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March/April 2019
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Preparing for a second wave of US LNG export projects SHIP-TO-SHIP TRANSFERS Flexible or rigid? New solution offers best of both worlds
SMALL- AND MID-SCALE LNG Modular approach helps smaller facilities adapt
CONTAINMENT SYSTEMS Reduce boil-off gas to improve transportation costs
AREA REPORT: CHINA How the ‘China effect’ is shaping the LNG market
At the Core of LNG
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Contents March/April 2019 volume 41 issue 2
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10
Comment
5 Identifying the bottlenecks that could hamper the growth of LNG
Area report – China
6 China’s LNG imports are second only to those of Japan and with growth expected to continue, we ask how best to manage this insatiable appetite?
Emerging gas markets
10 Despite a long history of LNG exports, Indonesia is now turning to Mozambique to help manage its consumption
20
Operator profile
14 Having recently entered the exclusive FSRU-ownership club, Nakilat is looking to boost its shipmanagement credentials
Vessel profile: Clean Jacksonville
18 A look at the lessons learnt from the design and build of America’s first LNG bunker barge
Interview – Erik Langeteig
20 Examining the design and build requirements for small-scale LNG infrastructure
Market data
42
24 The LNG Global Orderbook 2019-2023
Latest delivery
27 The challenges in developing the world’s largest LNG bunker supply vessel, Kairos
Shipmanagement
33 As LNG cargoes increase, the spotlight is firmly on safety and training 37 Help retain knowledge by taking a long-term approach to safety
Small and mid-scale LNG plants
52
38 How Engie went about designing a vessel to provide small-scale LNG bunkering in European ports 40 A modular approach is helping new US LNG export facilities build-out their projects
Ship-to-ship transfers
42 A system that brings the best elements of rigid and flexible transfer technology together in one solution
Ship-to-shore transfers
45 Why standardisation is key to the development of the large-scale STS link sector
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LNG World Shipping | March/April 2019
Contents March/April 2019 volume 41 issue 2
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US LNG
Editor: John Snyder t: +1 917 886 5192 e: john.snyder@rivieramm.com
Containment systems
Production Editor: Kevin Turner t: +44 20 8370 1737 e: kevin.turner@rivieramm.com
49 A raft of FIDs are ushering in a second wave of US LNG export projects
52 Improving the thermal performance of containment systems can have a significant impact on LNG transport costs 55 With next year’s sulphur cap acting as a catalyst, LNG containment systems represent a growing and profitable market
Viewpoint
56 A new project is underway to determine the cost-effectiveness of emissionsreducing technology
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The May/June 2019 issue of LNG World Shipping will cover: • Area Report: Scandinavia & Baltic sea • Special Report: LNG as marine fuel, service & supply vessels, container & cargo ships, passenger ships & ferries, tankers & bulk carriers • Operations: LNG bunkering & bunker vessels • Technical: Propulsion & bunkering systems for LNG-powered ships • Equipment: Ballast water treatment systems – newbuild & retrofit Cover image: Golden Pass LNG terminal, Sabine Pass, Texas
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COMMENT | 5
Bottlenecks could derail LNG growth T
John Snyder, Editor
THE US HAS AMBITIONS TO BE A MAJOR LNG ACTOR ON THE GLOBAL GAS STAGE, BUT ITS TRADE WAR WITH CHINA HAS LEFT IT PLAYING THE ROLE OF AN EXTRA”
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he world needs clean energy, and unless you are from Norway, renewables – wind, hydro, solar and wave power – alone are not capable of meeting the demands of a growing population. Bountiful and environmentally attractive, natural gas and LNG are going to play major roles in meeting the world’s energy needs for the foreseeable future – if the industry can overcome some bottlenecks. As the world continues to pivot away from coal, I see there are a number of favourable factors that point to a bright future for natural gas and LNG. Last year, for example, LNG demand jumped 9% to 319M tonnes driven by strong growth in Europe and Asia. Growth is expected to accelerate to 11% up to 354M tonnes this year, according to Shell. One country that is at the center of the demand for natural gas and LNG is China. Anyone who has recently visited Shanghai knows firsthand that the country needs a breath of fresh air – literally. China’s LNG demand is being driven by strong economic growth coupled with an aggressive national stance on improving air quality by replacing the country’s coal-fired power plants with clean-burning natural gas ones. Already the world's second largest importer of LNG, China has drafted a plan to increase LNG imports by four-fold and expand the number of its import terminals from 19 to 34 by 2035. Even as Europe continues to invest in offshore wind, there are ample growth opportunities for gas in the European power generation sector. Currently less than 40% of Europe’s power is generated by gas-fired plants, and Europe will need to import more LNG to offset its own declining production. However, while LNG’s path ahead looks rosy, there are some bumps in the road that could derail its growth. One is the need for
continued investment by LNG exporters in liquefaction capacity. The 37M tonnes of new LNG capacity that came online in 2018 was all absorbed by the market and the additional capacity slated for this year is expected to be gobbled up by Europe and Asia. To avoid a shortfall, major LNG exporters such as Australia, Qatar, Russia and the US need to ramp up capacity by quickly moving forward on FIDs for proposed export terminals. The US, for example, has ambitions to be a major LNG actor on the global gas stage, but its trade war with China has left it playing the role of an extra. Despite China’s almost insatiable appetite for LNG, only six ships carrying US LNG landed at Chinese import terminals during the second half of 2018. More to the point, the trade war is also a stumbling block for investors looking to make FIDs on 12 new US LNG export terminals. Without the burgeoning Chinese market, those LNG export terminals just don’t look as attractive. Rising transportation costs could also slow the progress of LNG. Last November, spot charter rates for standard-size LNG carriers shot up to US$190,000 per day because of a shortage of ships. The LNGC fleet grew by 12% last year but is expected to only grow about 6-7% this year and next. When delivered, many of the new LNGCs will already be tied to long-term charters, meaning that only a few vessels will be available for spot charter. The good news is that shipowners are planning to order as many as 69 LNGCs this year, up from 65 in 2018 and a mere 17 in 2017. Newer ships will also be outfitted with smart ship technologies and lighter containment systems that will help reduce fuel consumption, increase capacity and lower transportation costs to keep LNG competitively priced now and in the future. LNG
LNG World Shipping | March/April 2019
6 | AREA REPORT China
CESI Gladstone transports LNG from the Port of Gladstone in Australia to China
Feeding China’s appetite for LNG China has emerged as the world’s largest importer of natural gas and second largest importer of LNG. But how best to feed that insatiable appetite?
I
n January, China imported a record 6.58M tonnes of LNG, surpassing December’s record volume of 6.29M tonnes. On a year-on-year basis, China’s LNG imports in January were up 27.8% from January 2018. In an effort to improve the air quality in its cities, under its “blue skies again” policy, China is looking to switch from coal-fired power plants to ones that burn natural gas. As a result, the country’s imports of LNG jumped by 16M tonnes in 2018, up by 40% from 2017, according to Shell’s LNG Outlook 2019. “The continued surge in Chinese LNG imports has helped improve air quality in some of its biggest cities over the last few years,” explains Shell integrated gas and new energies director Maarten Wetselaar. “China’s success in making the air cleaner for millions of people shows the critical role that natural gas can play in providing more and cleaner energy to the world.”
LNG World Shipping | March/April 2019
In the World Energy Outlook 2018, International Energy Administration (IEA) energy analysts Peter Zeniewski, and Tae-Yoon Kim report that gas accounts for 7% of China’s energy mix, well below the global average of 22%, but the expectations are that the share of gas will double to 14% by 2040. Demand for LNG is set to quadruple over the same period, accounting for nearly 30% of global LNG trade flows. “China has long driven global trends for oil, coal and, more recently, also for many renewable technologies,” wrote Mr Zeniewski and Mr Kim. “The ‘China effect’ on gas markets is now becoming a pivotal element for those working in gas markets.” Based on a draft proposal by China’s Ministry of Transport, the so-called “China Effect” will shape the LNG market for decades to come. The proposal calls for a four-fold increase in the amount of LNG the country currently imports. Last year, China’s 19 LNG import terminals with a total
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China AREA REPORT | 7
capacity of 2,860Bn cubic feet (bcf) handled 67.5M tonnes of LNG. Under the proposed policy, China would grow its LNG imports to 247M tonnes and build 15 additional terminals to handle a total of 11,000 bcf by 2035.
Terminal development
Delivered in 2018 by China’s Hudong-Zhonghua Shipbuilding (Group) Co., Ltd. (Hudong), the 174,100 m3 CESI Wenzhou is one of a fleet of six LNGCs under charter by Sinopec that are owned by a joint venture of China Energy Shipping Investment Co Ltd (CESI) (80%) and Mitsui OSK Lines (20%). CESI itself is a 51/49 joint venture involving China COSCO Shipping and Sinopec, respectively, The dual-fuel, diesel-electric LNGC transports LNG from the Australia Pacific LNG Project for Sinopec under a long-term charter agreement. Australia Pacific LNG is the largest producer of natural gas in eastern Australia and a major exporter of LNG to Asia. It is a joint venture of ConocoPhillips (37.5%), Origin Energy (37.5%) and Sinopec (25%).
Work has already begun in earnest on new import terminal capacity. One of the new LNG import terminals currently under development is the Tianjin Port LNG Public Terminal in northeastern China. Chinese developer Tianjin Hongfa Investment Group has invested approximately CNY20Bn (US$3Bn) into the project, which will be constructed in three phases. One of the goals of the project is to expand the availability and use of natural gas and LNG for industrial companies, power generation and LNG vehicle refueling in the BeijingChina’s seaborne supply line Tianjin-Heibei region. China imports the majority of its natural gas via pipeline Situated on the northern side of Tianjin Port Deep-Water from Russia and its LNG from Australia, Qatar, Malaysia, Channel, the terminal will have a capacity of 10 mta when Indonesia, Papua New Guinea and the US. it is completed in 2025. When the construction of the first China gets about 45% of its LNG from Australia, with phase is completed in 2021, the terminal will open with a exports of 14.2M tonnes of LNG shipped last year from three capacity of 2.8 mta, followed by an additional 3.2 mta in terminals at the Port of Gladstone in Queensland, Australia. the second phase at the end of 2023 and another 4 mta in That represented a rise of 22% from the 11.6M tonnes shipped by 2025. in 2017. The LNG import terminal will have two LNG piers, each The port handles LNG from Australia Pacific LNG, the capable of berthing three 270,000 m3 LNG ships, and one Santos-operated GLNG and Queensland Curtis Island, a additional berth for a 3,000-dwt general cargo ship. Shell-owned business, with China National Offshore Oil The LNG receiving station will have 10 LNG storage tanks, Corporation and Tokyo Gas. each with a capacity of between 160,000 and 200,000 m3, along China has also solidified its supply of LNG from Qatar. with LNG unloading arms and gasification facilities. The Last September, Qatargas signed a sale and purchase receiving station will be completed in 2025. agreement with PetroChina under which it will supply the About 1,500 km south of Tianjin, company’s Chinese terminals with around Sinopec plans to build its fourth LNG 3.4 mta of LNG over a period of 22 years. terminal in a partnership with Zhejiang Qatargas is the world’s largest LNGEnergy Group Co Ltd. The 3 mta facility producing company and is responsible will be built in Wenzhou in the Zhejiang for marketing Qatar’s entire annual THE ‘CHINA EFFECT’ province on the east China Sea. The production capacity of 77 mta. For its IS NOW BECOMING A project will include four 200,000 m3 part, PetroChina is China’s largest gas PIVOTAL ELEMENT FOR supplier, meeting 66% of China’s demand storage tanks, a dock to berth LNG carriers ranging from 30,000 to 266,000 m3 in 2017 through a combination of LNG THOSE WORKING IN capacity, and a 26-km pipeline. The first imports, pipeline gas imports and GAS MARKETS” phase of the project will open at the end domestic gas production. of 2021. Under the 22-year agreement, which Construction of the LNG import extends to 2040, Qatargas will supply terminal is being carried out by Zhejiang Zheneng Wenzhou LNG from the Qatargas 2 project, a joint venture between LNG Co. Ltd., a new company owned by Zhejiang group Qatar Petroleum, ExxonMobil and Total. Shipments from (51%), Sinopec (41%) and minority investors (8%). Qatar’s Ras Laffan terminal are directed to the three Sinopec also owns LNG terminals in Beihai and Tianjin, PetroChina LNG receiving terminals at Dalian, Tangshan with plans to increase its LNG import terminal capacity from and Rudong. The three facilities have an aggregate capacity the current level of 9 mta to 26 mta by 2023. of 13 mta. Sinopec’s Qingdao LNG terminal in northern China Last July, Russian independent gas producer Novatek marked a milestone on 31 January when it welcomed the made history by delivering the first LNG from the Yamal CESI Wenzhou, the 200th ship to be unloaded at the receiving LNG to China via the Arctic’s Northern Sea Route. Yamal terminal. Since it opened in November 2014, the Qingdao LNG is a joint venture between Novatek (60%), FranceLNG terminal has received 14.2M tonnes of LNG. based Total (20%) and China-based China National
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LNG World Shipping | March/April 2019
8 | AREA REPORT China
The Arc7 icebreaking LNGC Eduard Toll on gas trials
Petroleum Corporation (20%). The LNG was carried on the icebreaking Arc7 LNG tankers Vladimir Rusanov and Eduard Toll, each with a capacity of 172,000 m3, to the port of Jiangsu Rudong. The Vladimir Rusanov is jointly owned by Mitsui OSK Lines (MOL) and China COSCO Shipping and managed by MOL. The Eduard Toll is jointly owned by Bermuda-based Teekay LNG Partners LP and China LNG Shipping. Equipped with an icebreaking bow, the Arc7 LNG carriers have an overall length of 299 m, beam of 50 m and draught of 12 m. The ships were built by South Korea’s Daewoo Shipbuilding & Marine Engineering. The voyage from the port of Sabetta through the Northern Sea Route to Jiangsu Rudong was completed in 19 days, as compared to 35 days for the traditional eastern route via the Suez Canal and the Strait of Malacca. At the time, Novatek chairman Leonid Mickhelson said the Northern Sea Route would cut transportation time and lower costs, playing “a key role in developing our hydrocarbon fields on the Yamal and Gydan peninsulas.”
