2008 norton rose lng shipping

8/3/2019 2008 Norton Rose LNG Shipping

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LNG SHIPPINGLNG SHIPPINGNorton Rose

23 AprilOlga Vedernikova


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LNG Shipping Solutions for Norton Rose 2008 2

IntroductionIntroduction

History on LNG shipping What makes it different Fleet size

Types of ships Who builds what and where

Propulsion systems Innovation

Safety record


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W hat makes LNG ShippingW hat makes LNG Shipping

differentdifferent It is only 40 years old

Ships generally built against long term contracts Little or no surplus tonnage = no spot market

availability (although today not the case)

Lead time for new ships about 4 yrs High capital cost: about twice VLCC Mainly steam turbine propulsion Few experienced shipowners The product needs respect


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First MossFirst Moss


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Speculation ships for BPSpeculation ships for BP


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Liquid cargo at

T=-163C

Cryogenic liner composed of:

-primary & secondary membranes

-load bearing cryogenic insulation D o u

b l e h u

l l s

h i p s

t r u c

t u r e


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First CS1 and DFDEFirst CS1 and DFDE


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The LN G fleetThe LN G fleet

Existing Fleet 266 ships Orderbook 126 ships Total 392 ships

Fleet size: 266 ships

155 Membrane 99 Moss 8 Other 4 fully pressurised

On Order: 126 ships 99 Membrane 13 Moss 4 SPB

10 semi-pressurisedSource: LNG Shipping Solutions research

Fleet Growth

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Fleet s o y Delivery


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Delivery ScheduleDelivery Schedule

Delivery Schedule

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LNG tanker parametersLNG tanker parameters -- RecentRecent


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LNG tanker parametersLNG tanker parameters -- RecentRecentdevelopmentsdevelopments

Containment system: Membrane systems dominant. Moss vessels only built by Japanese yards. HHI

has cut up its jigs for Moss tank manufacturing BUT, Moss revival due to problems with CS1 / Mark III vessels? NO96 in strong position due to problems with CS1 / Mark III vessels

Propulsion: Traditional steam turbine propulsion challenged by alternatives Dual Fuel Diesel electric new standard (APM, Bergesen, BP, Chevron, Gaz de

France, K Line, MOL, Teekay, MISC) Slow speed diesel with reliquefaction (only ExxonMobil/Qatar)

Gas Turbine orders yet to be placed Cargo capacity :

Increasing Standard ship size now ~ 155,000-165,000 cbm LNG capacity West of Suez Max ~ 165-177 kcbm?

ExxonMobil/Qatar taking deliveries 216,000 cbm: Q flex QatarMax ~ 260,000 cbm with slow speed diesel with reliquefaction but

for single destination trade in original thought process: they now wantto change all terminal s to accept these ships!

Source:


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Propulsion SystemsPropulsion Systems

Steam

Dual fuel Diesel Electric Slow speed diesel with re-

liquefaction Possibly gas turbine


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Propulsion alternat ives: 1 SteamPropulsion alternat ives: 1 Steam

Steam turbine Burns a combination of boil off gas (2/3) and HFO (1/3) Low fuel efficiency of about 27% High fuel consumption of about 180 tonnes 380 cst equivalents per day (150 kcbm

vessel)

Fuel heats water to boiling point steam propels steam turbine which is connected topropeller through reduction gear

Originally chosen in the 1960s as a reliable but fuel inefficient system. LNG Industry has stuck to technology until today no one has wanted to be first

with other propulsion but now GdF and BP have Diesel Electric vessels on order

and Exxon has Slow speed diesel with reliquefaction on order All other shipping segments abandoned steam turbine after the 1970s oil crisis

Steam turbine has become outdated for several reasons Kawasaki and Mitsubishi only steam turbine manufacturers in the world with total

annual capacity of 24 turbines per year not enough at present growth rate of

LNG shipping High oil and gas prices Little fuel saving when slow speeding However a fight back underway with new Re-heat or Ultra steam

Operating costs of steam turbine LNGC approximately USD 13,500/day


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Propulsion alternatives: 2 DFDEPropulsion alternatives: 2 DFDE Dual Fuel Diesel Electric

Diesel engines burn boil off gas with marine diesel oil as a pilot fuel engines connected to electricity generators which power electric motorswhich power propeller

Engines can run on 100% marine diesel or heavy fuel oil as well High fuel efficiency of ~ 43% Good fuel consumption of about 125 tonnes MDO equivalents per day (150

kcbm vessel) High redundancy as several diesel engines and several motors minimize

risk of total break down Big savings when slow speeding as one or several engines can be shut down

Proven technology installed on many new cruise ships Propulsion alternative offers very little emissions and ships carry very little

bunker oil which in case of diesel is also non persistent minimizingconsequences of spills and leakage if involved in serious accident

Any crew can operate the engines

Operating costs of DFDE propelled LNGC approximately USD 15,500/day Small engine room space offers ~ 5,000 cbm extra cargo capacity to steamturbine


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Propulsion alternatives: 3 SSDR Propulsion alternatives: 3 SSDR

Slow speed diesel with reliquefaction Diesel engines which burn HFO are connected directly to propeller Engines can not burn boil off so ship must be equipped with reliquefaction

system High fuel efficiency of ~ 43% Good fuel consumption of about 105 tonnes 380 cst per day (150 kcbm

vessel) Savings when slow speeding as engines work efficiently over a wide range

of speeds Slow speed diesel engines proven technology installed on in excess of 90%

of merchant vessels Reliquefaction plant onboard ship non proven technology. Only exists on 1

vessel, LNG Jamal, for research purposes. Owned by Osaka Gas technicalmanager NYK.

