LNG Gas Supply System for Military and Nuclear Market

8/18/2019 LNG Gas Supply System for Military and Nuclear Market

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Issue Date: 30 Jan 2016

LNG

LNG‐Gas Supply System for ME‐GI gas‐injecon system Manifold (3 page brochure)………………………………………… 2‐4

FT 01/10/16:US will be a gas supplier to the world by tomorrow ………………………………………………………………… 5‐6

WSJ 12/02/15: Out‐of ‐Bounds CO2 elutes talks………...……………………………………………………………………………………………. 7

Gas Marine Fuel 12/03/15: The Majority of shipping vessels are set to run on LNG within 10 years………………………… 8

Marine Link 11/03/15: ABS deems Crowley Product Tanker ’LNG‐Ready’……………………………...……………………………….. 9

WSJ 07/22/15: Economic Anchor. July 22, 2015……………………………………………………………………………………………………….. 10

IGU World LNG Report 2015 edion—secon 5 …………………….………………...………………………………………………………….. 11‐23

Marine Link 06/10/15:DSME launches LNG carrier for Turkey………………………………………………………………………………….. 24

Motorship 11/27/13: MAN hosts phase of EU LNG iniave. November 27, 2013.…………………………………………………. 24‐25

CONTENTS:

Page:

Within 10 years the majority of shipping vessels will run on LNG...a cleaner, alternative fuel

source. The newest innovation in LNG carrier engine design, M-type, electronically controlled,

gas injection (ME-GI) engines, optimize the capability of slow speed engines by running directly

off BOG (removing the need to reliquefy the gas) or utilizing fuel oil, and ME-GI propulsion

results in less fuel consumption.

Environmental legislation is currently impacting the marine market segment. Ships were

traditionally powered by Heavy Fuel Oil (HFO), which produces high levels of harmful

pollutants. LNG is one of the only fuel source able to comply with the environmental legislation.

The following pages 2 thru 25, represent various publications/news articles regarding LNG

applications, markets, and developments.

Page 1 of 25


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Issue Date: 30 Jan 2016 Page 2 of 25


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The Energy Atlantic, a 290-metre tanker

steaming slowly through the Gulf of

Mexico, is about to make history. It isscheduled to arrive on Tuesday

at Cheniere Energy’s Sabine

Pass liquefied natural gas plant on the

coast of Louisiana, to be loaded with the

first cargo of LNG to be exported from

the “lower 48” contiguous states of the

US.

The shipment is a momentous event for

energy markets, marking the arrival of

the US as a gas supplier to the world.

The plunge in oil prices since the sum-

mer of 2014 has dragged down the value

of LNG, which is often sold on crude-

linked contracts, and damped the excite-

ment over US exports. The economics of

shipping gas from the US were compel-

ling two years ago, but are now margin-

al. Deteriorating market conditions have

put the brake on any new investments in

US LNG.

Even so, US LNG exports are likely tohave a significant impact, holding down

energy costs for consumers in Europe,

Latin America and Asia. They will also

provide tough competition for anyone

hoping to build rival LNG plants, such as

the proposed projects in east Africa, the

west of Canada, or Russia. By the end of

the decade, the US is likely to be the

world’s third-largest exporter of LNG,

after Qatar and Australia.

Combined with the new suppliesfrom Chevron’s huge Gorgon and Wheat-

stone projects in Australia, which are

scheduled to come on stream this year,

exports from the US are making it a

buyers’ market for LNG.

“There is an awful lot of LNG sloshing

around the world at the moment, with

even more to come,” says Frank Harris

of Wood Mackenzie, a consultancy. “Andthat is putting downward pressure on

prices.”

A decade ago, this prospect seemed

wildly unlikely. US gas production was

in decline and by the 2010s the country

was expected to be a large importer of

LNG, not an exporter.

The shale revolution, the result of

advances in production techniques that

made it possible to extract gas atcommercially viable rates from previ-

ously unyielding rocks, meant that US

production started rising again in

2006, and since 2011 it has been break-

ing new records every year.

