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NAFSGREEN.GR October 2013 - Issue 2 Nikos K. Doukas Publicatios 12, Karababa str., Agios Dimitrios 173 43 - Athens - Greece 210 4286606 - nafsgreen@nafsgreen.gr - www.nafsgreen.gr

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ä l i s t r Wtäher ECA compliant

o t e n a k r s a e s m a e S l U re e h t o t e n i g n e l e u f l a u d Noble Energy DNV GL recommends World’s First LNG- Environmentally Maersk Drilling’s Powered Tugboat friendly ways to make first ultra deepwater flow test results by Rolls Royce scrubber offshore of LNG bunkering drillship named Cyprus safe and efficient Maersk Viking


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HOUSTON

Wärtsilä releases another ECA compliant dual-fuel engine to the US market Wärtsilä, the marine industry’s leading solutions and services provider, has now released its Wärtsilä 20DF dual-fuel engine for sale in the US market. The engine meets the strict emissions compliance criteria of the United States Environmental Protection Agency (EPA) Tier 4 and is now available to American ship owners and operators. The Wärtsilä 20DF is a proven and successful engine, and its release to the US market is in response to the growing demand for natural gas fueled engines.

Tier 4 emissions requirements without the need for exhaust after-treatment, while at the same time increasing the safety and operational flexibility for LNG vessels, provides significant value to our customers.” The Wärtsilä 20DF is a commercial duty, medium-speed, dualfuel engine. Engines supplied to the US market will operate primarily on natural gas, with marine diesel oil (MDO) as a pilot fuel or as an emergency backup fuel.

By extending the availability of dual-fuel engine technology, Wärtsilä now offers the American marine sector greater possibilities to select fuel that enables compliance with environmental legislation. In addition to the environmental benefits attained from burning gas, the choice of fuel can now be made on the basis of price and availability since Wärtsilä’s dual-fuel (DF) technology allows engines to use either natural gas or diesel oil. In particular, this technology is attracting the attention of global fleet owners operating within the North American Emissions Control Area (ECA), for which the regulations came into force in August 2012. The legislation is aimed at achieving stricter control on emissions of sulphur oxides (SOx), nitrogen oxides (NOx) and particulate matter from vessels. ECA’s have also been established in the Baltic Sea and North Sea.

Wärtsilä dual-fuel main and auxiliary engines allow ships to operate on natural gas, which minimizes their environmental footprint and operational costs and also make it possible to operate without exhaust gas after-treatment. The Wärtsilä 20DF power spans the range from 1,056kW (1,415HP) to 1,584kW (2,122HP) per engine. Wärtsilä’s 4-stroke dual-fuel engine portfolio has the widest power range in the market. The Wärtsilä 20DF, Wärtsilä 34DF and Wärtsilä 50DF output ranges from 1056kW (1,415HP) to 17,550kW (23,515HP) per engine. Wärtsilä has delivered over 1,000 dual-fuel engines. This portfolio of engines currently has over 7 million operating hours.

Lars Anderson, Vice President, 4-stroke at Wärtsilä Ship Power, states: “The Wärtsilä 20DF will further accelerate the adoption of LNG as a marine fuel in the US. The ability to meet EPA

Wärtsilä’s lean burn, low pressure dual-fuel engine technology utilizes a very low percentage diesel fuel as a pilot ignition source, amounting to about 1 per cent of total energy. This contrasts with other gas engine technologies that employ a significantly higher percentage of diesel pilot fuel. The Wärtsilä lean burn advantage results in lower operational costs and reduced emissions.


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Maersk Drilling’s first ultra deepwater drillship named Maersk Viking | Maersk Drilling’s

first ultra deepwater drillship was named Thursday morning in a ceremony held at the Samsung Heavy Industries (SHI) shipyard in Geoje-Si, South Korea. Mrs. Nathalie Newman, wife of Mr. Harry E. Newman Jr., ExxonMobil Global Drilling Manager, had the honour of naming the drillship, Maersk Viking. Maersk Viking is the first in a series of four ultra deepwater drillships to enter Maersk Drilling’s rig fleet. The four drillships represent a total investment of USD 2.6bn and will be delivered from the SHI shipyard in late 2013 and 2014. After delivery from the yard and mobilisation to the US Gulf of Mexico, Maersk Viking will commence a three year contract with ExxonMobil. The estimated contract value is USD 610m including mobilisation, but excluding cost escalation and performance bonus. “The naming of Maersk Viking is an important milestone in our further expansion in the ultra deepwater market. With the contract for Maersk Viking we look forward to continuing our relationship with ExxonMobil, and establishing ourselves as a significant drilling contractor in the US Gulf of Mexico,” says Claus V. Hemmingsen, CEO of Maersk Drilling and member of the Executive Board of the A.P. Moller – Maersk Group. Maersk Drilling has been active in the US Gulf of Mexico since 2009 with the ultra deepwater semi-submersible Maersk Developer. With Maersk Viking and the second newbuild drillship, Deepwater Advanced 2, to enter the US GoM, Maersk Drilling is becoming a significant drilling contractor in the US Gulf of Mexico, which together with West Africa, are the target regions for Maersk Drilling’s deepwater activities. Growing the business activities in the ultra deepwater market is part of Maersk Drilling’s strategy to deliver on the financial ambition of a profit (NOPAT) of USD 1bn in 2018.


