Editorial: Molecular attraction

A series of DME and rDME announcements are sure to further pique the interest of the LPG sector while also posing questions, writes Matt Scotland

The molecule dimethyl ether (DME) looks set to attract yet more attention from the LPG industry after a seemingly landmark deal between the Indonesian government and US firm Air Products was signed on 12 May. This came as US retailer Suburban Propane began its first sales of a renewable DME (rDME) and propane blend in California, followed by distributors UGI and SHV Energy's rDME joint venture Dimeta announcing that its first commercial plant will be in Teesworks, northeast UK.

Indonesia's president Joko Widodo and investment minister Bahlil Lahadalia were present to witness the inking of the deal with Air Products, under which the firm will invest around $15bn in coal gasification projects in the country, state-owned news agency Antara says. It is part of government attempts to develop a downstream coal industry "so that the products can be used as substitutes for imported items", Lahadalia said on 13 May — in reference to the country's plan to switch 50pc of its imported LPG to locally produced DME. Indonesia imports 7mn-8mn t/yr of LPG, costing 80 trillion-90 trillion rupiah ($5.5bn-6.1bn) each year, Lahadalia said.

Air Products will also provide $3bn to develop hydropower plants built alongside Indonesia's public works and housing ministry, the report says. One might expect such a significant deal to be heralded by the US company, but it has yet to make an announcement and did not confirm or comment on the deal when requested.

The reason for Air Products' reticence is unclear. The firm is investing in two coal gasification plant projects in the country, work on one of which began this month while the other has been in development since the start of this year. It may be because development of the country's downstream coal sector has been mooted for years, and some LPG market participants have voiced doubt that this time is any different or its plans are feasible, given economic constraints. Yet the government successfully shifted practically the entire nation from kerosine to LPG as a cooking fuel from 2007-12, and with the backing of state-owned oil firm Pertamina and coal company Bukat Asam, the huge DME programme is theoretically achievable.

The plan also aligns well with a country that relies on its huge, at-risk coal industry — producing over 600mn t and exporting more than 300mn t last year. Indonesia consists of around 17,500 islands accustomed to environmental dangers, be it tsunamis, earthquakes, volcanic eruptions and most recently rising sea levels. It will be acutely aware of the risks it and other nearby islands face from climate change, as well as the negative perception its coal sector and large-scale deforestation attract on the world stage. While Indonesia remains reluctant to end its reliance on coal, the proposed investment in a downstream sector at least demonstrates to the global community that it is looking to transition.

Curious brew

If it does succeed, the question then is how will the DME be sold. The general assumption is that DME can be safely blended with LPG up to 20pc without modifications to equipment and infrastructure being needed. But Indonesia may plan to go higher if it is willing to invest. Jakarta will be keeping an eye on developments in the US and Europe, as first sales of rDME and LPG blends emerge. Suburban Propane is now selling its "propane+rDME" product in California. The initial blend ratios are at a level that will guarantee to customers that the product is a safe drop-in, Suburban chief executive Mike Stivala says. But it plans to increase this rate in future. UGI and SHV Energy will also be watching closely. Their Dimeta venture plans to open its new 50,000 t/yr rDME plant in Teesworks by mid-2024.

These developments and others will be explored at the International DME Association's DME 9 conference in Zurich on 15-17 June. Each of the aforementioned companies will be presenting, as will the World LPG Association — a clear signal that the LPG sector is fully embracing the exciting opportunities this molecule offers.