Viking Energy, an LNG-powered offshore supply boat – Courtesy of Eidesvik

DNV has won a contract with the Flemish government to undertake a feasibility study for the provision of LNG bunkering facilities at the ports of Antwerp, Zeebrugge and Ghent in Belgium.

The work will consist of a market survey, a risk and safety analysis, and modeling of the logistics, legal and regulatory requirements needed to establish LNG bunkering infrastructure at the ports. Hazard identification and quantitative risk analysis are key components of DNV’s service and this scope of work covers not only people at the port but the wider community and natural environment.

“The Flemish ports authorities are optimistic about the potential for safe and efficient LNG bunkering operations and DNV’s multi-disciplinary analysis will help them move forward confidently,” says Mohamed Houari, DNV Head of Solutions for Central Europe.

Burning LNG as fuel reduces SOx and particulate emissions by 100%, NOx emissions by approximately 90% and CO2 emissions by approximately 20% compared to heavy fuel oil use.

“Shipowners are working hard to meet the increasingly strict emissions requirements of the Baltic and North Seas and ports are now responding as the popularity of LNG is becoming apparent,” says Torgeir Sterri, DNV Regional Manager Central Europe.

Currently, there are 22 LNG-fueled ships in operation – all classed by DNV. In addition DNV has 18 signed newbuilding contracts and 3 ships scheduled to be converted for LNG fuel.

By 2020 it is anticipated that the majority of new ships will use LNG as fuel, especially short-sea ships operating in Emission Control Areas such as the waters of Belgium. Signs of recognition of this growing market have been seen right across Northern Europe. Norway has so far been the frontrunner, but late October contracts were signed in Brunsbüttel in Germany too where a decision was made to offer bunkering of LNG in the Elbehafen.

The latest contract with the Flemish Government in Belgium is another important step towards promoting LNG as an environmental friendly and available fuel for ships.

DNV has been involved in several projects for LNG import terminals in Europe including Rotterdam’s GATE terminal and has also contributed to ‘A feasibility study for an LNG filling station infrastructure and test of recommendations’ published in October 2011 by the Danish Maritime Authority.

A prerequisite for the widespread use of LNG in shipping globally is a functional and standardized bunkering infrastructure and DNV heads the ISO working group tasked with the development of internationally agreed guidelines.

- By Per Wiggo Richardsen, Det Norske Veritas

The Ice-classed LNG carrier, Ribera del Duero Knutsen, owned by Knutsen OAS Shipping

*Editor’s Note: Changed title to include Northeast Passage, not Northwest Passage as was originally reported.

OSLO (Dow Jones)–Russia has for the first time authorized a Liquefied Natural Gas tanker to sail through its Arctic waters from Europe to high-demand Asian markets, a route that requires about half the usual sailing time, potentially reduces costs and avoids the threat from Somali pirates.

Russia authorized the tanker Ribera del Duera Knutsen to sail along the Northern sea route from the Atlantic ocean to the Pacific ocean, Norwegian shipping company Knutsen OAS Shipping said.

In September, Russian Prime Minister Vladimir Putin said that he sees the future of the Northeast Passage “as that of an international transport artery” able to compete with other maritime routes on both fees, safety and quality.

From Europe, the route is a much shorter way to the Far East than sailing across the Mediterranean Sea and through the Suez Canal, which requires ships to sail through the ‘pirate alley’ in the Gulf of Aden north of Somalia.

It would save a lot of time and money, Knutsen’s Chartering Manager John Einar Dalsvag said, as current LNG rates are at a very high level of about $150,000 a day, so “days are expensive.”

Using the shorter Northern route means sailing in icy Arctic waters from the Barents Sea along Siberia to the Bering Strait, then on to Japan or other countries in the Far East.

Japan’s demand for LNG has climbed sharply after an earthquake and a tsunami knocked out several nuclear power plants in 2011. In December, only seven out of Japan’s 54 nuclear power plants were in operation because of safety concerns. Electricity production has largely been replaced by thermal power plants.

The LNG tanker’s journey along the Northern sea route to Japan would take about 20 days, according to Knutsen OAS Shipping, based in Haugesund, Norway. Due to the icy conditions, the ship must sail the route at some time between June and October, according to the company.

However, the company said the authorization only means the journey is technically possible, as it hasn’t yet signed any contract to deliver LNG by this route.