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Noble Energy announces appraisals drilling and flow test results offshore of Cyprus Noble Energy, Inc. (NYSE: NBL) announced today that the A-2 appraisal well drilled on the Block 12 discovery offshore the Republic of Cyprus has successfully encountered approximately 120 feet of net natural gas pay within the targeted Miocene-aged sand intervals. The Cyprus A-2 well, which is more than four miles northeast of the A-1 discovery location, was drilled to a total depth of 18,865 feet in 5,575 feet of water. Production testing procedures were performed over a 39-foot section of the upper Miocene reservoir. The test, limited by surface equipment, yielded a maximum flow rate of 56 million cubic feet per day (Mmcf/d) of natural gas. Performance modeling indicates development wells in the reservoir should have capacity to deliver up to 250 Mmcf/d. Evaluation of drilling data, wireline logs and reservoir performance information has resulted in

an updated estimate of gross resources of the field ranging(1) from 3.6 trillion cubic feet (Tcf) of natural gas to 6 Tcf, with a mean of approximately 5 Tcf. The Cyprus A structure represents the third largest field discovered to date within the Deepwater Levant Basin. Keith Elliott, Noble Energy’s Senior Vice President, Eastern Mediterranean, commented, “Results from the Cyprus A-2 well have confirmed substantial recoverable natural gas resources and high reservoir deliverability. While the A-2 location has successfully defined the northern area of the discovery, we anticipate additional appraisal activities are necessary to further refine the ultimate recoverable resources and optimize field development planning. In the meantime, we continue to identify and advance multiple development options. In addition to the Cyprus A discovery, we are also encouraged about

the further exploration potential in Block 12. We have recently completed a 1,100 square mile 3D seismic acquisition, which will be interpreted over the next several months.” Noble Energy operates Block 12 offshore the Republic of Cyprus with a 70 percent working interest. Delek Drilling and Avner Oil Exploration each have 15 percent working interest. Noble Energy plans to move the Ensco 5006 drilling rig to Tamar SW, offshore Israel, at the completion of operations offshore Cyprus. The Tamar SW well, testing an exploration prospect offsetting the main Tamar field, is expected to reach total depth by the end of 2013. Noble Energy operates Tamar SW with a 36 percent working interest. (1) Range of resource estimate based on 75th and 25th percentile probabilities SOURCE Noble Energy


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lngShip 5 DNV GL recommends ways to make LNG bunkering safe and efficient LNG-fuelled ships have logged over 130 ship-years of operation in Norwegian waters and LNG’s attractiveness and stability as a fuel have been thoroughly demonstrated. Globally too, operators, suppliers and regulators have gained significant experience in all aspects of LNG-fuelled ship operations in recent years. However, the process for developing the required infrastructure has not been standardised – leaving the industry with many open questions. Currently, 83 LNG-fuelled ships are in operation or on order worldwide. These range from passenger ferries, Coast Guard ships and cargo vessels to tankers and platform supply vessels. Estimates put the global LNG-fuelled fleet at 3,200 by the year 2025. With the EU poised to invest in helping to equip 139 seaports and inland ports with LNG bunker stations by 2025, the time was ripe for standardising development processes, designs and operations. “An ISO committee brought together the experience and knowhow of more than 30 industry professionals in 2011 and its draft guideline was published in June 2013. The ISO guideline defines the overall philosophies of designs and operations relevant to LNG bunkering and suggests a list of 24 functional requirements. However, it is not intended to be concrete and descriptive about how to achieve the requirements’ objectives,” states Mr Blikom. He explains that DNV GL therefore sets out to put its own

knowledge and experience of how to meet the ISO guideline’s requirements into a more practical format. This is now available in the form of a Recommended Practice (RP) which will serve as a practical guide for authorities, LNG bunker suppliers and ship operators on developing design solutions and operating procedures to undertake LNG bunkering safely and efficiently. The RP document is now open for comments during an external six-week consultation period. Subsequently, DNV will update the document based on the input received by the industry, followed by formal publication. Jan Tellkamp, project manager for the RP, describes the document’s philosophy: “The development of the RP is based on extensive experience of LNG bunkering-related projects over the past decade, as well as on knowledge that can be drawn from other relevant industries, in particular from the large-scale LNG industry. The RP covers all modes of bunkering a ship with LNG and provides guidance on how to work on the three key topics suggested by the ISO guideline – planning, design and operation; safety management systems; and risk assessment. The concept of ‘layers of defence’ is detailed on both the equipment and procedural levels.” Blikom concludes that: “These documents, both the ISO guideline and DNV GL RP, represent significant steps forward in taking operational and technical risk off the table for operators looking at investing in LNG-fuelled ships or LNG bunkering terminals. Our aim is to lead the way in meeting the needs of this new, innovative and growing sector. The Bunkering RP is one of our very important deliveries.”

URUGUAY

Jan De Nul Group orders new multipurpose vessel | BELGIUM Jan De Nul Group ordered a new vessel at the Uljanik Shipyard in Pula, Croatia. The vessel with a deadweight of 10,500 tonnes and a total length of 138 m will be a multipurpose vessel. It will be a trenching and offshore support vessel, a subsea rock installation vessel and a cable laying vessel. In the cable laying mode, the vessel will be able to install up to 10,000 tonnes of cable and will thereto be equipped with a 5,500 tonnes capacity turntable above deck and a 4,500 tonnes capacity turntable below deck along with tensioners as required by the project, chute and auxiliary equipment.

GDF SUEZ is pleased to announce that it has signed a 15-year BOOT (Build, Own, Operate and Transfer) contract with Gas Sayago S.A. 1 for LNG storage and regasification services in Uruguay. Commercial operation of the new terminal is expected in 2015. Located in the Punta Sayago area, close to Montevideo, the offshore terminal, GNL del Plata, will comprise a Floating Storage and Regasification Unit (FSRU) and a jetty, protected by a 1.5 km breakwater. The entire capacity of the terminal, which will be capable of receiving LNG carriers up to 218,000m3, will be reserved by the offtaker Gas Sayago.