Trade war hinders US LNG
Driven by its abundance of shale gas, the US would appear to be the perfect dance partner for an LNG-thirsty China, but the ongoing trade war between the two countries has struck a sour note. Over the last half of 2018, only six ships transported US LNG to China. This was after the US had exported 103,410M ft3 of LNG to China in 2017 — a 500% increase over 2016, according to the US Energy Information
LNG World Shipping | March/April 2019
Administration (EIA). EIA totals were not available for 2018, but as of the end of November, US exports of LNG to China stood at 90,052M ft3. On 9 February 2018, the leading exporter of US LNG, Houston-based Cheniere Energy, Inc announced it had entered into two LNG sale and purchase agreements with China National Petroleum Corporation for the supply of 1.2 mta of LNG from 2018 to 2043. If it drags on, the US-China trade war could well impact FIDs on the 12 new LNG export projects in the US. While the US can still export its LNG to South Korea, Japan, Mexico, India and Europe, without an energy-eager China the financial picture for the new export terminals looks far less attractive. China also has other options to fill its energy needs, such as British Columbia on Canada’s west coast. The LNG Canada export terminal in Kitimat, British Columbia, has plans to be operational in 2021 with annual LNG exports of 1,357.8Bn ft3. One of the five joint venture (JV) partners in LNG Canada is PetroChina Company Limited. It owns a 15% stake in the JV through its subsidiary PetroChina Canada Limited, along with: Royal Dutch Shell plc, through its affiliate Shell Canada Energy (40%); Petronas, through its wholly-owned entity North Montney LNG Limited Partnership (25%); Mitsubishi Corporation, through its subsidiary Diamond LNG Canada Ltd (15%); and Korea Gas Corporation, through its whollyowned subsidiary Kogas Canada LNG (5%). LNG
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10 | EMERGING GAS MARKETS
The world’s first CNG carrier was ordered for Indonesia but is yet to trade (image: Wikimedia Accurimbono)]
LNG: Powering growth in Southeast Asia The Indonesian economy has prospered from LNG imports and is now turning to emerging LNG exporter Mozambique as the next big provider
I
ndonesia has many of the characteristics associated with an immature LNG import market, despite being an established exporter of LNG. As a country it is nominally self-sufficient in natural gas, but with a booming population and 17,000 islands across which to transport LNG, it has had to develop import facilities to compensate for the energy it cannot supply itself. Indonesia commenced LNG exports in 1977 and by 1984 had overtaken Algeria to become the world’s leading supplier of the product. In 1988, shipments from Bontang and Arun, the nation’s two liquefaction plants at the time, accounted for almost 40% of the global trade in LNG. Indonesian LNG exports peaked in 1999,
LNG World Shipping | March/April 2019
at 28.5 mta, although the country remained the world’s leading LNG supplier until 2006 when Qatar took on that mantle. Since then, declining production at Bontang and Arun has been compensated for by output from the new 7.6 mta Tangguh and 2 mta Donggi Senoro terminals. Indonesia’s LNG production in 2017 was 18.7 mta (19.9 mta in 2017), of which 2.64M tonnes shipped to domestic terminals. The country’s LNG output is expected to remain stable until at least the early 2020s, and probably for considerably longer. The commissioning of a third 3.8 mta Tangguh train in 2020 will help maintain the nation’s production levels. However, Indonesia is an emerging economy and is hungry for energy in
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EMERGING GAS MARKETS | 11
any form, but especially LNG. Pertamina only made its first LNG shipment to the east of the country in 2017 and has been busy forming alliances with independent suppliers to plug the LNG gap under a mandate from the government. This includes development deals with Woodside, ENI and BP. Two liquefaction plants are under construction that will require the services of LNG carriers: Senkang LNG, with a contracted capacity of 0.5 mta, due to start production in early 2020; and the aforementioned Tangguh third train. In addition, Djakarta-headquartered JSK is developing a mini-FSRU which will initially be stationed in Bali. The Karunia Dewata has 26,000 m3 capacity and will regasify around 50M standard cubic feet a day (scf/d). The LR-classed vessel is the first mini-FSRU to be built in PaxOcean’s Zhoushan shipyard and is the largest ship of its type to be built in China. The non-propelled vessel was designed for the installation of four independent type C tanks, each with a capacity of 6,500 m 3 and a minimum operating temperature of minus 163C. “The design is focused on simple and reliable operations in Indonesian waters,” said PaxOcean engineering director Lixin Bian at the launch. The vessel will be put to service in the small-scale supply of LNG within Indonesia’s network of archipelagos, with their often shallow depths.
Gas-to-power
Remote locations and stranded gas in Indonesia are the norm rather than the exception, and this was a key factor in the deal offered to a Japanese consortium to construct and operate Indonesia’s – and Asia’s – first gas-to-power project by deploying an FSRU. An essential element of the Jawa 1 project, the Mitsui OSK Lines (MOL)managed FSRU will operate in West Java, distributing gas under pressure to a local power plant from its anchorage 14 km offshore in the Cilamaya Sea east of Jakarta. The gas will be sent through a 21-km long pipeline. The power plant is jointly owned by Pertamina and trading houses Marubeni and Sojitz. At 293-m long and 43-m wide,
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THE JAWA 1 PROJECT WILL BE WATCHED CLOSELY IN A REGION CONSIDERED RIPE FOR FSRUS THAT ARE USUALLY DEPLOYED TO SMALLER FIELDS”
the vessel, which will be built by Samsung Heavy Industries, will have an LNG storage capacity of 170,000 m3 and a regasification capacity of 300M cubic feet per day. According to a statement by the consortium partners, the FSRU will feature “the optimal tank and regasification capacity tailored to the plant’s power generation ability.” Co-financiers for Jawa 1 include seven banks. MOL has a central role in the project, which is due to start up in December 2021 and run for a contract period of 25 years. The Jawa 1 project will be watched closely in a region that most analysts consider to be ripe for FSRUs usually deployed to ‘stranded’ – or smaller – fields, where the cost of a fixed platform is not justified or is at least marginal. “As regions worldwide have comparatively unexpected and smaller gas requirements, FSRUs are projected to meet their demands,” noted energy consultant TMR in early 2019. “The low cost of construction required for FSRUs is another [attraction] that is likely to contribute to the development of the global market in coming years,” it added. The difficulties involved with remote access can sometimes kill or stall a project. Pertamina recently decided not to construct the Bojonegara LNG receiving terminal, proposed for a site to the west of Jakarta. The US$800M project would have provided Indonesia with its second landbased receiving facility. However, the proposed location is about halfway between country’s two existing large-scale FSRU receiving terminals – PGN FSRU Lampung at the southern tip of the island of Sumatra and Nusantara Regas Satu in Jakarta Bay where it serves Jakarta. However, doubts began to emerge as regards the immediate need for another LNG receiving facility in the area, as the distance between the two FSRUs is only 250 km. In October 2016 the project participants agreed to push back the start date to 2020. Project delays in Indonesia are not unusual. Indonesia was on the cusp of a world first with Jayanti Baruna, a 2,200 m3 Compressed Natural Gas carrier (CNG) which was contracted by Pelayaran
LNG World Shipping | March/April 2019
12 | EMERGING GAS MARKETS
Bahtera Adhiguna, the Indonesian subsidiary of state power company Perusahaan Listrik Negara (PLN) in 2014. The pioneering vessel is designed to hold natural gas at 250-bar pressure to be transported in 832 vertically-arranged, 12-m high cylinders designed and fabricated by CIMC Enric. The vessel was completed in China in 2016, but has yet to be delivered due to a lack of gas receiving facilities in Indonesia.
Floating LNG
As mentioned above, SHI is constructing a floating LNG vessel for Eni’s Coral FLNG initiative in Mozambique. The 3.4 mta floating production vessel will go on station off the country’s northern coast for 25 years. BP has agreed to purchase the entire output of the Coral FLNG vessel. Floating LNG production obviates
THE FLNG APPROACH USUALLY TRANSLATES INTO SHORTER LEAD TIMES AND LESS CAPITAL EXPENDITURE”
the need for undersea gas pipelines to a shore liquefaction plant when the commercialisation of remote gas fields is being considered. Because FLNG vessels are constructed at specialised facilities, the local labour costs and permitting issues associated with the construction of shore terminals can be avoided. Despite the use of innovative technologies and the detailed preparation work associated with these inaugural floater projects, the FLNG approach usually translates into shorter lead times and less capital expenditure than is required for traditional shore-based liquefaction plants. The Coral LNG will be 439-m long, 65-m wide and weigh about 210,000 tonnes. It is designed to produce 3 mta of LNG and 480,000 tpa of condensate. The first cargo is scheduled for 2022. It could be that Coral LNG beats
INDONESIA LNG DEVELOPMENTS Location
Exporter(s)
Buyer
ACQ (Mtpa)
Start date
End date
Delivery format
Bontang
Pertamina. ENI Muara bakau
Pertimina
1.4
2016
2021
FOB
Bontang
Pertamina. IDD Bangka
Pertimina
0.2
2016
2021
FOB
Bontang
Pertamina. Total E&P. Chevron. Vico
CPC
1.8
1998
2017
DES
Bontang
Pertamina. Total E&P. Chevron. Vico
KOGAS
1.0
1998
2017
FOB
Bontang
Pertamina. Total E&P. INPEX
JERA et al**
2.0
2011
2020
DES / FOB
Bontang
Pertamina. Total E&P. INPEX
Nusantara Regas
1.5
2011
2022
FOB
Tangguh
Tangguh PSC Contractor Parties
CNOOC
2.6
2009
2033
FOB
Tangguh
Tangguh PSC Contractor Parties
Kansai Electric
1.0
2014
2035
DES
Tangguh
Tangguh PSC Contractor Parties
PLN
1.5
2015
2033
DES
Tangguh
Tangguh PSC Contractor Parties
Posco
0.6
2005
2033
DES
Tangguh
Tangguh PSC Contractor Parties
Sempra LNG
3.7
2008
2029
DES
Tangguh
Tangguh PSC Contractor Parties
SK E&S
0.6
2006
2026
DES
Tangguh
DES
Tangguh PSC Contractor Parties
Tohoku Electric
0.1
2010
2024
Donggi-Senoro
PT Donggi-Senoro LNG
JERA
1.0
2015
2028
DES
Donggi-Senoro
PT Donggi-Senoro LNG
KOGAS
0.7
2015
2028
FOB
Donggi-Senoro
PT Donggi-Senoro LNG
Kyushu Electric
0.3
2015
2028
DES DES
New developments Tangguh
BP
PLN
1.0
2020
2035
Woodside*
Pertimina
0.6
2019
2039
Bontang
Pertamina. ENI Muara bakau
ENI
1.0
2017
2024
FOB
Bontang
Pertamina, ENI Muara bakau
ENI
1.0
2017
2027
FOB
Bontang
Pertamina, ENI Muara bakau
Pertimina
1.4
2017
2024
FOB
ExxonMobil (Heads of Agrreement stage)
Pertimina
1.0
2020s
2030-2040
DES
Portolio
Notes: ACQ = Annual Contract Quota Notes: DES = Delivery Ex Ship, FOB = Free On-Board Notes: *There are provisions allowing the volume to increase up to 1.1 MTPA from 2024 to 2038 Notes: ** = JERA. Kansai Electric. Kyushu Electric. Nippon Steel Corporation. Osaka Gas.Toho Gas Source: GIIGNL
LNG World Shipping | March/April 2019
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EMERGING GAS MARKETS | 13
Mozambique’s onshore LNG to market. The onshore project is far larger, consisting of two LNG trains with total nameplate capacity of 12.88 mtpa to support the development of the Golfinho/Atum fields located entirely within Offshore Area 1. This foundational project paves the way for significant future expansion of up to 50 mtpa from Offshore Area 1. The Golfinho/Atum Project will also supply initial volumes of approximately 100 million cubic feet of natural gas per day (MMcf/d) (50 MMcf/d per train) for domestic use in Mozambique. Anadarko Petroleum Corporation has signed a number of sales and purchase agreements for Mozambique LNG1. We now see that a former major exporter of LNG is turning to the newest supplier in the field to provide energy to meet its future demands: Anadarko and
Mozambique LNG1 has announced it is to supply 1 mta for 20 years to Pertamina. “Indonesia is expected to be one of the fastest growing natural gas markets in Asia and Pertamina, the national energy company of Indonesia, will play a key role in meeting Indonesia’s long-term energy needs,” said Anadarko executive vice president international, deep-water & exploration, Mitch Ingram. “The Anadarkoled Mozambique LNG project is well positioned to make a sanctioning decision in the first half of this year, as we remain on track to complete the project financing process, secure the necessary approvals, and have executed a sufficient volume of long-term SPAs, which now total more than 9.5 MTPA. We are extremely pleased and grateful to Pertamina for selecting Mozambique LNG to be part of its longterm energy portfolio.” LNG
INDONESIA IS EXPECTED TO BE ONE OF THE FASTEST GROWING NATURAL GAS MARKETS IN ASIA”
MALAYSIA LNG DEVELOPMENTS Location
Exporter(s)
Buyer
ACQ (Mtpa)
Start date
End date
Bintalu
Malaysia LNG, Satu
Hiroshima Gas
0.10
2016
2026
Delivery format FOB
Bintalu
Malaysia LNG, Satu
JERA.Tokyo Gas
7.40
1983
2018
DES / FOB
Bintalu
Malaysia LNG, Satu
Saibu Gas
0.45
2014
2028
DES / FOB
Bintalu
Malaysia LNG, Satu
Shikoku Electric
0.36
2010
2025
DES
Bintalu
Malaysia LNG, Dua
CPC
2.00
1995
2020
DES
Bintalu
Malaysia LNG, Dua
Gas Bureau. City of Sendai
0.15
1997
2018
DES
Bintalu
Malaysia LNG, Dua
JERA
0.54
2011
2031
DES
Bintalu
Malaysia LNG, Dua
JX Nippon Oil & Energy Corporation
0.38
2015
2025
DES
Bintalu
Malaysia LNG, Dua
KOGAS
2.00
1995
2018
FOB
Bintalu
Malaysia LNG, Dua
Shizuoka Gas
0.33
2016
2025
DES
Bintalu
Malaysia LNG, Dua
Tohoku Electric
0.37
2016
2026
DES
Bintalu
Malaysia LNG, Dua
Tokyo Gas
0.90
2015
2025
DES
Bintalu
Malaysia LNG Tiga
CNOOC
3.00
2009
2029
DES
Bintalu
Malaysia LNG Tiga
Japan Petroleum Exploration Co.
0.48
2002
2021
DES
Bintalu
Malaysia LNG Tiga
KOGAS
2.00
2008
2028
DES
Bintalu
Malaysia LNG Tiga
Osaka Gas.Toho Gas. Tokyo Gas
0.68
2004
2024
DES
Bintalu
Malaysia LNG Tiga
Toho Gas
0.52
2007
2027
DES
Bintalu
Malaysia LNG Tiga
Tohoku Electric
0.50
2005
2025
DES
Bintalu
Malaysia LNG
Osaka Gas
0.80
2009
2023
DES
Malaysia / MLNG / Petronas
Hokkaido Electric Power
0.1
2018
2028
DES
Malaysia / MLNG (Heads of Agreement)
JERA
2.5
2018
2021
FOB/DES
New developments Portfolio
Notes: ACQ = Annual Contract Quota Notes: DES = Delivery Ex Ship, FOB = Free On-Board Source: GIIGNL
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LNG World Shipping | March/April 2019
Nakilat strengthens its ship management arm A key link in Qatar’s LNG supply chain, Nakilat is looking to boost its ship management capabilities, having recently entered the exclusive FSRUownership club
LNG World Shipping | March/April 2019
Q
atari-owned shipping and maritime services company Nakilat remains the essential transportation link in Qatar ’s LNG supply chain. Established in 2004, Nakilat was listed on the Qatar Stock Exchange and took its first LNG ship delivery the following year. From thereon, the company followed through on its long-term business strategy to establish itself at the forefront of the energy transportation sector. Capitalising on Qatar ’s abundant natural gas resources, Nakilat grew,
adding ship management capabilities and driven by its vision to become a globally leading shipping and maritime services company. Nakilat first started ship management in early 2012 with four very large gas carriers (VLGCs) and later four Q-Flex LNG carriers. As of August 2017, Nakilat had wrapped up the first phase of its fleet management transition, switching 10 LNG carriers from Shell to its ship management arm, Nakilat Shipping Qatar Limited (NSQL) in Doha. At the time, it was seen as one
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OPERATOR PROFILE | 15
partners have been fundamental to our success, and we always look for opportunities to grow our international presence and maximise returns for our shareholders.”
