rupees)?

a) Transportation

Transportation cost was involved in the price of wood & LPG cylinder cost. So there was no any

transportation charges involved.

0 - 20 39 91%

21 - 40 4 9%

41 - 60 0 0%

61 - 80 0 0%

81 - 100 0 0%

Yes 0 0%

No 60 100%

Not Sure 0 0%



6. Is there any additional expenses you are bearing (in Rupees)?

b) Storage

There was no storage charge involved in for storage of wood & LPG Cylinders.

7. What is your Credit Finance Facility?

a) Wood

Most of the users like to pay cash while receiving their fuel. 92% pay them in cash followed by

4% each as cheque and using both as their payment mode. The users of wood like to pay them in

cash as the provider also favors the same.

Yes 0 0%

No 60 100%

Not Sure 0 0%

Cash 22 92%

Cheque 1 4%

Both 1 4%




b) Coal

It is seen that Coal users also like to pay in cash. 67% pay in cash while rest in cheque. This

shows that there is a liquid cash flows which is very beneficial for the service provider. The

distributer would like and appreciate such type of payment mode.


c) Fuel Oil

Fuel oil users also pay the fuel cost in cash. 67% pay in cash and the rest in cheque. This shows

that there is a liquid cash flows which is very beneficial for the service provider. The distributer

would like and appreciate such type of payment mode

Cash 2 67%

Cheque 1 33%

Both 0 0%

Cash 2 67%

Cheque 1 33%

Both 0 0%




d) LPG

The LPG subscribers pay their booking in cash. 55% of them pay in cash, 34% of them in cheque

and only 11% like to pay in both the mode. This question helps us in getting the knowledge of

the payment mode the consumers are ready to accept which in turn helps the service provider to

plan accordingly.

8. What is the frequency of your FUEL booking (monthly)?

a) Wood

The basis of asking this question is to find out how frequently the respondents book their fuel for

their daily consumption.

The consumers using wood is seen booking their fuel mostly once in a month. 40% of the total

respondents booking only once in a month followed by 32% twice a month, 16% thrice a month,

8% four times a month and only 4% booking five times a month.

Cash 24 55%

Cheque 15 34%

Both 5 11%

1 10 40%

2 8 32%

3 4 16%

4 2 8%

5 1 4%



It shows that the consumers stock their fuel to meet future demands. It was helpful for us to share

them the information that the LNG fueler will be available as per their requirement and the need

not to block their space to store additional fuels. They can use that space for some other purpose.


b) Coal

The coal users were very few and they also like to stock up their fuel for future demand. Most of

the consumers book twice a month which is 67% and only 33% like to book once a month.

The coal users were also ready to use LNG as it has many added advantages over coal.


c) Fuel Oil

1 1 33%

2 2 67%

3 0 0%

4 0 0%

5 0 0%

1 1 33%

2 2 67%

3 0 0%

4 0 0%

5 0 0%



We also found some users of fuel oil who like to book twice a month i.e. 67% and the rest once a

month. Fuel oil users were also ready to use LNG.


d) LPG

We found a lot of variation over the use of LPG. LPG users book LPG according to their need.

They said that it is very easy to get LPG cylinders so they book it accordingly. They do not keep

additional cylinders or stock up as it is not very safe to keep it in their plant.

From the above graph we see that 30% of the users book four times a month followed by 23%

thrice a month. 19%, 16% and 12% booking once a month, five times a month and twice a month

respectively.

It was very satisfying for our survey as we can supply them frequently which shows a positive

response towards usage of LNG.

1 8 19%

2 5 12%

3 10 23%

4 13 30%

5 7 16%



9. Do you feel safe with your present FUEL?

The above graph tells us that more that 50% of the respondents were not happy with their present

fuel as there were safety issues related to that.

The respondents who were feeling safe with their present fuel were mostly Wood and Coal users.

They said that it was really very easy and safe to use wood and coal in their daily use as they

never experienced any sort of problem in past.

10. Are you aware of LNG (Liquefied Natural Gas)?

As per our survey we found out that most of the people in the Dahod District, Gujarat is not

familiar with LNG. We saw that 47/60 respondents do not know about LNG which contributed

to 78% of our survey.

We were happy to see that 13/60 respondents knew about LNG and were very happy to know

that it is going to be distributed and marketed in the Dahod District, Gujarat. They were all ready

to accept it.

Yes 29 48%

No 31 52%

Not Sure 0 0%

Yes 13 22%

No 47 78%

Not Sure 0 0%



11. After getting awareness of LNG (Liquefied Natural Gas) are you interested in using it?

We asked them this question due to the reason that we were focused to market and distribute

LNG. As per the previous question we have seen that 78% of the respondents were not aware of

the LNG but as soon as we explained them about the properties and better aspects of LNG they

were all ready to accept the product.