The Ribera del Duera Knutsen is the only LNG tanker with ICE-1A class notation from classification society Det Norske Veritas, which means it can handle ice thickness of up to 0.8 meters, according to the company.

Knutsen OAS Shipping has “studied all risks”, says Dalsvag, adding that such a journey would require two Russian icebreakers to accompany the ship.

The company said it hasn’t yet calculated what this would cost, or how much time and fuel this route would save them compared to the longer trip through the Suez Canal.

-By Kjetil Malkenes Hovland, Dow Jones Newswires

GG: The world is getting more complicated – and regulatory compliance is a significant challenge. New regulations, regional differences and higher fuel bills have created a new paradigm.  Shipowners are looking for solutions to high ol prices and the need to reduce environmental impact.

GG:  The IMO.  The International Maritime Organization is setting regulations because they want to make sure that it’s a logical, international program rather than one that is addressed on local levels, which can be a little bit more confusing and complicated.  That doesn’t mean that local states can’t decide to make things more stringent. They have been doing a very good job and they have some very difficult issues to handle, maintaining a level playing field and fair treatment for all.

Energy efficiency is very important and it’s a good focus because it not only makes companies more sustainable in the future, it also makes them economically sustainable in the short term.  It allows them to stay in business, save a lot of money and reduce their impact on the environment.

It’s not business-as-usual.

We’re not going to operate the same way we did five years ago, and it’s changing very quickly.  You have to be able to look five or 10 years down the road and say, ‘ok, do I want to develop and modify my fleet so that it’s competitive in five years, or do I want to do the bare minimum, making my fleet obsolete very soon because it won’t be able to compete with the more efficient vessels or comply with the demands of society’?”

GG: Possibly.

RA:  But we’re still in the gigaton range when it comes to the amount of CO2 emitted by the global shipping industry.

GG:  Yes, but you need to look at what your trade transport options are.  Merchant shipping comes out on top, of course, because it moves 90% of world trade by volume. In actuality, it emits a very low CO2 volume per ton-kilometre, which is a more accurate accounting of relative contributions to global emissions.  What shipping companies need to consider is: “is there a way to streamline my operations to make them more fuel efficient”?

If they are able to identify that and make appropriate changes, they will have a lot to be proud of.

RA: I understand you came from the cruise line industry over to Lloyd’s Register fairly recently.  One of the big topics in the commercial maritime industry is the use of LNG … are cruise lines looking at using LNG as a fuel?

GG: Nothing is off the table for anybody these days.  It’s of course very daunting to look at the infrastructure and some of the associated challenges of LNG propulsion and, also, what do your stakeholders really think about LNG on cruise ships?  So they need to look at that and balance it.  I think they are all looking at different options and they are willing to try a lot of different methods to be compliant.

LNGC Celestine River, Image courtesy K Line LNG

RA:  You have ferries that carry a couple hundred cars full of gasoline, and it seems ridiculous that people are afraid of having LNG on board considering it’s far less volatile than gasoline.  Where did this misconception come from and how do we get past this?

JF: I wish I could give you a pithy response, but the truth is that incidents in the past have allowed people with little knowledge of the industry to show pictures or make simple statements to the detriment of the industry.  In one case in the ‘40s, an LNG tank  in Cleveland collapsed due to the poor cryogenic strength of the steel.  The LNG ran into the sewers and the vapors rose into the homes.  Several fires ensued, killing many families and leaving the area looking like it had been bombed.  That couldn’t happen today because the sewer systems are designed differently and the metallurgy of the materials used in LNG tanks allows it to withstand the cryogenic temperatures it may be exposed to.

Right after 9-11, an enterprising reporter determined that the loaded LNG ship in Boston held the same amount of energy that was released by the Hiroshima atomic bomb.  The math was correct, but the time it would take to release of the energy — that was never mentioned — would be about a nanosecond for the bomb and maybe a month for the ship.  But, it was a quick answer and it stuck.

Despite the nay-sayers, the LNG industry will continue to use the best science and technical engineering for construction, the best risk-analysis tools for operation and the best training available.  The dedicated men and women that build and operate LNG facilities of all sorts are providing this country with a cleaner and more efficient energy [than heavy fuel oils].

It’s pretty hard to be against that.

LNG is an exciting fuel with great potential in certain applications.  It’s not necessarily the fuel of the future, but it’s certainly a fuel of the future.

