ssLNG

Small scale LNG (ssLNG)

Changes to regulations concerning the use of heavy fuel oil by the global shipping industry are expected to drive changes in the market for petroleum products. This could include the supply and demand for heavy fuel oil and potential substitutes for heavy fuel oil such as diesel. This could have implications where heavy fuel oil and diesel are used in power generation for remote sites.

The LNG export terminals in Australia and South East Asia plus proposed LNG import terminals in Australia may support opportunities for the use of gas converted from LNG in Pacific nations and increased delivery of gas in the form of LNG in Australia. LNG could assist in meeting smaller distributed energy requirements and provide a response to the changing market for the supply of heavy fuel oil and diesel.

The West Kimberley Power Project includes transport by road train of LNG to remote sites in Western Australia. Small scale LNG carriers, LNG storage and liquefaction facilities are emerging as a solution for fuel supply for:

  • locations that can not be supplied using road transport;
  • larger scale remote power stations; and
  • as an alternative to heavy fuel oil in the marine industry.

There is also a small but increasing availability of LNG ISO shipping containers for the delivery of LNG using conventional container infrastructure.

ssLNG supply chain

The ssLNG supply chain consists of:

  • a large scale LNG export terminal;
  • an ssLNG carrier(s); and
  • an ssLNG import terminal.

LNG is sourced from export terminals associated with production projects or import terminals that re-export LNG, such as the GATE Terminal in Rotterdam.
An ssLNG import terminal consists of:

  • LNG unloading facilities;
  • a storage tank(s);
  • regasification facilities; and
  • in some cases truck loading facilities.

ssLNG import terminals can be land based or floating with the storage and regasification facilities installed on a barge.

Storage tank designs include vacuum insulated bullet tanks for smaller levels of gas demand and steel and concrete tanks for larger levels of demand.

Development of ssLNG as a solution

ssLNG for smaller power stations and industrial users is a relatively new concept. Gasnor, a subsidiary of Shell, developed a seaborne supply chain to supply locations in coastal areas of Norway in the mid-2000’s.

Gasnor historically distributed gas in Norway using pipelines and road transport. This was expanded in 2006 to include the delivery of gas using an ssLNG carrier.

The Coral Methane was built by Anthony Veder to transport LNG for Gasnor to LNG import terminals that supply gas in locations that can not be supplied from the main Norwegian pipeline grid or using road transport.

SkanGas supplies LNG using ssLNG carriers to centres along the coasts of Norway, Sweden and Finland. The LNG is delivered to customers in trucks or regasified and delivered as gas in pipelines.

LNG is also used by the shipping industry in Norway.

Recent ssLNG projects have been developed in Jamaica, Indonesia and Gibraltar.

Jamaican Government policy is to transition from the use of oil to gas as fuel for power generation. This transition commenced in 2016 with an existing power station converted to gas from oil.

Two new power stations that have recently been completed run on gas.

The LNG is supplied from a large scale LNG carrier that has been converted for use as a Floating Storage and Regasification Unit (FSRU).

Gas for one of the power stations is regasified on the FSRU and piped ashore LNG for the power station located at Montego Bay is transhipped to Montego Bay using an ssLNG carrier (see picture on first page).

In Indonesia LNG production plants are in the east or north of the country and domestic demand is in the west. ssLNG has been developed as a solution for fuel supply to a power station in Bali.

LNG is transported from the Bontang LNG Terminal on a Mitsui OSK Lines ssLNG carrier to the Benoa LNG Terminal. Deliveries to the terminal commenced in 2016. The Benoa LNG Import Terminal in Bali has two barges, one for storage and a second fitted with regasification facilities.

The North Mole Power project in Gibraltar includes an 85 MW dual fuel (gas and diesel) base load power station located adjacent to a residential area in Gibraltar.

The power station will be supplied with gas that is regasified at an adjoining LNG import terminal developed by Shell. The terminal will have approximately 5,000 m3 of storage. LNG deliveries are expected to commence in early 2019 using an ssLNG carrier chartered by Shell.

Marine fuel regulations

LNG is slowly being adopted as an alternative fuel in ships, initially by cruise ship operators. Carnival took delivery of the first LNG powered cruise ship in late 2018. Carnival and MSC have additional LNG powered ships on order.

LNG bunkering services are now available in Europe and North America. Infrastructure and vessels are being constructed to provide LNG bunkering services in Oman, Spain, Singapore, Japan and South Korea.
Shell, Total and some of the Japanese energy utilities are developing LNG bunkering services.

A regulatory change that is likely to foster the development of ssLNG is the decision by the International Maritime Organisation to set a global limit for sulphur in maritime fuels of 0.5% from 1 January 2020. Compliance with this includes installing scrubbers on ships to lower the sulphur content of higher sulphur heavy fuel oil or operating ships with other types of fuel including LNG or diesel.

The suitability of oil refineries in Asia to adjust to changes in the mix of demand for various types of fuels and the impact of this on the supply and pricing of heavy fuel oil and diesel is uncertain. The US EIA notes that “the price and availability of higher-sulphur fuels after 2020 remains uncertain”.

This will have an impact on the demand for LNG from shipping companies and potentially from other users as the supply of heavy fuel oil and diesel is affected.

ssLNG carriers

The global fleet of ssLNG carriers that provide shipping or bunkering services is relatively small with about 40 ssLNG carriers. These have cargo capacities in the range of 1,000 m3 to 30,000 m3.
In comparison the global large scale LNG carrier fleet includes about 400 vessels with LNG carriers ranging in capacity from 130,000 m3 to 260,000 m3.

ssLNG carriers are typically less than 150 metres in length compared to the largest large scale LNG carriers which are 345 metres in length.

As the wharfs for LNG export terminals are generally designed to load large scale LNG carriers ssLNG carriers need to include specific design features to enable loading at these wharfs.

This includes dual manifolds, an upper manifold to connect to loading facilities at export terminals that are designed for large LNG carriers with higher topsides. A lower manifold connects to the unloading facilities at the LNG import terminal.

The distance between mooring dolphins at a wharf may also not allow an ssLNG carrier to berth at an LNG export terminal wharf.

Other considerations include the ability of ssLNG carriers to berth without the assistance of tugs at LNG import terminals where tugs are not available.

Innovation in ssLNG

Conceptually ssLNG is scaled down large scale LNG, however the relatively small scale of the demand and the available infrastructure at some potential locations results in unique technical challenges.

Wartsila, Houlder and Trelleborg are suppliers of services or equipment to shipping or offshore oil and gas companies. These companies have trialled a concept for a jetty less LNG transfer system.

This concept would enable a ship to moor offshore and transfer LNG ashore using floating cryogenic pipes.

The jetty less LNG transfer system would be beneficial in locations where there is not a wharf or there are draft restrictions which prevents ships from berthing.

The Adriatic LNG Terminal is a large scale offshore LNG import terminal located off the coast of Italy.

Medium to large scale LNG carriers discharge LNG at the terminal. LNG is stored and regasified for transport in a subsea pipeline to the onshore Italian pipeline grid.

The Adriatic LNG Terminal is a gravity based concrete caisson structure which sits on the seafloor. The terminal is capable of berthing ships with LNG cargo capacity of 65,000 m3 to 152,000 m3.
China National Offshore Oil Company (CNOOC) has developed a concept for smaller concrete caisson structures for LNG storage.

CNOOC has been granted approval in-principle by a marine certification association for the design of modular concrete caisson structures with storage capacity of 5,000 m3 to 50,000 m3.

Drake Energy and Maritime Consulting