We can see from the above graph that 95% of the respondents agreed to use LNG as their basic

fuel. Few of them were not sure and 1 of them disagreed to use LNG.

10.2 FEW CONCERNS SHARED BY THE RESPONDENTS

i) Not sure about the secure and constant supply of LNG for long term.

ii) Not sure about the infrastructural cost changeover that is relative with LNG.

iii) Not sure of LNG SOP.

iv) Not sure about safety.

v) Refilling and replacement of cylinders and how it is used.

vi) Not sure about the location as to where to keep it.

vii) Not sure about the price at which LNG will be available in future.

viii) Not sure of distribution system that accompanies LNG infrastructure.

Yes 57 95%

No 1 2%

Not Sure 2 3%



10.3 TESTING OF HYPOTHESIS

Let us first calculate for WOOD, we take t test as sample size < 30

Table 10-1 calculation for the hypothesis testing we considered for wood

WOOD

X X(Mean) X - X(Mean)

[X-

X(Mean)]^2

(A)

20000 11424 8576 73547776

30000 11424 18576 345067776

54000 11424 42576 1812715776

60000 11424 48576 2359627776

35000 11424 23576 555827776

12000 11424 576 331776

8000 11424 -3424 11723776

120 11424 -11304 127780416

12 11424 -11412 130233744

10 11424 -11414 130279396

2000 11424 -9424 88811776

10 11424 -11414 130279396

8000 11424 -3424 11723776

10000 11424 -1424 2027776

2000 11424 -9424 88811776

100 11424 -11324 128232976

8000 11424 -3424 11723776

5000 11424 -6424 41267776

300 11424 -11124 123743376

300 11424 -11124 123743376

600 11424 -10824 117158976

300 11424 -11124 123743376

7000 11424 -4424 19571776



Sum (X) 262752 Sum (A) 6557975896

X(Mean) 11424

Sum (A) / (n-1) 298089813.5

N 23

σ (Standard

Deviation) 17265.27768

Wt * Calorific

Value of LNG 1001395.2 X(Mean) - µ 11137.88709

µ 286.1129143

[X(Mean) - µ] /

σ 0.64510327

[X(Mean) - µ] /

σ / sqrt(n) 3.093806597

A Null Hypothesis and an Alternative Hypothesis:



………………………Eqn 10.1

Figure 10-1Research Methodology by CR Kothari (HYPOTHESIS TESTING OF MEANS) Page

No.: 197



Figure 10-2Research Methodology by CR Kothari (Table 2: Critical Values of Student’s t-

Distribution) Page No.: 377

The Tcal is 3.093806597

and Ttab is 2.074 at 5% level of significance.

As we can see that Tcal > Ttab , we “REJECT THE HYPOTHESIS”

i.e. LNG IN CYLINDERS IS NOT FEASIBLE.



Now we calculate for LPG, we take z test as our sample size > 30

Table 10-2calculation for the hypothesis testing we considered for LPG

LPG

X X(Mean) X - X(Mean)

[X-

X(Mean)]^2

(A)

