Two LNG carrier newbuildings fitted with low boil-off rate containment systems and efficient dual-fuel propulsion are taking different paths, one is entering the buoyant spot market while the other is set for long-term charter
Two new LNG carriers – Flex Freedom and GasLog Galveston – could hardly have joined the global fleet at a better time, as spot charter rates go through the roof on the back of mounting LNG demand driven by a bitter Asian winter.
Powered respectively by MAN Energy’s two-stroke high pressure dual-fuel ME-GI engine and WinGD’s two-stroke low pressure dual-fuel X-DF model, the vessels are entering a market in which spot charter rates hit a record US$350,000 /day in mid-January.
Although spot charter rates slipped towards the middle of January, to an average of between US$168,000 and US$172,000 per day West of Suez and between US$158,000 and US$162,000 per day East of Suez (the latter for vessels of between 155,000 and 165,000m³), they still show how much pressure is on the total LNG carrier fleet amid continuing demand for deliveries. Reflecting the sky-rocketing spot market, one-year time charter rates for most modern vessels were hovering around US$49,000 a day.
And demand is not going away. According to Flex LNG, the market for the gas is expected to “more than double in size by 2050, both in ‘business as usual’ as well as in ‘rapid decarbonisation’ scenarios.”
This demand will continue to be driven by Asia. Over the next five years, GasLog told investors in January, it expects LNG demand to grow by 89M tonnes, translating to a compound annual growth rate of 4%. Some 22% of LNG demand growth will come from China and another 53% from other areas of Asia, according to Wood Mackenzie. Other growth will be led by Latin America (9%) and India (6%), while LNG as a fuel will account for 10% of the growth. By 2030, marine fuel is expected to be the fifth largest end market for LNG.
Going to the spot market
Built by South Korea’s Daewoo Shipbuilding & Marine Engineering (DSME) and flying the Marshall Island flag, the 173,400 m³ Flex Freedom went straight to the spot market. Based on AIS data, Flex Freedom was sailing from Gladstone, Australia to the port of Ningbo, China, with an arrival on 30 January, according to Vessel Finder.
Meanwhile, the Bermuda-flagged GasLog Galveston entered a seven-year charter to Cheniere Energy, the Texas-based LNG producer, following its delivery in January. Cheniere also has a long-term charter agreement for GasLog Georgetown, sister of GasLog Galveston. Each LNG carrier has an overall length of 293 m, beam of 46 m and draught of 9.5 m.
One third of GasLog’s consolidated fleet, including GasLog Galveston, is fitted with WinGD two-stroke, low-pressure, dual-fuel X-DF propulsion. The other 24 vessels operated in the combined GasLog Ltd and GasLog Partners fleets have either steam or tri-fuel, diesel-electric propulsion.
“The market for LNG is expected to more than double in size by 2050”
Samsung Heavy Industries (SHI) is building two 180,000-m3 LNG carriers, Hull No 2311 and Hull No 2312, with X-DF propulsion and GTT Mark III Flex + cargo containment systems for delivery in mid-2021.
These vessels have seven-year charter agreements with Cheniere Energy. The first of those, GasLog Wellington, was launched in November, with delivery set for 15 June 2021.
GTT containment systems
The all-important containment systems for Flex Freedom and GasLog Galveston were supplied by France’s GTT, which has continually refined its tanks over the years. The Mark III Flex+ system guarantees a boil-off rate of 0.07% a day, due mainly to an insulation thickness increase to 480 mm.
Publicly listed Flex LNG appears to have found a winning formula with its latest LNG carriers. Flex Freedom is the sister vessel of Flex Artemis and Flex Resolute launched earlier, all three purpose-designed for extended voyages. “These vessels have full reliquefaction systems and are prefect for long-haul routes because they have very low boil off,” Flex LNG senior vice-president finance Thorolf Aurstad, tells LNG Shipping & Terminals. For this latest design, GTT has further reduced the boil-off rate to 0.035%.
“A very efficient vessel with low boil-off makes Flex Freedom particularly attractive in the charter market,” Mr Aurstad explains.
For its latest vessel, Flex LNG preferred the ME-GI power plant, but its next two ships will change to WinGD’s Otto-cycle X-DF engine that allows operators to switch between maritime diesel and boil-off gas. The vessels – Flex Volunteer and Flex Vigilant – are due respectively for delivery in February and May 2021. Mr Aurstad put the decision down purely to customer choice. “Some charters prefer X-DF and some ME-GI – it’s good to have a mix”, he says.
The relative merits of the two types of engines are still up for debate, but the dual-fuel, low speed ME-GI design has gained the support of Korean shipyards and engine builders such as Doosan, Hyundai, Samsung and Daewoo. One of its the secrets of its success is the fuel gas supply system, with a multi-stage, low temperature, boil-off fuel gas compressor plus the driver and auxiliary systems, high pressure piping system and safety features, controls and instrumentation.
As MAN Energy has explained, the dual-fuel two stroke engine brings several benefits as a low-speed direct propulsion alternative. It offers “high thermal efficiency, flexibility in regard to fuel and, compellingly, low operational and installation costs,” says the company. The high-pressure gas system pumps the boil-off gas (BOG) at pressures of 250-300 bar for injection in the cylinders.
These latest vessels reflect the premium put on BOG after years of indifference. “For many years the LNG market has not really valued boil-off gas, as this has been considered a natural loss,” explains MAN Energy. “But today the high price of fuel oil has encouraged operators to burn BOG instead of using 100% HFO, diesel oil or gas oil.”
Clearly, when it comes to their newbuilds, GasLog and Flex LNG have run the numbers in the pursuit of efficiency on long-haul routes.