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As the world scrambles for more LNG, Chart Industries Inc. CEO Jillian Evanko sees the way that projects are built is changing rapidly in a way that’s allowing developers to deliver the super-chilled fuel faster.

Timelines on projects that once took years to build are shrinking as more equipment for smaller, modular projects is being pre-fabricated off site, cutting down costs and turnaround times in the process, Evanko said.

Venture Global LNG Inc.’s Calcasieu Pass terminal, which is currently ramping up in Louisiana, is a modular facility. The company set the U.S. record for a facility of its size, taking 29 months from final investment decision to first liquefied natural gas.

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Chart engineers, designs and manufactures equipment for energy and industrial gas markets. The company’s work touches various parts of the natural gas value chain, including small-scale, large-scale and floating liquefied natural gas (FLNG) facilities.

The company has made equipment for most of the large-scale LNG export terminals operating in the United States. Its patented process technology also ensures the equipment it manufactures, such as heat exchangers, cold boxes and storage tanks, work properly together.

Evanko expects rapid growth for LNG over the next decade as demand has accelerated since Russia invaded Ukraine and global buyers have looked to diversify their gas supplies. 

NGI: Are there any noteworthy projects the company is currently working on?

Evanko: We have equipment being used in Venture Global LNG Inc.’s Calcasieu Pass and both phases of the company’s Plaquemines project. We’re currently working on the process technology for Cheniere Energy Inc.’s Corpus Christi Stage 3 expansion, and we know we’ll be working on Tellurian Inc.’s Driftwood plant as well.

We also anticipate some work on other U.S. Gulf Coast projects, and we’re currently in the quoting stage for some of the larger international projects as well. This is a newer development for Chart because historically those larger projects would have been larger, baseload-style facilities versus modular, mid-scale facilities. 

We’re seeing a move away from that stick build construction where most equipment is put together on site to the modularity side, which has opened the door for us to participate on a grander scale in projects outside the United States.

NGI: So this shift to smaller, modular LNG projects is something that is catching on outside of the United States?

Evanko: Yes. I would say the United States was ahead of the game in the trend toward it. That’s because of the size of land, geography and the lower expenses needed for the technology. It’s also the speed that you can get a train up and running without having to sell 20 million metric tons/year (mmty) of offtake for these larger facilities. 

Having the modularity to do 2 mmty trains gives you more of an opportunity to return profits faster than can be reinvested. That is a key driver to this modular, mid-scale approach. You also need fewer personnel on site during construction because the parts of the facility are being manufactured off site at other locations.

NGI: Is it likely most facilities will be built this way going forward?

Evanko: That’s certainly Chart’s opinion, and that’s what we’re hearing from nearly all of our customers. I can’t think of a customer that’s constructing a larger, baseload-style facility. That’s not to say that some of the projects from the last cycle that are starting to come around won’t take that approach. 

NGI: Chart is coming off a record second quarter, reporting its largest total orders, largest backlog and most sales in a period. How much did LNG factor into those results?

Evanko: LNG was a key contributor to those figures, but not in their entirety, meaning that we’ve had record order and backlog quarters in the past which were much more dependent on LNG activity. We booked $887 million of orders last quarter, and $300 million of that was related to big LNG work. 

It’s certainly a key contributor right now to the activity that we see, which has been escalated as a result of the Russia/Ukraine conflict. There have been continued discussions around energy access, security, resilience and independence – you can pick whatever term you want – but natural gas is something that helps address that in the near- and medium-term.

NGI: Is LNG your most important business segment?

Evanko: It’s certainly a very important line of business. We wouldn’t pick and choose which one is more important, because we believe that as end markets evolve, there will be a hybrid of molecules and a hybrid of solutions needed. It really depends on the application, but LNG is a key growth area for us right now, and we expect that to continue throughout this decade.

NGI: Given how tight global gas markets are, do you think more small-scale and large-scale LNG projects are likely to be sanctioned soon?

Evanko: Yes. I would also say that regardless of the conflict in Ukraine, the situation has raised awareness about the concept of energy needs and access. The way LNG plays into this is that it can be utilized in the near term. When we talk to European Union member states that are looking to solve next winter’s heating needs, natural gas becomes a key part of that conversation.

It’s also part of the longer-term transition to cleaner and greener. When you think about that, you have to think not only of the developed world, but also the rest of the globe. There are populations around the world that don’t have adequate access to power or water. Cost-effective natural gas, or where natural gas infrastructure can be deployed very quickly, plays well to those needs.

I think you’re going to see larger LNG projects get sanctioned. I also think there will be continued movement toward FLNG and regasification to handle the molecule when it’s imported or exported. 

NGI: How has the company contended with supply chain issues and inflationary pressure as it works to meet more demand from energy markets?

Evanko: The macro challenges have been the largest challenges for us over the last 12 to 15 months. We’ve had to navigate through historically high material costs for our top three input materials, which are stainless steel, carbon steel and aluminum, to availability of those materials and the freight and containers at ports to truck drivers. The list goes on. 

One of the key things we did last year that has allowed us to continue to be competitive on deliveries and lead times was adding safety stock where we could, or pre-buying some of these materials. We added over $100 million of safety stock to our inventory in 2021 to continue being competitive. We’ve also leveraged supplier relationships. Having multiple suppliers for the materials we use has helped too. That has allowed us to take on this record order book.

NGI: Are there any other projects or parts of the business you see driving longer-term growth, particularly as it relates to the energy transition?

Evanko: We expect double-digit growth in specialty markets in the coming years. Hydrogen comes to mind. Outside of LNG, it is the largest over the next 10 years in terms of dollars and growth.

We’ve had hydrogen equipment for 57-plus years, and no one cared about it until 2020, when the world really started to focus on more sustainable energy. We have seen a consistent increase in demand for hydrogen-related equipment across the world.

We have a process that takes gaseous hydrogen and turns it into liquid hydrogen. The same concept of liquefying natural gas for export translates to a hydrogen liquefier. The equipment used for both is not the same, but it’s a similar concept. It’s still cryogenics. 

I also see carbon capture and storage (CCS) being a key part of the next decade and beyond. The carbon emissions targets in the public and private sectors are going to be very difficult to achieve without some form of CCS.

Right now, we’re seeing high demand in small-scale reuse cases, like in the food and beverage sector. That pays for itself. Instead of having to go buy CO2, you capture and reuse it. 

The economics of the larger-scale, industrial-sized CCS projects don’t work yet. I think the Inflation Reduction Act will provide some traction for CCS.

Finally, probably the least appreciated piece of our business is water treatment. It fits very well in a lot of power applications. It fits well with green hydrogen because you need very clean water to produce green hydrogen.

Editor’s Note: This segment is one in a regular series by NGI’s LNG Insight. Conversations with experts explore news and issues throughout the global LNG market that matter most to the industry in North America and beyond. Excerpts have been edited for brevity and clarity.

© 2022 Natural Gas Intelligence. All rights reserved.

Related topics: Asia Chart Industries Cheniere Europe Ukraine-Russia Crisis Venture Global

email jamison.cocklin@naturalgasintel.com

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Spot natural gas prices strengthened for the Aug. 22-26 week, fueled by robust power burns amid pockets of heat and low wind generation. NGI’s Weekly Spot Gas National Avg. climbed 26.5 cents to $8.985/MMBtu. Futures prices shifted lower, however, after a dramatic surge to more than $10 early in the period amid mounting supply fears…

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