28 726.7790698 -698.7790698 488292.1883

30 726.7790698 -696.7790698 485501.0721

114 726.7790698 -612.7790698 375498.1883

228 726.7790698 -498.7790698 248780.5604

209 726.7790698 -517.7790698 268095.1651

95 726.7790698 -631.7790698 399144.793

114 726.7790698 -612.7790698 375498.1883

570 726.7790698 -156.7790698 24579.67672

190 726.7790698 -536.7790698 288131.7697

114 726.7790698 -612.7790698 375498.1883

76 726.7790698 -650.7790698 423513.3976

760 726.7790698 33.22093023 1103.630206

380 726.7790698 -346.7790698 120255.7232

228 726.7790698 -498.7790698 248780.5604

9.5 726.7790698 -717.2790698 514489.2639



1045 726.7790698 318.2209302 101264.5604

950 726.7790698 223.2209302 49827.58369

1900 726.7790698 1173.22093 1376447.351

114 726.7790698 -612.7790698 375498.1883

34 726.7790698 -692.7790698 479942.8395

2200 726.7790698 1473.22093 2170379.909

28 726.7790698 -698.7790698 488292.1883

51 726.7790698 -675.7790698 456677.3511

68 726.7790698 -658.7790698 433989.8628

114 726.7790698 -612.7790698 375498.1883

152 726.7790698 -574.7790698 330370.979

114 726.7790698 -612.7790698 375498.1883

152 726.7790698 -574.7790698 330370.979

228 726.7790698 -498.7790698 248780.5604

152 726.7790698 -574.7790698 330370.979

570 726.7790698 -156.7790698 24579.67672

57 726.7790698 -669.7790698 448604.0023

152 726.7790698 -574.7790698 330370.979

850 726.7790698 123.2209302 15183.39765

1260 726.7790698 533.2209302 284324.5604

51 726.7790698 -675.7790698 456677.3511



152 726.7790698 -574.7790698 330370.979

760 726.7790698 33.22093023 1103.630206

1140 726.7790698 413.2209302 170751.5372

1330 726.7790698 603.2209302 363875.4907

14000 726.7790698 13273.22093 176178393.9

102 726.7790698 -624.7790698 390348.886

380 726.7790698 -346.7790698 120255.7232

Sum (X) 31251.5

Sum (A) 191675212.2

X(Mean) 726.7790698

Sum (A) / (n-1) 4675005.174

N 43

σ (Standard

Deviation) 2162.176028

Wt *

Calorific

Value of

LNG

1004463.2 X(Mean) - µ 635.9267543

µ 90.85231548 [X(Mean) - µ] /

σ 0.294114238

[X(Mean) - µ] /

σ / sqrt(n) 1.906078111

A Null Hypothesis and an Alternative Hypothesis:





Figure 10-3Research Methodology by CR Kothari (HYPOTHESIS TESTING OF MEANS)

Page No.: 197

The Zcal is 1.906078111

and Ztab is 1.96 at 5% level of significance.

As we can see that Ztab > Zcal , we “Do NOT REJECT THE HYPOTHESIS”

i.e. LNG IN CYLINDERS IS FEASIBLE.

10.4 CONCLUSION

Total number of companies targeted for the marketing survey of Dahod District, Gujarat was 60.

All the companies were mainly using LPG, Wood & Coal and a very few companies were using

Fuel Oil also. LPG is used by 58% of total targeted companies, 32% of the companies are

relying on the wood, 5% on the coal & 4% on the fuel oil. So, this shows that the companies are

mainly using LPG as a fuel source to carry out their operations followed by Wood & Coal.

After analyzing the all the graphs related to usage of a particular type of fuel, individual fuel

consumption level, price of fuel per kg, monthly bill of the company& the variation in

consumption level, we reached to the following conclusion.

LPG can be replaced by the LNG in cylinders as LNG has a various advantages over LPG

i.e. high calorific value, safety factor, hassle free, lower LFL & UFL, less manpower required

as compared to LPG & eco-friendliness.

Industry named Ashok Steel Limited, Dahod Steel, Raj Steel Ltd, Powder Coating (Ashok

Steel Expansion) were the largest consumer of the LPG in that particular area. Ashok Steel is



using 120 LPG commercial cylinders & for their expansion of Powder Coating plant the

demand is 15 tonne of gas per month to carry out their operations. So, this shows that there is

a greater scope of LNG in cylinders use as an alternative fuel to the LPG gas.

The customers who were using LPG were mainly concerned about the price of LNG at which

it will be delivered to them. The cost of the cylinder is very high in the range of 1600$ to

2000$ excluding port charges. So, the customers were concerned about the price of LNG and

Cryogenic cylinders which they are going to use in future. So, in context to this problem,

company has decided to provide the LNG at the rate 20% less than the price of the

commercial cylinder due to which the customer can afford the LNG in cylinders at

reasonable prices.

Price of the LNG cylinder is quite high as compared to the price of the LPG cylinder. So, this

was the major concern for the customers so the company has already planned a solution for

this problem. Company will provide the cylinders to the customers & in return will ask the

security of Rs 25,000 to 30,000 per customer for the 230L cylinder which is equal to 6 LPG

cylinder of 14.2 kg. As the customer use to pay the security of Rs 2000-3000 in case of

domestic LPG cylinder & even much more in case of LPG commercial cylinder. So, it will

not be an issue for the customer to pay this much security for the LNG cylinders at the

starting as its going to add much value to their system & efficiency will also be increased

along with other benefits too.

In case of LPG there was a concern of leftover gas up to 10% in the cylinder. In winters it

can increase up to 15%. So, it is a loss to the LPG customers. But in case of LNG there is no

leftover of gas in the cylinder. This point has also influenced the LPG customers a lot to

think about LNG as an alternative.

