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2015 • A supplement to LNG World Shipping

“We are now well beyond the chicken-and-egg situation. If we are the chickens, the chickens are ready.” Stefaan Adriaens, commercial manager, Gate Terminal, see page 14


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2014 • A supplement to LNG World Shipping

2014 • A supplement to LNG World Shipping

carried by experience

We turn great ideas into real energy. Leading the industry in floating LNG solutions.

SNRI celebrating 50 years of cryogenic expertise SNRI_cover.indd 1

“As part of our effort to continuously improve our LNG carrier repair service, we listen to our clients’ feedback and make sure our organisation does something with it!” Jos Goris, managing director, Damen Shiprepair Brest

15/07/2014 10:28

www.excelerateenergy.com

“Our floating LNG play is not limited to production vessels. We are also committed to regasification units and willing to invest in infrastructure to open up new markets.” Maarten Wetselaar, executive vice president of Shell’s integrated gas business

One of the world’s leading seabourne transporters of liquid gas “While prospective LNG-fuelled vessel owners may have access to capital, our solution helps them with capital resource efficiency using a classic capex to opex model.” Pace Ralli, co-founder, Clean Marine Energy


contents

May 2015

06 More shipping companies are booking LNG-powered tonnage

comment  5 LNG bunkering extends its reach

analysis  6 LNG World Shipping’s in-house data shows slow but steady growth in vessels able to use gas as marine fuel

statistics 14 Can Europe’s waterways support an LNG supply chain? (credit: Joe Dunckley)

 8 LNG-fuelled vessels in service and on order

distribution 14 Plans are under way to deploy greener barges on Europe’s major rivers and to expand the LNG supply chain inland 16 Vienna-based ProDanube is co-ordinating the master plan for an LNG artery across Europe

small-scale infrastructure 22 North America pioneers such as TOTE and Harvey Gulf are breaking new ground

34 Turkish cryogenic specialist Karbonsan posts double-digit growth in sales and turnover

bunkering arms 26 Sweden’s Mann Tek marks a technical breakthrough in North America

bunker vessels 28 Developing LNG as vessel fuel will require purpose-built vessels to supply the gas – but who has the confidence to move first?

contracts 31 Lawyer Peter Roberts explains why the devil is in the detail when it comes to LNG breakbulk shipping contracts

14 Gate Terminal sees growth in European small-scale demand

profile 34 Karbonsan vice-chairman Turgay Karacalar outlines the Turkish cryogenic specialist’s mid-term opportunities

Small-Scale LNG 2015

1


contents LNG distribution

Published in May 2015

37 Madeira gas-supply venture offers a template for other remote but energy-hungry islands

interview 38 LNG will transform the whole maritime industry, argues Society for Gas as a Marine Fuel general manager Mark Bell

Editor: Karen Thomas t: +44 20 8370 1717 e: karen.thomas@rivieramm.com Consultant Editor: Mike Corkhill t: +44 1825 764 817 e: mike.corkhill@rivieramm.com

bunkering equipment

Sales Manager: Ian Pow t: +44 20 8370 7011 e: ian.pow@rivieramm.com

41 FMC develops the world’s first LNG bunkering arm for Shell

news

Production Manager: Richard Neighbour t: +44 20 8370 7013 e: richard.neighbour@rivieramm.com

43 All the latest developments in small-scale LNG shipping

viewpoint 48 ABS Gas Solutions’ Stavros Niotis looks at how vessel designs and containment systems are evolving to support smaller shipments

coming up The next bimonthly issue of LNG World Shipping is the May/June issue: • Have we got FSRUs for you; an exclusive infographic showing today’s floating storage and regasification units and future projects • Highlights from the annual International Group of LNG Importers (GIIGNL) report • Equipment for ice-class operations • Why LNG shipmanagement firms need creative new ways to recruit and retain seafarers • Ship-to-shore jetties and mooring equipment • Area report: Scandinavia follow LNG World Shipping on Twitter: @LNGkaren

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ISSN 1746-0603 (Print) ISSN 2051-0616 (Online) ©2015 Riviera Maritime Media Ltd

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Total average net circulation: 4,000 Period: January-December 2015


comment

Bunkering solutions extend LNG supply chain into new realms Mike Corkhill, consultant editor

Viking Grace is setting the pace – burning 23,000 tonnes of LNG a year

N

atural gas is not only the cleanest-burning fossil fuel but is available in sufficient quantities to last for 100 years at current consumption rates.

