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LNG Shipping in the 21st Century

LNG CongressLondon

15th March 2016

• SIGTTO• LNG Shipping Industry• LNG Shipping Safety Record• The industry today• The future• Summary

ContentsCONTENTS

SIGTTO

• A “not-for-profit” organisation • Only remit is safety – no commercial role• Registered in Bermuda with London liaison office• 190 Members from across the LNG/LPG industry • About 97% of LNG tonnage and terminals are members• Publishes guidelines, recommendations and best practice• Issues technical advice• NGO status at IMO• Panel Meetings & Regional Forums• Liaises with other industry bodies

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WHERE IT ALL BEGAN

Methane Pioneer and Lake Charles Liquefaction Plant c1959

First commercial vessel – Methane Princess

First commercial discharge 12th October 1964

Q-flex 216k alongside a 145k

LNG Shipping Safety Record

• Over 50 years of commercial operation (Oct 64)• Over 80,000 cargoes• No loss of cargo tank containment• No onboard fatalities directly attributable to the cargo

An very impressive, in fact, unprecedented, safety record for the carriage of liquid hydrocarbons at sea in bulk.

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How was this safety record achieved?

• Strong, overarching safety philosophy• Robust design of equipment and systems• Good operational & maintenance procedures• High standards of training coupled with

competency verification• An ability to share lessons learnt and to develop best practices as

an industry (SIGTTO)• IGC Code (International Code for the Construction and Equipment

of Ships Carrying Liquefied Gases in Bulk) was developed based on actual experiences in the early days of LNG transport

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LNG Shipping Challenges

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• Maintaining the safety record• Skills shortage• Public perception/Anti LNG organisations• LNG as a fuel• Commercial pressures not to “gold plate” LNG• Efficiency – less use of GCU, laden vessels passing each

other

Anti LNG Lobby – lifting guidance out of context

Perceived Hazards

• Explosion• Fireball• Pressurised release• Atomic bomb effect• “Burning seas”• “Frozen harbours”• Soft terrorist target

Hazards

• Flammable gas clouds

• Fire characteristics

• Brittle Fracture

• Rapid Phase Transitions – “RPT”

• Human contact

• BLEVE

History of the Gas Codes

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• The mandatory IGC Code applies only to those vessels the keel of which was laid on or after 1st July 1986; next revision due to Enter into force January 2016

• The mandatory GC Code applies to vessels delivered after 30th June 1980; and

• The non-mandatory EGC Code applies to those vessels delivered on or before the 31st October 1976.

• Amendments to the IGC and GC Codes introduced after vessels were delivered do not necessarily apply to such vessels.

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Working Groups and GPC Projects Revised IGC Code - LNG Bunker vessel (SIGTTO)

• The Revised Code was Adopted at MSC 93 (May 2014) • Entered into Force 1 January 2016• Application/Implementation date is 1 July 2016 due to existing ship

building contracts• Not retroactively applied – only applies to vessels contracted/keel

laid after 1 July 2016• Maximum tank filling limits being addressed by the Membrane

Owners’ Group; SIGTTO working with the Group • New proposal for annex to IGC Code for Liquid H2

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IGF Code - LNG fuelled vessel (SGMF)

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• IGF Code adopted at MSC 95, June 2015.• Corresponding date for entry into force is 1 Jan 2017• MSC 95 also adopted amendments to the STCW Interim

Guidance on Training for seafarers sailing onboard vessels using LNG as Fuel

• Note: Gas carriers using liquefied gases as fuel (not necessarily cargo Boil-off) and complying with the IGC Code are exempt from the IGF Code (see AOB)

• Phase 2 Corr Group dealing with methanol and low flash diesel

SIGTTO Competency Standards

• “Recommendations” when it leaves SIGTTO’s office

• Advice for the industry

• The minimum standard is determined by regulation, best practices “raises the bar”

• Not mandatory however other bodies may insist on compliance within their jurisdiction, i.e. charterers,

• SIGTTO currently developing competency verification guidelines

Skills shortage – fleet expansion

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• Fleet will increase by 1/3rd in the next 3 years• Specialised vessels / facilities / operations• Competency requirements for small scale are virtually the same as

larger LNG vessels• New operators entering the sector• Each vessel is 14-20+ new officers required• In service today: 450 LNG ships, On order: 168• LPG VLGCs: 190+ in operation and 90+ on order • Ethane: 18 vessels • Industry successfully went through similar phase in 2004-2006• However LPG helped to provide the officers to meet the shortage

Present situation

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• Continuing shortage of skilled personnel

• Restricted pool of available personnel to choose from

• Growing need for specialist knowledge in specific areas

• Dilution of the experience that is currently available

• Experience gap! Average age is increasing, retiring experience not being replaced. Larger proportion of senior personnel leaving the industry

• More reliance on procedures

• Continuing shift to developing countries

Training

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• No option but to invest in training• Ship operators who do not employ cadets should not

complain about shortage of personnel• Poaching is short term fix and is not the answer• Identify likely charterers requirements• May have to use external manning for a period• Train to SIGTTO competency standards plus internal

standards• Allow for understudying – extra cabin space in vessel design

What can be done?

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• Continue training!

• Continue to recognise the benefits of training

• Retain staff – continuity is of prime importance

• Make lecturer / trainer positions attractive

• Offer in house training services to others

• Encourage the industry (providers, manufacturers etc) to become more involved in training provision

• Provide direct assistance to the industry

LNG Shipping Industry Dynamics • Used to be 20 year + time charters on specific projects going

from A to B

• Portfolio players (BG, BP, Shell, Gazprom etc) and Traders

• Vessels trading on spot market

• Vessels being ordered completely unfixed!

• Vessels need to be designed to be compatible with most terminals not just project terminals as in the past

• New technologies allow greater efficiency (BOR <0.075%), fuel consumption and emissions compliance.

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Panama Canal

Extensive technical guidance forLNG vessels transiting the new locks including details of any modifications required

49m beam will dictate the futuremax size of most LNG vessels

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Panama Canal

• Toll fees have been announced• 173,000 m3 LNGC in laden condition US$0.38m, in ballast

US$0.335m and for ships undertaking a round trip through the Canal US$0.68m.

• Heel of less then 10% cargo capacity the vessel treated as ballast (Suez is 3%)

• Fees charged by volume not by tonnage (Suez) negating MOSS/Membrane differential

• Only 6 vessels per day in each direction can transit the new locks

• Container ships, bulk carriers, oil tankers and cruise ships will also use the new locks

• If vessels delayed there may be logistical scheduling issues• Laden LNG vessels may transit in both directions

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Arctic LNG

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FLNG – Shell Prelude project

The Prelude FLNG facility will be 488m (1,600-feet) long, 74m (240-feet) wide and will displace around 600,000 tonnes of water.

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Future Innovations – Downstream: Floating Power Plant (FLPP)

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Ethane

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Liquid Hydrogen Carriers (-252c flam range 4-74%)

Summary

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• The LNG Shipping industry is different to other forms of shipping

• Has an impressive safety record built up over 50 years• Safety expectations and experience requirements are high• Industry sets its own best practice to operate in excess of

minimum requirements• New routes offer the market more options• The industry has a modern, efficient fleet with lower BOR

and less fuel consumption than ever before• The safety record is highly impressive however this remains

the licence to operate

Thank you!