Day by day, the number of accidents in LPG cylinders are increasing due to leakages,

mishandling etc. So, the customers were very much concerned about the safety of the plant &

man-power. Loss of human life is considered as the biggest loss as compared to the loss of

the property & money. As the LNG is much safer than LPG because of its less density on

leakage, it dissipates very rapidly into air whereas LPG settles down at the bottom, so

chances of accidents are more.

All the agro- based industries were using coal as a fuel for their boiler. All of them were

concerned about environment as the coal was producing greenhouse gases on combustion &



the residual disposal was the one of the another problem which they were facing. So, looking

at the special qualities of LNG, they all were ready to use LNG in place of Coal.

Coal handling & storage was one of the another problem they were facing. They were

bearing the transportation cost for the procurement of coal from their vendors. In case of

LNG, there is no transportation cost, as JEL is going to provide the LNG at their door step &

the LNG is free from pollution too.

The only matter of concern related to the coal & LNG was the price of the respective fuels.

There was a large gap between the price of LNG & coal. But, if we talk about the calorific

value & usability of LNG, then the amount of LNG required to generate the same amount of

heat will be less.

Wood procured by all the agro-based industry was not of good quality. The wood they were

receiving was wet wood sometimes. So, the calorific value was low for wet wood. This leads

to increase in consumption of wood & which was not economical. Procurement of wood in

large quantity was also becoming a problem for them. So, wood based customers were also

influenced to switch to LNG.

One of the most important factor which became the matter of concern was the price of LNG at

which it will be delivered to the customers at their doorstep. This needs to be economical, else

this price factor can disturb the feasibility of LNG in that particular area.

All the agro-based customers were concerned about the conversion cost of switching from coal

& wood to Gas-Based System. They were ready to switch, provided that cost of conversion is

within their limits. As per their information, the boiler provided to them by the companies named

Thermax Industries Ltd, Baroda & Heatex Industries Ltd., Surat are IBR (Indian Boiler

Regulation) Certified. All the industries demanded that if these companies will supply the gas –

based boiler to them, then it is immediately acceptable by them & definitely they will switch to

the LNG.

We have targeted the Thermax Industries Ltd & Heatex Industries Ltd in order to know the

conversion cost to switch to gas-based system. The response obtained from them was not

satisfactory. Managing Director of the company had a discussion with a boiler specialist,



according to him the gas-based system will not be feasible & efficient due to several factors like

low price of wood, high price of gas etc.

As the use of LNG in cylinders is a totally new concept, so few of the customers were concerned

about the factor that whether LNG is used earlier in the country or not. They were concerned

about the feasibility & the viability of the project.

After carrying out the hypothesis testing, that whether LNG is feasible or not in case of LPG,

hypothesis is accepted i.e. LNG is feasible for the targeted area.

After carrying out the hypothesis testing, that whether LNG is feasible or not in case of Wood &

Coal, hypothesis is accepted i.e. LNG is not feasible for the targeted area.



11 VISITS DURING INTERNSHIP

11.1 PESO, VADODARA

Minutes of the meeting on “Potential of LNG in cylinders to meet commercial & industrial

requirement” at PESO, Baroda on 23rd

June 2014

Further to the discussion in the meeting on 23rd

June 2014 chaired by Mr. S.D Mishra

(PESO) , we came to the conclusion that the LNG has a great potential when it is in cylinders

to meet industrial and commercial demand provided that all the safety & pricing issues are

considered.

Mr. S.D Mishra informed that as per the policy of Govt. of India, the rules are revised from time

to time in order to satisfy the changing requirements of industry due to technological

advancements, globalization & environmental concerns.

PESO plays an important role by being part of the process of industrial development. While

keeping this thing in view the Gas Cylinders Rules, 1981 & Gas Cylinders Rules, 2004 &

SMPV Rules, 1981 were amended for introduction of LPG, CNG, Methane, cryogenic

liquids, composite cylinders, mounded/underground tanks, cavern storages etc.

Issues for Discussion

Issue for the discussion was mainly revolving around the following mentioned points.

Viability of LNG in cylinders to meet commercial & industrial demand.

Precautions to be taken while handling & installation of cylinders, infrastructure.

Necessity of technical & manpower training etc. as operation is quite crucial.

Minimum Safety distances to be made during installation of LNG cylinders & storage tanks.

What are the standards (National and International) like OISD standards used as reference for

provisions related to LPG & CNG

Cost of the cryogenic cylinder & how much security is expected from the customer as the

cylinder is costly.

LNG safety related issues that what are the challenges which INDIA is facing due to which

standards are not being passed till now for the usage of LNG in cylinders.

Role of government, several policies like subsidies on domestic LPG, price of LNG at which

it will be delivered to the door step of the customer were also discussed.