Charif Souki, Cheniere’s visionary

founder who

was ejected from the

company at the end

of last year, was one

of the first to see thepotential for LNG

exports from the US.

In 2010, he submitted

the first application

to regulators to

convert the LNG import terminal that

Cheniere had built at Sabine Pass,

which was being barely used because

US domestic gas production was so

strong, into a liquefaction plant.

Many in the industry were skepticalthat the project could be made to work

but the plan took a decisive step for-

ward in October 2011 when Britain’s BG

Group signed a 20-year contract to buy

most of the production from Sabine

Pass’s first “train”, as LNG production

units are known. After that contract

was signed, the trickle of proposals for

similar projects turned into a flood.

The US Department of Energy has

received applications to export LNGfor 54 projects. If they all went ahead,

they would have the capacity to liquefy

about 60 per cent of the entire gas

production of the US.

So far, however, just five plants have

started construction: Cheniere’s

Sabine Pass and

its Corpus Christi

project in Texas;

Freeport LNG,

also in Texas;Cameron LNG in

Louisiana; and

Cove Point LNG,

on the east coast

in Maryland.

Those projects have been able to make

progress because they were fast

enough at signing up customers on

long-term contracts that guarantee

their revenues. Since the end of 2014

those customers, mostly utilities inEurope and Asia, have been reluctant

to make any further commitments.

The price of LNG delivered in north-

east Asia, including Japan and South

Korea, the world’s two largest mar-

kets, has fallen along with oil. It has

dropped to about $6.65 per million

US will be a gas supplier to the world by tomorrow– January 10, 2016

http://http://www.ft.com/intl/cms/s/0/f1773832-b5ee-11e5-b147-e5e5bba42e51.html#axzz3yHh5aaug

British thermal units, just a third of its

price of almost $19 per mBTU two years

ago, according to Argus, the information

service.

At that price, with benchmark US gas at

about $2.40 per mBTU, plus liquefaction

costs of $3 to $3.50 per mBTU, plus

transport at about $2 per mBTU, LNG from

Louisiana or Texas does not look commer-

cially attractive.

Similar calculations apply in Europe. Bench

mark UK National Balancing Point gas has

dropped by almost a half since 2013 to

about $5.20 per mBTU, meaning that LNGexports from the US to Britain are unlikely

to cover all of their costs.

Since 2013, most of the new LNG projects

launched worldwide have been in the US.

However, the deteriorating economics

make it unlikely that any new plants will be

approved for a while.

The plants that have already started con-

struction, though, are highly unlikely to be

stopped. This is because the companies

buying LNG from one of these plants have

typically made firm commitments for 20

years under which they have to pay the

charges they have promised, even if they

do not use the capacity.

The US LNG projects will add to global over

supply. Bernstein Research has estimated

that the world’s liquefaction capacity will in

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Continued—US will be a gas supplier to the world by tomorrow-January 10, 2016

hp://hp://www..com/intl/cms/s/0/f1773832 ‐b5ee‐11e5‐b147‐e5e5bba42e51.html#axzz3yHh5aaug

the next three years rise by 90m tonnes

per annum, which is about 35 per cent ofpresent demand.

Nikos Tsafos of Enalytica, a research com-

pany, says US LNG should help hold gas

prices down for a few years at least.

When the global oversupply is finally ab-

sorbed by rising demand, the next wave of

plants in the US, including projects backed

by ExxonMobil and Kinder Morgan, will be

poised to benefit.

There are other promising potential new

sources of LNG in the world, including the

projects to develop large gas discoveries

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World leaders are hammering out

ways to cut their countries’ carbon

emissions in Paris. But what about all

the carbon dioxide—from planes and

ships—emitted outside any one coun-

try’s borders?

Airlines and the global maritime indus-

try count among the world’s biggest

CO2-emitting industries. Unlike emis-

sions from power plants or passenger

cars, CO2 from planes and ships ply-

ing international routes aren’t tabulat-

ed as part of any one country’s total

emissions. Those totals are the main

subject of haggling in Paris this week

and next, aimed at coming up with a

concrete plan to limit man-made

climate change.

