Gas Carrier Sector: A Comprehensive Update on Trade, Fleet, and Efficiency

This comprehensive update dives deep into the current state of this vital industry, exploring the forces driving its expansion, the evolution of the global fleet, and the relentless pursuit of greater efficiency and safety.

From ice-cold cargo making red-hot headlines due to rapidly growing trade volumes and shifting geopolitical dynamics, to the crucial question of whether the world’s shipyards can keep up with demand, we’ll analyze the data shaping the market. Furthermore, we examine the innovative strategies being deployed – from energy efficiency optimization to the development of flexible and capable FSRU newbuilds and LNG vessels for the future – all underpinned by a commitment to zero harm.

Ice-cold Cargo Makes Red-hot Headlines

After years of anticipation, growing worldwide liquefaction capacities and new LNG tonnage entering the market are beginning to align. With global demand on the rise, new trade patterns emerging, and transport activities intensifying, the LNG segment is quickly becoming one of the most interesting markets to watch.

Over the past few years, we were nothing but optimistic about the future of the LNG segment. Considerable additions of liquefaction capacity combined with the rapidly growing appetite for LNG has surely painted promising prospects for this industry.

On the flip side, however, low Gas analysis of LNG on tankersLNG tanker earnings seemed to be the only missing element of that exciting story. Ever since 2015, we have been witnessing new LNG cargoes entering the market, yet due to excessive deliveries of new tonnage, rates remained stubbornly below the break-even levels.

Not anymore! In the fourth quarter of the last year, spot earnings increased almost twofold and have remained on that level, flirting with the mark of 80 000 US dollars (USD) per day.

It didn’t take long for the sentiment to change. New headlines emerged very quickly, warning about the possible scarcity of new tonnage, which may hit the sector as early as 2020! From oversupply to undersupply in less than three months. It remains to be seen whether this story holds true in the future. Ten new contracts for LNG tankers placed in just two months of 2018 certainly calls for some reflections. However, it would be unwise to draw long-term conclusions based upon just that one whiff of optimism. Let’s have a closer look at the current fundamentals.

Rapidly growing seaborne trade

Double-digit growth has been awaited for a long time. In 2017 it was finally achieved when 26 million tonnes of cargo was added to the trade, representing a growth of ten per cent. Looking ahead, in 2018, we expect another 36 million tonnes of “new LNG“, which will result in twelve per cent of annual growth.

When you look at the trade patterns, the situation looks even better. The tonne-mile effect grew by twelve per cent in 2017 and is expected to accelerate to 14 per cent in 2018. It comes as no surprise that the increasing distances are caused mainly by the US cargoes. However, on 8 December 2017 Christophe de Margerie loaded the first cargo from Yamal bound for the UK, opening a new trade pattern. In 2020 (with three trains running), it will add another 17,5 million tonnes per annum (MTPA) of LNG into the gas trade.

In 2017, 24,9 MTPA of liquefaction capacity came online. The vast majority (18,7 MTPA) came from Australia, with two Gorgon trains, Ichthys T1 and Wheatstone T1. In addition, Cheniere’s Sabine Pass opened the third train (4,5 MTPA).

Another 1,2 MTPA was added by Petronas’ PFLNG Satu, and 0,5 MTPA came from Sengkang LNG. This year’s expected additions are even larger. Cameron LNG T1, Cove Point T1, Sabine Pass T4 and Elba Island LNG will collectively add 17 MTPA from the US. On the Australian side, Ichthys T2, Wheatstone T2 and Prelude FLNG will bring 12,3 MTPA. In addition, Yamal T1 will produce 5,5 MTPA, and Golar’s project in Cameroon (GoFLNG) is expected to produce two MTPA.

Altogether, the world liquefaction capacity will have grown by 36,8 MTPA by the end of the year. The good news is that the growth doesn’t stop there, as another 33,3 and 25,2 MTPA will come online in 2019 and 2020 respectively.

When we accumulate all additions between 2017 and 2020, we are looking at a whopping 120,2 MTPA representing 35 per cent growth in just four years. No other shipping segment can enjoy such a robust trade development.

Changes to the list of top importers

Although Japan still remains the leader, last year China overtook South Korea, claiming second place. To add even more flavour, during the first two months of the current year, Chinese imports reached 63 per cent of the Japanese level, which only underlines the strength of their demand. Elsewhere, back in 2015, India pushed Taiwan down the list and currently takes fourth position after South Korea. It is just a matter of time before it advances to the top three LNG importers. A large increase in imports is also observed in Pakistan, Jordan and France.