First FSRU
Nakilat's Q-Max LNG carrier Mozah has 80% more cargo carrying capacity than conventional LNGCs
of the world’s largest management transitions of LNG carriers and was carried out within just 10 months. In 2018 Nakilat further refined its business focus and strengthened its international portfolio by expanding its joint venture partnership with Greece-based Maran Gas, to include two additional LNG vessels. The agreement increased the number of vessels jointly owned by Nakilat and the John Angelicoussis-led Maran Gas from 13 to 15 vessels. The two newly added vessels, Woodside Rogers and Woodside Goode, both built by South Korea’s Daewoo Shipbuilding & Marine Engineering Co, are under long-term charter, and equipped with dual fuel diesel-electric (DFDE) propulsion and have a capacity of 159,800 m3 each. Commenting on the company’s growth strategy, chief executive Eng. Abdullah Al Sulaiti said: “Strategic alliances with renowned
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Last year, Nakilat marked an historical milestone by signing an agreement with Houston-based Excelerate Energy, to acquire a 55% interest in a floating storage regasification unit (FSRU) Exquisite, the first such unit to join its fleet. This is the first FSRU co-owned by a Qatari company and paves the way for Qatari LNG to expand its outreach into developing and emerging markets. Earlier this year, Exquisite achieved another milestone, completing the 200th ship-to-ship transfer of LNG at the Engro Elengy terminal (EETL) in Pakistan’s Port Qasim. Nakilat continues to play a vital role in connecting the global LNG export market, with the world’s largest fleet of LNG carriers, 65 in
all, as well as four large LPG carriers and the aforementioned FSRU Exquisite. Nakilat’s LNG carrier fleet has 20 conventional LNGCs, ranging in capacities from 145,000-170,000 m3, 31 Q-Flex LNGCs (210,000-217,000 m3) and 14 Q-Max LNGCs (263,000266,000 m3). Nakilat’s LNG fleet has a combined carrying capacity of over 9M m3, which is about 12% of the global LNG fleet carrying capacity. Its in-house shipping management subsidiary Nakilat Shipping Qatar Limited (NSQL) currently operates 18 vessels, comprising 14 LNG carriers and four LPG carriers.
‘Five-star’ safety
Safety enhancement, vessel reliability and cost optimisation continue to be the main drivers in managing Nakilat’s vessels. The company’s main operational focus between late-2017 up to 2019 has been to safely and successfully complete all its vessels’ second special survey dry dockings, which is a requirement when vessels
N-KOM, a joint venture between Nakilat and lKeppel Offshore & Marine Ltd.
LNG World Shipping | March/April 2019
16 | OPERATOR PROFILE
approach 10 years of age. For this reason, it has not taken more vessels under its ship management wing while this cycle is underway. Nakilat achieved a “five-star” grading following its recent FiveStar Occupational Health and Safety Audit, conducted by the British Safety Council (BSC). This is the second consecutive year that Nakilat has received the “five-star” grading, which is the highest available rating that can be achieved in the audit. The British Safety Council’s FiveStar Occupational Health and Safety Audit assesses organisations’ safety management system (SMS) against a worldwide benchmark of current best practices. Nakilat underwent a detailed, quantified and objective evaluation of its occupational health and SMS, and had its performance measured against a number of key best practice indicators. The audit specification includes the five best practice indicators of
IN 2018 NAKILAT STRENGTHENED ITS INTERNATIONAL PORTFOLIO, EXPANDING ITS PARTNERSHIP WITH MARAN GAS TO INCLUDE TWO ADDITIONAL LNG VESSELS”
leadership, stakeholder engagement, risk management, organisational health and safety culture and continual improvement. In December 2018, Nakilat received the “Sword of Honour” Award by the British Safety Council, following its achievement of gaining a maximum five-star grading. Mr Al Sulaiti said: “At Nakilat safety is a core value and is the cornerstone of our operations. We are deeply committed to providing shipping and maritime services in a safe, reliable and efficient manner. We all are proud of the company’s safety initiatives, which place great emphasis on occupational health and safety, employee wellbeing, and enhances our safety culture."
Expanding in-house crew administration
Aligned with the company’s longterm growth objectives, Nakilat will be expanding its in-house crew
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OPERATOR PROFILE | 17
administration to attain greater autonomy in its operations and closer management of its seafarers. This will support the company’s efforts to strengthen its in-house capabilities and its technical knowhow, and also contribute towards the development of a sustainable workforce, according to the company. Nakilat is also modernising its systems, with the aim of enhancing its human capital capacity and competency, in preparation for the next phase of its LNG ship management expansion. The next round of vessel transitions is scheduled to commence in 2020, with several wholly-owned LNG vessels being transitioned from Shell International Trading and Shipping Company Ltd. (STASCO), to NSQL.
The strategic partnership aims to increase productivity levels at Nakilat’s Erhama Bin Jaber Al Jalahma Shipyard and develop local construction capabilities to support the increasing demand for the construction of offshore and onshore structures in Qatar. The establishment of the joint venture is aligned with Qatar ’s newly launched localisation programme, which is designed to
enhance the resilience of the energy sector ’s supply chain. The joint venture between Nakilat and McDermott coincides with Qatar ’s ambitions to localise its energy sector ’s supply chain and increase its LNG production from 77 to 110 mta in the coming years. The joint venture will be operated from Nakilat’s shipyard in Ras Laffan Industrial City. LNG
Visit us at LNG19 GTT will exhibit in Hall 2 – booth 4020
LAST YEAR, NAKILAT MARKED AN HISTORICAL MILESTONE BY SIGNING AN AGREEMENT WITH EXCELERATE ENERGY TO ACQUIRE A 55% INTEREST IN THE FSRU EXQUISITE
Following the acquisition of Exquisite, Nakilat plans to take over full ship management responsibility of the vessel from the current operator in 2020. This will require NSQL to complement its skill base with additional knowledge and competencies to strengthen the company’s positioning in this fastdeveloping, niche segment of the LNG industry. In addition, earlier this year Nakilat struck a deal with US-based McDermott to form a joint venture company, providing offshore and onshore fabrication services in Qatar.
THE FUTURE IS GREEN, THE FUTURE IS LNG SWITCHING TO LNG AS FUEL? ASK GTT. LNG IS IN OUR BLOOD.
Learnmore moreonon Learn www.gtt.fr www.gtt.fr
LNG as fuel allows to meet 2020 Global Sulphur Cap. GTT has developed for over 55 years LNG tank technologies. This considerable expertise, combined with this experience, is available for owners looking at switching to LNG. Today, GTT solutions allow to save some space compared to other LNG tank solutions.
18 | VESSEL PROFILE Clean Jacksonville
What did we learn from the first US LNG bunker barge?
C
lean Jacksonville, a nonself-propelled, steel-hulled bunker barge with a capacity of 2,200 m3 of LNG, was constructed at Conrad Orange shipyard, a subsidiary of Louisiana-based Conrad Industries. The shipyard provided feedback on the project, which was detailed by GTT North America general manager Aziz Bamik during a seminar in Tokyo last year. Based on a conceptual design by cryogenic cargo containment company GTT, Clean Jacksonville transports LNG from the JAX LNG liquefaction facility on the St Johns River to refuel Tote Maritime Puerto Rico’s 3,100-TEU dualfuel container ships Perla del Caribe and Isla Bella, which operate from the Port of Jacksonville, Florida to San Juan, Puerto Rico.
First-in-class vessels can pose technical challenges to the most experienced shipbuilders, but the lessons learnt can prove invaluable
Designed to operate in inland waterways, bays, harbours and US coastal waters, the bunker barge has no propulsion machinery and is towed via hawser wire or pushed from the stern and manoeuvred at the hip by a tug, with the ability to be towed at a maximum speed of eight knots on its 1.6 km transit down river. Clean Jacksonville has a length
overall of 64.6 m, beam of 14.6 m and draft of 2.6 m. It is compliant with the Jones Act, meaning that it is registered under the US flag, built in US and owned and crewed by US citizens. Rhode Island-based naval architect and marine engineering firm Bristol Harbor Group (BHGI) was responsible for the design and engineering of the bunker barge and its sister company The Shearer Group, Inc based in Texas provided technical/shipyard support during the construction. BHGI also served as the regulatory lead and liaison between the regulatory bodies ABS and the US Coast Guard (USCG) and participated in a Hazid/Hazop primary risk assessment workshop, as well as a waterway suitability study and a waterway suitability risk assessment that were the first steps towards
LNG bunker barge Clean Jacksonville has a Mark III Flex cargo containment system (image: The Shearer Group)
LNG World Shipping | March/April 2019
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Clean Jacksonville VESSEL PROFILE | 19
obtaining USCG approval. While Clean Jacksonville is a non-selfpropelled vessel, it is still outfitted with all the complex equipment necessary for LNG transport and bunkering. Six Stirling StirLNG-4 cryocoolers can be used to cool down the LNG to manage BOG when necessary. Despite its short route, the bunker barge also has an impressive LNG holding time of more than 27 days. The first such barge built in the US, it is fitted with a single cargo tank with a capacity of 2,200 m3 based on GTT Mark III Flex cargo containment technology. GTT also developed a specially designed bunkering arm to refuel the bunker tanks at a transfer rate of 500 m3/h located on the aft deck of the containerships. The barge has an LNG transfer time of 4.5 hours and it is capable of accepting return vapour from the vessel that is being bunkered. Beyond its traditional role of designing the cargo containment and other cryogenic elements, GTT adapted and expanded its support services by developing a training simulator to ensure the effective training of the barge crew and the safe and satisfactory execution of the barge commissioning activities and gas trials.
Development timeline
The concept for the LNG bunker barge was Approved in Principle by class society ABS on 21 March 2014. Conrad Orange acquired all of the equipment and trained its own crew for the installation of the membrane containment system. GTT conducted a technical audit of the shipyard in May 2014, followed by additional training in October at Conrad, GTT in France and major component
DESIGNING AND INTEGRATING THE LNG SYSTEMS WERE MAJOR CHALLENGES”
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suppliers in South Korea. A mock-up of the membrane tank was completed in December after only six weeks of fabrication by Conrad’s team. In January 2015, Conrad Orange signed a license agreement for the GTT membrane technologies. A shipbuilding contract was inked on 25 February 2015. Conrad Orange laid the keel for the steel-hulled barge in September 2015. This led to the start of the cargo containment system engineering and the procurement of the main equipment in April, steel cutting in July and the launching of the barge in February 2016. Installation of the primary and secondary barriers of the cargo containment system took about eight months to complete, with the tank completed in early January 2017. The barge was commissioned, with cold tests using nitrogen at Conrad Orange shipyard and gas trials performed at Harvey Gulf International’s bunkering facility in Port Fourchon, Louisiana, which has three x 340 m3 small LNG ISO tanks. Tests were conducted at the facility to examine future operational scenarios including gassing up, cooling down, loading (trucks and via terminal onshore tanks), unloading, warming-up, inerting and aerating. The bunker barge was loaded with 635 m3 of LNG – a record for the plant – in several parcels due to terminal commercial operations and truck logistics. Tote took delivery of the bunker barge on 20 August 2018, with the first commercial bunkering on 27 September 2018. The Clean Jacksonville was loaded with 1,500 m3 of LNG for the 3,100TEU, LNG-fuelled container ship Perla del Caribe. The connection was achieved in about 20 minutes via the bunker mast, with 1,000 m3 of LNG transferred in under four hours. Mr Bamik joined GTT in 1999 and has served as general manager of whollyowned subsidiary GTT North America (GTT NA) in Houston since its formation in 2013. He will present on “Feedback on the construction and first year of operation of the first dedicated LNG bunker barge for US marine market” at LNG 19 in Shanghai on 4 April. LNG
Overcoming the odds Conrad Orange noted several technical challenges in designing and building Clean Jacksonville, including: • As the first US LNG bunker barge, developing a barge design with assumptions on the regulations and rules that were undefined at that time was difficult. • Management and coordination of an international project team was a strength, but language and the time zone differences between the team proved challenging. • The adaptation of a ‘hazardous zones’ definition based on the International Gas Code (IGC) in comparison to the policy letter issued by the US Coast Guard proved difficult and induced many changes. • Full front-end-engineering design (FEED) before steel cutting will be beneficial for all future LNG bunkering vessels. • The operating profile of any barge needs to be clearly defined. • The lack of small-scale LNG equipment available on the market proved challenging. • LNG systems design and the integration of systems were major challenges, with the overall LNG systems design and approval requiring much more time than anticipated. • Strong collaboration between all stakeholders including regulators was critical. • The construction of the membrane tank was the “most straightforward item,” meeting budget and schedule. The membrane tank containment system was completed 20 months prior to delivery.
LNG World Shipping | March/April 2019
20 | INTERVIEW Erik Langeteig
LNG fuelling infrastructure – multiple demand is key to success Chart Industries’ Erik Langeteig explains the design and build requirements for small-scale LNG infrastructure
BELOW: Eagle LNG’s Talleyrand LNG bunkering facility is in an active container terminal
“
W
here do you place 500,000-gallons of LNG storage in an active container terminal?” asks Chart Industries director of application development for engineered systems group Erik Langeteig. Is was this conundrum that Mr Langeteig had to address when leading a project to develop the cryogenic tank equipment at Eagle LNG’s Talleyrand LNG bunkering station in the Port of Jacksonville (JAXPORT) in Florida. The facility provides weekly refuelling for Crowley Maritime’s two LNG-powered, 2,400-TEU container/roll-on roll-off ships (ConRo), El Coqui and Taino that serve San Juan, Puerto Rico. Mr Langeteig explains that the small footprint at JAXPORT further complicated the engineering solution: “Since the site is only two acres, we didn’t have space as a natural safety buffer, which meant the bunkering facility required a unique engineering solution.” The Chart team decided to eliminate all the bottom connections to the 52-m-long, 5.8-m-diameter LNG storage tanks. Instead, each of the 1,000 m3 capacity tanks has an inner shell to hold the LNG and an outer
stainless-steel shell that is insulated and kept under vacuum. Two internal LNG pumps inside the tanks can each deliver a flow rate of 3,407 litres per minute, with a design capacity flow rate of 10,220 litres per minute, sufficient to fuel each of Crowley’s ConRo ships in less than eight hours. Houston-based Eagle LNG and Crowley Maritime’s LNG engineers, in consultation with JAXPORT, the US Coast Guard and the local fire department, jointly developed the design of the Talleyrand LNG fuel depot. LNG is delivered to the Talleyrand LNG bunker station by tanker trucks from Eagle LNG’s Maxville LNG Facility in West Jacksonville. The Maxville LNG Facility has an additional 3.8M litres of LNG storage capacity. Eagle LNG transfers LNG to power Crowley’s ConRo ships through a Mobile Transfer Unit with ongoing simultaneous operations, including gantry crane operation and container movement forward, and roro aft of accommodation. The first LNG bunkering station of its kind in the US, Mr Langeteig calls Eagle LNG Talleyrand “an exciting marine project”. Eagle LNG president Sean Lalani feels the small footprint design of the Eagle LNG terminal “can be easily replicated in other coastal ports”.