That omission is ratcheting up pres-

sure on negotiators in Paris to figure

out how to handle that uncounted CO2,

and whether to force the industries’

global watchdogs to come up with a

credible, separate plan to rein in air

and sea emissions.

One big challenge: It’s hard to peg just

how much CO2 the two industries are

emitting in the first place.

A recent European Parliament report

estimated between 3% and 4% of

global, man-made CO2 emissions

came

from

inter-

national commercial flights and ship-

ping. Left unchecked amid efforts to

reduce emissions elsewhere, that

share could grow to as much as 40%

of global emissions by 2040, the re-

port warned.

The International Civil Aviation Organi-

zation, a United Nations body, puts the

current contribution from internation-

al aviation to global C02 emissions at

1.3%. Its shipping counterpart, the

International Maritime Organization,

said in a report last year that from

2007 to 2012 such emissions reached

an average 3.1% of the global output.

The issue hasn’t been at the top of the

climate-change agenda among negoti-

ators in the yearlong run up to the

Paris talks. But the threat of a more

forceful approach to reining in air and

sea emission has long shadowed those

industries. It is also flaring anew as an

irritant for environmental groups,

which say executives haven’t done

enough to come up with a plan on theirown.

“Progress has been insufficient,”

said Andrew Murphy, a representative

for Transport & Environment, an envi-

ronmental advocacy group.

A preliminary paragraph in the draft

of the Paris accord—a document

global leaders hope will spell out a

final, concrete plan—could require

that countries work through the U.N.

agencies to slice up emissions from

such international trips by air and sea

and apportion them to individual coun-

tries.

The ICAO and IMO have taken leading

roles in trying to broker the details of

any agreement, and representatives

of both are in Paris now.

Countries with rapidly growing air-lines, or those heavily dependent on

tourism, argue any moves to limit

flight emissions will favor more ma-

ture markets, such as those in the U.S.

and Europe. The airline industry,

meanwhile, has fought against what it

worries would be a patchwork of

national regulations and taxes that

would govern its emissions.

The European Union has, for instance,

threatened that the lack of a global

agreement on international flight

emissions could spur it to revive

efforts to include them in its carbon

cap-and-trade mechanism, something

carriers so far successfully have

fought.

“We are supportive of

ICAO putting together a

framework that gov-

erns the entire planet,”

said Mark Dunkerley,

chief executive of Ha-

waiian Airlines par-

Out-of-Bounds CO2 Elutes Talks—by Robert Wall and Costas Paris– December 2, 2015

For the shipping

industry, the IMO

has imposed an

efficiency

standard for

ships built since

2013.

Carbon‐dioxide emission from ships don’t count toward naonal totals.

hp://www.wsj.com/arcles/out‐of ‐bounds‐co2‐clouds‐emissions‐tallying‐1449107855

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Environmental legislaon is

the key

factor

currently

im‐

pacng the marine segment.

While ships were tradionally

powered by Heavy Fuel Oil

(HFO), which produces high

levels of harmful pollutants,

including sulphur dioxide

(SOx), internaonal law now

states that shipping fuel can

contain no more than 3.5%

sulphur. Further, the limit in

Emission Control Areas (ECAs)

or Sulphur Emission Control

Areas (SECAs), which current‐

ly include coastal areas such

as the Balc Sea, North Sea

and the waters surrounding

North America and the Carib‐

bean, is 0.1%.

LNG is one of the only fuel

sources able to comply with

these strict limits and, with

the majority of vessels oper‐

ang in coastal areas, the

need for LNG‐compliant solu‐

ons is set to become a must

for operators in the very near

future. Ten years from now,

the majority of vessels will

run on LNG and convenonal

vessels will have very limited

trading opons. This supports

the CapEx argument – while you may have to pay more

for your LNG‐compliant solu‐

ons in the short term, there

will be significantly more val‐

ue to be gained from it down

the line.