WORLD ENERGY CONGRESS: Financing solutions to energy projects discussed | The solution to liberating an

“ocean of capital” to finance energy projects in close collaboration among the science sector, governments and capital said Rowan Douglas, chairman of the Willis Research Network, on Tuesday. Douglas asserted that if there is a long-term stable policy along with “enough data and a big enough [data] set you can package risk in ways that people can accept.” He added, “If we can come to a set of mutually understood truths I think we can understand risk within tolerable parameters and liberate capital.” Joined by Prince Michael of Liechtenstein and Michael Eckhart, Managing Director and Global Head of Environmental Finance at Citigroup, the group suggested that public funds should be used to lower the risks and open the floodgates to private finance. “90% of the risk in the energy sector is political or market risk,” said Eckhart, who proposed that governments should insure the output, so if an investment is made and energy provided, the investor knows they will be paid. “That removes the risk for capital to flow into the sector,” he added. “If the World Bank or development banks would provide some finance as an insurance for other banks to invest in green projects, it would provide a big boost and help capital flow,” said Prince Michael.


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Sanmar Shipyard Completes M/T Borgøy, World’s First LNG-Powered Tugboat

anmar has completed the first of two tugs for Norwegian customer Buksér og Berging, which each feature two Rolls-Royce Bergen C26:33L6PG engines fueled purely by liquefied natural gas (LNG). The first boat, named Borgøy, will enter service next month following a series of sea trials. It will be operated by Norwegian state oil company Statoil at its Kårstø gas terminal.. Tugs are usually fuelled by marine diesel oil. However, this fuel produces a number of polluting emissions. The new vessels, Borgøy and Bokn, are designed by the Norwegian tug owner Buksér og Berging AS and built by the Turkish yard Sanmar. These are the first tugs to be fuelled by the much more environmentally friendly liquefied natural gas (LNG) to eliminate sulphur emissions, bring particulate matter emissions down close to zero and reduce the discharge of CO2 and NOx by 26 per cent and 80-90 per cent respectively. Powering each of the new tugs is a pair of lean-burn gas engines from Rolls-Royce Bergen, with a combined output of 3410kW at 1,000 rev/min. These powerful gas engines are particularly robust, with a high degree of reliability and long intervals between overhaul. The lean-burn principle delivers high efficiency coupled with reduced exhaust emissions and low specific energy consumption. The engines are direct coupled to Rolls-Royce azimuthing Z-drives mounted aft in ASD configuration. The propellers have diameters of 3,000mm. Gas engine technology is not new having been proven in both land-based and large ship installations but the two new 35m LNG fuelled terminal tugs are trailblazers in this sector of the marine market demanding a significant step-forward in technical know-

how above that of the average tug building yard. Always at the forefront of innovation and technological advance, Sanmar now has a distinct lead on all other specialist tug building yards in the search for more eco-friendly and economic tug operation. The systems have had to meet the International Code of Safety for Gas Fuelled ships and the DNV Classification Society rules. These involve such requirements as independent engine room spaces with ventilation of 30 air changes per hour, gas detection, automatic shutdown of gas supply and disconnection of electrical equipment, excess flow shutdown, ventilated double (sheathed) piping. Other special knowledge has been incorporated into the installation of the Aga Cryro AB 80m3 capacity double walled tank, cold boxes and gas heating systems. The tugs are built to DNV Class including Fi-fi and oil recovery as well as escort notation. The tug has a length of 35 m, beam of 15 m and draft of 5.5 m with superior escort capabilities of 100 tonnes steering force at 1o knots. Static Bollard pull is 70 tonnes. The 2 tugs will operate at Statoils gas terminal at Kaarstoe in Norway. For the ancillary tasks, where close quarter manoeuvrability is required, the vessels are fitted with a Schottel 333kw bow thruster whilst the main towing winch, suppplied by Karmoy, has a brake load capacity of 250 tons. A Heila deck crane is also carried. Onboard accommodation provides two single officer cabins and two twin berth crew cabins, galley, mess room - all to North European standard of comfort and quality including heated floors to all the sanitary spaces. Care has been taken to reduce sound levels throughout the accommodation areas and at 85 per cent engine load, just 65dB is recorded.


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lngShip 7 MOL to build and charter World’s largest FSRU | TOKYO Mitsui O.S.K. Lines, Ltd. (MOL; President: Koichi Muto) today announced that MOL, along with a subsidiary of GDF Suez S.A. has signed a 20-year time charter party for one floating storage regasification unit (FSRU). The FSRU will be a core facility for a liquefied natural gas (LNG) import project in Uruguay led by Gas Sayago (*1). This is the first FSRU project for MOL to solely build, own, and operate such a unit. The FSRU will have a storage capacity of 263,000 cubic meters of LNG, making it the world’s largest. Built by Daewoo Shipbuilding & Marine Engineering Co., Ltd., in South Korea, the FSRU is to be completed by September 2016 and will enter into service in November 2016 after delivery and commissioning at Port of Montevideo. Since FSRUs first came into practical use in 2005, plans to operate them have been developing in many places around the world as they provide a competitive solution for receiving LNG because of timing and cost effectiveness. Participation in this project marks an important milestone for MOL to enter into the expanding business field. As the world’s largest LNG carrier operator, with vast experience in LNG loading and discharging, vessel operation, and maintenance gained over more than 30 years of operating LNG carriers, MOL will take further active steps to develop more new business opportunities in this field that promises growth.

SINGAPORE

SLNG Completes First Vessel CoolDown Service OSLO

FLEX LNG to Explore Strategic Alternatives FLEX LNGannounced that it has settled the dispute with Samsung Heavy Industries and that two LNG Carriers have been ordered. Following the dispute settlement, FLEX LNG will work towards securing employment for the LNG Carriers and continue its preparations to manage the construction process.

Singapore LNG performed its first Vessel Cool-Down Service following an agreement signed with MISC Berhad, a Malaysian shipping company, on 25 September 2013. This is the first agreement for Vessel Cool-Down Services that SLNG has entered into, and the first cool-down was performed on one of MISC’s LNG ships, the Seri Bakti. The provision of Vessel Cool-Down Services is an important first step for SLNG towards expanding its portfolio of services to optimise the use of the terminal’s facilities, and for Singapore to eventually develop into a Gas Hub for the region.