There is a growing number of countries which join the “FSRU team“. In 2017, there were 26 floating terminals operating worldwide, and another 14 were planned. Most of the terminals are located in Latin America, the Middle East and Indian peninsula.

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The major incentive behind the FSRU projects is a significantly lower capital cost. An Equipment and cargo system of LNG onshore terminalsonshore terminal would typically have capex in a range of USD 330/tonne, whereas an FSRU will cost three times less. Not only does it offer much lower construction cost, but it also provides a great deal of flexibility, as it can be moved from one country to another or also be used as a conventional LNG tanker.

So, whether onshore or floating regasification unit, developments are substantial. It does look like it is currently a supply-driven market, where every cubic metre of LNG gets sold. The only question is, how long will it last?

Finally how big is the fleet?

The rapid fleet development has been a source of concern for quite a few years. In the end, oversupply was the reason behind the disappointing earnings. Five years ago, the world LNG tanker fleet stood at 372 ships, corresponding to 53,4 million cubic metres (cbm). Since then, 153 ships have been delivered. With very little scrapping activity, the fleet passed the 500 mark in November 2017, and it currently stands at 516 ships and 75,9 million cbm, which represents over 40 per cent growth.

As it usually happens in shipping, as soon as there is a whiff of optimism, new ships get built come hell or high waters. This time around, a flurry of new contracts was driven mainly by liquefaction projects in Australia and shale gas developments in the US. Ships started to hit the water one after another, but as it turned out, a little prematurely. Many LNG terminals were delayed, which is why we hadn’t observed any substantial growth of seaborne trade until 2016.

Ever since, however, the demand for tonnage has been increasing steadily. Owners have gained a bit of breathing space, although earnings hadn’t really improved much until the last quarter of 2017. One may say that in the past five years, only the last two quarters have brought some good returns.

Will there be a shortage of ships?

Recently, there has been a lot of discussion about a possible shortage of tankers in the near future. A typical supply/demand desktop exercise may prove such theory correct. For example, if all projects come online on schedule; if all liquefaction plants run with full-capacity utilization; if imports of LNG continue to soar undisturbed; if gas is traded on the longest distances; if prices allow a decent arbitrage etc., etc. A careful reader would count five “ifs” in the previous sentence, and they certainly do not exhaust the list of possible concerns. Without disproving the undeniable success of the LNG industry, a few possible problems should be addressed.

First of all, at the time of writing this article, there were 105 LNG carriers on order, representing 20 per cent of the existing fleet. The list of deliveries, particularly in 2018, is rather overwhelming. According to schedule, 63 ships are supposed to be handed over to owners this year. The 36,8 million tonnes of this year’s expected cargo growth will generate a need for 40 to 45 ships only. What to do with the remaining 20 ships? Luckily, we will most likely not see all ships delivered in time anyway. A high non-delivery factor suggests that at least one third of deliveries will slip until 2019 when we already expect 34 tanker deliveries. It looks like we may kick that delayed-deliveries “tin can” down the road for quite a few years before we start to see any shortage of ships.

Secondly, we need to look at the distances. Although Australian exports will most likely maintain their usual trade patterns (in terms of average distance), US exports will be more diversified. In case of Australian exports, we need around 1,1 ships per million tonnes of cargo. US exports may increase that factor up to 1,7 ships, assuming that gas is shipped to the Far East. In the US, however, LNG is sold in much more flexible terms. Lack of fixed destinations is one of the advantages, which allows LNG buyers to resell the cargo as they wish. It means that some of the LNG that was meant to go to the Far East may end up in Europe, thus indeed reducing the voyage distances and demand for ships.

Cross-regional arbitrage should also be monitored. Although American gas appears to be very cheap, in most cases it needs to be shipped over long distances. Until recently, low freight rates certainly helped to achieve higher competitiveness for US projects. In the wake of better ships’ earnings, we need to factor them into the overall equation as they naturally reduce the price arbitrage.

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The issues we have just listed are fairly obvious and in some cases even predictable. What about the black swans? A typical example seems to be painting itself before our eyes. US President Donald Trump’s proposal of introducing import taxes for steel and aluminium was not welcomed warmly at all. Many countries have warned that they will retaliate with similar measures.