These two factors are driving an extension of the LNG

supply chain into parts never reached before.

The total of LNG-powered ships on order has grown even more quickly, by 42 per cent to 81 vessels. The current orderbook contains vessels that are, in general, larger than those in service, and features two lowspeed dual-fuel engine technologies for the first time.

Remote locations not linked to pipeline grids are

The new propulsion systems provide improved efficiencies

anxious to take advantage of the environmental and

compared with existing gas-burning marine power trains and

cost benefits offered by gas and LNG is proving to be the

will no doubt add to the attractions of LNG bunkers.

optimum delivery option.

The use of LNG as marine fuel presents cost challenges

The use of LNG as fuel in high-horsepower applications,

that extend beyond the LNG itself and shipboard gas-

including as a means of powering seagoing and inland

burning propulsion systems to encompass the LNG

waterway vessels, is a key driver in the nascent spread of this

bunkering infrastructure.

small-scale gas network.

Orders for five LNG bunker vessels, the world’s first

Significant infrastructure developments have taken place in ports ringing the North and Baltic seas in recent years and

such ships, placed over the past 10 months constitute an important milestone.

similar projects are getting underway in North American

They will not only streamline bunkering logistics for

waters. These three zones constitute the current ledger of

the new generation of larger LNG-fuelled ships but provide

IMO emission-control areas (ECAs), where the tightest

a springboard for further supply chain cost reductions and

restrictions governing ship atmospheric pollution apply.

additional newbuilding orders.

The LNG-powered fleet continues to grow, albeit not

The cause of LNG as marine fuel is also set to gain

quite at the rates some industry watchers were predicting as

support from a tightening regulatory regime. The draft of

recently as 18 months ago.

the International Code of Safety for Ships using Gases or

The list of LNG-powered ships in service that LNG

other Low Flash-Point Fuels (IGF Code) was approved

World Shipping itemises from page eight of this year’s small-

in principle at the 94th session of IMO’s Marine Safety

scale LNG supplement shows that this fleet expanded by

Committee (MSC94) in November 2014.

27 per cent over the past 12 months, to reach 66 vessels by 1 May 2015.

The instrument is scheduled to be adopted at MSC95 in June 2015 and to enter into force in January 2017. LNG

Small-Scale LNG 2015

5


analysis

LNG-fuelled fleet makes slow but sure progress LNG as marine fuel faces stiff competition and progress has been slower than envisaged, writes Mike Corkhill. But the growth fundamentals are in place

T

he buoyant forecasts of two or three years ago on the number of LNG-powered vessels that would be in service by 2015 will not be met.

The capital costs associated with a commitment to

LNG fuelling have been a key determining factor, and the drop in the price of oil over the past 10 months has not helped the promoters of LNG as marine fuel. The relatively slow build-up in LNG bunkering infrastructure has also prompted a number of shipowners to consider other fuel solutions.

Terntank is building four 15,000 dwt tankers that will be

Stricter requirements on emissions of sulphur oxides

propelled by Wärtsilä RT-flex50DF two-stroke engines

(SOx) entered into force in International Maritime Organization (IMO) emission-control areas (ECAs) on 1

streams collected on board. As of 1 February 2015 the

January 2015.

fleet of in-service and on-order vessels opting for scrubbers

Based on capital costs, fuel availability and fuel price, shipowners have three realistic ways of meeting the ECA

LNG-fuelled fleet in terms of ship numbers.

restrictions. LNG is one of them, the other two being

By far the most popular fuel solution for the shipping

the burning of low-sulphur marine diesel oil (MDO) and

industry for its vessels when sailing in ECAs has been,

the continued consumption of heavy fuel oil (HFO) on

and will continue to be for the foreseeable future, the

vessels fitted with an exhaust gas scrubber.

consumption of MDO.

Scrubbers come with their own investment costs

The recent fall in oil prices has reduced the disparity

and operational challenges such as disposal of the waste

in LNG and MDO prices and the refining industry has had no problem producing low-sulphur distillates in the

LNG-POWERED FLEET BY SHIP TYPE, 1 MAY 2015

quantities required.

In service

On order

The biggest challenge for the MDO fraternity is

Passenger car ferries

27

16

likely to come in either 2020 or, more probably, in

Platform supply vessels

14

12

2025, when the reduction in the global sulphur cap,

Container ships

20

from 3.5 per cent to 0.5 per cent, comes into force.