Sakhalin Energy produced and offloaded 700 LNG cargoes Sakhalin Energy offloaded the 700th LNG cargo from Prigorodnoye production complex on 10 October 2013. The first LNG cargo was produces and delivered by the company in 2009, when the first Russia’s LNG plant has been launched by Sakhalin Energy. The cargo was loaded to Fuji LNG carrier to be delivered to Japan. Asia-Pacific is a major global center for LNG consumption (c.a. 66%). These are geographically adjacent markets, and this is a beneficial factor for the Sakhalin Energy. Korea is the secondlargest buyer of Sakhalin LNG, while most of it is shipped to Japan. LNG cargoes are also delivered to China, Taiwan and Thailand. More than 45 mln tonnes of LNG have been produced since Sakhalin Energy started production in 2009. In 2013 the company plans to produce more than 10,5 million tonnes of LNG.

HOUSTON

PARIS

Annova LNG, LLC (Annova) announced that they have filed an application with the Department of Energy (DOE) to receive authorization to export domestically produced LNG to free trade agreement (FTA) countries from its facility in the Port of Brownsville. In its initial stages, the facility will produce 2.0 millions of tons per annum (mtpa), or about 300,000 mmbtu/day, and is expected to be in-service by mid-2018. The facility has been designed to be small enough to sell 100% of its volume in long-term tolling agreements to buyers in FTA countries, with the scalability in place to support up to 6.0 mtpa.

Power Conversion takes the guess work out of complex dynamic positioning (DP) operations with its advanced human-machine interface (HMI) and returns ship control to the mariner, so skilled DP operators can once again focus on the task of ship handling. Hornbeck Offshore will employ Power Conversion’s latest generation DP technology for its four new multipurpose supply vessels (MPSVs). In their role as MPSVs, they can operate as either a subsea construction vessel capable of performing complex subsea construction operations or as a resupply and support vessel to ultra deepwater drilling in the Gulf of Mexico, or anywhere else in the world as required by their charterers.

Annova Lng to export LNG to FTA

GE Advanced DP TechnologyGE’s


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LNG

Featured article

as a ship’s fuel LNG is an attractive alternative to conventional marine fuels. GL looks at the benefits, costs and impact of making the switch. By Germanischer Lloyd

Why LNG as Ship Fuel?

Using liquefied natural gas (LNG) as ship fuel has recently gained more attention not only in Europe, but also in Asia and the USA. There are three drivers visible which make LNG as ship fuel one of the most promising new technologies for shipping: • First, using LNG as ship fuel will reduce sulphur oxide (SOx) emissions, which are created when using fuel with a high sulphur content, by between 90% and 95%. This reduction level will become mandatory within the so-called Emission Control Areas (ECAs) from 2015. A similar reduction will be enforced for worldwide shipping from 2020 on, pending a review at the IMO which may shift the introduction to 2025. • In addition, the reduction of nitrogen oxide (NOx) emissions to comply with IMO Tier III limits, applicable in ECAs from 2016, can be achieved for both pure gas engines and four-stroke dual-fuel

engines, which are typically used on board ships engaged in short sea and coastal shipping. • Second, due to the lower carbon content of LNG compared to traditional ship fuels, a 20% - 25% reduction in carbon dioxide (CO2) emissions is possible. The actual reduction depends on engine type and the range of possible measures for reducing the unwanted release of unused methane. • Third, current LNG prices in Europe and the USA suggest that LNG could be offered at a price comparable to heavy fuel oil (HFO), taking into account its energy content and the costs of small-scale LNG distribution (not yet available). This means that LNG will certainly look commercially attractive compared with the low-sulphur marine gas oil (MGO) which will be required to be used within the ECAs if no other technical measures are implemented to reduce SOx emissions.


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Will it be cost-effective?

When GL published its LNG-fuelled container feeder vessel design concept in 2009, LNG was competitive against MGO but still looked more expensive than HFO. Nevertheless, when compared to a standard container feeder vessel, also operating within an ECA, the LNGfuelled design variant showed superior commercial attractiveness, with the initial investment for the LNG equipment expected to be paid back within less than two years. It is noted that, at the time, this additional investment was about 25% of the typical newbuilding cost. A more systematic analysis of costs and benefits for LNG-fuelled container vessels was recently completed by GL and leading engine manufacturer MAN, who is currently preparing to launch a range of LNG-fuelled two-stroke engines in 2013. Five container vessel sizes and three different operational profiles were investigated by systematically changing the price of LNG and the proportion of time spent operating within ECAs. Results for using LNG as fuel were compared with the principal other technical alternative, the implementation of exhaust gas cleaning systems (scrubbers), to reduce emissions to required levels. The decision to use LNG as ship fuel as opposed to using a scrubber system would depend on the price differential between LNG and HFO, the proportion of time spent operating within ECAs and the starting year for the vessel. Most LNG systems are expected to become profitable in 2020, when a global low-sulphur fuel standard is expected to be implemented.

LNG Supply Chain

At the end of 2011, no supply chain for LNG as ship fuel exists, with the exception of that serving Norwegian coastal waters. The primary reason for this is that LNG suppliers have yet to be convinced that this technology will take off. Moreover, LNG users have to be convinced that LNG will be made available at attractive price levels and the right locations. In principle, Europe is well prepared for this future as local LNG production is up and running in Norway. A number of large LNG import terminals already exist, with some of these having or planning an export facility, which is a necessary step towards small-scale LNG distribution. At present, however, large LNG terminals are not yet equipped for exporting smaller quantities of LNG. One possible supply chain for LNG as fuel would be as follows: A small LNG tanker could load, say, 10,000 m3 of LNG at an LNG terminal, e.g. Zeebrugge, and transport her cargo to an intermediate LNG terminal. Several small LNG tankers already exist and are thought to be available to fulfil this task. Intermediate terminals have been built, such as the one near Stockholm, and more are planned for Gothenburg and several other locations in the Baltic region. The port of Hamburg also considers this to be an option for the future supply of LNG to ships.