Against this backdrop, SMi’s

Gas as a Marine Fuel master‐

class will examine the grow‐

ing demand for LNG as a ma‐

rine fuel as a result of an in‐

creasing emphasis on envi‐

ronmental performance and

how to best prepare for it by

examining how this is be‐

ing implemented world‐

wide, with focus on recent

developments in Europe and

the US. The full‐day pro‐

gramme will also explore the recent technical and regula‐

tory developments and how

you can best adapt to these

changes.

Source: E-mail from [email protected]

“LNG is one of the

only fuel sourcesable to comply

with these strict

limits…”

The Majority of Shipping Vessels are Set to Run on LNG within 10 years, with

Conventional Vessels having very Limited Trading Options | Gas as a Marine Fuel .

Gas as a Marine Fuel | 3rd

December 2015, Central

London, UK

Register online to network

with latest attendees in-

cluding ExxonMobil:

www.smi-

online.co.uk/2015gasmari

nefuel.asp

Alternavely, con‐

tact Marn Hughes on tel

+44 (0) 20 7827 6078 or

email mhughes@smi‐

online.co.uk

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“ABS has played a fundamental role

in supporting the ambitions of the

maritime industry as it moves to

embrace the opportunity of LNG as

fuel,” said ABS Chairman, President

and CEO Christopher J. Wiernicki.

“This milestone builds upon our workto provide owners with the guidance

and support they need to move ahead

with shipbuilding projects that allow

them the flexibility to respond to

changes over the lifetime of their

vessels.”

According to ABS, who published

the Guide for LNG Fuel Ready Ves-

sels in 2014, its LNG-Ready endorse-

ments allow shipowners and yards the

flexibility to limit initial investment

while planning for the future conver-

sion to dual fuel or gas-powered

combustion engines.

Rob Grune, senior vice president and

general manager petroleum services

Posted by Eric Haun

Four-ship series built to ABS class is

first to take advantage of LNG-Ready

approval for potential conversion to

LNG fuel in the future

ABS has issued the first LNG-Readyapproval in accordance with its Guide

for LNG Fuel Ready Vessels to a

product tanker, granting LNG-Ready

Level 1 approval and approval in

principle for Crowley Maritime Cor-

poration’s new Jones Act tank-

er Ohio, the first in a series of four

ships built by Aker Philadelphia

Shipyard

By achieving compliance with the

ABS Guide for LNG Fuel Ready

Vessels, Crowley has the option to

convert the product tankers to LNG

propulsion at a later date having

already been granted a conceptual

review.

for Crowley, said, “As our business

continues to shape itself to better

meet the requirements of our custom-

ers, these vessels that stand ready and

able to operate on a cleaner, alterna-

tive fuel source are our way of antici-

pating future demands.”Crowley will christen Ohio today at

the Tampa Cruise Terminal. The

50,000 dwt, 330,000-barrel-capacity

ship has already made two voyages to

date carrying clean petroleum prod-

ucts to Florida.

The three remaining product tankers

are expected to be delivered through

2016.

ABS Deems Crowley Product Tanker ‘LNG-Ready’- November 3, 2015Source: (http://www.marinelink.com/news/lngready-crowley-product400340.aspx)

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Fleet Size

Source: The Wall Street Journal | Wed. July 22, 2015 |

Rows of shipping containers at the freight terminal at Piraeus port in Greece last week. PHOTO: SIMONDAWSON/BLOOMBERG NEWS

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electrical systems and the

introducon of a passive par‐

al reliquefacon system add

to these

LNG

vessels’

efficien

‐

cy and further help to reduce

the unit freight cost.

Over the next 8 months DSME

will install the cargo contain‐

ment system capable of

transporng 174,000 m3 of

LNG and put the ship and its

equipment through the re‐

quired tests and trials.

Posted by Eric Haun

Teekay’s first M‐type, Elec‐

tronically Controlled, Gas

Injecon (MEGI)‐powered

LNG vessel, Creole Spirit, was

floated out at the Daewoo

Shipbuilding & Marine Engi‐

neering (DSME) shipyard in

South Korea on May 29. The

vessel is on charter contract

with Cheniere and is expected

to enter service early 2016,

making it the most efficient

LNG ship on the water with the lowest unit freight cost

in the world fleet.