Gas carriers

2

10

The ability of refiners to produce sufficient quantities

Ship type

Inland waterway vessels

6

2

of marine bunker MDO worldwide without major

Tugs

4

7

alterations to their crude oil distillation processes will

Product/chemical tankers

1

8

be open to question.

Ro-ro/cargo

6

1

In addition, by that time oil prices are expected to

Car carriers

2

have rebounded while LNG, thanks to plentiful gas

Patrol vessels

4

reserves worldwide and a much more extensive bunkering

Bulk carriers

1

infrastructure, is likely to remain competitively priced.

Others

2

2

LNG World Shipping’s list of LNG-powered ships

66

81

beginning on page 8 shows 66 such vessels in service and

Total

6

stood at approximately 150, putting it on a par with the

Small-Scale LNG 2015


analysis

81 on order, up from 52 and 57, respectively, featured in our tabulation of 12 months ago. Considering the fuelprice shifts and geopolitical uncertainties of the past year, this year’s totals represent a healthy jump. As shown in the LNG-powered fleet by ship type table opposite, what is notable in the 2015 summations is the extent to which shipowners contracting container ships, product/chemical tankers, tugs and gas ships that are not LNG carriers have opted for LNG fuel. Not shown in our tabulations are several container ships and tankers that have recently been ordered that will be built to an LNG-ready specification. These include more than 20 very large container ships with capacities in excess of 18,000 TEU. Some are skeptical that such vessels will ever have

TOTE’s inaugural Marlin-class container ship will be the

the modification work needed to enable burning of

first vessel in service with an ME-GI propulsion system

gas, but certain favourable conditions may dictate otherwise. These are the likely presence of several

go into service in late 2015, sailing between Florida and

strategic LNG bunkering stations on the longhaul

Puerto Rico. The newbuilding, the first of a pair, will

routes, the introduction of the global sulphur cap

mark significant milestones for both LNG as marine fuel

and the rebound of oil prices.

and the shipping industry in general.

The other distinctive feature of the LNG-powered

It will also signal the start of the performance

fleet orderbook is the fact that the ships are, on average,

record of gas-burning low-speed engines in service –

considerably larger than the in-service vessels.

shipowners will be monitoring the data accumulation

In general terms the newbuildings are more likely

with interest.

to require refuelling by dedicated bunker vessels than

Supporters of LNG-powered ships may have had to set

the existing ships, which take on their relatively limited

their sights lower in recent months but there is no denying

quantities of LNG via jetty-side transfers from road

the groundswell of momentum building in favour of this

tankers or from shoreside fuelling stations.

fuel option.

Since July 2014 five LNG bunker vessels have been

The coverage of small-scale LNG developments in

ordered and these will add an important new dimension

this supplement and in regular issues of LNG World

to the global infrastructure required to support gas as

Shipping highlights the myriad bunkering infrastructure

marine fuel.

projects now under way and planned. And most oil-

Another critical component of the evolving gas fuelling network is the coastal LNG distribution tanker – there are five such vessels on order that will complement

patch gurus are predicting a rebound in crude prices sooner rather than later. The LNG optimists believe there are more cards stacked in their favour than against. LNG

the 14 in service. The emergence of larger LNG-powered vessels is also reflected in the engine choice for the ships on order. Recent advances in propulsion technology have made

LNG-POWERED FLEET BY ENGINE TYPE, 1 MAY 2015 In service

On order

Gas only

29

4

MAN Diesel & Turbo (MDT) has stepped in with

Dual-fuel medium-speed

26

42

its high-pressure gas-injection ME-GI units and Wärtsilä

High-pressure low-speed dual-fuel

15

Low-pressure low-speed dual-fuel

10

11

1

9

66

81

dual-fuel low-speed engines realistic options for gasburning ships.

is offering its low-pressure RT-flex50DF two-stroke engine. Both offer significant efficiency improvements over medium-speed dual-fuel engines and have made significant breakthroughs. The first vessel to be propelled by ME-GI engines – a Marlin-class 3,100 TEU container ship for TOTE – will

Engine type

Gas + oil Not yet known Total

Small-Scale LNG 2015

7


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Sslng 2015 sample  

LNG World Shipping published its most recent Small Scale LNG Supplement in May 2015. The supplement augments the small scale LNG coverage th...

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