The last step of supplying LNG to the end-user is performed by LNG bunker vessels, none of which have yet been built. These would be small LNG tankers, too, and would deliver the LNG to the ship in a fashion similar to the present bunker delivery of HFO. It is noted, however, that technical and regulatory challenges need to be overcome before LNG bunkering in ports becomes standard.

Regulatory Development

Even before the strict ECA emissions requirements were adopted at the IMO, a process of regulatory development addressing the use of gases as ship fuel had already started, based on a proposal tabled by Norway in 2004. This delivered the so-called IMO Interim Guidelines on Safety for Natural Gas-Fuelled Engine Installations in Ships (Resolution MSC.285(86)). These guidelines contain the very latest safety concepts for using gas as a ship fuel. They address, inter alia, ship arrangement and design, fire safety, electrical systems, control and safety systems, engines, building and operational procedures. They are implemented by flag states on a voluntary basis, so it can safely be assumed that a flag state will accept a proposed ship design. GL issued its own guidelines, incorporating the IMO Interim Guidelines and adding its own interpretations. At present, the IMO Sub-Committee on Bulk and Liquid Gases (BLG) is working on the International Code of Safety for Gas-Fuelled Ships (IGF Code), which will supersede the Interim Guidelines and is planned to enter into force at the same time as the 2014 revision of SOLAS. As such, the IGF Code will be published in time for ships using LNG as ship fuel to meet the strict ECA emissions requirements. However, there are many outstanding technical issues which still need to be resolved by BLG before an agreed draft IGF Code can be delivered to the IMO’s Maritime Safety Committee (MSC) in spring 2013 as scheduled. Outstanding items include the necessary distance between an LNG tank and the outer hull of the ship, which is relevant in cases of collision, and the question of whether the LNG tank may be placed below the accommodation, which is in particular relevant for passenger ships LNG is an attractive alternative to conventional marine fuels. GL looks at the benefits, costs and impact of making the switch. New, stringent regulations are forcing the shipping industry to rethink its fuelling options. Emissions controls, introduced by the IMO’s Marine Environment Protection Committee, combined with the introduction of emission control areas in European, U.S. and Canadian territorial waters, will have a profound impact on international shipping over the next ten years. LNG is an attractive alternative to conventional marine fuels. Can the use of LNG as marine fuel help the industry to meet these challenges? In this web-special GL looks at this potentially game changing technology, informs about GL’s own guidelines for gas as ship fuel and the development of rules and design concepts for LNG-fuelled vessels.


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Hyundai Samho Heavy Industries Launches World’s First LNG Carrier Built On-ground3 |

National Grid unveils £6 million training facility 1 | GREAT BRITAIN National Grid opened a

pioneering £6 million gas training facility – the first of its type in Europe – at its National Grid Academy learning centre in Eakring, Nottinghamshire. National Grid Chief Executive Steve Holliday unveiled a state-of-the-art working replica of an ‘Above Ground Installation’ (AGI) – a critical complex of equipment on the high pressure gas network that helps deliver gas safely and reliably to homes, businesses, schools and public services. Using pressurised air instead of gas, it will allow generations of budding gas engineers to gain handson experience of maintaining and operating these facilities in a safe environment. After touring the facility and meeting trainees, Mr Holliday said: “Our investment in this world class facility demonstrates our commitment to our people and investing in their skills. It shows our hands on approach to developing the next generation of technicians to keep Britain’s energy flowing. It will also hopefully signal to more boys and girls that engineering is a career they should be considering.” The full-size replica AGI - believed to be one of a just a handful in the world - is made up of a complex network of valves and pipes. Half-a-mile of pipes (850 metres), some up to four feet (one metre) in diameter, wind their way across the facility, both above and below ground. Time lapse footage showing how the facility was constructed is available by going to: http://bcove.me/excotevy. National Grid owns and operates 7,660 kms of high pressure transmission pipes, which take gas from coastal terminals across the country. The company owns and operates some 400 AGIs, which step down the gas pressure so that gas can be delivered safely to homes and businesses.

Hyundai Heavy Wins USD 850 Million Order for Moss type LNG Carriers | Hyundai Heavy Industries (HHI),

the world’s biggest shipbuilder, today won a USD 850 million order to build four 150,000 m3 Moss type LNG carriers from Malaysian oil company Petroliam Nasional Bhd (Petronas). The contract also includes an option exercisable by the owner to order four additional same class LNG carriers. The double-hulled LNG carriers are scheduled to be delivered to the owner from the second half of 2016.

The tankers for carrying liquefied natural gas will be constructed with four independent self-supporting spherical tanks that have more reliable performance when loading and unloading cargo, and have greater resistance to sloshing forces compared to membrane tank system. These features play a crucial role in Moss type LNG carriers being the preferred choice for offshore storage work where harsh sea conditions are a significant factor. Mr. Ka Sam-hyun, executive vice president of Hyundai Heavy’s Shipbuilding Division said, “We see this order as the first of many for LNG carriers as regulations for carbon dioxide emission tighten and demand for LNG increases as an alternative energy source.” Hyundai Heavy is the only Korean shipbuilder that can build Moss type LNG carriers. The Ulsan, South-Korea based company has built 15 Moss type LNG carriers since 1994.