The two‐stroke engine tech‐

nology provided by MAN

Diesel, the MEGI propulsion

system, is driving a step

change in global LNG vessel

efficiency.

While

the

most

efficient Dual Fuel Diesel Elec‐

tric (DFDE) propulsion sys‐

tems have daily consump‐

ons in the region of 125‐130

metric tons including sea

margin, the MEGI vessels

have a consumpon of 100

metric tons. That being said,

it is not just the fuel con‐

sumpon that makes the two

‐stroke story so compelling.

The reducon in the num‐

ber of cylinders requiring

overhaul, the reducon in

the size of the complex

Special points of interest:

The two-stroke engine

technology provided by

MAN Diesel, the MEGI pro-

pulsion system, is driving astep change in global LNG

vessel efficiency.

DSME Launches LNG Carrier for Turkey—June 10, 2015

Creole Spirit (Photo: Teekay)

Source: http://www.marinelink.com/news/launches-carrier-teekay392752.aspx)

MAN Diesel & Turbo has marked the final phase of the EU-

funded Helios project by hosting an industry conference at its

PrimeServ Academy in Copenhagen.

The Motorship attended the event, at which the results of the Heli-os project, aiming to develop a research platform for an LNG-

fuelled two-stroke marine Diesel engine. Helios is part of the EU

7th framework programme, and MAN as lead organisation was

partnered by Germanischer Lloyd, Kistler Instruments, Sandvik

Powdermet, TGE Marine Gas Engineering and four universities -

Uppsala, Erlangen, Jonkoping and Lund. (continued on 3 of 17)

MAN Hosts Final Phase of EU LNG Initiative– November 27, 2013

MAN Diesel & Turbo ME‐GI engine

http://www.motorship.com/news101/lng/man-hosts-final-phase-of-eu-lng-initiative

The MAN Diesel MEGI

propulsion system, is

equipped with Dynamic

Control’s:

Gas Supply System for ME‐GI

gas‐injecon system

Manifold.

Refer to pages 2,3,4 of 25.

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The project centred around

MAN's ME-GI research engine

and it was enlightening to see the

two different approaches to gas-

fuelled two-stroke developmentsfollowing our visit to Wartsila in

Trieste two weeks ago. MAN's

high pressure gas system is un-

doubtedly more complex than the

competing low-pressure technolo-

gy, burns a higher percentage of

pilot fuel, and will need EGR or

SCR in order to meet IMO Tier

III emissions limits. However, it

appears to be engineered with an

even more highly fail-safe approach to problems with the gas

system and a simpler retrofit pos-

sibility. In addition, the company

says that it offers shipowners the

most flexible choice of fuel possi-

ble, and although NOx emissions

are currently above Tier III limits,

methane slip is very low, so car-

bon emissions - and hence EEDI -

implications are highly positive,the engine is tolerant to variations

in gas quality, and it can run on

gas at loads of 10% or lower.

MAN is confident that with fur-

ther development the pilot fuel

percentage can reduce further, and

NOx emissions can be cut.

The Helios project has explored

wider aspects of LNG as fuel in

Europe, including availability,

pricing and infrastructure, as well

as lubrication and wear issues

resulting from using ultra-low

sulphur fuels.

The ME-GI engine has already

attracted orders, the first being for

TOTE container ships, which was

not expected by MAN, as

well as Teekay LNG tank-

ers and for two larger con-

tainer ships for US compa-ny Matson. No doubt the

low price of LNG in North

America has influenced

these orders. MAN ex-

pects the market for dual-

fuel two-stroke engines to

grow rapidly as the lower

ECA sulphur limits come

into force.

Continued—MAN Hosts Final Phase of EU LNG Initiative– November 27, 2013http://www.motorship.com/news101/lng/man-hosts-final-phase-of-eu-lng-initiative

Documents

LNG Gas Supply System for Military and Nuclear Market