Virtual pipelines are scheduled shipments of natural gas between two points--from A to B--by road, rail or sea without a fixed pipeline. Virtual pipeline operations are usually to be found in remote areas where the terrain makes it too costly or too difficult to construct permanent pipelines.
They are also located in regions where the market is too small to justify the capital costs of a pipeline, or as a means to deliver gas to off-grid, large-scale gas customers.
Virtual pipeline operators deliver gas in two main formats: (liquefied natural gas (LNG) or as compressed natural gas(CNG). To make LNG, pipeline gas is converted in a liquefaction plant from where it is distributed by tanker trailers to large energy-intensive customers like power plants and mines where the customer's gasification unit converts the LNG into ready-for-use gas.
For CNG, a compression station linked to the gas grid, compresses the gas that is then stored in purpose-built trailers for delivery to customers' decompression plants. CNG is delivered to smaller customers such as hospitals and factories.
Virtual pipeline delivery systems, by rail, road, river or sea, are flexible enough to meet a client's changing levels of demand. Equally important, virtual pipeline operators offer customers up to five years of price certainty. Obviously, lower long-term energy costs are important for customers, so a five-year, locked-in contract when gas prices are low offers certain and predictable bills.
Customers in remote or mountainous areas of Canada, New England, Pennsylvania and Washington state are routinely supplied with CNG or LNG by virtual pipeline rather than by permanent pipelines.
For instance, in New England, the only pipeline of significance is the Maritimes & Northeast Pipeline, which serves coastal communities. The region has many communities without access to piped gas, and it is this gap in the market that has been filled by companies using trailers designed to carry large quantities of natural gas drawn from compression terminals (Figure 1).
Off-pipeline gas deliveries have long been used by the military, but it was not until 2011 that NG Advantage pioneered virtual pipeline deliveries by road from an existing compressor station to customers within 200 miles who require over 100,000 MMBtu of gas a year. For large-scale, energy-intensive concerns--those able to consume over 750,000 MMBtu, lying outside the 200-mile limit of an existing compressor station--NG...