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:
0
API = 141.5 --- 131.5 ………………….eqn 1.1
Sp.gr
Lower the 0
API number; heavier is the crude oil and vice-versa.
0
API > 33 that means crude is light crude.
If it is in between 23-330
API it is considered as medium and below 230
A 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 that 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
+ 2O2
= CO2
+ 2H2
O

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/cm2
gauge pressure & 100-175 lpm
flow rate. The operating pressure of storage tank will be
3 kg/cm2
g.
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/cm2
g & discharge will be 10.5 kg/cm2
g.
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 -1620
c .
Design temperature is -1960
c & plus 400
c. 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.

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