ExxonMobil/Qatar Petroleum to use this system for their Qatar-UK andQatar-US trades

Any crew can operate the engines but who has got the skills to operate

the reliquefaction plant? Operating costs of SSD propelled LNGC approximately USD 14,500/day

LNG vessel development


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Floating LNG projectsFloating LNG projects On-board regasification concept

A submerged buoy connects to the specially designedvessel: Energy Bridge and Neptune

Vessel regasifies LNG onboard and discharges gas overabout 6 days

Interconnecting subsea pipeline ties into thedownstream delivery infrastructure.

First commercial LNG STS completed over the summer2006 Teesside saw alongside discharge of gas early 2007

On-board regasification opportunities No need for onshore installation less permitting and

NIMBY problems Very fast way and low cost to set up LNG imports

infrastructure Can connect directly to onshore pipeline system Conversion of old carriers (Golar) extending life


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Scenic BostonScenic Boston


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Not a new terminalNot a new terminal


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Not so scenic BostonNot so scenic Boston

And the US is w orried aboutAnd the US is w orried about


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And the US is w orried about And the US is w orried aboutterrorist attack!terrorist attack!

LNG hi i i d t t diti lLNG hi i g i d t t diti l


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LNG shipping industry traditionalLNG shipping industry traditionalcomm ercial characteristicscommercial characteristics

Conservative industry which has a strongtendency to favour ship owning companies

established in LNG shipping Politics nationality of shipping company and flag

state often very important Vessels mainly built for LNG plants or LNG buyers

which take them on 20-25 year time charters Ownership of vessel often shared between

several companies

For ship owners not currently active in LNGshipping banks and oil majors normally requirepartnership with LNG ship managementexperienced owner

No pools!: yet!


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LiquefactionLiquefaction

Major talking point for 2008 due to delays andexpense of large shore based projects

Many stranded fields that are too small to justifyhigh land based investment are suitable

Majors dominance of the product is encouragingend users to look at/invest in the small offshoreideas

Technology still needs perfecting and manydoubts on putting the liquefaction on a movingstructure

Flex LNG would appear to have the edge due tothe early shipyard psoitions but what abouttopsides (Chris?)

LNG shipping industry futureLNG shipping industry future


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LNG shipping industry futureLNG shipping industry futuredynamicsdynamics

New buildings now moving into semi-speculative ownersreserve slots without exact charterer lined up: very similarto LPG

LNGCs ordered against medium term charters with ownercarrying residual value risk

New and established LNG shipowners with orders forvessels they only plan to use in the short term market

STASCO launched standard LNG time charter partytargeting short term trade well received in the market

Old vessels coming off 20 year T/Cs becoming available forshort term trade

Oil companies building their own fleets for tradingpurposes

Short term market already a reality and growing quickly: LNG& LPG displaying increasingly similar characteristics

Use and control of LNGC is movingUse and control of LNGC is moving


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from t ramline for projects to flexiblefrom tram line for projects to flexible

trading for gas tradingtrading for gas tradingLNG fleet control situation

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LNG project Available if project T/C not extended Fixed

Open/Shipowner control Major LNG trader control Project as % of fleet if not extended

What is spot trade?


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= spare cargoes + long shipping market + demand from end users

Cargoes: Projects debottlenecking, diversion clauses in existing long term SPAs; Wedge volumes

Equity

Shipping : excessive shipping capacity needed to move the product to price driven

markets like Asia

End user market : has been facilitated by increase in the regas capacity + panic demand :

not always in the same place!

Existing Projects on the Spot:Existing Projects on the Spot:


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Existing Projects on the Spot:Existing Projects on the Spot:

ATLANTIC LN G

E. GUIN EA

DAMIETTA

OMANDAS Is

IDKU

SNOHVIT

NLNG

ARZEW

QATARGAS

NW S

Repsol

MajorsMajors volumes for spot plays in next 3 yearsvolumes for spot plays in next 3 years


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MajorsMajors volumes for spot plays in next 3 yearsvolumes for spot plays in next 3 years

SAKHALINSAKHALIN

TANGGUHTANGGUH Yemen LN G Yemen LN G

SKIKDA

QATARGASRASGAS

k h


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Spot market growth: 2000Spot market growth: 2000 --20072007Since 2000 spot market has quadrupled and so did the routes with newregas terminals coming on stream in recent years and projects sendingcargoes to any high priced markets as at present moment.

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S M kS M k


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Spot M arketSpot MarketSpot Cargo destination for Q1 2008

Atlantic 23%

MED 16%

Asia-Pacific 61%


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Spot M arket Trading ParticipantsSpot M arket Trading Participants

IOCs BG / BP / Shell / Statoil / Chevron Texaco/ Conoco Philips / Repsol /

GDF

NOCs Sonatrach / Petronas / GOSO

Projects NLNG / RasGas / QatarGas / NWS / MLNG / Brunei LNG

Energy Companies

Sempra / Cheniere / RWE / Suez / Constellation / DB Energy / Essent

Traders Vitol / Goldman Sachs / Merryl Lynch / Gazprom / EDF / Sempra

Trading

SS


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SummarySummary Spot market is growing rapidly in price-driven environment.

Today as much as 20-25% of fleet working on a flexible basis

Main drive - to have global reach and maximum applications including offshore

Main challenges getting cargoes and compatibility

Transportation costs are not just a question of charter rate

Offshore activities for both regas and liquesfaction are indicative of thediversion in the industry!

LNG vessels operating in the spot market can be profitable but right size andpropulsion of great importance

shipowner / charterer have to be open-minded and prompt in decisions!

A growth industry such as this needs good reliable shipowners but whorequire sensible charter revenues in order to maintain high quality safeoperations


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Thank you for your attention

With any questions please contact: [email protected]

2008 norton rose lng shipping

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