Ginger Garte, Environmental Business Development Manager – Lloyd’s Register North America, Inc.

Ginger has been active in the marine industry for over 18 years.  She obtained her Geology degree from Virginia Polytechnic Institute and in 1994 was selected to serve as a U.S. Commissioned Officer with the National Oceanic & Atmospheric Administration (NOAA).  Upon completion of Officer Training School, Ginger served for five years onboard NOAA’s research vessels and at shore side laboratories. She worked as superintendent for seven years at Carnival Cruise Line’s in the Environmental Health and Safety Department and as the senior analyst for five years at Royal Caribbean Cruises Limited, within the Environmental Stewardship Department.  Now at Lloyd’s Register, North America, Inc., Ginger is primarily responsible for meeting clients’ environmental needs throughout the industry.

The LNG ship will be delivered to the shipper by February 2015, said a spokesman for STX Group, who didn’t identify the client’s name.

-By Kyong-Ae Choi, Dow Jones Newswires

The proposals will be opened Aug. 25, with a final selection of the winning design expected Oct. 31, Gas and Energy Director Maria das Gracas Foster said. The three bids were from a consortium of Technip, Modec and JGC; SBM and Chiyoda; and Saipem.

The floating liquefaction plants would liquefy natural gas produced hundreds of kilometers offshore at the recently discovered ultra-deep-water fields known as the pre-salt.

Floating LNG plants serve as “an alternative” to traditional submarine pipelines, Foster said. Initial natural gas output will be delivered to shore via pipeline, with the first possible use of floating LNG plants likely no sooner than 2016, she added.

-By Jeff Fick, Dow Jones Newswires

EXMAR :

• Flanders Liberty – 84,597 CBM – built 2007 BW Hugin – 35,000 CBM – built 2002
• Flanders Loyalty – 84,631CBM – built 2008  BW Helga – 35,058 CBM – built 1994

BW Gas 

• BW Hugin – 35,000 CBM – built 2002
• BW Helga – 35,058 CBM – built 1994
• BW Hedda – 35,058 CBM – built 1993
• BW Sombeke (50%) – 38,000 CBM – built 2006 (which results in Exmar holding 100% ownership)

The settlement will include a cash contribution of USD 35 million payable by BW Gas to EXMAR.   The vessels are scheduled to be delivered to their respective owners between 15th August and 30th September 2011.

The transfer of the VLGC’s goes together with the novation of time-charters to BW Gas, the midsize vessels will remain dedicated to existing North Sea LPG contract commitments to be further performed by EXMAR.

EXMAR has a proven track record in LPG shipping in general and wishes to dedicate its maritime gas expertise to support the future needs of the North Sea based LPG industry in particular. This investment allows EXMAR to reinforce its focus on the “Midsize” LPG/NH3 segment as a core business.

BW Gas is the largest owner and operator of LPG (liquefied petroleum gas) carriers and one of the largest independent owners and operators of LNG (liquefied natural gas) carriers.

This transaction will generate a book loss for EXMAR of about USD 25 million that will be accrued for at 30th June 2011.

Many opponents of the facility boasted a victory to the state, claiming that the facility would have been an environmental nightmare. According to a former Rhode Island Attorney General Patrick Lynch, ships delivering LNG would risk “tearing up our waterways”.

Hess claims that the opposition had no bearing on their decision to pull the plug on the proposed terminal. They say that their decision is based on the higher price of imported gas vs. the cheaper and recently much more available shale gas found right here in North America. At this point it is not economical for them to build a brand new facility designed to  import an ultimately more expensive product.

And who can blame them….

The plans for a facility in Fall River were drawn up long before new shale gas extraction techniques such as hydraulic fracturing and horizontal drilling, that have made production of the gas a viable option. When this project was first proposed, it was commonly believed that the US couldn’t “drill their way out” of an energy shortage.

However, with significant advancements in technology, we essentially have.

According to the Energy Information Administration, the amount of recoverable shale gas has increased by 134 percent in one year, since 2010. The EIA says that as of 2009, shale gas accounted for 14% of the total US natural gas supply. They expect that by 2035, that number will increase to 45%.

So for now, the battle is on hold.

As long as shale gas production continues be a viable option, there is no need to pursue the business of LNG shipping on local waters. The argument ends with no clear winner. However, the opposition gets a bay free of LNG ships, and Hess Energy gets access to a newly recoverable product.  In the end, both sides of the argument got what they wanted: cheaper gas.