Marine bunkering projects in Europe
While progress in LNG refuelling infrastructure has been slow in the US, Mr Langeteig points out that his European counterparts have been far busier. Czech Republic-based Chart Ferox and PPS Pipeline Systems were part of a consortium chosen in 2016 by Lithuaniabased Klaipedos Nafta (KN) to carry out engineering, procurement and construction (EPC) for the LNG-reloading station at the Port of Klaipeda. Klaipeda is the first full-scale LNG import
LNG World Shipping | March/April 2019
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Erik Langeteig INTERVIEW | 21
terminal in the region, offering reloading services for small-scale LNG carriers that provide break-bulk distribution to small- and mid-scale import terminals in the Baltic. These services are critical to expanding the use of cleaner fuels in terms of transportation and power generation in the region. The LNG reloading station comprises five 1,000m3 storage tanks, two tanker-lorry loading bays, a marine bunkering jetty and the regasification unit. Chart worked with Becker Marine Systems and the German company’s subsidiary Hybrid Port Energy on the development of a shore power solution, deployed in the Port of Hamburg to reduce emissions from cruise ships. Five 1.5 MW LNG generator sets fuelled by two 17-tonne LNG containers on the barge produce electricity for the vessel’s power needs while it is docked, allowing the cruise ship to shut down its diesel generator sets while it is in the port. By using the gas-powered generators, CO2 emissions are reduced by 20%, nitrous oxides by 80%, while particulate matter and sulphur oxide emissions are virtually eliminated. Designed as a flexible and mobile solution, the 76-m-long barge supplies power to cruise ships during the summer season and is able to operate as a floating power and heat plant in the winter. “Part of the difficulty with the cruise ship market is the seasonality of it,” says Mr Langeteig. “What makes the operation successful at the Port of Hamburg is that the barge supplies power to cruise ships during the summer season and is able to operate as a floating power and heat plant in the winter. You need to get the throughput in order for it to pay-off, or strong environmental regulations driving the adoption of these types of power barges.”
First US railroad powered by LNG
Mr Langeteig has developed a broad portfolio of projects outside the marine sector utilising cryogenic gas applications; these range from power generation, to mine-haul trucking, to rail. This broad range of experience and problemsolving has proved beneficial, allowing some solutions to find their way across transportation modes. One such project involved the
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Erik Langeteig (Chart Industries): “If you can combine demand points ... into a single terminal, that is where you start to see these projects take off”
A BROAD RANGE OF EXPERIENCE AND PROBLEM-SOLVING HAS PROVED BENEFICIAL, ALLOWING SOME SOLUTIONS TO FIND THEIR WAY ACROSS TRANSPORTATION MODES”
development of an LNG tank solution for Florida East Coast Railway (FECR), which became the first North American railroad in 2017 to adopt LNG for its entire line-haul locomotive fleet. Each of FECR’s 24 locomotives is paired with a tender car specially designed and built by Chart Industries; these are fitted with an ISO container with a cryogenic tank permanently mounted in a railcar. The cryogenic tank – protected by a heavy steel frame to protect it against collisions, punctures, impacts and derailments – consists of an inner stainless-steel tank within another carbon-steel tank, with a thermal insulation layer in between. “It’s actually a much smaller version of the tanks at the Eagle LNG Talleyrand terminal,” explains Mr Langeteig. FECR particularly liked the flexibility offered by the ISO containers, that can be removed to perform repairs. “It has submerged pumps in the column so that you can pump the LNG out the top of the tank and then across at pressure to the locomotive, where it can be re-gasified with engine heat and consumed in the engine,” says Mr Langeteig. Chart collaborated with the engine manufacturers on the project to better understand the flows, pressures and supply they needed to develop a solution. To date, said Mr Langeteig, FECR locomotives “have 15M km of successful operation and have consumed 2M gallons of LNG. That’s a substantial amount of CO2 removed from the air, plus the associated nitrous oxide, sulphur oxides and particulate matter as compared with burning diesel.” Furthermore, burning LNG allows the rail operator to comply with US federal rules imposing tighter restrictions on locomotive emissions. The tender car provides enough fuel for one roundtrip between Hialeah and Miami – about 1,448 km of heavy haulage, obtaining speeds up to 96 km/h . Another benefit to using a tender car with an ISO container is that “you have a volume play”, says Mr Langeteig. “With diesel fuel you need to fill a tank right on the locomotive, which limits your volume. A tender car provides significantly more storage than just a locomotive tank.” FECR is the first railroad in the US
LNG World Shipping | March/April 2019
22 | INTERVIEW Erik Langeteig
to haul LNG as a commodity under a US Federal Railroad Administration waiver and its trucking subsidiary Raven Transport converted its fleet of trucks to dual fuel, allowing them to burn both diesel and LNG. The use of LNG across the two different modes is not coincidental; FECR’s original owner, New Fortress Energy, owns and operates a 378,541 litres per day small-scale LNG plant in Hialeah and FECR’s new owner, Mexico’s Grupo Mexico Transportes, remains committed to using LNG. While Chart has worked with other railroads exploring the use of LNG as a fuel, progress has been slow because of the capital costs involved in creating the refuelling infrastructure. Beyond the requirement for federal regulatory approval, railroads often use their locomotives on different routes in their networks, which means if you are using LNG as a fuel, the refuelling infrastructure is required at multiple points across the rail network. “This would involve billions of dollars of investment in converting your whole fleet and building the refuelling infrastructure,” says Mr Langeteig. “The reason that FECR has worked so well,” he explains, “is that its trains are always in a point-to-point service, which minimises the amount of infrastructure that you need for the operation.”
ABOVE: FECR’s locomotives run on LNG, the first such railroad to do so in the US
Heavy-duty LNG
About two-thirds of small-scale LNG demand comes from trucks, about 220,000 of which are in operation in China. Mr Langeteig notes a drop off in the Chinese LNG-fuelled truck market, as the government has shifted its focus and subsidies. “We’re still growing in the vehicle and truck market, but primarily in Europe,” he says. “Europe has been the rising star in the over-the-road market.” The reason for this is a matter of “real estate”. Mr Langeteig says trucks are designed for the tight, compact streets in Europe, meaning that the engine must fit under the cab. “In the US, the roads are wider and there’s plenty of space,” which is reflected in the design of the class A trucks, which have the engines out in front, allowing for more flexibility in power options. With air emissions regulations
LNG World Shipping | March/April 2019
WHAT MAKES LNG FUELLING INFRASTRUCTURE PROJECTS SUCCESSFUL IS WHEN YOU CAN SERVICE MULTIPLE DEMAND CENTRES”
tightening “LNG is really the only cleaner fuel available to the European heavy-duty vehicle market,” he says. He also notes that in the US and Canada, there is continued interest in dual-fuel applications for mine-hauling vehicles. Minehauling vehicles may have as many as four of the same LNG tanks that would be used in one lorry, according to Mr Langeteig. “We fit them into the ‘dead real estate’ in a mine-haul truck,” said Mr Langeteig. “LNG is not their primary fuel, but with a minehaul truck you get so much more consistent driving that you hit that sweet spot. When you are putting the throttle down, there’s usually a lot more diesel used in those dualfuel applications.” “What makes LNG fuelling infrastructure projects successful is when you can service multiple demand centres,” says Mr Langeteig. “The name of the game is throughput. Any way you can pull together multiple demand centres and put some flexibility to where the LNG is being used, that really helps with the viability of a project. Even at a dollar a gallon delta, to get to a couple of million dollars, that is a lot of gallons you have to sell. If you can combine demand points and demand modes into a single terminal, that’s where you start to see these projects take off.” Mr Langeteig will present on “Thinking innovatively and collaboratively to provide complete LNG fuelling solutions for road, maritime and rail” at LNG 19. LNG
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LNG Global Orderbook 2019-2023
The bullish stance of this sector is illustrated by the fact that 64 LNG carriers were ordered throughout 2018. This compared with only 23 in the preceding year. The supreme confidence of owners is underlined with 152 vessels due to be delivered between now and 2023 of which over 42% was contracted last year. Experts conclude that 2019 will be almost be as brisk as 2018. In the first two months of 2019 18 new vessels have already
been added to the orderbook. Oil majors are banking on a number of currently ageing vessels being uncompetitive by 2020 due to the imposition of new emission control regulations. New liquefaction plants are under construction or planned which run hand in hand into long term COA business. The level of ordering reflects this. Qatar is due to replace its ageing fleet in the next five years which will see 64 vessels planned for replacement none of which are yet ordered.
JAPAN
15
CHINA
Vessels
24
Vessels
2.416,500 (cu.m.)
1.824,000 (cu.m.)
SINGAPORE
1
Total Vessels
147
Vessel
7,500 (cu.m.)
SOUTH KOREA
107
Vessels
17.974,860 (cu.m.)
Total Capacity
22.222,860
YOUR PARTNER IN SHIP PERFORMANCE MONITORING www.kyma.no
Order forecast to date by number of ships 2019
39
2020
52
2021
47
2022 2023
8
Top 5 shipyards by capacity (cu.m)
1
Samsung 5.944,818
Hyundai 3.505,600 Daewoo 6.059,642 Hyundai Samho 2.434,800
Hudong-Zhonghua 1.419,200
Propulsion Manufacturers Confirmed
04
StaGE
89
LSDF
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LATEST DELIVERY | 27
Meeting the rising demand for LNG as fuel The world’s largest LNG bunker supply vessel is now performing shipto-ship bunkering and transhipment operations
“
K
airos” is an Ancient Greek word meaning the right, critical or opportune moment. It is only fitting then that the world’s largest LNG bunker vessel should be named Kairos because it comes at a time when small-scale LNG (ssLNG) infrastructure is much-needed to serve the growing fleet of LNG-fuelled vessels in the Baltic region. With some 250 in attendance, Annegret Kramp-Karrenbauer, Federal Chairman of the Christian Democratic Union, served as godmother at a naming ceremony on 8 February for the 7,500 m3 LNG bunker vessel (LNGBV) at the Port of Hamburg in Germany. Since its delivery in October of last year, Kairos has been serving the Linde/AGA terminal in Nynäshamn and the Klaipėda LNG-fuelling station in Lithuania. Kairos can perform both ship-to-ship (STS) bunkering and transhipment operations, providing LNG bunkering for ferries, container ships, cruise ships and land-based gas consumers. It is not surprising that the world’s largest bunker vessel would be based in the Baltic, which
was one of the first Emissions Control Areas (ECA). Many large roro ferries in the region were early adopters of LNG as a marine fuel. Kairos’ clients will include Gothia Tanker Alliance, the Swedish operator of a fleet of regional North/Baltic Sea chemical/product distribution tankers that run on LNG. Owned by Babcock Schulte Energy, a 50/50 joint venture of the Babcock International Group and Bernhard Schulte Shipmanagement, Kairos is time chartered by Blue LNG, which is 90% owned by Nauticor, with the remainder held by Lithuanian energy infrastructure provider Klaipedos Nafta (KN). Nauticor chief executive Mahinde Abeynaike said commissioning Kairos secured the availability of LNG as fuel for shipping on a large-scale basis in the Baltic Sea. “With shipping companies having access to a fuel that is not only financially attractive, but also environmentally sustainable,” said Mr Abeynaike, “people and nature in northwest Europe will benefit from a substantial reduction of emissions at sea and in port.” Ms Kramp-Karrenbauer, who took over
RIGHT: Kairos has a ballastfree design, eliminating the need for a ballast water treatment system
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LNG World Shipping | March/April 2019
28 | LATEST DELIVERY
the party leadership from Angela Merkel last December, said Kairos is not only important for the German shipping industry but also addresses “environmental concerns in general and the global move towards more sustainable transport modes at sea.” Equipped with a cargo-handling and fuelling solution complete with CNG and utilisation capabilities, Kairos eliminates the release of boil-off gas (BOG) and flash gas to the atmosphere during normal operations, providing an environmentally responsible shipping alternative. In addition to using BOG in its engines, Kairos extracts vapour from receiving ships to use as fuel, which requires additional interfaces between the gas plant and the rest of the ship. The innovative system enables significant reductions in emissions and offers beneficial environmental footprint savings.
Ballast-free design
While the conceptual design for Kairos was developed by BMT Titron, a joint venture of the UK’s BMT Group and Hong Kong’s Titron, its detail design was created by South Korea shipbuilder Hyundai Mipo Dockyard (HMD). The initial contract for construction was awarded in December 2016 and HMD cut the first steel in November 2017. One of the innovative features developed by HMD for the ice-class LNGBV is its ballast-free design, eliminating the need for a ballast water treatment system (BWTS) and the threat of transporting invasive species. To develop the ballast-free vessel design, HMD focused on a combination of a special hull form with dead-rise, the forward positioning of the engine room and deckhouse and its twin propulsion system with two azimuth thrusters. As a result, Kairos uses only a limited volume of permanent fresh water ballast for trim purposes. The smaller diameter of the propellers fitted in the azimuth thrusters enables the vessel to achieve full immersion in all operational conditions, retaining its damage stability and control over the trim and heel without ballasting. One of HMD’s first obstacles in the development of the design was the speed management by dead-rise. In general, dead-rise is known to help improve a ship’s stability, which is critical to a ballast-free vessel, but it is also likely to deteriorate the
LNG World Shipping | March/April 2019
ABOVE: Annegret KrampKarrenbauer, Federal Chairman of the Christian Democratic Union, served as the godmother at the christening for Kairos (image: Nauticor)
vessel’s speed performance. To counteract this, HMD focused heavily on hull form optimisation and successfully developed a better performing dead-rise hull form, confirmed through wet model testing, according to Lloyd’s Register. The ballast-free design of the vessel translates into lower maintenance costs and removes requirements to comply with regulations related to BWTSs.
Flexible loading/unloading
KAIROS EXTRACTS VAPOUR FROM RECEIVING SHIPS TO USE AS FUEL; THE SYSTEM ENABLES SIGNIFICANT REDUCTIONS IN EMISSIONS”
Designed to cater to a wide range of potential receivers, Kairos has a low-level loading/ unloading manifold on the port-side, forward of midships, and a stern offloading manifold, in addition to the conventional port and starboard midships manifolds. The midships and port-side manifold will enable Kairos to load and offload at any of the current LNG terminals, floating storage and regasification units (FSRUs) or floating storage and offloading units (FSOs). LNG is stored in two independent IMO type C tanks that are designed to contain the LNG with a minimum temperature of -163°C and maximum vapour pressure of 3.75 bar(g) and can be transferred to an LNG-fuelled vessel at the rate of about 1,250m³/hour through the cryogenic flexible hoses without ballasting and/or de-ballasting operations. Additionally, the natural vaporising gas from the bunkering vessel and the returned BOG from the LNGfuelled vessel are compressed up to 220
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LATEST DELIVERY | 29
bar(g), stored in two sets of 40 ft containers and used for propulsion fuel and electric. HMD senior vice president of initial planning Seung-Ho Jeon, said the ballastfree concept was made a reality by the technology expertise of HMD. “We aim to stand out in the field of eco-friendly business practice," he said. Lloyd’s Register Korea chief representative and marine manager JinTae Lee, said: "We believe that this design is another remarkable development for HMD to realise the industry’s need for safe, efficient and clean requirements in the shipping industry worldwide."
