Sunday, April 18

Slower near-term growth in new LNG infrastructure

“Looking ahead, as the global economy slowly opens up and continues on its road to recovery,” said Mr Bancroft, “a majority of industry forecasts estimate for the LNG marketplace to be oversupplied across most of the 2020s, requiring substantial investment in LNG infrastructure to access new markets, which we expect to be mainly based on new FSRU terminals.”

One of the world’s largest owners and operators of floating storage and regasification units (FSRUs), Excelerate currently has FSRUs operating in Argentina, Bangladesh, Brazil, Israel, Pakistan, UAE, and the US. The Houston-based owner continues to target emerging LNG import opportunities, such as in the Philippines, but Covid-19 has injected an amount of uncertainty into the market.

“In its current state, the LNG market has entered into more of a buyer’s market, with spot prices in 2020 hovering around US$2/MMBtu, driven in part due to an enormous temporary reduction in energy demand due to Covid-19,” said Mr Bancroft. “This has been further exacerbated by the downturn in oil prices (which LNG cargoes from long-term contracts are priced) and a slower growth in the investment of LNG infrastructure (ie, import terminals) in new emerging markets, which is necessary to meet the demand for natural gas in these markets and to keep pace with global supply growth.” Added Mr Bancroft, “These conditions have allowed buyers to dictate historically competitive prices and flexible terms within their sales and purchase agreement (SPAs).”

Energy demand destruction caused by the Covid-19 pandemic and the low-price oil environment have had a further knock-on effect on the market, noted Mr Bancroft.

“The shale gas revolution in the US and the build out of LNG production facilities – especially in the US and Australia – and the LNG vessel fleet following the earthquakes and tsunamis from 2011 in Japan are the primary factors for the shift in the market,” Mr Bancroft told LNG Shipping & Terminals.

Over the past decade the LNG industry has seen a paradigm shift in the marketplace for global LNG trade, according to Excelerate Energy chief operating officer Calvin Bancroft. This shift has been marked by increased liquidity, destination flexibility for the delivery of cargoes, diversified price formulas (ie, Henry Hub-indexed cargoes) and a burgeoning spot market.

Expanding its fleet of FSRUs

By the end of 2020, Excelerate Energy expects to transition its entire fleet to its newly formed ship management arm Excelerate Technical Management, according to Mr Bancroft.

In June, Excelerate expanded its fleet of FSRUs to 10, taking delivery of Excelerate Sequoia from South Korea’s Daewoo Shipbuilding and Marine Engineering (DSME). The FSRU joins the Excelerate fleet under a five-year bareboat charter (BBC) signed with Greek shipowner Maran Gas Maritime in September 2019. Excelerate will have the option to purchase Excelerate Sequoia during the five-year BBC.

The vessel completed its first gas-up and cool-down operations at POSCO Energy’s Gwangyang LNG Terminal in Jeonnam, South Korea in June. South Korea’s first private LNG terminal, Gwangyang, has carried out gas-trial and gas-up/cool-down operations for more than 150 vessels since 2005. Gas-up is one of the mandatory procedures an LNG carrier must perform to make the vessel commercially ready to receive LNG cargoes.

Operational flexibility: FSRU or LNG carrier

Capable of operating as either an FSRU or a fully tradeable LNG carrier, Excelerate Sequoia has an overall length of 294.5 m, beam of 46.4 m, draft of 11.7 m and depth of 26.5 m, with a storage capacity of 173,400 m3. The vessel’s main generators consist of two 6L Wärtsilä 50 DF and two 9L Wärtsilä DF engines, with a service speed of 18 knots.

Of particular note is the attention to crew comfort on Excelerate Sequoia, with limitations set on noise and vibration as signified by special Bureau Veritas (BV) class notations CONF-Noise 3 and COMF-Vib 3.

Mr Bancroft also highlighted Excelerate Sequoia’s LNG vaporisation design, which uses glycol water as the heating medium in a closed loop to regasify the LNG. The indirect glycol water regas system does not require any direct seawater interface with the vaporiser. For storage, Excelerate Sequoia is equipped with a GTT NO96 glass wool cargo containment system, with an expected boil-off rate (BOR) of 0.122%, surpassing the industry average BOR of 0.15% regardless of operating as either an FSRU or LNG carrier.

Other innovations on Excelerate Sequoia are its Klaw Safety Integrated Level Safety Instrumented System (SILSIS) ship-to-ship transfer system. SIL2 compliant, the Klaw SILSIS is an automated system for managing LNG transfers and emergency situations in flexible hose operations.

SILSIS provides continuing system diagnostics, both before and during LNG transfers, along with monitoring operations and complete control over ESD1 and ESD2 procedures and black box records of transfer data. It also ensures the LNG transfer operation is always maintained at SIL2, is highly ‘available’ and in a ‘ready for transfer’ condition.

A fully automated, programme logic-controlled system, SILSIS minimises the ‘human element’ in the transfer process, maximising cost-efficient availability.

Safe crew changes

Safety is a clear concern for Excelerate Energy, which is grappling with the same crew change issues as the rest of the maritime industry, said Mr Bancroft. “Governments worldwide continue to implement health and safety constraints in the interest of all parties to minimise the spread of Covid-19 during this pandemic,” said Mr Bancroft. “Presently, we remain abreast of global resources that are available in the maritime community, such as the IMO-recommended framework of protocols for ensuring safe crew changes and travel and we modify and adjust our internal procedures accordingly.”

Mr Bancroft said Excelerate has implemented a number of precautionary measures to safeguard the health of its mariners. Among these are enhanced screening/testing, quarantine requirements, personal protective equipment, and strict travel requirements to warrant the health and safety of seafarers.

“Understandably, precautionary health and safety restrictions on a country-by-country level can impact the mobility of our crew changes and we are sensitive to that fact. We are also managing the indirect consequences of Covid-19 by engaging third parties to provide well-being coaching with video conference facilities, educating our seafarers on the management of health and well-being during these difficult times. We continue to modify, adjust and manage the challenges presented by this virus and its impact upon our seafarers,” said Mr Bancroft.