With strong growth in the small-scale LNG (ssLNG) market, industry needs to standardise, keeping safety top of mind, said experts at a Riviera Maritime Media webinar
Small-scale LNG is “here to stay,” underpinned by well-developed technology and growing demand, but needs to remain focussed on safety and establish standardisation, agreed a panel of industry experts at a Riviera Maritime Media webinar.
“Small-scale LNG is here and will stay here for a long time,” OLT Offshore LNG Toscana O&M technical superintendent Martina Sabatini told delegates at the webinar, Small-scale LNG’s big opportunities, held on 21 April. Noting the rapidly changing market, Ms Sabatini was confident that the LNG industry was prepared to meet the challenge, armed with a high degree of flexibility, knowledge and technology. “Keeping in mind that safety is first in LNG,” said she, “we have to operate in a safe mode. Standardisation is essential because if we have some standard framework.” She said this was especially critical with small-scale LNG carriers that can transport multiple types of fuel. “We have to establish procedures, standards, and I think that the LNG business is definitely ready to do this,” she said.
Fellow panellist Grain LNG commercial advisor and ssLNG lead Paul Ocholla agreed. Noting the number of small-scale LNG projects in development, he said, “We need a market that is standardised and benchmarked, so we can understand each other to make life easier for all these new participants coming on board.” This would mean working with competitors to get a consistent approach globally “would be a big bonus to take us to the next step,” said Mr Ocholla. “New players in small-scale LNGneed to maintain high standards across the board,” said Mr Ocholla.
Rounding out the panel, Small LNG director Eduardo Perez Orue called ssLNG carriers and LNG carriers “different animals.” Unlike standard and large LNG carriers which are dedicated to the LNG trade and outfitted with membrane cargo containment systems, Mr Orue highlighted ssLNG carriers’ ability to operate in different markets – LNG, ethylene, LPG or ethane – diminutive size, topping out at around 40,000 m3 capacity, and cargo containment equipment, which is usually made up of IMO Type C tanks. “Their economics are based on the petrochemicals business,” said Mr Orue, noting that they are managed differently because of their operational flexibility, requiring crews to handle multiple fuels as cargo.
He estimated the global ssLNG carrier fleet at 76 vessels – about 60 of which were currently in operation— with a capacity of 940,565 m3. “That’s about the equivalent of four Q-Max vessels,” referring to the 266,000 m3 LNG carriers built to transport Qatari LNG.
Both OLT Offshore LNG Toscana and Grain LNG are expanding their operations to handle ssLNG vessels. In the case of OLT Offshore LNG Toscana, it operates a floating terminal off the coast of Italy that is based on a floating storage and regasification unit (FSRU). Ms Sabatini said the FSRU would not have to be taken out of service in order to complete the modifications necessary to handle ssLNG carriers. “We receive one cargo about every eight days,” she said, which would allow the modifications to be completed while the FSRU continued to receive LNG carriers.
Those modifications are expected to be completed for the new ssLNG service to start by January 2022. OLT Offshore LNG Toscana expects to develop into an LNG hub, said Ms Sabatini, handling ssLNG vessels with a maximum length of 120 m that would distribute LNG or bunker LNG-fuelled vessels.
Grain LNG, the largest LNG terminal in Europe, has been offering ssLNG truck loading since 2015, along with its other services of regasification, reloading and transhipment, noted Mr Ocholla. One of the challenges in adding cargo loading services for ssLNG carriers is taking its marine jetty out of service to make the necessary modifications.
Polls reveal insight into ssLNG future
Several polls were taken during the webinar that provided further insight into the audience’s thinking regarding the future of ssLNG. In one poll, 66% of respondents said they believed that small scale LNG is a business of today rather than of the future. Respondents were less certainty, however, regarding the future fuels picture. Responding to a poll asking, ‘Who is the biggest challenger to LNG as a marine fuel?’ 30% of voters chose ammonia, followed by hydrogen (25%), fuel oil (15%), marine diesel oil (11%), LPG (7%), ethanol (6%), batteries (5%) and other (2%).
Regarding growth of the ssLNG fleet in 10 years, respondents were upbeat, with 39% of those voting saying the fleet will grow to 500 ships, 31% 200 ships, 16% 100 ships and 14% 1,000+ ships. In another poll, 65% voters expect the ‘vessel size of choice’ for ssLNG carriers to be 7,500 to 10,000 m3, followed by 23% for over 10,000 to 15,000 m3 and 12% for under 7,500 m3.
In an effort to divine the future of LNG-fuelled trucks vs their electrically charged competitors, a poll asked attendees ‘How much more would you be prepared to pay for a low-emission electric truck versus an LNG truck?’ 65% of respondents said plus 15% - the lowest possible choice offered by the poll – 27% said plus 25% and 8% said greater than 40%.
LNG will be the main alternative fuel for shipping for at least two decades, according to respondents to another poll, which asked, “LNG is sometimes labelled as an interim alternative fuel. How long do you think this interim period will last?” 62% of respondents said 20 years-plus, 31%, 10 years and 7%, 5 years.
Perhaps surprisingly, however, respondents were split on the viability of bio-LNG, which has been touted as a drop-in fuel of the future. “Do you believe bio-LNG is a viable replacement for fossil LNG?” 45% of respondents said ‘yes’, while 55% said ‘no’.
A multiple choice poll asked “Do you think ssLNG vessels will still be multi-chemical vessels rather than pure LNG vessels in” 28% selected mid-term (5 to 10 years), 26% long term (10 years+), 25% never going to happen and 21% the short term (0 to 5 years).
Overwhelmingly, some 92% of respondents to another binary poll said the dominant challenge in the ssLNG business was the lack of flexibility of infrastructure for accommodating different sizes of vessels, while only 8% said meeting fuel specifications.
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