KAIROS MAIN PARTICULARS Owner: Babcock Schulte Energy Builder: Hyundai Mipo Dock Year built: 2018 Deadweight: 4,400 t Type: LNG bunker vessel Length, oa: 117 m Beam: 20 m Draught, laden: 5.2 m Cargo capacity: 7,500 m3
Close collaboration
Despite being christened this past February, Kairos has been in operation for some months. Back on 1 November the LNGBV took on a cargo of LNG at the Pengerang LNG regasification terminal in the Malaysian state of Johor on its delivery voyage from South Korea to the Baltic Sea. It was the first small-scale loading of LNG carried out at the Petronas-operated Pengerang facility since it commenced commercial operations in November 2017. The Kairos' reload operation involved a close collaboration between all relevant Petronas units, including Petronas Gas Berhad and Pengerang LNG (Two), and other key maritime sector stakeholders such as the Marine Department of Malaysia, Johor Port Authority and Johor Port Berhad. “We believe that small-scale LNG opportunities will increase from the utilisation of alternative cleaner fuels such as LNG,” said PLL chief executive officer Ezhar Yazid Jaafar in the statement. Ice-class 1A Kairos is based in Klaipeda, the same port where the 170,000-m3 FSRU Independence is berthed. Kairos is supplied with LNG from Independence. Kairos can function as both an LNGBV and a coastal distribution tanker. The ability to carry out STS trans-shipment operations is central to the vessel bunkering role. Kairos is equipped with Babcock’s Fuel Gas Supply Vessel Zero (FGSV0) technology, which integrates its fuel system with the cargo systems, allowing BOG and flash gas, which would otherwise be lost during operations, to be collected as CNG, and used as fuel. Integral components of the FGSV0
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system are high-pressure CNG Titan tanks supplied by Hexagon Lincoln, a subsidiary of Hexagon Composites. The Titan cylinders will store compressed BOG from the LNG tanks and flash gas from cargo operations and supply the CNG as fuel to the ship's four-stroke, dual-fuel Wärtsilä propulsion engines. "By compressing the boil-off and flash gas and supplying it as fuel to the ship's engines, our clients will save distillate fuel costs and at the same time reduce the vessel's emissions of sulphur oxides (SOx) and particulate matter," said Babcock LGE process general manager Andrew Scott. "In addition, we eliminate fugitive emissions of LNG from the cargo systems, providing a true zero emissions solution." "We are really pleased to have been chosen by Babcock LGE Process to work on this cutting-edge project,” said Hexagon Lincoln vice president mobile pipeline Americas Miguel Raimao. “Babcock's boil-off-gas recovery system is an innovative way of meeting stringent emission regulations. It is a cost-effective way for vessel operators to address environmental concerns, and our Titan tanks are a key enabler for achieving this." Mr Raimao continued: “The LNGBV’s wide-ranging STS transfer rate capability, from 60 up to 1,250 m³/hour, is achieved through a combination of different-sized pumps and a variable-speed drive. The design enables the charterer to meet the needs of a wide spectrum of potential customers … with tight time constraints on fuelling due to strict port turnaround timetables.”
LNG bunkering infrastructure on the rise
SMALL-SCALE LNG OPPORTUNITIES WILL INCREASE FROM THE USE OF ALTERNATIVE CLEANER FUELS SUCH AS LNG”
Whilst the number of owners using LNG as a marine fuel represents less than 1% of the world fleet, the segment has been growing, driven by the 1 January 2020 deadline for IMO’s sulphur cap. More than 90% of the world fleet will use the most straightforward way of complying — burning marine gas oil or ultra-low sulphur fuel oil. The remainder of the fleet will use either exhaust gas cleaning systems and continue to burn heavy fuel oil, or use a gas-derived fuel such as LNG to comply. As of this year, there are 144 LNG-fuelled vessels in operation, 63 on order and another 112 that are designated as LNG ready, according
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ABOVE: Kairos can use BOG and flash gas in its dual-fuel engines (image: Nauticor)
to DNV GL. One of the hurdles for widespread adoption of LNG as a marine fuel has been the lack of small-scale LNG infrastructure to refuel vessels. However, that is rapidly changing. In Europe, there are now 39 operational, 12 under construction and another dozen planned LNG bunkering facilities, with 11 operational bunker ships, one under construction and another six planned, according to Gas Infrastructure Europe.
Another milestone for Kairos
On 22 February, Kairos transported LNG from the Klaipeda LNG Terminal to the LNG reloading station, marking the 10th LNG reloading operation in which a gas carrier transported LNG from the terminal to ground storage tanks. It was the third such operation by Kairos in Klaipėda this year. Since the start of operations at the LNG reloading station in October 2017, gas carriers chartered by Shell, Gasum and other companies have also moored at the KN berth. Market participants in Klaipėda have been more actively using both the service of LNG acceptance from gas carrier ships and temporary storage, and the service of LNG reloading to LNG semi-trailer trucks. In 2018, tank semi-trailer trucks were loaded with
LNG World Shipping | March/April 2019
240 units of cargo or over 64,000 MWh of LNG, and gas was transported to Lithuanian, Estonian, Latvian and Polish clients. “The LNG infrastructure in Klaipėda developed by KN, as well as favourable global growth trends of the small-scale LNG market open up opportunities for us to generate extra revenues from commercial activities,” said KN chief executive Mindaugus Jusius. “These funds could be allocated for the reduction of costs of maintenance of the current natural gas infrastructure, thus respectively contributing to the reduction of expenses related to the maintenance of the LNG Terminal with respect to consumers,” added Mr Jusius. “The number of LNG-fuelled vessels, more than a half of which are used across Europe, has been rapidly increasing worldwide, and the LNG bunkering infrastructure has been developed and expanded in many ports,” he said. “International analysts forecast that 2019 will be the year of expansion of the small-scale LNG business. KN has been ready to start this year – we have all necessary tools in Klaipėda to supply the cleanest marine fossil fuel with minimum emission to the sea in all Baltic Sea ports,” said Mr Jusius. LNG
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OPERATIONS SHIPMANAGEMENT | 33
Growing LNG cargoes place emphasis on safety and training With the total number of LNG cargoes transported set to hit 100,000 in 2019, training and safety practices are under intense scrutiny
RIGHT: Andrew Clifton (SIGTTO): “There is a need to focus more on major accident prevention”
A
ddressing the audience at the LNG Ship/Shore Interface Conference Europe in London at the end of 2019, Society of International Gas Tanker and Terminal Operators (SIGTTO) general manager Andrew Clifton emphasised how the organisation is working to promote safety across the board. Mr Clifton noted that it had been 54 years since the first LNG carrier, Methane Princess, entered service in 1964. Since then, nearly 100,000 cargoes have been delivered, with around 570 vessels in service and roughly 100 more on order. During this time, there has been no recorded loss of cargo tank containment, or cargo-related loss of life.
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This impressive record can be attributed in large part to the International Code for the Construction and Equipment of Ships Carrying Liquefied Gases in Bulk, known for short as the IGC Code. First developed in the early days, a revised version of the code entered into force on 1 January 2016 Mr Clifton also highlighted the good operational and maintenance procedures within the industry, along with high standards of training and competency verification. “We owe a great credit to those who drew up the IGC code many years ago in the infancy of LNG shipping,” he said, adding, “We all have a collective responsibility towards retaining it.”
SIGTTO suggests operators apply a risk-based philosophy to their safety regimes. Mr Clifton noted the industry is well-equipped to address smaller risks and issues arising from Ship Inspection report Programme (SIRE) inspections, but noted, “there is also a need to focus more on major accident prevention”. Training remains arguably the key element in identifying major risks and mitigating and avoiding them. Mr Clifton explained that SIGTTO recommends tools such as bow-tie models, which clearly differentiate between proactive and reactive risk management. A bow tie begins with identifying a hazard, with the rest of the model devoted to identifying how
LNG World Shipping | March/April 2019
34 | OPERATIONS SHIPMANAGEMENT
to prevent ‘top event’, situations in which control of the hazard is lost. The model resembles a bow tie, with the ‘top event’ forming the knot in the middle. On the left-hand side of the model threats that could lead to the ‘top event’ occurring are identified, along with proactive steps that can be taken to prevent them, while the right-hand side identifies the potential consequences of the ‘top event’, and what barriers can be put in place to mitigate or prevent them. SIGTTO also recommends ‘engineering out’ the human factor in design wherever possible. “You can never eliminate the human factor breaking down,” said Mr Clifton, “but you can minimise it.” As an example, he cited introducing interlocks to prevent the running of pumps at times when high-level alarms are disabled. “As soon as the construction contract is signed and you know
you’re going to have another vessel in the next 18 months to two years, you start your training and forward planning,” he added. UK Ship Register director Doug Barrow cited his own experience in a previous role where he had assisted in the delivery of six LNG carriers. He noted that using simulators had played a key role in the preparation and planning stages, allowing crew members to familiarise themselves with vessel systems before they boarded the ship. Liquefied Gas Consultancy principal consultant and Bernhard Schulte Shipmanagement group fleet director Chris Clucas observed that owners who are investors from outside the industry may have the mistaken belief that a qualified crew can be secured “like you’d whistle up an Uber”. He added: “We always say training is something that’s got to be done at least a year ahead.”
Mitsui OSK books manager for bunker vessel Mistui OSK Lines (MOL) has booked Sinanju Tanker Holdings to manage its 12,000 m3 LNG bunker vessel that will operate in Singapore. Currently under construction at Sembcorp Marine, the GTT Mark III Flex membrane, dual-fuel vessel is set for delivery in early 2021 and is the largest LNG bunker vessel currently set for use in the Port of Singapore. Sinanju managing director Ju Kai Meng said: “We are delighted to partner MOL to promote the development of infrastructure and competencies in LNG fuel deliveries for Singapore. “MOL’s expertise in LNG and our strong foundation in fuel oil bunkering augurs well for a successful collaboration in meeting the growing demand for LNG as a marine fuel. “While Singapore has entrenched itself as the world’s largest bunkering port, our foray into LNG bunkering is still in its early stages.”
LNG World Shipping | March/April 2019
E-learning platform
Elsewhere, Columbia Shipmanagement has introduced a proprietary e-learning management platform that will allow its seafarers to undertake training wherever they are in the world, even without network connectivity. Developed in partnership with software giant Adobe Systems, Columbia Shipmanagement’s platform, Adobe Captivate Prime, is web and app based and can be used at seafarers’ convenience, whether in the office, on board vessels, at home, or travelling. Seafarers can use computers or mobile devices such as smartphones and tablets to download courses, collect points and badges as they learn and generate certificates upon successful completion of relevant tests. The system also incorporates the ability for seafarers to post comments and questions in dedicated forums, participate in webinars, attend virtual classrooms and access virtual reality content Masters and managers can use the programme to create continuous development programmes for their teams by enrolling them for specific courses, and use captured data to monitor training effectiveness and attendance, provide feedback and manage results on how quickly the workforce is improving through skill awards. This is the first time a ship manager has teamed up with a software company to develop a global LMS solution for the entirety of its e-learning course offerings. Columbia Shipmanagement group director of training Capt Faouzi Fradi said: “Seafarers play a key role in operating Columbia’s fleet; hence, it is of utmost importance to recognise their contribution and efforts by caring about their wellbeing and satisfaction. “Columbia’s LMS has been implemented to train and educate seafarers, but also to adapt to their schedule and lives while onboard or ashore and help them train on their own terms.” LNG
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Sulphur Cap 2020 Conference | Awards | Exhibition 8-9 May 2019, Amsterdam
Information critical in countdown to 2020 In less than 10 months’ time a once-in-a-generation regulatory change will shift most of the global fleet onto entirely new fuels, about which little is yet known. Others will have to look to technologies that have so far played only a small role in the maritime sector. For the well-informed shipowner or operator, IMO’s global sulphur cap is an opportunity as well as a challenge. The challenge remains the selection of the appropriate compliance method and the preparation of fleet, crew and ancillary functions. Opportunities include improving the cost base relative to competitors, investing in efficient new technologies and processes and safeguarding the fleet against future environmental regulation.
