If you take a look at some of the new LNG (liquefied natural gas) export projects in the US over the next year, chances are Chart Industries played a significant part in what you see. Chart has positioned itself firmly in the clean energy and fuels space with hydrogen and LNG playing big roles behind the cryogenic equipment manufacturer’s prediction of a record-breaking year in 2022, with a sales outlook expected to be in the range of $1.60 billion to $1.70 billion.
For the LNG market, Chart manufactures brazed aluminum heat exchangers (BAHX), over the road vehicle tanks, ISO containers, LNG/LCNG fueling stations, small scale LNG and big LNG terminals, regas, and repair and service/installation (or field service/lifecycle). Chart, with major facilities in New Prague (Minnesota) as well as Czech Republic, Italy, China and India, saw strong demand for LNG vehicle tanks, fueling stations and trailers continue through the first half of 2021, while the US-based company expects more business from big LNG projects in 2022.
Plenty is going on in LNG right now, from LNG-by-rail to progression of new export projects. With our November issue focusing on LNG and clean fuels, this was a good time to check in with Jill Evanko, Chart CEO and President, to discuss the LNG landscape and what sort of growth she expects from LNG versus hydrogen.
Can you give us any update on the development with LNG-by-rail?
Jill Evanko, Chart CEO and President (JE): We have seen an uptick in interest for LNG by rail, even commercially translating to order activity for us in the US and in Europe. In Europe, we work with VTG on LNG by rail and are their supplier of railcar vessels. In North America, we recently booked another large LNG by rail order. I would also like to take a moment to expand this to ‘molecules by rail’ as we are seeing interest in hydrogen for heavy duty transportation ranging from heavy-duty trucks to trains to airplanes.
What would you say in response to those that argue LNG-by-rail is dangerous?
JE: Like any molecule or power/energy source, there are safety considerations, including diesel! I think sometimes people forget that there are accidents and explosions from all molecules. So, it is our job to find ways to ensure these modes of transportation are as safe as possible, which we do both through extensive testing and safeguards as well as industry group participation and global/regional certifications. I would also point to the FRA (Federal Railroad Administration) and related agencies, which have done a good job in sharing why LNG-by-rail is a safe option. Our internal expert also serves as a Subject Matter Expert on Industry Committees to educate the public on the realities of the safety for these transports.
Does Chart already manufacture LNG railcars for use in North America? Do these get an exemption from law for use?
JE: Yes, we do manufacture LNG railcars already for use in NAM. The US DOT approved the transportation of LNG in DOT-113C120W9 tank cars in August 2020. So, it’s in the CFR; no special permission; no Exemption needed. We have manufactured DOT-113C120W (no ‘9’ at the end) tank cars for liquid ethylene for 25 years or so. And one future sales plug – we think liquid ethane should be approved for the DOT-113C120W9 tank car as well. Currently there is no commercial interest in liquefying ethane and transporting it by rail, but the Marcellus Shale and other ‘wet’ shale plays are high in ethane content and it is being liquefied in Texas and Delaware and exported via ship to the UK and perhaps other locations.
Are you optimistic about the potential for business related to LNG-equipment with export projects in the US progressing nicely recently?
JE: I am very optimistic, and my optimism has been growing throughout 2021, especially as each of the US Gulf Coast operators that have FERC (Federal Energy Regulatory Commission) approval have publicly shared meaningful progress toward Final Investment Decision (FID) over the past few months. For example, Tellurian’s offtake agreements, Venture Global’s progress on Calcasieu as well as foreshadowing progress on Plaquemines sales and Cheniere’s capital allocation planning which included intent to FID Corpus Christi Stage 3 in 2022.
Can you explain to us which by Big LNG projects Chart has supplied products for?
JE: We have supplied Woodside and Venture Global Calcasieu with BAHX and cold boxes. We also will be supplying BAHX, cold boxes, air cooled heat exchangers (ACHX) for all three of Tellurian, Venture and Cheniere. For Cheniere Stage 3 and Tellurian Driftwood, our IPSMR® process technology is the process that will be used for liquefaction. We are thrilled with this!
Which products are performing strong?
JE: I bucket the LNG end markets into three categories: big LNG, small scale LNG and LNG infrastructure (stations, ISOs, trailers, tanks). Big and small scale LNG projects are choppier in terms of when they come in, whereas infrastructure has continue to be very strong for us in LNG over the past two years, and we expect that to continue into 2022.
As for small-scale LNG, what projects has Chart recently worked on and do you expect good growth in this area?
JE: We are currently working on New Fortress Energy Inc’s Fast LNG 1 project and expect that they will replicate this into other regions around the world over time. The 1MTPA jack up rig liquefaction concept is unique and I believe it will become even more cost effective as it is standardized, taking advantage of volume. We have worked on many utility projects over the past few years for small scale LNG… and have letters of intent in hand for Eagle’s Jacksonville, Florida, small scale LNG facility which we expect to process to construction in the coming few quarters as well as a project in the Northeastern United States which is anticipated to move to Notice to Proceed in Q4 2021.
I continue to expect good growth in the small-scale arena. The hub and spoke models are proving effective, and there are also numerous regas opportunities which fall into this category. I think the small scale LNG model will grow in other geographies where the smaller, self-contained and ‘speedier’ to be built dynamics are desired. One anecdote on this topic is the increase in quoting activity that we have seen this year for regions like South Africa for this type of equipment/solution.
In comparison with hydrogen, how is your LNG business performing and which – hydrogen vs. LNG – has the greater potential over the next decade?
JE: Wow, now there is a question! It is my belief that this decade is going to be the perfect storm for Chart – LNG continuing to grow as it is cost effective and scaled now while hydrogen and other renewables gain traction and grow from silo’ed demonstration projects to interconnected networks. I also believe that there won’t be one single answer to the energy transition, rather a hybrid of LNG, hydrogen, wind, solar, biogas, carbon capture. This is great for the Chart business as we are molecule agnostic, we can play across the solution set. I also believe you will see many of these work together – my phrase of the ‘nexus of clean – clean power, clean water, clean food and clean industrials’… how does industry utilize existing infrastructure to handle different energy sources? We can help with that as well! So, the one sentence answer is both have significant growth potential this decade, just in different ways and at different stages of evolution.
Currently, we see both of our LNG infrastructure and hydrogen order books performing similarly from an absolute financial perspective. Growth percentage is much higher for hydrogen because it is coming off of a very low base as the starting point. Obviously with our expectations for Big LNG projects moving ahead will skew that growth because of the size of the Big LNG content that we have, which is hundreds of millions for each project.
What driving demand for your hydrogen trailers right now, and what bit about your hydrogen business are you most excited about?
JE: Heck, in the last 12 months we have booked over 60 hydrogen trailers! Currently we see most of the hydrogen demand in our order book for liquefaction, trailers/transports and storage tanks, which makes sense because the industry is working on addressing production of hydrogen and then storing and moving it… before end use. I expect we will continue to see those areas grow and then tack on more growth in the end-use category like fueling stations, warehousing, fuel cell vehicles, forklifts, etc. I am excited about the entire business – the value chain requires everything that we offer, and so I don’t want to pick favorites!