Hyundai Samho Heavy Industries (HSHI), a shipbuilding affiliate of Hyundai Heavy Industries, the world’s biggest shipbuilder, announced it successfully launched a 162,000 m3 LNG carrier built using the on-ground shipbuilding method for the first time in the world. The vessel, designed for delivering chilled natural gas, was ordered by Golar of Norway in February, 2012. It, measurings 289.0 m in length, 45.6 m in width, and 26.0 m in depth, is scheduled to be handed over to the owner by late July 2014 after outfitting and painting work. Since onground shipbuilding method allows higher productivity and cost effectiveness, facilitates efficient utilization of yard facilities and resources, and improves the safety of working conditions, Hyundai Samho Heavy Industries plans to build 10 of 12 LNG carriers in its order book using this method.


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Environmentally friendly scrubber

Although nowadays the sulphur limit for ship fuel in the North Sea and Baltic Sea is 1%, Langh Ship’s m/s Laura sails in the area with whatever fuel the charterer has found in Rotterdam, no matter how high its sulphur content. This is possible because the shipping company has equipped the vessel with a closed loop scrubber that emits exhaust gas that is even cleaner than if the fuel had a sulphur content of no more than 0.1%. Environmental regulations in this sulphur emission control area (SECA) have been tightened such that the sulphur limit for fuel will drop to 0.1% at the start of 2015. “In practice, this means that ships will have to switch to diesel, i.e. marine gas oil (MGO), unless they are equipped with exhaust scrubbers,” explains the shipping company’s Managing Director, Hans Langh. The difference in price between MGO and the low sulphur heavy fuel oil currently being used in the area is more than 300 USD per tonne, bringing a major increase in shipping costs. Hans Langh says the company started looking into various options early on: “We requested quotations on scrubbers, but the offers we were getting were just too high to seriously consider installing them in used vessels.” The challenge in installing exhaust scrubbers in ships, especially when it comes to retrofitting, is the lack of space. Another problem appeared to be cleaning of the emission washing water used in the scrubber. Genuine closed loop system ]Legislation allows the use of seawater in scrubbers such that instead of emission impurities being released into the air, they are discharged into the sea (i.e. open loop scrubber). “For us, however, it was important that our scrubber be based on a closed loop system, whereby the requirement is for the washing waters used in the process to be cleaned so as to separate the harmful substances,” explains Reino Verosaari, Langh Ship’s Senior Technical Adviser. Hans Langh has extensive expertise in water treatment, as another of his family-owned companies – Industrial and Ship Cleaning Services Hans Langh – has 40 years’ experience in cleaning washing waters. This expertise served as the foundation when the company set off to develop a scrubber and washing water processing system for its ship.

And the development work paid off: while m/s Laura was docked in May, a scrubber was installed in the vessel and test runs have been carried out since then. And, upon being granted special permission from the Finnish Transport Safety Agency Trafi, high sulphur fuels have been tested, too. The results are encouraging: the exhaust gas is cleaned in line with the requirements of the upcoming regulations, and the washing waters used in the method are also cleaned. In addition, the cleaning system removes particulates from the exhaust gas, even though this is not required by legislation. The system is protected by multiple patent applications. “We would never have been able to accomplish this without the participation of Tekes, the Finnish Funding Agency for Technology and Innovation. We put in a tremendous amount of effort into conducting research and developing and testing methods, and the support and funding we received from Tekes was crucial in that respect,” says Langh. After first building a small-scale model of the scrubber and conducting the ship’s exhaust gases to it, the cleaning of the washing water was tested using various methods. The project was started up in 2012, and now the results are in. The scrubber is literally out of sight “Our goal was to create a scrubber that would change the ship’s properties as little as possible and barely affect its cargo capacity,” explains Langh Ship’s Commercial Manager, Laura Langh-Lagerlöf, who was highly involved in the development team. “And on m/s Laura, we really hit the nail on the head – you can’t even see the scrubber from the outside.” Since the scrubber does not result in any new projections from the ship, nor does the vessel’s centre of gravity change as a result of the scrubber, its sailing characteristics remain the same. The efficiency of the installation is further increased by the fact that the increase in weight is very small. The washing water cleaning system additionally ensures that on board storage of the waste destined for land does not actually reduce the vessel’s cargo capacity. Langh Ship is planning to install scrubbers in its four other vessels. The method will also be made available to others: “This has been such a success that we believe others may be interested in it too,” says a pleased Langh-Lagerlöf.


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South Stream Transport B.V. shareholders confirm terms and conditions of South Stream’s offshore section construction Shareholders of South Stream Transport B.V. held a meeting where they discussed and confirmed the implementation of a number of the Shareholders Agreement terms and conditions, including the company’s long-term business plan draft approval and the Gas Transmission Agreement between Gazprom Export and South Stream Transport B.V. Shareholders Meeting confirmed the decision to continue the large-scale construction of South Stream’s four offshore gas lines with a total throughput capacity of 63 billion cubic meters, as well as shareholders’ financing provision in the amount needed for building South Stream’s offshore section.

LNG Tanker Set to Receive Rush of New Supply | NEW YORK NYC-based

PIRA Energy Group reports that LNG tanker is set to receive rush of new supply. In the U.S., regional prices largely tracking benchmark Henry Hub. In Europe, the LNG contract/storage relationship becomes central to European supply outlook. Specifically, PIRA’s analysis of natural gas market fundamentals has revealed the following:

1. LNG Tanker Set to Receive Rush of New Supply

The tanker market is in the midst of a supply surge ahead of new liquefaction from next year. Until that new supply begins to roll out from 2H14 from Australia and Papua New Guinea, we should expect a much weaker market for spot tankers. But what should happen in LNG shipping often does not. After probably the weakest year in modern LNG shipbuilding history, in which a single vessel was delivered in 2012 (boosting rates to never seen before highs last year, combined with nuclear outages in Japan), some 10 vessels have been delivered through September and 13 more are on the books for 4Q, which should have a mitigating effect on relatively high LNG spot charter day rates.