The European Sulphur Cap 2020 Conference aims to shed light on these opportunities, addressing: • Which compliance option for which vessel and trade • What your crew needs to know about low-sulphur blends • How availability and pricing of low-sulphur fuel will affect uptake and operations • When a scrubber is a good choice for your vessel or fleet • How to tackle the challenges of scrubber financing, installation and maintenance • How growing availability and lower capex demands are driving LNG uptake • Why advances in gas-fuelled technology are driving today’s engine developments • How your chosen compliance method will affect your ship engines, machinery and technical operations • Why the 2020 sulphur cap offers a path to compliance with future environmental regulation. Book your place online today at www.sulphurcap2020.com/book-now or for more information please contact Tom Kenny on +44 20 8370 7791 or at tom.kenny@rivieramm.com
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OPERATIONS SHIPMANAGEMENT | 37
A long-term approach to safety helps retain knowledge Experience gained from a long history in the gas carrier business has allowed BSM to devise some interesting approaches to efficiency and safety
B
ernhard Schulte Shipmanagement (BSM) has more than 45 years in the third-party LNG vessel management business, including design and consultancy work. The company currently manages more than 90 gas carriers, with 57% operating in the LNG transport industry, 36% in LPG transport and 8% operating in the ethylene transport industry. Across all sectors, safety is put at a premium, with SIGTTO’s LNG and LPG Experience Matrix used as the minimum requirement for officer selection. As well as mandatory International Convention on Standards of Training, Certification and Watchkeeping for Seafarers (STCW) and liquid simulator training, BSM’s officers undergo in-house advanced LNG/gas-tanker training programmes. A pipeline has also been developed for junior officers and cadets on gas tankers to develop their LNG-related skills. According to Bernhard Schulte Shipmanagement Singapore managing director Capt Raymond Peter, talking at the 2018 LNG Ship/Shore Interface Conference in Singapore, BSM considers a long-term approach to safety as the best way to retain valuable experience gained in day-to-day shipboard work and across many cargo transfer operations. Indeed, when Ian Beveridge was appointed CEO of BSM in 2018 – an extension of his role as CEO of Bernhard Schulte, BSM’s ship-owning sister company – he noted, “Our LNG capabilities have been our focus for the last decade,” adding “There are great opportunities in management and on the owning side, where we have also invested.” 2018 saw further expansion of this capacity, with the acquisition of German company Pronav adding six additional LNG carriers to BSM’s managed fleet. Mr Beveridge also recognised the potential market for management services for LNG bunker vessels: “We are seen as an LNG bunker provider and are now invited to participate
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Capt Raymond Peter (BSM): “A long-view approach to training enables the company to retain valuable experience”
in all the relevant tenders. We also wish to manage these gas supply vessels for other owners, which is a growth area for us.” In February 2019, BSM took on management of the world’s largest LNG bunker supply vessel, Kairos, which was launched in Hamburg. The vessel is owned by Babcock Schulte Energy (BSE), a joint venture between Babcock international Group and Bernhard Schulte. With a capacity of 7,500m3, the vessel has been deployed to the Baltic region to service a number of clients, including the Linde/AGA terminal in Nynäshamn, Sweden, and the Klaipėda LNG fuelling station in Lithuania. BSM’s director of energy projects Angus Campbell said: “Our industry is evaluating ways to meet new emission regulations and reduce its carbon footprint. The use of natural gas is emerging as the most sustainable solution for powering global maritime transportation into the future.” In 2016, BSM signed an operational partner agreement with Dreifa Energy Limited, developer of a floating regasification solution that splits the floating storage and regasification unit concept into floating storage units, converted from LNG carriers, and a smaller floating regasification unit, converted from a platform supply vessel. The solution is targeted at small- and medium-scale or phased developments, or those where an interim solution is required. LNG
LNG World Shipping | March/April 2019
38 | SMALL AND MID-SCALE LNG PLANTS
Pioneering small-scale ship-to-ship bunkering One of the big challenges in developing the first wave of European LNG bunker ships was finding a market in which to place them
PCTC Auto Eco was the first vessel to be fueled with LNG by the bunker vessel Engie Zeebrugge
W
hen Engie set out to design a vessel to provide small-scale LNG bunkering in European ports in 2012, no one had any idea of exactly what it would look like. However, its designers did know that it had to be able to serve a broad base of clients and a variety of ship types and bunker fuel wherever customers needed it. The decision to build an LNG bunkering vessel was not made in a vacuum; rather, it came in the wake of tightening international emission regulations in the form of Emission Control Areas (ECAs) in the Baltic and North Seas, North America and the US Caribbean which reduced the allowable sulphur oxides (SOx) and nitrous oxides (NOx) from ship emissions. Clean-burning LNG was a viable solution for shipowners to meet the strict emissions requirements in these ECA zones. More recently, an abundance of cheap natural gas unleashed by the shale gas revolution in the US, expanding LNG infrastructure and the impending IMO 0.5% global sulphur cap have made LNG an even more attractive longterm option as a marine fuel. Well experienced in the LNG business as Europe’s secondlargest operator of LNG terminals, Engie realised it needed to
LNG World Shipping | March/April 2019
work with partners that could “de-risk” the development of the LNG bunker vessel. Hence, Engie partnered with Japan’s NYK Line, which fully or jointly owns a fleet of 74 LNG carriers, and Mitsubishi Corporation, Japan’s first importer of LNG. The companies formed a commercial brand, Gas4Sea, in 2016 to develop the use of LNG as a cost-effective, environmentally friendly alternative fuel to conventional oilbased marine fuels. Another Gas4Sea partner was Fluxys, an independent Belgium-based operator of a high-pressure natural gas transmission network, natural gas storage infrastructure and the LNG terminal in Zeebrugge. Besides its pipeline, storage and LNG terminal assets in Belgium, Fluxys’ partnerships included ownership in the Interconnector and BBL pipelines linking the UK with mainland Europe, the Dunkirk LNG terminal in France, the NEL and TENP pipelines in Germany, the Transitgas pipeline in Switzerland, the Swedegas infrastructure in Sweden and the TAP pipeline from Turkey to Italy under construction to bring gas from Azerbaijan and potentially other sources to Europe. Engie vice president LNG bunkering market Laurent Rambaud explained that owing to its focus on LNG
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SMALL AND MID-SCALE LNG PLANTS | 39
bunkering in Northern France, UK, Antwerp and Rotterdam, the company realised it needed to adopt a flexible approach to the bunkering vessel, to allow it to serve the broad range of vessel types operated by potential customers in the region. Each vessel type offered its own bunkering challenges, said Mr Rambaud. Roro car carriers, for instance, have high freeboard, closed bunker stations, and LNG tanks, with a capacity of 800 m3, whereas tankers have relatively low freeboards, bunker stations on their open decks for easy access and much bigger tanks, with capacities of 2,000 m3. Cruise ships are even more complex, said Mr Rambaud, because of their large LNG tanks with capacities of 3,000 m3, high freeboard, and the complications of passengers and crew onboard. Engie also contemplated serving LNG-fuelled container ships, though not anything on the scale of CMA CGM’s massive 22,000 TEU, LNG-fuelled container ships. “We focused on feeder container ships that would have to load containers while we were performing bunkering operations, said Mr Rambaud. The company did not address smaller vessels, since it thought the truck-to-ship fuelling option was the best bunkering solution in that instance. “We also knew we needed to meet the customers where they are. That’s why we decided to develop a bunker vessel as opposed to an inland or port bunker barge,” he explained. The result of this effort was the Engie Zeebrugge, built by Hanjin Heavy Industries in 2017, with two IMO type C LNG tanks with a total capacity of 5,100 m3. Managed by NYK LNG Shipmanagement (UK) ltd, the ship can discharge LNG at a flow rate 600m3/h using two pumps in each of its tanks. Shipboard cranes handle two flexible hoses, one for cryogenic liquid and the other for the return gas during filling operations. Four Yokohama fenders protect the Engie Zebrugge and the refuelling vessel during close quarters bunkering operations. Classed by BV and flying the Belgian flag, the bunker vessel has an overall length of 107.6 m, beam of 18.4 m, depth of 9 m and draught of 4.7 m. It operates out of its home port of Zeebrugge, Belgium, where it loads LNG at the Fluxys LNG terminal, which commissioned a second jetty
The Port of Zebrugge welcomes the LNGBV Engie Zebrugge for the first time
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THE ENGIE ZEEBRUGGE IS FITTED WITH A GAS CHROMATOGRAPH THAT PRECISELY MEASURES THE COMPOSITION OF THE LNG THAT IS DELIVERED TO THE CUSTOMER”
specifically designed for receiving small LNG carriers. The Engie Zeebrugge’s two Wartsila 9L20DF main engines can burn marine gas oil, marine diesel or LNG.
First year under the belt
Even after more than a year of operations, Mr Rambaud said that there is still room for learning and improvement, in terms of reducing the amount of time required for bunkering operations. He noted several factors that impact the amount of time it takes to bunker a vessel, such as the mooring operation, connecting the flexible hoses, access to the ship’s bunkering station and even the capacity restraints of the piping on the receiving vessel, which may not be able to handle the Engie Zebrugge’s high bunkering flowrate. As a matter of building client trust, the Engie Zeebrugge is also fitted with a gas chromatograph that precisely measures the composition of the LNG that is delivered to the customer. “We are the only bunker ship that is fitted with such a device,” said Mr Rambald. “When you refuel a customer, you don’t unload all of your cargo; part of it remains on the bunker vessel. At some point you will need to reload at the LNG terminal [and] you will not be completely empty. This means you will mix different cargoes, which makes it impossible to know exactly the nature of the LNG onboard. With the gas chromatograph, you can know exactly what is delivered to the customer.” Engie is proposing to invoice its customers based on the amount of energy it delivers, less any return vapour and energy consumed on board the vessel during bunkering operations. In June 2017 in the port of Zeebrugge, Engie Zeebrugge performed its first deliveries of LNG to M/V Auto Eco and M/V Auto Energy, two new gas-propelled pure car and truck carriers owned by UECC. The LNG bunkering operations and loading of the dual-fuel PCTCs were conducted as simultaneous operations. This past February, Marine LNG Zeebrugge, a joint venture of the Gas4Sea partners, Engie, Mitsubishi Corporation and NYK Line, has signed an agreement with Equinor to supply four crude shuttle tankers with LNG as marine fuel in the port of Rotterdam. The four planned dualfuel vessels are to come into service in early 2020 and will be operated by Equinor in Northern European seas. LNG
LNG World Shipping | March/April 2019
40 | SMALL AND MID-SCALE LNG PLANTS
US export terminals to deploy mid-scale liquefaction plants New US LNG export facilities are building-out their projects with a modular approach, employing mid-scale liquefaction plants
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uthorised to site and begin its construction this past February by the US Federal Energy Regulatory Commission, the 10 mta nameplate Calcasieu Pass facility in Cameron Parish, Louisiana, will employ a process solution from GE Oil & Gas, LLC, part of Baker Hughes, a GE company (BHGE) that uses mid-scale, modular, factory-fabricated liquefaction trains. Developer Venture Global has executed an integrated turnkey engineering, procurement and construction contract with US-based Kiewit to design, engineer, construct, commission, test and guarantee the Calcasieu Pass facility. The project is based on mid-scale liquefaction technology that will consist of two electrically driven 0.626 mta trains in each block, with nine blocks for the entire facility.
LNG will be stored in two 200,000 m3 full containment storage tanks, optimising output during colder periods
LNG World Shipping | March/April 2019
The gas will flow through acid gas removal and dehydration systems before it enters the liquefiers. The LNG will be stored in two 200,000 m3 full containment storage tanks. This ample storage capacity allows Venture Global to optimise the plant output during colder periods. The facility will also have two docks to accommodate LNG carriers up to 185,000 m3 capacity. Back in December 2018, BHGE was selected to supply Masoneilan control valves and Consolidated safety relief valves for the Venture Global LNG liquefaction facility. Unlike more traditional large-size liquefaction trains, the Venture Global project will use 18 smaller liquefaction modules for a combined capacity of 10 mta of LNG production. Masoneilan and Consolidated valves will be used in both conventional and cryogenic applications. BHGE global project pursuit leader Stephen James said: “This is truly a full-stream LNG project where BHGE leverages our equipment across the entire scope of the plant. For years, our teams from around the world have worked closely with the design of the LNG modules and systems to optimise our products around their specifications. We are excited to have this major project in our backyard where we can oversee the start-up and help the customer through the lifecycle of their operation.” Under the terms of the contract, BHGE will supply nearly 1,000 total control and safety relief valves. This is
the first phase of construction of three total plants that will be built by Venture Global, in which BHGE will partner in the full-stream supply of equipment. Houston-based Eagle LNG owns the small-scale Maxville LNG liquefaction terminal near Jacksonville, Florida, which produces about 757,000 litres per day of LNG. The facility, with a storage capacity of 3.8M litres, provides LNG to Eagle LNG’s Talleyrand LNG bunkering station at the Port of Jacksonville via tanker truck. The LNG is used to fuel Crowley Maritime’s two LNG-fuelled container/ roro vessels El Coqui and Taino, which sail from Jacksonville to San Juan, Puerto Rico in Jones Act service. The Maxville Facility produces more than enough LNG to meet the bunkering needs of Crowley’s two ships, allowing excess capacity to be sold to customers in the US Southeast and Caribbean. Eagle LNG is developing a larger, on-water liquefaction plant and terminal in Jacksonville, known as the Jacksonville Export Facility, on a 0.78 km2 site. Awaiting final approval by the Federal Energy Regulatory Commission, the new facility will be capable of liquefying 6.24M litres of LNG per day, with 45.4M litres of LNG storage capacity for natural gas exports and additional marine bunkering demand to the Caribbean and Atlantic Basin. The proposed LNG facility will serve both domestic and international markets, receiving natural gas via pipeline and liquefying and storing it for export to countries currently using heavy fuel oil or diesel for power generation, as well as for use in domestic marine fuelling. The company is seeing increased demand for LNG to serve small-scale export markets, while domestic demand for LNG, to displace diesel and other petroleum fuels, continues to develop. LNG
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42 | SHIP-TO-SHIP TRANSFERS
STS solutions: flexible, rigid, or both? Rigid, or flexible? Both STS technologies have their drawbacks, but by bringing together the positives, one company hopes to have found the ideal solution
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Renaud Le Dévéhat (TechnipFMC Loading Systems): Solution is the result of work done on integrating flexible and rigid technologies
LNG World Shipping | March/April 2019
he development of ship-ship (STS) transfer technology has essentially followed two strands: flexible and rigid. Flexible systems use a cryogenic hose setup that is relatively inexpensive and requires no modifications to the vessel, but which suffer from pressure losses during transfer operations and are time-consuming to put in place, take down and drain for each STS operation. Rigid systems, on the other hand, are expensive. They require structural modifications to the vessel and are not adapted for use when sailing. Their rigidity does, however, mean faster transfer rates, no need for set up or take down and easier draining. A solution was sought that combined the best of both worlds and TechnipFMC turned to its considerable experience in this area to devise its Articulated Rigid Catenary Offloading System (ARCOS). Business development director Renaud Le Dévéhat explains: “What we are coming up with today is really the result of the work we have done in integrating those two technologies – flexible and rigid. We went through all the possible combinations: fully rigid, fully articulated, hybrid solutions from the top, from the bottom and we came up with one solution that we believe checked all the boxes.” The system is an arrangement of three 16-inch lines – standard steel – placed in a catenary arrangement, using swivel joints on the loading arms, which ensured six degrees of freedom between two vessels, says Mr Le Dévéhat. With the swivel joints as a focal point, he says the
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SHIP-TO-SHIP TRANSFERS | 43
