CBI: Industry expected to keep pace with LNG vessel demand

Paula Dittrick
Senior Staff Writer

HOUSTON, Apr. 27 -- World shipbuilding capacity has kept pace with new LNG vessel demand during the past decade, and shipyards now are being asked to find ways to deliver more ships each year because many more LNG projects are proposed.

Commercial considerations are driving a trend toward larger and more-efficient LNG vessel designs, American Bureau of Shipping (ABS) spokesman Rick Neilson said Monday in Houston at an LNG conference sponsored by the Center for Business Intelligence Research Inc., Woburn, Mass.

"Strong demand for LNG transport is expected for many years to come. The largest demand growth will come from opening the US market and from China's need for energy. It looks like a steady stream of new and larger LNG carriers will be needed," said Neilson, director of technology and business development for ABS, a Houston-based self-regulating agency to the international marine industry.

LNG trade is expected to expand rapidly in 30 years, and LNG consumption is increasing at a faster rate than pipeline gas consumption, he noted.

ABS said its tally of the worldwide LNG carrier fleet showed 161 vessels as of Apr. 1 with 62 more vessels having been ordered. "The order book number changes almost daily," Neilson added.

Gabriel F. Avgerinos, general manager, LNG and gas consulting, at Poten & Partners Inc., New York, said the cost of an LNG vessel now averages about $1,000/cu m of capacity. He believes that shipyards will be able to supply an anticipated 50 additional carriers by 2008.

"Most yards build 4-6 LNG vessels/year," he said, noting that accelerated LNG vessel construction will affect other ship construction. "If you want more LNG vessels, then there will be oil tankers or cruise ships that will not be built."

LNG trends
Avgerinos and Neilson both foresee a trend toward larger LNG vessels—200,000-250,000 cu m capacity vessels compared with typical existing carriers with 135,000 cu m of capacity.

Neilson said that, "Demand for LNG shipping will double by 2015 with increases in both trade and average haul length.

"The size of LNG ships will grow, supported by lower ship prices and a new generation of terminals," he said.

He noted that 2003 prices for LNG carriers were 65% of 1995 prices. "Even with higher steel prices, vessel prices still are below the 1990s prices," Neilson said.

ABS is involved with several studies involving designs for all types of containment systems and has developed guidelines for alternative propulsion systems. The existing fleet is all steam turbine propulsion.

New propulsion systems are being designed to replace traditional steam turbines with smaller, more-efficient units to help reduce fuel costs and to increase carrying capacity.

Dual-fuel propulsion systems involving natural gas turbines, diesel engines, and electric drives are expected to play a significant role in the future, Neilson said.

When considering larger LNG vessels, most people anticipate a ship with a 40-year life cycle, he said. Structural design issues for larger vessels include fatigue and vibration analysis as well as higher corrosion and noise considerations.

Avgerinos said, "The number of people available to run steam turbines is decreasing. Manpower is there for diesel."

Regarding the future global LNG fleet, Neilson said he wonders where the shipping industry is going to find the people to operate all the anticipated vessels.

Crew requirements particularly will become an issue for larger LNG carriers, he said. A 135,000 cu m LNG carrier typically has a 25-member crew, he said, adding that crew sizes vary by company and by operating philosophies.

Contact Paula Dittrick at Paulad@ogjonline.com.

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