One of those countries was China, which pledged to introduce similar taxes on US-originated LNG. If it becomes a reality, it will severely damage the price arbitrage, subsequently reducing the amount of cargo on that trading pattern.

To summarize

The LNG industry seems to have a bright future ahead, and shipping will benefit a lot from it. Trade keeps growing rapidly, and the freight rates have picked up momentum. One may say that LNG tankers are doomed to success, and it is probably true. We may not, however, forget that it doesn’t take long to destroy even a well-functioning market. The ordering of new tonnage is certainly tempting these days. Newbuilding prices are as low as they can possibly be. A couple of years back, a brand-new 175 000 cbm tanker would set you back nearly USD 210 million.

Today it is only USD 180 million. If you order against an existing project, by all means, go ahead. Otherwise, just look over your shoulder and see how long it took for rates to recover. Floating storage and regasification units (FSRUs) are a relatively young and highly dynamic industry segment with a steep learning curve. As a classification society DNV GL has been at the forefront of the technological development, ensuring safety and guiding the industry along the way.

When redrafting its regasification rules DNV GL was not only able to draw on its extensive in-house knowledge and many years of experience but also on feedback from key users, designers, ship-yards and shipowners. Naturally the IGC Code forms the basis of the Maritime Safety Information Under the GMDSS safety requirements, but the updated DNV GL class rules go much further, incorporating criteria derived from practical experience. True to DNV GL’s policy of offering shipowners more flexibility, they follow a two-track approach, says Johan Petter Tutturen, DNV GL Business Director Gas Carriers. The basic REGAS rules comprise all requirements to ensure safe operation, and a line-up of optional class notations further enhance safety levels on board for those owners and operators who want to go the extra mile. “What is more”, says Mónica Paola Alvarez Cardozo, Senior Engineer, LNG, Cargo Handling & Piping Systems, “our clearly-defined set of basic rules and the add-on Enhanced Safety (ES) qualifier make it easier for shipyards to build to our class”. The response from designers, yards and owners has been positive, says Alvarez Cardozo. “In particular, major Korean yards who were instrumental in the rule development process and were given the opportunity to comment on the draft rules at a very early stage have been very supportive”.

Saving costs

Accommodating specific needs and new trends and providing flexibility for exceptional situations is part of the DNV GL classification philosophy. For example by opening up the possibility of fitting regasification plants on board non-LNG carriers ship types on a case-by-case basis. Furthermore, the updated regasification rules now reflect DNV GL’s established practice with earlier regasification vessels, e. g. regarding the strength of the regasification module skid or the use of high-integrity pressure protection systems (HIPPS).

One of the most popular changes relates to FSRU dry-docking. “Ships are normally required to dry-dock every five years”, explains Alvarez Cardozo. “Our new class notation UWILD (Underwater Inspection in Lieu of Dry-docking) allows an FSRU to remain at a stationary location for as long as desired, subject to flag state approval. We will do all required inspections as before but carry them out differently, using underwater techniques where applicable”. This inspection model, which can save owners and operators significant costs, has been accepted by several flag states, who will approve its application on a case-by-case basis. Arrangements to accelerate this approval process may be made in future, Tutturen adds.

Rule development work at DNV GL continues. “We are simpli-fying our mooring rules, leaving behind some of the complexities of the POSMOOR notation which was originally designed for off-shore structures in the North Sea. Our new approach will account for more benign waters”. DNV GL is also working on an option to waive the requirement to enter into the tanks every five years, a time-consuming and costly process. “Our partnership approach means we are willing to do what we can to make our customers’ lives easier without compromising safety”, Tutturen stresses.

Flexibility for Changing Markets

With its latest orders for next-generation LNG carriers and FSRUs, the BW Group has again demonstrated its flexibility in adapting to a changing market environment. The newbuilding orders reflect a continuous search for efficiency gains whilst maintaining full focus on safety and operational excellence. Supported by in-house newbuilding and technical management teams, BW’s recent growth initiatives have already paid off in attractive charter contracts.

At BW, the commercial team and a dedicated group of technical experts from their in-house newbuilding department keep a close eye on market requirements and seek solutions to address an increasingly dynamic market environment in LNG shipping and infrastructure. In developing projects, BW utilizes the long-standing technical experience gathered from numerous newbuilding projects since the company was established, alongside operational experience from managing one of the largest fleets of LNG and LPG carriers in the world. Each new project benefits from a growing and deepening pool of knowledge where new designs are continuously optimized for safety, efficiency, maintenance and the environment.