SEOUL –  South Korea’s Hyundai Samho Heavy Industries has inked an order for two 164,000m³ LNG carriers with Greece’s Maran Gas, an LNG division subsidiary of Angelicoussis Shipping Group. 
The shipbuilder said Sunday that the price for the membrane type LNG carrier is $200m per ship. 
The pair is set for delivery in December 2013 and April 2014 each. 
The contract includes two options and Hyundai Samho expects more orders to be firmed up.

DOHA — Qatar, the Persian Gulf emirate that is the world’s largest exporter of liquefied natural gas, is poised for a sharp rise in the value and volume of its exports of the super-cooled fuel this year, benefiting from the troubles in Japan’s nuclear industry and from surging demand for energy elsewhere in Asia.

With a quarter of Japan’s nuclear production shut down by the devastating earthquake and tsunami in March, that country’s power companies have agreed to buy an extra four million tons of LNG from Qatar over the next year and are in talks to purchase additional volumes, Qatar’s energy minister, Mohammed bin Saleh Al Sada, said last month. Surging demand for natural gas in China — keen to switch from polluting fuels such as oil and coal amid strong economic growth — is also positive for Qatar.

“Post Fukushima, there will be a lot of opportunities,” said Fatih Birol, chief economist for the International Energy Agency. “Japan and Korea have new long-term contracts in the next four years, and China demand is booming — as of 2015 they will have to import as much as Europe today.”

Qatar sits on the third-largest natural-gas reserves in the world, after Russia and Iran, with its offshore North Field containing an estimated 900 trillion cubic feet of gas.

Mostly as a result of greater Asian demand, Qatar’s LNG exports are expected to rise to 73 million tons this year, 30% above the 56 million tons exported in 2010 and close to the country’s installed export capacity of 77 million tons, according to projections from the commodities consultancy Wood Mackenzie.

And prices for LNG are rising, after being depressed in recent years by the development of massive shale-gas reserves in the U.S. and Canada, which stymied the hopes of Qatar and other exporters to supply large quantities of natural gas to the North American market. With higher volumes and rising prices, the value of Qatar’s LNG exports is expected to jump at least 43% to over $30 billion in 2011, from $21 billion last year, according to estimates from Samba Financial Group, a Saudi bank.

Qatar is already exporting around 60% of its LNG to Asia, Energy Minister Al Sada has said, a figure that is expected to rise as the country prepares to reach full export capacity by the end of 2011, according to Erik Nikolai Stavseth, an analyst at Norway’s Arctic Securities ASA.

The surging demand for natural gas is fueling a boom in the local economy, which is also gearing up for massive investments in infrastructure ahead of hosting the soccer World Cup in 2022. Qatar’s real GDP growth hit a stellar 16% in 2010 and is set to accelerate even further, to 20% this year, according to the International Monetary Fund.

With natural-gas demand rising in Japan, China and other Asian countries, and no new, large-scale LNG projects due to come on stream for five to six years in the Asian-Pacific region, the supply-demand balance is tightening, according to market analysts.

“The Pacific basin market was going to be short over the next five or six years even before what happened in Japan, so now you’ve got an uplift in demand — it just exacerbates that situation,” said Frank Harris, an LNG expert at Wood Mackenzie. “It increases the probability that Qatar will be able to secure some additional long-term deals in the Asian market,” Mr. Harris said, adding that LNG demand in the Pacific basin will rise to 241 million tons in 2020 from 138 million tons in 2010.

LNG prices have risen in the Asian market this year, averaging $11.60 per million British thermal units in May, up nearly 30% from January this year, according to import data calculated by IHS CERA.

By Alex Delmar-Morgan, 2011 Dow Jones & Company, Inc.

LONDON (Zawya Dow Jones)-State-run Qatargas said Friday it delivered its first shipment of liquefied natural gas, or LNG, to Thailand, as demand for the fuel climbs in fast-growing Asia.

The Golar Viking LNG tanker left the Qatari industrial port of Ras Laffan May 17, carrying 131,000 cubic meters of the gas-cooled-to-liquid. It was received at the Map Ta Phut LNG Terminal in Thailand, according to an emailed statement from Qatargas.

Qatar is the world’s largest producer of LNG with the capacity to export 77 million metric tons annually.

-By Alex Delmar-Morgan, Dow Jones Newswires