Industry Insight: Fresh Thinking in the LNG Transfer Zone Easing Infrastructure Concerns

Vincent Lagarrigue, Director, Trelleborg Oil and Marine.

Image Credit: Trelleborg Oil and Marine

As specialists in oil and gas transfer, one of the most dramatic changes that we've witnessed in 2017 has been the rise of LNG as a marine fuel, and the subsequent urgent need to develop the infrastructure that goes with it. The fleet of vessels able to take on board LNG as a fuel is growing and diversifying, and while availability of the fuel is not an issue, the infrastructure required for getting it onto ships is proving to be a limiting factor for the industry.

The challenge of developing new modes of LNG bunkering in a timely and cost-effective manner is no longer a technologically interesting sideshow – but a matter of urgency for ports and gas suppliers around the world. In response, bunkering infrastructure continues to evolve to become leaner, more flexible, and more adaptable to meet growing demand – and confidence is growing that infrastructure issues can be resolved. The Maritime and Port Authority of Singapore's (MPA's) announcement in December 2017 to invest around USD 9 million as part of an initiative to improve LNG bunkering operations in the world's busiest bunkering hub, is a case in point.

The growth and diversification of the LNG fleet driving this infrastructure demand has made 2017 a year of milestones for LNG as a marine fuel. The global LNG-fuelled fleet is around 120 vessels, while a confirmed order book of 111 vessels means that this figure will soon double. A further 114 vessels are classified as 'LNG-ready'. New, dedicated bunker delivery vessels have entered into service in ports around the world to meet growing demand, such as the 6,500 m3 LNG bunker delivery tanker Cardissa that is being operated from Shell's base in Rotterdam in the Netherlands.

Developments on the ground were bolstered by bold announcements of greater things to come. One of the most dramatic of these was from major container line CMA-CGM, who announced the order of nine new build container ships, all of which will be powered by LNG. Meeting the increased demand for LNG as a marine fuel, a new fleet of dedicated bunker supply vessels has emerged. In the cruise sector, Carnival has seven 180,000 GT, gas-powered cruise ships on order.

These developments have the potential to dramatically change shipping. Speaking after the naming ceremony of the Cardissa, Shell LNG Fuel General Manager Lauran Wetemans said that the marine LNG sector had the potential to be 'disruptive' - just as the electric-powered car industry is disrupting existing supply infrastructure. However, he acknowledged that the 'buy-in' of owners is crucial if the use of LNG bunker fuel is to be stepped up from its current, relatively modest proportion of the world fleet.

Wetemans noted that the availability of LNG is not the challenge. Rather, he observed that LNG transference presents obstacles to be overcome, highlighting the need, for example, to be able to take that LNG in smaller quantities out of key hub terminals such as Rotterdam in the Netherlands, Busan in Korea, Shanghai in China, and Singapore, to satellite hubs.

This is where infrastructure becomes a limiting factor – ship owners and operators will be unwilling to invest in LNG on a larger scale until they can be confident it will be possible to refuel their vessels beyond the world's major bunkering ports.

Infrastructure

Infrastructure doesn't need to just become more widespread – it needs to become smarter. Existing infrastructure at current hubs may not be suited to the range of vessel sizes represented in today's fleet. At the same time, as LNG spreads to new locations, it may require bunkering to occur in locations that are too deep or shallow for traditional jetties to be used, or where harsh environments make conventional jetty-based transfer difficult.

This is one example of why it is vital to look beyond traditional transfer methods. Earlier this year, Trelleborg's floating cryogenic hoses were used in a successful sea launch of a UTS – Universal Transfer System developed with Connect LNG and Gas Natural Fenosa. This demonstrated a system that would bring bunkering infrastructure to a vessel using a floating platform connected to the shore by cryogenic floating hoses. It showed how flexible floating hose technology can underpin new solutions that could easily be used to upgrade existing ports, or establish new bunkering facilities with lower start-up costs than heavier infrastructure would require.

The evolution of bunkering infrastructure is setting the scene for bigger things to come. According to a recent report from BMI Research, in the short term the use of LNG as shipping fuel will be limited to short-distance routes dominated by smaller vessels and cruise ships. However, by providing more refuelling facilities for ships on shorter or more segmented routes, it will support the build-up of global LNG bunkering facilities. This will, in turn, increase the uptake of LNG by larger ships, with container vessels – with fixed and schedules routes – the most likely next beneficiary. In this way, new technologies such as unconventional solutions are essential in laying the foundations for the next generation of LNG fuelled shipping.

This is clearly where the likes of CMA-CGM are hoping the market will develop and is reflected in rapidly growing confidence in LNG infrastructure. Just two years ago, 76% of respondents saw LNG infrastructure as the biggest obstacle to LNG bunkering. Now, that figure is 46%. Infrastructure is still seen as the main obstacle, compared to price or availability of gas – but a lot less than it was before. Continued innovation in the field of transfer infrastructure is vital to continue this momentum and support the first movers in making the LNG fleet of the future a reality.