Small-scale LNG terminals, carriers and bunkering hubs are set to expand steadily in regions eager to be supplied with cleaner energy for power, ground transportation and shipping, according to a panel of industry executives
As delegates at Riviera Maritime Media’s Small-scale LNG’s big opportunities webinar heard in late April, small-scale terminals, infrastructure and new ships are being built that will help expand the availability of LNG for transport and power generation to meet global mandates for greener fuels.
In Italy, OLT Offshore LNG Toscana, for instance, is well advanced in the development of the country’s first regasification terminal that will service small-scale LNG carriers from FSRU Toscana moored off the Tuscany coast. Webinar panelist OLT technical superintendent Martina Sabatini said full-mission bridge simulations have been conducted while manoeuvring and mooring studies were done with models to identify any criticalities for the new loading service at the floating terminal.
As she explained, small-scale deliveries of LNG are vital in regions that have so far been short of the gas. “LNG plays a central role in heavy land and sea transport as well as in industrial and civil uses in areas not served by the national transport network,” Ms Sabatini said.
After converting the FSRU to accommodate small-scale LNG (ssLNG) carriers, the hub expects to launch in 2022 and has recently invited potential stakeholders to express their level of interest in the facilities, for instance in terms of tariffs, annual capacity, number of visits by small-scale vessels. “Our goal is to be as flexible as we can,” promised Ms Sabatini.
If the experience of Grain LNG, based 100 km east of London on an island of the same name, is anything to go by, FSRU Toscana will be busy. Already the largest LNG terminal in Europe, the hub predicts annual increases in utilisation of more than 35% in a market that is in rapid transition.
In fact, the terminal’s main problem is coping with the surge in demand. “Significant fleet orders – an additional 615 trucks – are being filled and this will lead to yet another significant increase in 2021,” said Grain LNG commercial advisor and ssLNG lead Paul Ocholla. “The challenge is to optimise to cater for the market transition to a high-growth phase.”
On 28 May, Gasrec, the UK’s leading supplier of gas for road transport, reported carrying the 10,000th tanker load of LNG from the National Grid facility on the Isle of Grain.
Since 2015, Grain LNG has been supplying the fuel to small-scale road transport, off-grid industry and ships. Currently, its jetties can handle Q-Max vessels unloading at a rate of 12,000 m³ per hour.
As Mr Ocholla explained, the terminal has worked through a series of challenges that lately include the crash in oil price, changes in technology, Covid, and Britain lagging behind the EU in its environmental goals. But now the challenges are more welcome – “we are looking at up to 70% growth this financial year, which is quite significant,” he said.
Meanwhile, ssLNG carriers should not be seen as being miniature versions of ’normal’ carriers, said Bilbao-headquartered Small-LNG director Eduardo Perez Orue.
There is a big difference. As he pointed out, standard vessels carry a single product in membrane tanks, their economics are based exclusively on the LNG trade, and they ply between dedicated ports. By contrast, ssLNG ships are typically multi-gas carriers using IMO Type C or membrane tanks and their economics are more broadly based on the petrochemicals trade. Also, they are more flexible operationally because they have a wider choice of ports. Finally, they are fitted with the latest technologies to reduce boil-off gas rates.
“Small LNG carriers are not better or worse,” he maintained. “They are different. They solve a different problem, and they need to be managed differently,” citing for example the different training of their crews.
Asked whether they were financially viable because ssLNG ships are more expensive to build per cubic metre of capacity, Mr Perez said the essential issue was not the cost “but how much money they make.” And in practice, ssLNG carriers can charge premiums for deliveries to smaller locations such as islands in the Caribbean.
And there will soon be more ssLNG carriers, if the worldwide audience is correct. In a snap poll, more than twice as many respondents saw ssLNG as an industry of the future with the global fleet growing to more than 500 ships in the next 10 years. That compares with the current 76-strong fleet, as estimated by Mr Perez, adding though that only 60 are currently available.
Responding to another question about the carriage of other gases besides LNG, he said hydrogen was not an option because of the extremely low storage temperatures while ammonia was certainly possible. “But I would be careful if you’re going back to LNG in the future, “ Mr Perez warned.
He believes ssLNG vessels will progressively become multi-gas carriers because it makes more commercial sense for the shipowner over the life of the vessel in the event that LNG runs out of its time as an ’interim fuel’. On that subject, easily a majority of respondents predicted LNG has at least another 20 years before alternative fuels become viable.
Looking ahead, the panellists summarised their views of the future of small-scale LNG. Mr Ocholla believes the next generation of vessels will be bigger, between 7,500 – 10,000 m3, while Ms Sabatini sees Italy’s inaugural hub berthing carriers up to 7,500 m³ and ultimately even 15,000 m³, although no vessels longer than 120 m.
All three panelists see a bright future for the sector. “We aim to be a hub for LNG providing the gas to smaller terminals around the Mediterranean,” said Ms Sabatini.
Citing the high cost of electric trucks relative to LNG-fuelled vehicles, Mr Ocholla believes LNG will be the fuel of choice for the road transport industry for longer than anticipated and that other fuels will take a long time to achieve the same scale.
Finally, all panelists agreed that the sector must work together, even competitors, to achieve common standards, technologies and other synergies that enable deliveries to communities hungry for LNG.