The point “LNG is safer than LPG due to its density” was also considered.

Feasibility of using the process of Mobile Fueling over Pipeline infrastructure.



Mr. S.D Mishra has also threw light on the various standard used in designing of Cryogenic

containers are as per

BS EN 1251-3:2000, DOT:4L, TC-4LM(Canadian), 6

49 CFRCh.1, ASME, GB: 5458-1997 and other international standards.

International codes related to safety aspects of cryogenic containers used for the reference

are as follows:

NFPA 55 – Compressed Gases and Cryogenic Fluids Code 2010 Edition

EIGA Document No. IGC Doc. 93/03/E - Safety Features of Portable Cryogenic Liquid

At the end of the meeting, Mr. S D Mishra concluded with a note that LNG is a safer & eco-

friendly fuel. It has a great potential & can change the economy of the India to a great extent. But

he also added a point that as the PESO & Indian government is working religiously towards the

formation of standards & amendments for the design of cryogenic cylinders, so it will take some

time of five to ten years to adopt the usage of LNG to the fullest.

11.2 GIDC, Sayajiganj Baroda

The meeting was chaired by Mrs. Ruchi P Patel, Regional Manager, Gujarat Industrial

Development Corporation, Baroda & by Mr. Hasmukh Shah, Director & CEO, Jindal Energy

Limited. Baroda.

First of all, we explained them about the company profile & the business plan of the Jindal

Energy Limited. Mr. Hasmukh Shah explained the reason of choosing Dahod as the location of

the company. He said that at that location we can trade the LNG among three states as Dahod is

located at the border of Madhya Pradesh, Gujarat & Rajasthan. Our motto was to collect the list

of the companies of GIDC, Kharedi, Dahod in order to carry out the market survey so that we

can calculate the demand of the LNG in that very particular area.

Discussion was revolving around the advantages of using LNG over other fuels. Our company

director Mr. Hasmukh Shah had thrown the light on the various anomalous properties of the

LNG like safety, calorific value & storage etc. Regional Manager of GIDC, Ms. Ruchi P Patel

appraised the initiative taken by the company. She has allowed us to visit the companies based in

GIDC, Khardi, and Dahod by providing the whole list of the industries with their contact detail

and plot number.



12 Bibliography (2012). Tapi Pipeline Project Report.

and, H. V. (FEB 2014). Challenges to JCC Pricing in Asian LNG Markets. University of Oxford.

(August 2012). Gas Supply and Demand Scenarios 2012 - 2027. wellington, Netherland: Concept

Consulting Group Limited.

BP Stats. (2014 Review). Natural Gas Proved Reserves.

Coast, L. o. (n.d.). LNG on BC's 2019 Coast. 8.

Dr A K Baliyan. (n.d.). Meeting Demand Challanges Of Emerging LNG Market : India. 2,4,7.

Duke Energy. (n.d.). Natural Gas. Retrieved from http://www.arizonenergy.org/data/natural_gas.htm

INDUSTRY GROUP. (2013). VISION 2030. Natural Gas Infrastructure in India.

Industry Group. (2013). Vision NGPV 2030.

Mukherje, K. (2014). Boston Consulting Group.

Sudeep Shah, P. B. (2013-14). Study of Safety Issues related to LNG Container s Filling & it's Distribution.

Dehradun: University Of Petroleum & Energy Studies.

Susan L. Sakmar, E. (2010). The Globalization and Environmental Sustainability of LNG : Is LNG a Fuel for

the 21. World Energy Congress, Montreal, Canada, September 12-16, 2010, 1,5.

Thapar, S. (2013). LNG Transportation.



Annexure

QUESTIONNAIRE

Company Name :

Address :

Contact Person :

Email Id :

Phone no. :

Production information :

Question 1: Which fuel do you use?

Wood Coal Fuel oil LPG Others

Question 2: How much quantity do you consume per month?

ANS:

Question 3: What is the cost per unit of the fuel?

ANS:

Question 4: what is the monthly bill?



ANS:

Question 5: Is there any variation?

ANS:

Question 6: What are additional expenses?

ANS: TRANSPORTATION : _____________

STORAGE : ____________

Question 7: What is your credit finance facilities?

ANS:

Question 8: What is the frequency of your fuel booking?

ANS:

Question 9: Are you interested in using natural gas?

ANS:

Question 10: Any remarks?

ANS:

manpreet singh sip_report

Business

o f t h e r e p o r

t t e d b y

potential of lng

summer internship project

university of petroleum

company mentor

dehradun ro20213089

manpreet singh mbaoilgas