BW’s growth initiatives are set against a backdrop of an LNG industry constantly seeking efficiency gains, and BW’s strategy is to be at the forefront of this development. To adapt to the changing market environment, BW has recently ordered five next-generation LNG carriers as well as three FSRUs, all classed by DNV GL. “All our ships are built for maximum efficiency, safety and reliability”, says Petter Larssøn, Vice President, Gas Solutions and LNG Shipping, BW LNG. He emphasizes, “Our aim is to be at the forefront of efficiency developments not only for today, but also in the development of lasting solutions which will be competitive over time”. With this in mind, the in-house newbuilding team makes numerous modifications to the original design. “We have many preferences when tailoring newbuilding designs and may apply as many as 800 to 1 000 changes to a yard design, from small to large, in order to include lessons learnt, ensure operational flexibility, and include new technological developments”, Kasper Winroth, LNG Manager at BW LNG, explains.

Open dialogue in design development

The technical preferences range from careful selection of equipment makers to improving redundancy and efficiency through to enhancing the design to ensure the crew can fulfil their tasks. “We believe these efforts yield results, through optimizing the design we ensure that operations and maintenance will be much more efficient, which provides the best economics for us and for the customer”, Larssøn underlines. Having an in-house newbuilding team and a large gas carrier fleet facilitates sharing experiences and solutions with key yards and suppliers across all disciplines involved in ship design.

All our ships are built for maximum efficiency, safety and reliability.
Petter Larssøn, Vice President, Gas Solutions and LNG Shipping, BW LNG

The newbuilding team is in constant dialogue with shipyards and equipment makers to evaluate new developments, improvements or products. This includes close cooperation with partners such as DNV GL. “Having an open dialogue on what goes on in the industry and continuously working on optimizing the designs is very important for us”, Larssøn comments. “We have a longstanding relationship with DNV GL and they understand our business and our constant push to evolve and change in line with the dynamic industry environment. DNV GL has been involved in many processes during the newbuilding phase, looking at equipment, instrumentation, automation, digitalization and more, and supporting us in the constant pursuit of operational excellence and operating best-in-class vessels. Moving into future concepts like digitalization and automation will get increased focus going forward. We are looking at alternatives for operations and maintenance, which could involve innovations such as the use of drones for tank inspection, which will save costs and improve safety”, he adds.

The recent LNGC and FSRU newbuilding orders were placed before firm charters were lined up amid changing market requirements. “We have taken some newbuilding positions ahead of charters/contracts to time deliveries and benefit from attractive yard pricing. This allows us to meet the expected market requirements”, Larssøn explains. “This is especially important in the FSRU segment, where the lead time of projects is often very short and you cannot offer a solution to the client without an available asset”, he adds.

So far, these decisions have paid off: BW’s first FSRU, the BW Singapore, was chartered immediately following delivery for the EGAS project in Egypt, with a world-record five-month implementation time after contract signing. The second FSRU, the BW Integrity, was chartered out on a 15-year contract in Pakistan shortly after delivery. Similarly, the two MEGI LNG carrier new-builds delivered in Q1 2018, BW Tulip and BW Lilac, are both committed to charters. Furthermore, FSRUs offer an interesting risk mitigation option by doubling as fully tradable LNG carriers. “In case of time gaps between delivery and start-up of an FSRU project, the vessels can sail as LNG carriers with competitive features such as large size and relatively efficient fuel consumption”, Winroth points out.

Flexible and capable FSRU newbuilds

When BW LNG launched the FSRU projects, the newbuilding team first optimized the designs so the vessels would be competitive for most projects worldwide. One of the key parameters is regasification reliability and efficiency, especially when these vessels are deployed in connection with large infrastructure projects. “One of the major developments in FSRU technology is increased regasification efficiency and capacity compared to five or ten years ago. The size of FSRUs has also increased to provide more storage space and accommodate cargo from all types of incoming LNG vessels”, Larssøn explains.

In case of time gaps between delivery and start-up of an FSRU project, the vessels can sail as LNG carriers with competitive features such as large size and relatively efficient fuel consumption.
Kasper Winroth, LNG Manager at BW LNG

With a capacity of about 170 000 cubic metres, these FSRUs are big enough for LNGCs of nearly any size whilst ensuring highly efficient operation and fast send-out. “We aim to design FSRUs that fit most projects worldwide, focusing on safe, reliable, efficient operation and flexible capacity”, Winroth explains. All of BW’s FSRUs are based on seawater heating, either direct or via a glycol intermediate loop, to regasify the LNG in the most energy-efficient way. The capacity of the Liquefied Natural Gas Plant and Regasification Terminal Operationsregas plant is tailored to location-specific conditions.