Excelerate Energy Performs 500th Ship-to-Ship Transfer of LNG Excelerate Energy L.P. (Excelerate) completed its 500th commercial Ship-to-Ship (STS) transfer of LNG on September 23, 2013 in Escobar, Argentina at the GNL Escobar LNG import facility. Using Excelerate Energy’s regasification vessel, Exemplar and the conventional LNG carrier SCF Arctic, 61,839 cubic meters of LNG were transferred using the double-banked LNG transfer system. Since developing and implementing the first STS transfer of LNG in 2005, Excelerate has successfully transferred a total of 53,311,335 cubic meters using its STS protocol – of the 500 operations, 424 have been with third-party vessels. With this unprecedented milestone, Excelerate has not only proven the commercial viability of such operations, but has demonstrated that STS transfers of LNG can be successfully performed in a wide range of environments including open ocean locations and protected bodies of water at a variety of locations between the LNG load ports and the market delivery points. Excelerate’s STS transfer system optimizes the capabilities of FSRUs by providing an efficient mode of delivering a continuous supply of natural gas to market.


online

lngShip13 HH Sheikh Ahmed with DDW and Shell officials

His Highness Sheikh Ahmed attends Prelude FLNG Turret Module delivery ceremony

| DUBAI The first Module, the bogie support structure, standing 22 metres high, with a diameter of 30 metres and weighing 1300 tonnes will be transported to Korea to integrate with the Prelude FLNG vessel. Other modules will soon follow. The Prelude FLNG unit will be 488-metres long and when fully loaded will weigh more than 600,000 tonnes. It will be the largest structure ever sent to sea displacing as much water as a fleet of six aircraft carriers. The vessel is to work at the Prelude offshore field 200 kms from the Australian coast. The turret for Prelude FLNG is the biggest turret ever built and over 800 workers are engaged in its construction. The turret is being built in five modules which when put together will weigh in at 10,500 tons. The first steel cutting took place on May 5, 2012.

Qatargas and E.ON sign Five-year Sales and Purchase Agreement

| DOHA - QATAR Qatar Liquefied Gas Company Limited (4) (Qatargas 4) and E.ON Global Commodities SE (E.ON) today signed a flexible SPA for five years starting in January 2014 and covering a volume of approximately 1.5 million tonnes of LNG per year. The LNG will come from Qatargas 4 (Train 7), a joint venture between Qatar Petroleum and Shell, and will be delivered on-board Q-Max LNG vessels to the Gate LNG Terminal in Rotterdam, Netherlands. His Excellency Dr. Mohammed Bin Saleh Al-Sada, Minister of Energy & Industry and Chairman of the Board of Directors of Qatargas, signed the SPA on behalf of Qatargas 4, while Christopher Delbrück, CEO of E.ON Global Commodities SE, and Richard Baylis, Director of LNG, E.ON Global Commodities SE, signed on behalf of E.ON. Klaus Schäfer, CFO of E.ON SE, also took part in the ceremony in Doha.

Qatargas delivered its first LNG cargo to The Gate receiving terminal in Rotterdam in the Netherlands in July of this year under a Master Sales and Purchase Agreement (MSPA) signed between the two companies in 2011.

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hile on official visit to France, His Excellency John Dramane Mahama, President of the Republic of Ghana, was welcomed earlier today by Thierry Pilenko, Chairman and Chief Executive of Technip, at the Group’s Headquarters in Paris. During this meeting, the Ghanaian delegation and Technip’s management discussed the booming development of the oil and gas market in Ghana, as well as Technip’s activities and projects.

Chevron and Tohoku Electric Sign Wheatstone LNG Agreement |

CALIFORNIA Under the agreements, Chevron subsidiaries, together with subsidiaries of Apache Energy and Kuwait Foreign Petroleum Exploration Company, will supply Tohoku with 0.9 million tonnes per annum of LNG for up to 20 years. The Wheatstone Project is located at Ashburton North, 7.5 miles (12 kilometers) west of Onslow in Western Australia. The project will consist of two LNG trains with a combined capacity of 8.9 million tonnes per annum and a domestic gas plant. Joe

Geagea, president, Chevron Gas and Midstream, said, “These agreements with Tohoku create a new partnership between our companies and demonstrate the benefits of buyers and sellers working together to ensure supply is brought to the market to meet growing LNG demand.” Roy Krzywosinski, managing director, Chevron Australia, said, “We welcome the agreements with Tohoku, which mean that 85 percent of Chevron’s equity LNG from Wheatstone is now committed to customers in Asia on a long-term basis. These agreements, combined with our ongoing exploration success, demonstrate that our Wheatstone and Gorgon projects in Australian are well-placed to meet the growing demand for natural gas in the Asia-Pacific region.”


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Steeper Energy and Aalborg University help the Port of

Frederikshavn produce sulfur-free marine fuel Partners in the world’s first biorefinery for sustainable marine fuel

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he Port of Frederikshavn and Steeper Energy, along with Aalborg University has entered into a partnership to establish the world’s first biomass-based plant to produce a sustainable marine fuel. The plant will produce sulphur-free fully renewable fuel for the several thousand vessels passing through the port annually. A new zero-tolerance law on sulphur content as well as the general acceptance that every part of society must do its part for climate change are the keys for success, according to the consortium.

even Canada. This will be brought to the port by ship, making use of already existing biomass handling facilities at the port.

Based on our research plant at Aalborg University and on-going project activities of Steeper Energy to establish a pilot-scale plant in Alberta, Canada, the technical challenges and risk involved in a plant in Frederikshavn will be significantly reduced, paving the way for a full scale commercial plant in Denmark, says Lasse Rosendahl, professor at Aalborg University, Department of Energy Technology.

