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Centre for Operational Excellence (COPE)

Faculty of Economics and Business
Centre for Operational Excellence (COPE)ProjectsLNG network design

LNG network design

The transport sector is on the eve of a transition to using new fuels, which is should bring about a lower environmental impact of driving and sailing. Bio-LNG is among the emerging fuels which facilitate compliance with new European emission reduction legislation. Logistically, though, this leads to huge challenges.

LNG network infrastructure

Comprehensive acceptance of bio-LNG can be facilitated by creating a new distribution point network, including bunker terminals for vessels and filling stations for heavy goods traffic. According to all stakeholders, though, the current situation presents a classic 'chicken and egg' problem: switching to Bio-LNG is not an option as long as there is no infrastructure, while few investments in this new infrastructure are being made because of the uncertainty regarding future use.

Scientists offer their support to the transport sector in its transition to using environmently-friendlier fuels.

LNG is the abbreviation of liquefied natural gas. It is among the cleaner fuels which appear to provide great opportunities to the shipping industry and to heavy goods traffic, in particular. It allows lorries to drive more economically and, also, to generate less noise, which results in permission to drive in inner cities outside delivery windows, too. Currently, LNG is actually the only alternative fuel which sea-going vessels can use in order to observe the strict emission standards which came into force for some parts of the sea in 2015.

The Dutch government recognises the potential of LNG too. In the summer of 2012, therefore, the national LNG Platform was set up. It has set concrete goals for the transition to the use of LNG by various modes of transport. European policy rules outline the frameworks within which a network of over 180 filling stations for heavy goods transport and over 40 bunker terminals for the shipping industry will have to be developed.

In order to achieve these ambitious goals and the opportunities which LNG offers, we must break away from the chicken and egg situation.

Support for investment decisions

In the next few years, the Dinalog project ‘Design of LNG networks’, a partnership between COPE, knowledge institutions and the business community, will attempt to prevent this imminent deadlock from happening by creating network designs and analysing possible business models. Its predominant aims are to clarify market demand and develop models which help businesses to draw up a business case. Besides that, the project will have to provide tools which help businesses to plan and implement future LNG-networks as well as possible. Concrete examples of research questions which will be discussed:

  1. What are good locations for LNG bunker terminals and filling stations?
  2. Which is more efficient: fuelling vessels by means of bunker terminals, tank lorries or with the help of LNG transport vessels, which fuel other vessels while at sea?
  3. How can LNG networks be structured in such a way that the right stock is at the right place at the right time?

Efficient and robust networks

Our researchers closely cooperate with the companies involved, which have a great deal of knowledge and tools at their disposal. Together, they make an inventory of the elements which additional research should focus on in order to reach the goals which have been identified. For instance, while science has provided various models for calculating the best possible locations and supply routes, none of these models takes into account the specific characteristics LNG has, such as evaporation and redelivery, plus the accompanying logistic challenges.

In addition to that, this research focuses on designing synchromodal LNG networks. It means that the terminals can be supplied by means of different modes of transport: road, water and, possibly, rail. This will reduce the possibility of chain disruptions and increase the networks' robustness. Any potential technological innovations will also be put under the microscope, including the option of transporting LNG in containers, which would allow switching between modes of transport.

Who benefits first?

Participation in the project not only allows the companies involved to get access to building blocks for drawing up their business cases, they are also the first to benefit from new scientific knowledge. Besides that, for many businesses participation is an interesting way of getting into contact with up-and-coming talents who are eager to develop a career within the energy sector.

Substudy: where will bunker terminals be located?

Where can good locations for tanker facilities be found for the purpose of providing vessels at the North Sea with LNG? Reinier Schneider, a student of Industrial Engineering and Management at the University of Groningen graduated on this topic. 'The North Sea has 25 large ports and the cost of investing in a new terminal can easily reach 40 million euros. Opening a terminal in each port in the short term is not a realistic scenario', Mr Schneider explained.

Input for this research, which was conducted at the request of Stichting Energy Valley, consisted of the shipping movements in the North Sea. Mr Schneider developed a mathematical model which based on these data calculates which ports are the first to be eligible for being assigned a terminal. 'While there are mathematical models for similar situations on the mainland, these are not always suitable for use at sea, though, if only for the fact that a vessel at sea can move freely between ports, whereas heavy-good vehicles are confined to roads', Mr Schneider said. He will continue to work in the energy sector after graduation and intends to set up a business.

The model shows that the United Kingdom is eligible for establishing a terminal. The question remains whether this will actually happen. Mr Schneider said: 'Obviously, a model is only a partial reflection of reality. Actually choosing a location involves so many other factors; just think of politics. This model points to a direction which could be followed, though.'

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