Equipped with efficient four-Stroke DF engines from Wärtsilä and MAN, the BW ships offer regasification with a minimum of environmental footprint.

LNG vessels for the future

Another project the BW LNG newbuilding team has been working on is the development of next-generation LNG carriers that will attract clients in an ever-changingers that will attract clients in an ev market with increased demand for flexibility and efficiency. For the series of five vessels ordered from DSME, the new-building team and its partners again utilized their extensive LNG-specific operational experience to achieve significant improvements over existing vessels.

“The big driver in LNG shipping is reduction of the unit freight cost”, Larssøn points out. “You can reduce the unit freight cost by building larger vessels with lower fuel consumption and boil-off rate”. 174 000 cubic metres is the size BW LNG prefers as it is highly flexible; 180 000 cbm ships may also be considered in future.

The fuel consumption of the new LNG carriers is some 30 to 40 per cent lower than that of DFDE/TFDE, and even better when compared with steam propulsion, thanks to the slow-speed two-stroke dual-fuel engines. The ME-GI engine offers reduced specific consumption, improved propulsive efficiency and increased fuel flexibility. Allowing almost any mix of gas and liquid fuel, the engines give the charterer a wide range of options. Apart from the larger size and lower fuel consumption of BW’s next-generation LNG carriers, the third big efficiency improvement is the significant reduction of the boil-off-rate (BOR), achieved by combining a low – BOR Mastic Application Procedures for Mark III Containment Systemscontainment system with a reliquefaction system working in tandem with the ME-GI fuel gas supply system. This ensures the best reliquification efficiency in the market, compared to independent reliquefaction systems. BW also places great emphasis on minimizing the environmental footprint of its ships. Lowering emissions to air and sea is a continuous effort at BW. Of course the vessels will comply with the relevant emission regulations. This can in part be achieved by reducing fuel consumption; in addition, the latest newbuilds have an EGR system on the main engine to reduce NO_X emissions to Tier III levels while reducing the amount of waste water that is discharged to sea, compared to an SCR system.

To comply with the Ballast Water Management Convention, BW LNG has opted for a combined electrolysis and filter system that comes with both IMO and USCG approval.

Zero harm is paramount

BW has a zero-harm policy and continuously works towards the ambitious goal of eliminating safety incidents entirely. The company believes that one aspect is to design vessels to reduce risks; a second one is to educate the crew, the yards and the suppliers to eliminate hazards and safety incidents, both during construction and during operation. BW has its own yard teams who supervise construction and work together with the suppliers and partners executing its projects. Experts from DNV GL are also present on site to support the supervision and make sure the work is per-formed in a safe manner. Cooperating closely with customers as well as partners such as DNV GL, BW constantly strives to live up to its zero-harm goal. “This is about changing behaviour, processes, procedures, training, communication, management, leadership, on-shore and offshore operations, and practising a safety culture that ultimately pays off by keeping people safe”, Winroth points out.

Ask the FSRU Experts

Over the past ten years LNG has become a popular form of transporting energy over large distances. DNV GL’s advisory services help owners and charterers of floating regasification units assure the safety, functional integrity and economic value of these complex units.

The availability of liquefied natural gas (LNG) in large quantities in the world market is providing many coastal nations with access to a new, low-pollution energy source. Forming the interface between LNG carriers and the local gas supply infrastructure, floating storage and regasification units (FSRUs) play a key role in the LNG value chain, and not surprisingly demand for these units remains strong. Compared to land-based regasification plants they offer numerous advantages, including faster planning, construction and deployment, flexible redeployment, independence from space availability on land and the associated permitting procedures, and significantly lower cost. In addition, FSRUs promise independence from international pipelines and are less likely to meet with popular opposition or be subject to bureaucratic delays.

By providing three separate LNG-related functions – transport, storage and regasification – FSRUs offer exceptional versatility and convenience. However, to allow owners and their customers to reap the full benefits of this potential, FSRUs must be designed with enough flexibility in mind so they can be used in a variety of situations throughout their operating life. Furthermore, the physical properties of LNG require highly specialized handling and storage equipment which is subject to stringent quality and safety standards. Today’s owners and operators know that understanding the complexities and system interdependencies on board a regasification unit is a gigantic task. From the planning and design stage through to the asset’s end of life there are countless questions to be answered that require very specialized knowledge. Working with a competent partner is a must.