development team was trying to clarify misperceptions about “With all the energy of the pumps pushing this liquid the system’s flexibility and its longitudinal range of movement. through the system, the friction will create boil-off gas, so “Sometimes, there is the perception that a rigid system has boil-off gas has to be managed and quite often it’s a limiting limitations in terms of degrees of freedom. Basically, all the factor in the transfer operation,” he says. six degrees of freedom are absorbed by swivel joints, so there “By dividing boil-off gas by a factor of 2.5, we can increase, is no limitation in terms of rotation. In terms of the overall significantly, the flow rate, or we can reduce the equipment operating length of the element, we have based today’s required for boil-off gas management and therefore save a lot design on the same thing we do with the hoses. You have on the capex of the system.” a normal operating envelope and then you have additional By using metallic pipes as opposed to hoses, the cooling space for ESD 1s, stop transfer and close the valves, and down process also occurs approximately 30% more quickly, additional space for ESD 2. The system must be able to follow according to TechnipFMC estimates. all the movement in that space. Beyond that, you ensure the Keeping the arrangement to three large-bore lines also emergency disconnection,” he explains. improves thermal performance: “Those The development team also lines are not insulated, but overall the considered the minimum distance thermal performance is better, so we also necessary between two vessels and reduce boil-off gas from heating waste into the use of floating fenders, typically the system.” THE DEVELOPMENT between 3.5-4 m in diameter. The number of lifting operations is TEAM WAS TRYING “We checked the safety gap when also reduced over flexible arrangements, the bottom element arrives in the saving time and costs and adding revenue TO CLARIFY horizontal position; we keep a safety from faster transfers. MISCONCEPTIONS gap in maximum compressed fenders “As we use only three lines, it’s ABOUT THE SYSTEM’S between the two hulls,” he says. only three ERS, three emergency FLEXIBILITY AND ITS The ARCOS system is built using release systems, to be tested before components already in common each transfer, instead of six to eight,” LONGITUDINAL RANGE use in the industry, and the whole explains Mr Le Dévéhat. “So we save OF MOVEMENT” system is compliant with OCIMF time and improve reliability here, [by] and SIGTTO standards as well as minimising the number of manual European (CSN EN1474-3) and bolting operations, eliminating up to 130 international standards (ISO 16904). bolting operations per transfer.” The system is also undergoing qualification by class The system also means the draining process is expedited, society DNV GL. According to Mr Le Dévéhat, it has with a patent-pending function that over-pressurises the successfully passed most of the classification levels and is lowest line with gas from the topmost line to force the liquid working towards the final stage of qualification. through. On average, according to TechnipFMC figures, the Mr Le Dévéhat says ARCOS offers similar reductions in process saves 25% over typical drainage setups. pressure loss that come with rigid arrangements, equating And, Mr Le Dévéhat is quick to point out, the company to some 2.5 times less pressure than is needed to achieve the believes that the system is “totally compatible” with same transfer flow on flexible arrangements. today’s fleet. This, Mr Le Dévéhat says, results in cost saving With one hybridised system nearing completion, opportunities from faster transfers, or the better management TechnipFMC says there is room for more. of boil-off gas. “For bunkering applications, we have other ideas, other systems. Basically, for bunker operations we know we must go fast, ensure several operations per day and minimise connections. We have other ideas based on hybrid systems and using flexible technology for bunkering,” Mr Le Dévéhat says. But the innovation must be feasible, a point emphasised by referencing a system that uses the hydraulic quick connect/disconnect (QCDC) feature. “The next stage – to keep it simple – is to use manual QCDC. So, we greatly reduce the number of manual operations. There is no [defined] limit; we could propose a hydraulic QCDC. It will work, it will save time, but we are getting further from TechnipFMC is developing the next generation of shipthe simple and lean system,” he points out. “So, yes, it is to-ship LNG transfer solutions. The new ARCOS takes possible, but I don’t think it is in the spirit of what we are performance, safety and reliability to a higher standard trying to do.” LNG
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LNG World Shipping | March/April 2019
THE FUTURE IS
JETTYLESS LNG WITH UTSâ„¢ www.connect-lng.no post@connect-lng.no
SHIP-TO-SHORE TRANSFERS | 45
Driving up standards in ship-to-shore connectivity Trelleborg technical sales manager Steve Ward explains the importance of standardisation in the large-scale STS link sector
Steve Ward (Trelleborg): Bunkering for the masses requires far more standardisation
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arge-scale ship-to-shore (STS) link system connectors are so important because they link the emergency shutdown (ESD) systems on one side of a ship-toshore connection to the other. When the two systems are properly linked, the connectors ensure that – if an ESD is initiated on either side – a mutual shut down happens. Pumps and valves on both sides of the connection shut down in a controlled way to avoid damage to loading arm seals and other important and expensive infrastructure. However, the large-scale STS market has been around for more than 40 years and development of link system connections during that time has largely been unregulated. Consequently, the market has several legacy link system connectors that are not necessarily compatible with each other, a big concern according to Trelleborg technical
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sales manager Steve Ward. “The ISO 28460, unfortunately, didn’t come out until 2010, so you’ve got quite a few years of terminals doing their own terminal configurations and expecting the ships to be compatible with what they’ve got at the shore,” Mr Ward says. He also notes that regulation around STS link systems is slowly expanding around the globe, with SIGTTO publishing recommendations in 2009, and the International Organisation for Standardisation (ISO) publishing theirs the following year. Unfortunately, this means that owners who order a system today realistically need to ensure that it is compatible with connectors developed decades ago. “If you look at the Pyle, it’s been around since 1976,” says Mr Ward. “There are only two specialist suppliers of this connector in the world. It is 37 pins; it provides ESD,
LNG World Shipping | March/April 2019
46 | SHIP-TO-SHORE TRANSFERS
telephony, mooring load monitoring (MLM) data and it does offer some additional functionality for use with things like FSRUs. “[In] 1983, a six-pin Miyaki Electric plug was introduced into the marketplace and basically, the ESD signals are put on one connector, and the telephony were either on a second connector or even a third connector. So most of the LNG carriers these days are fitted with three Miyaki connectors.” SIGTTO developed a five-pin electric connector in 1986 in an attempt to standardise connections, but it was not widely adopted because it only offered ESD. As well as ESD signals, most connectors also offer clear lines of communication between operatives on either side of the STS transfer and provide a slow-speed data transfer on quick-release hook moorings. Mooring line tension data is gathered within the docking and mooring system, and the STS link system can monitor the load on the line and pass that information across the link to the visiting LNG vessel. As such, the market resisted SIGTTO’s mid-1980s attempt to standardise and carried on down various development pathways for connectors. In 1989, Sumitomo-Furikawa Electric introduced fibre-optics to STS connections, which Mr Ward says was a major milestone, as it offered ESD, telephony and MLM. For large-scale LNG bunkering, Mr Ward says there are one or two choices of connector that will cover most of the globe. “If you order a new system tomorrow, we would recommend you need Pyle (power control plugs) and Fibre. That would cover you, basically, but there are other connectors available. Pneumatic is still sometimes used; obviously, that is for ESD only and if you have ESD only, then ITT Cannon were often used for telecoms in southeast Asia. And if you went to Das Island (Abu Dhabi), you were expected to have anti-surge connectors. But basically, Pyle and Fibre are the more common,” he says.
Massive growth potential
The small-scale LNG-fuelled market has massive potential for growth, according to Mr Ward and this equates to what he describes as “bunkering for the masses”, a concept that requires far more standardisation. It is important however, that such standardisation does not target the
LNG World Shipping | March/April 2019
Harvey Gulf International Marine was an early adopter of digital fibre-optic systems, via Trelleborg’s Universal Safety Link
UNFORTUNATELY, OWNERS THAT ORDER A SYSTEM TODAY REALISTICALLY NEED TO ENSURE THAT IT IS COMPATIBLE WITH CONNECTORS DEVELOPED DECADES AGO"
minimum requirements. “We believe that minimum should not be accepted as the best,” says Mr Ward. “Emergency shutdown is this final safety catch-all and the LNG transfer should be a managed process, not a managed emergency,” he says. The solution, for Mr Ward and Trelleborg, is digital: “If you have the digital fibre-optic system, the cargo officer can, at the press of a button, see all of the tank data on the other side of the transfer process; similarly, the chief engineer will see all of the tank data on the other side of the transfer process.” This means better visibility and improved monitoring from both sides of the LNG transfer, resulting in greater efficiency and reducing the need for operators to be in constant verbal communication via walkie-talkies. Mr Ward cites a Trelleborg case study involving Harvey Gulf International Marine, which was an early adopter of digital fibreoptic systems, using Trelleborg’s Universal Safety Link (USL) product on its offshore support vessels and at its Port Fourchon, Louisiana LNG bunkering facility on the US Gulf of Mexico. The project has provided valuable experience and Mr Ward characterises it as a great success. He uses the early adopter case study to make his final points on the topic. “The requirements have changed over the last few years and who knows how they are going to change in the next five or so years,” he says. He cautions that new applications being developed are often large-scale, multiconnection systems that increase costs and may create further compatibility problems. He also reiterates his concern that early attempts at creating bunkering standards are referencing outdated STS links and threaten a reversion back to what he calls the “lowest common or cheapest common” system, lacking a proper focus on safety or improving management processes. “Whoever is involved in [setting new guidelines] needs to talk and learn from the early adopters and the long-term users,” Mr Ward says. “Basically, we are talking about the process of transferring LNG from one tank to another. There has to be some common data requirements. Standardisation of data formats, we believe, is possible.” LNG
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USA LNG | 49
The first commercial production and export of LNG from Cameron LNG could start in April (image: Mitsui & Co)
US LNG: here comes the second wave A raft of FIDs suggests 2019 will be a big year for the US LNG export sector
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NG giants ExxonMobil and Qatar Petroleum announced on 5 February an FID on the US$10Bn Golden Pass LNG. Built originally to handle imports from Qatar, Golden Pass LNG will now add liquefaction facilities to handle exports from the US. The Golden Pass FID is just the first of many proposed US projects jockeying for position to catch the second wave of US LNG export projects with start-up dates in the mid-2020s. Who else will be in the second wave? Before we answer that, it is important to note that the first wave of US LNG exports has not even fully hit yet.
US LNG – the first wave
Thus far, only three US LNG export projects in the first wave of US LNG
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projects are online – Cheniere’s Sabine Pass T1-5, Dominion’s Cove Point Maryland facility and Cheniere’s Corpus Christi T1. Sempra’s Cameron LNG will be the fourth project online with the first cargo expected in just a few weeks. Kinder Morgan’s Elba Island LNG, notable for the fact that it is not located on the US Gulf Coast but rather in Savannah, Georgia, is commissioning and expected to be online by the end of Q1 2019, making it the fifth US LNG export project. Freeport LNG T1 is expected online in the first half of 2019 and the US EIA projects that US LNG export capacity will reach 8.9 Bcf/d by the end of 2019, making the US the third largest exporter in the world behind Australia and Qatar. Freeport Train 3 and
LNG World Shipping | March/April 2019
50 | USA LNG
Corpus Christi Train 3 are expected in service in 2020 and 2021, respectively.
US LNG – who will be in the second wave?
Even though the entire first wave of US LNG is not yet online, the market is eagerly awaiting FID announcements for the second wave of US LNG – projects targeting start-up in the mid-2020s. The FID on Golden Pass LNG was widely expected since Golden Pass has had all of the necessary regulatory approvals in place and it was just a matter of time before ExxonMobil and Qatar Petroleum brought the project forward. A number of US projects are in various stages of development and it is already clear that the second wave of US projects will be very different from the first wave of projects in terms of the variety of business models being proposed to attract a wide variety of buyers, partners, and most importantly, project finance. Here is a snapshot of a few other US projects likely to move forward this year – either by taking FIDs or advancing their business model.
Cheniere - Sabine Pass Train 6
In February 2016, Cheniere became the first US LNG exporter in the lower-48 states when it shipped the first cargo from its Sabine Pass facility located in Louisiana. Cheniere is developing up to six trains at the Sabine Pass LNG export site. Trains 1 through 4 are operational with Train 5 soon to follow. Train 6 is being commercialised and has all necessary regulatory approvals in place, including approval by the US Department of Energy and FERC. In November 2018, Cheniere announced it had finalised the engineering, procurement, and construction (EPC) contract with Bechtel for Sabine Pass Train 6 and was releasing Bechtel to commence early EPC activities for Train 6 ahead of making a final investment decision. Cheniere also indicated that its recent long-term SPA with Malaysia’s Petronas LNG supported progress toward a FID on Train 6 in 2019.
Venture Global - Calcasieu Pass
Venture Global’s Calcasieu Pass LNG export project is located in south-western Louisiana’s Cameron Parish, less than 80
LNG World Shipping | March/April 2019
km south of Lake Charles. The 10-mta facility will employ a process solution from GE Oil & Gas, now part of Baker Hughes, that utilises mid-scale, modular, factoryfabricated liquefaction trains. Over the past few years, Venture Global continued to surprise the industry with a slew of long-term deals from creditworthy buyers including Shell, BP, Edison, SpA, Galp, Repsol and PGNiG. In fact, after initially signing a 1M tonne binding 20-year agreement in 2016, Shell doubled down in 2018 and signed another 1M tonne deal. Venture Global was widely expected to take FIDs in early 2019 pending a final order from the FERC which was supposed to be issued by the end of January 2019. But back in December 2018, FERC inexplicably pulled Venture Global’s Calcasieu Pass project from their schedule with speculation that Democratic Commissioner Cheryl LaFleur was the hold-out voter over concerns about greenhouse gas emissions. Recently, Commissioner LaFleur announced she will not seek a third term at FERC and will leave the Commission later in 2019. Ms LaFleur’s departure could ultimately bode well for future approvals, but it will leave FERC with only three sitting regulators – two Republicans Chairman Neil Chatterjee and Commissioner Bernard McNamee and Democratic Commissioner Rick Glick. Since no one political party can hold more than three seats, the White House will need to nominate a Republican and a Democrat to fill the two vacancies. In the meantime, it is unclear how FERC will move through the applications and whether it will continue to follow the timeline it set out in August 2018 that was intended to streamline FERC’s environmental process and speed up approvals.
Tellurian - Driftwood LNG
One project that seems to be moving through the FERC process without any issue is Tellurian’s Driftwood LNG. FERC issued its final environmental impact statement for Tellurian’s Driftwood LNG on 18 January 2019. Tellurian is an interesting second wave US LNG project to watch since the founders, LNG industry mavericks
Susan L Sakmar (University of Houston Law Center): ‘The Tellurian team are trying to shake up the LNG world by offering a new business model for the 27.6 mta Driftwood LNG export project’
EVEN THOUGH THE ENTIRE FIRST WAVE OF US LNG IS NOT YET ONLINE, THE MARKET IS EAGERLY AWAITING FID ANNOUNCEMENTS FOR THE SECOND WAVE”
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USA LNG | 51
Charif Souki and Martin Houston, along with their president Meg Gentle and the Tellurian team are trying to shake up the LNG world by offering a new business model for the 27.6 mta Driftwood LNG export project. In a competitive world for LNG financing and buyers, Tellurian continues to modify its business model to attract investors, with the jury still out whether it will succeed. Tellurian’s most recent offering reduces the equity buy-in for potential partners, which means partners would pay less up front and the project would take on more debt to make up the difference. Whereas most of the second wave of US LNG projects is trying to secure long-term contracts from offtakers, Tellurian is seeking equity partners. Last year the minimum Driftwood LNG buy-in was US$1,500/tonne or US$1.5Bn. In the most recent offering, the buy-in has been lowered to US$500/tonne, or US$500M. Project debt will increase from US$3.5Bn as originally proposed to approximately US$20Bn, and the LNG cost delivered FOB will be US$4.50/MMBtu (US$3/MMBtu for feedgas and liquefaction and US$1.50/MMBtu for debt servicing) up from US$3/MMBtu. Tellurian is working on proving the commercial viability of its model and reportedly is on a short-list of projects being considered by Saudi Aramco, which is looking to take an equity stake in a US LNG export project. Another project reportedly being considered by Aramco is Sempra’s Port Arthur project in Texas. It is expected that Aramco will announce a deal in the first half of 2019 and it remains to be seen whether it is with Tellurian, Sempra or another US LNG project.
NextDecade – Rio Grande LNG
Another interesting project to watch is NextDecade’s Rio Grande LNG, which lays claim to being the largest private infrastructure project in Texas – no small feat in a state where everything is big. Rio Grande LNG is a large-scale (27 mta, 6 Trains) project and is one of three proposed LNG export projects at the Port of Brownsville in southern Texas and the Gulf of Mexico. All of the Brownsville projects are facing opposition from ‘Save RGV From LNG’, a coalition of environmentalists,
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fishermen, shrimpers, neighbouring cities and concerned residents. In December 2018, and despite opposition from Save RGV from LNG, NextDecade obtained three important state air quality permits from Texas regulators. There is plenty of high-level support for the project including Houston Mayor Sylvester Turner and US Senator John Cornyn, R-Texas, both of who wrote open letters to FERC supporting the project. Subject to FERC approval, NextDecade expects to take FID in Q3 2019. In the meantime, NextDecade is selecting an EPC contractor and is marketing its business model, which is notable for offering multiple pricing options to customers, including LNG linked to Brent oil, LNG linked to Henry Hub – the conventional US offer to LNG customers found in the first wave of projects – or LNG indexed to Waha (another US hub near the Permian Basin), plus transportation to Aqua Dulce where NextDecade’s Rio Bravo Pipeline will originate to deliver gas to its Rio Grande LNG project in South Texas.
