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Scottish minister upbeat on LPG

This article originally appeared in Argus LPG World, a twice monthly publication covering the latest development in international LPG markets, for a free trial, please click here.

LPG has a bright future as an off-grid energy source and has an important role to play in the transport sector.

This was the message that newly appointed Scottish minister for business, innovation and energy, Paul Wheelhouse, gave to the annual UK LPG Association (UKLPG) conference in Edinburgh on 26 May. Wheelhouse paid tribute to the role played by LPG distributors for “the vital work done in delivering essential supplies to homes, businesses and public services in every corner of Scotland — especially in our remote and rural communities”.

LPG is a crucial part of the UK energy mix in the country’s rural off-gas grid regions — a large number of which are in Scotland and northern England. The UK LPG market relies on a combination of domestic production from North Sea oil and natural gas fields, as well as imports — the country produced nearly 3mn t of LPG and imported 422,000t in 2014, according to Argus and WLPGA data.

Innovation

Wheelhouse recognised the importance of LPG to the Scottish economy. “We will examine the role for LPG and its derivatives, recognising it is an important product from the midstream oil and gas industry,” he said, referring to Scotland’s future energy strategy, following the further devolution of power from the central government in London. And he encouraged increased engagement with the oil and gas industry to “ensure that we capture the opportunities for research and innovation, as well as employment and export growth in the LPG sector”.

On the subject of innovation, Wheelhouse mentioned biopropane as a “new and innovative approach to the energy challenges that we face” — reducing greenhouse gas emissions. Biopropane is directly interchangeable with propane or LPG produced from fossil fuels, without the need for consumers to adapt existing appliances, he said. “Consumers using propane produced from fossil fuel sources could cut their emissions by something in the region of 90pc,” Wheelhouse said.

Biopropane should be commercially available in Europe by the end of this year, through a partnership of Netherlands-based LPG distributor SHV Energy and Finnish refiner and biodiesel producer Neste Oil. The latter company will produce the fuel from biomass feedstock through a new biopropane unit at its Rotterdam biodiesel plant, although supply will be restricted to around 45,000 t/yr, unless further investment is forthcoming.

There are a number of other production technologies for making LPG from renewable feedstocks, but none of these are commercially viable, yet.

Positive on autogas

Wheelhouse was positive about the demand growth prospects for the Scottish autogas sector. He acknowledged the benefits of autogas as a cleaner and lower-carbon transport fuel, and the country’s extensive refuelling network. The stated aim of the Scottish government’s Cleaner Air for Scotland strategy is to end the use of gasoline and diesel-fuelled vehicles on roads in the country’s urban areas by 2050.

The strategy is primarily focused on promoting the use of electric vehicles. But the Scottish government has committed to engage with the LPG, biofuel and compressed natural gas sectors over their role in the transition to a near zero emissions transport industry.

“We were delighted that the Scottish energy minister delivered his first keynote speech at our conference,” UKLPG chief executive Rob Shuttleworth said. “The whole conference was focused on the future role of LPG and its part in decarbonising the energy and heating sectors across domestic, business and transport applications.”

Clear vision

UK residential LPG consumption of 229,000t in 2014 was down from almost 300,000t a year earlier (see graph). The demand reduction — which was mirrored in a number of European countries — was primarily because of unseasonably warm weather in the first and fourth quarters of the year. UK autogas sales have also declined in recent years, in the absence of a clear UK government vision on taxation and as a result of a lack of new vehicle models from original equipment manufacturers.

Source: Argus LPG World