Going the extra mile

Based on its many years of experience and its pioneering role in the FSRU segment, DNV GL is in a unique position to help planners, designers, builders, owners and operators of FSRUs ensure efficient construction and operation while adhering to the highest safety standards. Having been involved in the development of FSRUs from the very beginning, DNV GL offers a comprehensive range of class-independent advisory services for FSRU projects, supporting owners in defining the boundary conditions for FSRU designs, ensuring fast approval of modifications when customizing existing vessels, and providing decision support and requirement-based evaluations that go beyond the ship itself and can include items such as tendering, cybersecurity, shore facilities, and project due diligence as well.

Services based on real-life experience

Conversion of existing LNG carriers is a common way of making FSRUs available to the market relatively quickly. In such a case a thorough assessment of the vessel before conversion is essential for the success of the project. In particular, the LNG cargo tank system must be examined for its remaining operable life, and all processing equipment, Pipelines in Marine Terminals: Key Considerations for Handling Liquefied Gaspipelines and connection points on board must be scrutinized for fatigue and crack propagation to determine how long the ship can serve its new purpose safely and to find out if and where steel repairs or renewals are required.

For conversion projects it might be beneficial to increase the maximum tank vapour pressure beyond the 0,25 bar normal for LNGCs. Experience indicates that such vessels may sustain pressures up to 0,4 bar or even above when operated in calm waters.

As for newbuilding projects, there are many questions that must be answered by the different stakeholders before a new FSRU can be ordered and built, from feasibility and risk assessments to specification reviews, the unit capability definition and the design review, through to support in charterer negotiations and contracting. Since the world’s first-ever FSRU was commissioned about ten years ago, DNV GL has assisted in numerous projects. Backed by this practical experience and its profound knowledge of applicable rules and regulations, DNV GL is able to provide guidance before, during and after conversion or newbuilding.

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For example, a major FSRU operator needed to map and assess the complex energy flows on board these units to identify the best new technology options for next-generation designs. DNV GL used its COSSMOS modelling service to examine the integrated power generation and processing plant design, simulate operation, and define operational profiles and the required metrics to provide decision support for the future operator. In the process, the intricate interaction patterns between the subsystems were studied, and critical areas for process improvement were identified. DNV GL developed, proposed and evaluated various alternative system configurations so the customer could select the best-performing variant.

In another project, an existing Moss-type LNG vessel was to be converted into an offshore FSRU, and DNV GL was asked to assess the feasibility of extending the operating life of the cargo tank system for this purpose. In particular, the owner needed a thorough fatigue and crack propagation analysis. Based on its long experience with Moss-type LNG tanks and knowledge of the relevant rules and regulations, DNV GL scrutinized the tanks, in particular the critical tower-to-tank shell connections, which are prone to fatigue. The remaining fatigue life and crack propagation rates were calculated to establish leak-before-failure criteria, and the customer received a comprehensive assessment and well-founded advice as a basis for its decision-making process.

Full lifecycle support

When a shipping company serving the oil and gas industry asked DNV GL for help developing a well-structured energy management approach that would support the company’s cost containment strategy, DNV GL formulated an energy strategy, defined appropriate organizational roles and processes interfacing with the company’s existing processes, and prepared a reporting and monitoring concept. The DNV GL experts also performed quantitative analyses of operational profiles and fleet performance along with a cost – benefit assessment, and defined implementation-ready on-board energy-saving measures.

As these examples show, DNV GL’s advisory services cover a wide range of LNG and FSRU competence and service areas, providing valuable decision support, helping avoid management mistakes, and improving safety, energy efficiency and ultimately, financial performance and corporate value.

Ships for the Long Haul

With the global LNG distribution network rapidly expanding and energy prices on the rise again, LNG carriers must meet entirely new requirements with regards to both design and operational efficiency. DNV GL offers unique capabilities in comprehensive performance optimization.

The worldwide LNG trade patterns are changing. Today liquefied natural gas is routinely transported across very long distances – typically from the USA or western Africa to the Far East. What is more, ship fuel prices, after years of decline, are on the rise again, while the pressure increases to keep the CO2 footprint in check. All this means that fuel efficiency plays a greater role than ever in keeping transport costs down and the ships attractive to charterers.