WHEREAS MOST OF THE SECOND WAVE OF US LNG PROJECTS IS TRYING TO SECURE LONGTERM CONTRACTS FROM OFFTAKERS, TELLURIAN IS SEEKING EQUITY PARTNERS”
Other US projects to watch in 2019
There are many proposed US LNG export projects hoping to be in the second wave of US LNG export projects. Three projects, Magnolia LNG, Delfin LNG, and Lake Charles, have been approved by both the US Department of Energy and the FERC, but have yet to take FID and 2019 could very well be their year. Further south, Sempra’s Costa Azul project in Baja California Mexico is working to negotiate final 20-year LNG sales agreements with units of Total, Mitsui & Co and Tokyo Gas, and is targeting FID in late 2019. In the dynamic world of LNG, anything could happen and it is clear that 2019 is already shaping up to be a very interesting year for the LNG industry. LNG Susan L Sakmar is licensed to practice law in California. She currently is a Visiting Law Professor at the University of Houston Law Center where she teaches a seminar on Shale Gas & LNG. She also consults on various aspects of global gas markets and has worked on a number of training projects related to LNG
LNG World Shipping | March/April 2019
52 | CONTAINMENT SYSTEMS
Lowering BOR to reduce transportation costs
The SK Spica is one of two 174,000m3 KNGCs with a KC-1 cargo containment system
LNG transport costs can be reduced by improving the thermal performance of containment systems
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or the last decade, French membrane containment engineering company GTT has been concentrating on ways to improve the thermal performance of an LNG carrier’s containment system to help reduce transport costs. Since 2010, it has reduced its boil-off rate (BOR) from 0.15% of volume per day in the Mark III containment system to 0.07% in the Mark III Flex+. “The thermal performance of LNG cargo containment systems is one of the chief concerns in the LNG sector,” says GTT technical director Karim Chapot. “It has a direct impact on transport costs and CO2 emissions. Technological advances have made it possible to continuously improve this performance over recent years, halving LNGC emissions in the space of a decade. Furthermore, there is a strong correlation
LNG World Shipping | March/April 2019
between thermal performance, vessel power usage, emissions and the efficiency of the containment system.” Mr Chapot explains that the design BOR corresponds to the amount of heat transferred to the tank under IGC code design temperature conditions (ambient air temperature = +45°C, sea water temperature = +32°C) with its insulation under a thermal steady state. Consequently, the guaranteed BOR depends only on the performance of the cargo containment system’s thermal characteristics. Unlike boil-off gas (BOG), BOR does not take into account cargo loaded, actual environmental conditions, tank and insulation cooling, the propulsion system and the way the vessel is generally operated. In September last year, GTT won an
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THE RELATIONSHIP BETWEEN SLOSHING AND THE BOR IN THE TANKS HAS BEEN A KEY TOPIC OF DISCUSSION AMONG SHIPOWNERS”
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approval in principle from class society Bureau Veritas for the development of one of its latest cargo containment systems, NO96 Flex. Much like its NO96 membrane technology, the NO96 Flex cargo containment system has insulating panels that are mechanically anchored to the inner hull and the double metallic barrier concept remains, with an unchanged secondary Invar membrane. One key change made by GTT is that the primary membrane is corrugated, waffled stainless steel, instead of Invar, a 36% nickel-steel alloy. NO96 Flex also contains the refinements first initiated with NO96 L-03 technology. It integrates the insulating foam panels within the NO96 system, leveraging the continuous improvement in thermal performance of the polyurethane foam (PUF) material. The use of PUF at the primary and secondary levels reduces the BOR to 0.07% of volume per day, according to GTT. GTT expects to begin a mock-up phase of the NO96 Flex containment system in Q1 2020. At about the same time it launched the NO96 Flex, GTT unveiled the Mark III Flex+, a variant of its Mark III Flex solution, which had obtained general approval from classification societies ABS, BV, DNV GL and LR at the end of 2017. Mark III Flex+ reduces the guaranteed BOR, reaching a performance of 0.07% volume per day as compared with the 0.085% volume per day guaranteed by Mark III Flex. The reduced BOR is possible thanks to an increased insulation thickness and a reinforced arrangement of the secondary barrier. The Mark III Flex+ containment systems have been licenced by Samsung Heavy Industries (SHI) for two 180,000m3 LNGCs for Monaco-based Gaslog Ltd. Those ships, set for delivery in Q2 and Q3 2021, respectively, will each go on a seven-year time charter with a wholly owned subsidiary of US-based Cheniere Energy, Inc. Earlier this year, GTT received an order from South Korea’s Daewoo Shipbuilding & Marine Engineering (DSME) to supply its NO96 GW membrane containment system for two 174,000m3 LNGCs for delivery in Q1 2021. GTT's NO96 GW membrane containment system uses a cryogenic liner directly
supported by the ship’s inner hull. The primary and secondary layers of the liner are both made from Invar, 0.7-mm thick, and two independent insulation layers consisting of a load-bearing system made of prefabricated plywood boxes filled with expanded perlite – a form of volcanic glass.
Digital solutions
GTT is also implementing digital tools to study the relationship between BOR and cargo sloshing that can occur due to wave action or navigation while the ship is underway. Working with Paris-based Cryovision, GTT installed a sloshing monitoring system in the 155,000m3 LNGC GasLog Singapore that provides real-time information to the crew. GasLog and GTT are co-operating in the project, which aims to demonstrate the performance of the sloshing monitoring system, SloShield. Using data provided by Gaslog, GTT’s teams will study the relationship between sloshing and the BOR in the tanks. The relationship between these two phenomena has been a key topic of discussion among shipowners but has not been investigated in an in-depth study based on actual data. “The installation”, said GasLog general manager of newbuildings and projects Theodoros Katemidis, would “further optimise the operations of our vessels and lead to improved efficiencies for GasLog and our customers.” In February, GTT launched its Digital Hub of Excellence, designed to help shipping companies reduce costs, mitigate risks and improve operational efficiency. GTT says the solution also helps those companies implement compliance and sustainability programmes and encourages data-driven collaboration.
Small-scale LNGCs get containment systems
Two small-scale 7,500m3 LNG carriers being built for Korea Line at SHI will be fitted with KC-1 containment systems and chartered to state-owned utility Korea Gas Corp for domestic coastal trades. The two small-scale carriers are only the third and fourth ships to use KC-1 containment systems. The others are the SK Spica and SK Serenity, 174,000m3 sister
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54 | CONTAINMENT SYSTEMS
BELOW: GTT has continuously refined its containment systems to improve thermal performance
ships delivered by SHI to South Korea’s SK Shipping last year. Korea Gas Corp (Kogas) has chartered both vessels for 20 years to carry LNG cargoes from Cheniere Energy’s export terminal at Sabine Pass in Louisiana. Working with South Korea’s leading shipbuilders, SHI, Hyundai Heavy Industries and DSME, Kogas established KC LNG Tech in 2016 to develop the KC-1 cargo containment system as a domestic alternative to GTT containment systems, which are built under licence from GTT by the shipyards. Last year, shipyards worldwide paid GTT €232M (US$259M) in royalty fees based on a record number of newbuild orders for 48 LNGCs, two floating storage and regasification units, and one onshore storage facility. Lessons learnt during the construction of the SK Serenity and SK Spica are being applied in the construction of the two small-scale LNGCs, according to KC LNG Tech. It said the delay in delivery of the SK ships was due to “insufficient” preparations for the mass production
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of membrane panels, rather than an issue with the KC-1 cargo containment system itself. The SK Shipping pair were delivered about six months late. Both the primary and secondary barriers of the KC-1 system are of 1.5 mm thick stainless-steel plate and have corrugations to accommodate thermal expansion and contraction. The barriers are positioned close to each other and are backed by a single layer of PUF insulation, supplied as panel pieces. Inter-barrier spacers are placed between the primary and secondary membranes to maintain equidistant spacing between the two, thus ensuring that any damage to the primary barrier does not impact on the secondary barrier. Under a 20-year contract with Kogas, the two small-scale LNGCs will transport cargo to a new LNG terminal being built on the Korean island of Jeju. KC-1 membranes will also be used as the containment systems for two 45,000 m3 storage tanks under construction at the new Jeju terminal. LNG
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LNG containment systems; options increase as 2020 draws near New containment systems could accelerate LNG bunker vessel builds
W
ith the deadline for IMO’s 2020 sulphur cap just months away, LNG as a marine fuel is gaining larger market acceptance as a compliance option for a broad range of vessels. While a relatively small percentage of the overall world fleet burns LNG as a fuel – there are about 300 LNG-fuelled vessels in operation, on order or under construction – it nevertheless represents a growing market segment for LNG containment system company GTT. “In an increasingly stringent regulatory environment, especially in the main trading ports, the interest of shipowners for our LNG propulsion solutions is becoming clear,” explains GTT chairman and chief executive Philippe Berterottière. “In conjunction with our partners, we are continuing our efforts to become a long-term player in this new ecosystem.” Those efforts include an agreement between the French engineering company and South Korea’s Dongsung Finetec regarding the development and commercialisation of a tank containment system which could be prefabricated for “drop-in” installation in an LNG-fuelled vessel at shipyard. GTT’s LNG Brick containment system, based on its Mark III membrane technology, targets containerships, bulk carriers, car carriers, and roro vessels with fuel tank capacities of 300 to 3,000 m3. Dongsung Finetec would be charged with fabricating the tanks. The LNG Brick was developed as GTT’s cost-
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effective solution to compete with IMO Type C tanks. The steel structure of the LNG Brick system has been reinforced to withstand high pressures. Depending on the LNG tanks and initial conditions, it is estimated that the LNG Brick has an approximate holding time of 15 days. This, in turn, enables the LNG Brick unit to better manage the boil-off for small volumes of LNG, thanks to its ability to maintain a higher pressure than traditional membrane tanks. Additionally, like other membrane tanks, LNG Brick units are customisable because of their parallelepiped shape – each face of the tank is shaped like a parallelogram – allowing them to suit the space available; this makes them more spaceefficient than bulky IMO Type C tanks.
Type B tank containment
Elsewhere, Japan’s Ecobunker Shipping Co, Ltd has entered into a newbuild contract with Japan Marine United for an LNG and low sulphur fuel oil
IT IS ESTIMATED THAT THE LNG BRICK HAS AN APPROXIMATE HOLDING TIME OF 15 DAYS”
bunkering vessel that will use selfsupporting prismatic-shape IMO type B tanks as the containment system. Based in the Port of Yokohama, the vessel will be part of a shipto-ship transfer LNG fuel supply business in Tokyo Bay, formed by Sumitomo Corporation, Uyeno Transtech Ltd and YokohamaKawasaki International Port Corporation, which are the three shareholders of Ecobunker Shipping. The LNG bunkering operation is being subsidised by the Japanese Ministry of Land, Infrastructure, Transport and Tourism. Self-supporting prismatic-shape IMO type B (SPB) tanks have been around since the late 1980s, first fitted in the 1,500 m3 LEG/LNG carrier Kayu Maru, and later in the 89,900m3 LNGCs Arctic Sun and Polar Eagle completed by IHI in 1993. More recently, SPB containment systems, developed by Japan’s IHI and Japan Marine United (JMU) have found their way into a series of 165,000m3 LNGCs under construction at JMU for owners NYK Line and Mitsui OSK. This is the first time the SPB containment system is being used in an LNG bunkering vessel. JMU is handling the concept and LNG system design, while the hull design and construction will be subcontracted to Fukuoka Shipbuilding Co, Ltd. The LNG tank fabrication and LNG cargo handling system will be supplied by Atlantic, Gulf & Pacific Company. The multi-product bunkering vessel, the first of its type in Asia, will have an overall length of 95.57 m, beam of 15.8 m and draught of 4.4 m, with an LNG tank capacity of 2,500 m3 and a low sulphur marine fuel oil capacity of 1,500 m3. LNG
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Measuring the impact of the LNG supply chain
A Andrew Clifton (SIGTTO): “The credibility of natural gas … hinges on demonstrating transparency and reductions in methane emissions across the supply chain”
THIS PROJECT PROVIDES A UNIQUE ACADEMICINDUSTRIAL COLLABORATION TO MEASURE METHANE EMISSIONS FROM LNG TRANSPORT”
s SIGTTO prepares to celebrate its 40th birthday in 2019, it is now well settled into its new London liaison office. The new premises have exceeded all expectations and I am confident our new location will serve SIGTTO well for many years to come. One very important project we are currently involved with concerns methane emissions from LNG vessels. Working with the United Nations Economic Commission for Europe (UNECE), Imperial College London, Enagás and the National Physical Laboratory, this project aims to provide industry with the crucial measurement tools and the modelling necessary to determine the impact which the LNG supply chain has on the environment. It will also help determine the cost-effectiveness of methods to minimise emissions and reduce uncertainty across the supply chain – with our focus clearly being on LNG shipping. The three areas to be assessed will be propulsion, operations and fugitive emissions. The project aims to answer the following questions: • What are the methane emissions from selected stages of the LNG supply chain? • What are the key technological and operational factors that affect emissions? • By how much can emissions be costeffectively minimised? The projects four work packages are: WP1 - Emissions inventory assessment; WP2 - Measurement ships; WP3 - Modelling emissions; and WP4 - Determining costeffective emissions minimisation. The current LNG carrier fleet varies significantly with respect to age, size, storage, efficiency and propulsion technologies, all of which will impact upon emissions profiles. To achieve a representative sample, multiple measurement studies will be made across different ships, as well as different
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stages of operational modes, such as laden and ballast passages. As this is a first-of-a-kind study, using mixed methods to measure methane emissions from ships, the design of the measurement system may require refinement, with the lessons learnt used to reduce cost and increase effectiveness. The credibility of natural gas and its role in decarbonising energy systems hinges on demonstrating transparency and reducing methane emissions across the global gas supply chain. This project provides a unique academic-industrial collaboration to measure methane emissions from LNG transport, modelling the key sources and their variability to provide sound evidence. This evidence will help determine potential minimisation targets via the most cost-effective solutions. SIGTTO, with its members and the project partners, is facilitating the measuring of these crucial emissions, with the first vessels hoping to be visited this summer. LNG
Upcoming events Because our industry is staging two global events in 2019 – LNG 2019 in Shanghai in April and Gastech 2019 in Houston in September – SIGTTO will not have a Panel Meeting this year. SIGTTO will hold its 79 General Purposes Committee meeting (GPC 79) in Shanghai in April in conjunction with LNG 2019, while GPC 80 will take place in Houston in September, in tandem with the Gastech event. I will be chairing the conference shipping sessions at both LNG 2019 and Gastech 2019. I am also pleased to have been appointed co-chair of the Gastech technical committee. We also intend to hold 12 regional forums over the course of this year, with details on our website once available.
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