Although the project will be established on a single feedstock, the plant design will accommodate the results of the research at Aalborg University. However, by building a solid business case on wood, we can focus on establishing a well functioning plant delivering a sustainable marine biofuel. Once this has been achieved, we can start thinking about extending the input range as well as considering a wider product portfolio, if this seems opportune, says CTO at Steeper Energy, Steen B. Iversen.

A new regulative effectively reducing the permissible sulphur content in marine fuel to zero be come into effect as of January 1, 2015, in what is known as SECA regions – Sox Emission Control Areas. This will force fleet operators in regions such as the North Sea and the Baltic Sea to either install flue gas cleaning equipment on board, or switch to a sulphur-free fuel. With current options this corresponds to annual expenditure increases of several hundred million Euros. According to CEO at the Port of Frederikshavn, Mikkel Seedorf Sørensen, the port could potentially serve a marine fuel market of at least 900,000 tons a year. This will not only be significant for the future customers to the sustainable marine fuel, but will also create jobs and bring more traffic into the port, says Mikkel Sørensen. Some 100,000 vessels annually pass the strait around Skagen either south- or northbound, and several of these will seize the opportunity to acquire sulphur-free fuel here. He emphasizes, that the new fuel will be a drop-in fuel, and thus be able to mix into what may be in the tanks already. The size of the plant is initially set at around 50-100,000 tons fuel annually, and will only cover a part of the potential market. To produce this, some 2-3 times as much wood will be sourced from locations such as Russia, the Baltic nations, Sweden, Finland or

In the longer term a research effort will be directed at mixing in locally sourced feedstocks, such as short rotation coppice, manure and straw etc. This will be carried out at the research plant at Aalborg University, where the consequences of mixing feedstocks on product quality and operating conditions will be analysed before implementing this in full scale.

At this stage the project is still in an initial phase, where the main focus is to establish a well-founded business case and feasibility study. The next stage will involve seeking investors and partners for the engineering stage. At the Port of Frederikshavn Havn, the prospects are considered very positive: It will be a major achievement to use waste materials from forestry or paper-pulp industry to produce something which will certainly be a part of the transformation of the marine sector a more sustainable operation. In a longer term perspective, probably also other means of transport. Today approximately 90 million barrels of fuel are used daily – of these, about 11 million barrels for marine and aerial transport, says Mikkel Sørensen. With the flexibility and efficiency we have seen and demonstrated with the hydrothermal liquefaction technology in the lab it is a good candidate for an extremely resource efficient way of utilizing the limited global biomass resource. In the long term it will not only be able to contribute in a very significant way to providing sustainable fuels to the transport sector at a global scale, but also to production of valuable platform chemicals previously produced from fossil sources, says Lasse Rosendahl.


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Significant discovery with Tingu-1 exploration well | AUSTRALIA Horizon Oil advised on 26 September

2013 that a core had been cut in the Tingu-1 exploration well in PRL 21, Western Province, Papua New Guinea and encountered elevated gas readings over the primary target Elevala Sandstone. Since the time of that report the well has been drilled through the secondary target Toro Formation reservoir, where elevated gas readings were also encountered, and into basement at a total depth of 3235m MD, and the first suite of wire line logs, including pressure measurements, run. The forward plan is to conduct a flow test, to obtain further information on reservoir and fluid properties for input to field evaluation and development planning.

LNG Carrier Grace Dahlia Delivered | TOKYO Kawasaki Heavy Industries, Ltd. announced that it has delivered the LNG carrier Grace Dahlia (Kawasaki hull no. 1665) to Nippon Yusen Kabushiki Kaisha (NYK Line). This is the second 177,000 m3 LNG carrier to be delivered by Kawasaki, and is the world’s largest Moss-type LNG carrier currently in operation. The significant increase in LNG carrying capacity that this vessel offers was made possible by expanding the size of the cargo tanks. Kawasaki has made sure the ship-shore compatibility and outstanding propulsion performance of its existing vessels are not affected by this upgrade. To power this vessel, Kawasaki has chosen the Kawasaki Advanced Reheat Turbine Plant (Kawasaki URA Plant), which it developed specially for LNG carriers.

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DF SUEZ is pleased to announce that it has signed a 15-year BOOT (Build, Own, Operate and Transfer) contract with Gas Sayago S.A. 1 for LNG storage and regasification services in Uruguay. Commercial operation of the new terminal is expected in 2015. Located in the Punta Sayago area, close to Montevideo, the offshore terminal, GNL del Plata, will comprise a Floating Storage and Regasification Unit (FSRU) and a jetty, protected by a 1.5 km breakwater.

GE to Provide Close to $600 Million in Turbomachinery Equipment for Russia’s Yamal LNG Megaproject

| HOUSTON GE (NYSE: GE) has received a contract to provide key turbomachinery equipment for the Yamal liquefied natural gas (LNG) “megaproject” that is being developed on the Yamal Peninsula in Russia’s northern Siberia region. The LNG produced at the site will be used to help meet the growing energy needs, primarily of Asia and Pacific Region countries. The LNG megaproject is owned by JSC Yamal LNG, a joint venture between Russia’s largest independent gas producer OAO Novatek (80 percent) and France’s Total SA (20 percent). The project is being implemented in the Arctic zone of Russia, in the Yamal Peninsula, near Sabetta port. The joint venture is building a gas liquefaction facility that will have a production capacity of 16.5 million tons per year, based on the feedstock resources of the South Tambeyskoye gas condensate field. Proved and probable reserves of natural gas (PRMS) of the South Tambeyskoye field exceed 900 BCM (32 tcf). Underscoring its leadership in the LNG sector, GE Oil & Gas is supplying Technip (France) and JGC (Japan) consortium, the LNG plant EPC contractor, with critical turbomachinery equipment for three production lines (or ”trains”), each with the capacity to produce about 5.5 million tons of LNG a year.


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Lngship october 2013