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With this in mind, the Chinese shipbuilding company Hudong-Zhonghua wanted to get the best out of the design when planning its next generation of 174 000 – cubic-metre LNG carriers. To leverage the latest expertise and technology, H&Z approached DNV GL for a joint development project. “DNV GL has rich experience and expertise in both the LNG industry and modern CFD technology for vessel performance analyses. We are very happy to work with this international leading class”, said Song Wei, Head of the R&D department at Hudong-Zhonghua. The operational profile for the ships was developed based on real-life AIS sailing data, which suggested a typical 60 per cent of sailing time spent in laden condition and 40 per cent in ballast, with speeds ranging between 15 and 19,5 knots.

In a first phase Hudong presented two design proposals: a slender, longer hull shape with a B1 beam (less than 46 m wide), and an alternative design with a wider, B2 beam (more than 46 m wide) at reduced length. To identify the most fuel-efficient concept, DNV GL undertook simulations with a standardized CFD setup in full scale. This procedure does not require application of traditional model test extrapolation methods since the fluid-dynamic properties are considered for the actual operating conditions. Both designs showed well-balanced performance between laden and ballast draught. For the anticipated operating profile, however, the B1 design exhibited a power demand that was approximately five per cent lower than that of the wider B2 variant, a penalty that could not be compensated by the benefit of higher displacement. Having achieved this much, the project partners were convinced that further hull design improvements would allow them to tweak efficiency by an additional three to four per cent.

Project phase two involved a dedicated, formal hull lines optimization to exploit the full potential of the B1 design. DNV GL’s ECO Lines service, which combines a fully parametric geometry model with computational fluid dynamics (CFD) and dedicated genetic optimization techniques, was the method of choice. The process began with a mutual definition of optimization targets and applicable design constraints. Then a dedicated parametric model was developed which served as a basis for generating hull shape variations. The process ensures that the ship forms derived are buildable while meeting the design constraints.

In this case constraints were applied to keep the displacement in ballast and laden conditions as well as the centre of buoyancy within tight limits. In addition a minimum propeller clearance was defined, and various hard points were added to allow installation of the LNG tanks.

Now the basic design was ready for computer-based optimization using DNV GL’s high-performance cluster of more than 7 000 CPUs. The geometry was generated for each design variant, and hydrostatic properties were analysed to check for intake and stability requirements. Design variants that met the requirements then underwent a performance analysis by means of computational fluid dynamics. More than 120 000 hull shape variations were looked at in the course of this project.

An item of special importance was the alignment of the propeller shaft lines. While many twin skeg designs feature inclined shaft lines to adapt to the local flow conditions, Hudong preferred parallel shaft lines to obtain a more compact machinery space.

To investigate the detailed effects of the rotating propellers in the wake of the skegs, DNV GL utilized a dedicated software tool which uses fully viscous calculations to optimize the propulsion system, accounting for the rotational components of the propeller. Finally a configuration was identified that accommodated a parallel shaft line arrangement and showed the desired level of performance.

Energy efficiency optimization

Because of the complex nature of LNG carrier operation, the machinery and systems must be flexible and operate efficiently across the entire operational profile. Operational and demand profile models were developed using COSSMOS, a DNV GL simulation software tool. Hudong and DNV GL set the speed range parameters for laden and ballast condition ten to 20 knots. In addition, the engineer considered various non-sailing modes, including anchored unloaded, cargo loading, anchored loaded, and cargo unloading condition. Based on the operational profile, various re-liquefaction technology variants, fuel Gas Handling Equipment for Efficient Gas Processinggas handling system configurations, and auxiliary engine economizers were subjected to techno-economic assessments using DNV GL’s COSSMOS tool.

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The results showed that AE economizer systems may bring better important overall efficiency improvement technology. “We were very excited to see the final report, which showed that the expected improvement potential could be fully realized by this JDP“, said Song Wei, when the results had been reviewed. “We subsequently conducted model tests. We will be ready to offer our fourth-generation LNGC V2.0 design to our clients in the coming months – thanks to the great work done by DNV GL“.

Author

Olga Nesvetailova

Freelancer

Literature

1. DNV GL (now DNV). (2024). Maritime Forecast to 2050: Driving the Decarbonization Wave. DNV GL.
2. Drewry Maritime Research. (2024). LNG Shipping Market Annual Report and Forecast. Drewry.
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