Suzhou Huafeng LNG is seeking opportunities to venture into liquefied natural gas-to-hydrogen production in Yangtze River Delta, east China.
The company has been in talks with some small chemical factories and refineries, the targeted customers, over the new business. According to the cooperation plan, Suzhou Huafeng LNG will supply hydrogen production equipments and LNG or CNG, the feedstocks. The equipments are placed inside the plant areas while the feedstocks will be delivered by trucks. After the conversion process, hydrogen will be produced and sold directly to those plants.
"The margins for producing hydrogen with natural gas are considerably high. In theory, one cubic meter of natural gas can yield four cubic meters of hydrogen. Even in actual production with the wastage deducted, the output is about two to three cubic meters. Based on the output and market prices, the margin from hydrogen production is about four times that from LNG," illustrated a source with the company.
In addition to economics, to develop long-term stable end-users is also really count for LNG producers, noted one industry player. This is because LNG is a substitute for piped natural gas, which is usually used when supply of the latter is tight or in areas the latter is not accessible, the industry player explained. The LNG business is seasonable, which is bullish in winner but watery in other seasons, added the industry player.
According to C1's survey, at present, hydrogen is mainly produced by large refineries with natural gas and dry gas generated during crude processing as feedstocks. Hydrogen is used to produce superior distillates in hydrogenation units. Besides, it is also applied in industries like metallurgy, electronics, food processing, etc.
Suzhou Huafeng LNG Co is jointly established by Suzhou Oxygenerator and Suzhou Natural Gas Pipeline Network in Suzhou. The plant is capable of producing 67,000cubic meter/day (20 million meter/year) of LNG.