Demand clusters needed
The opening up of Gate to small scale business does not just reflect demand to source LNG from Gate, it has also allowed Skangass the opportunity to use the terminal as a supplementary storage base for its own liquefaction volumes from Risavika.
Skangass delivered five cargoes on board the 16 000 m3 Coral Energy between July and October, according to Gate LNG. The company has a number of regional customers and is set to increase its delivery schedule with the start-up of its fully owned receiving terminal in Lyeskil, western Sweden, in 2014 where it has sold 200 000 tpy - or two thirds of its Risavika production - to local refiner Preem. A source said the extra storage space at Gate would enable Skangass to accommodate its peak deliveries. Skangass has also been looking at buying volumes not just from Gate, but also from the Snohvit plant.
While another Swedish import project in Gothenburg is also progressing towards its final investment decision (FID), political momentum is strengthening behind a string of three to five small scale projects in Finland.
The storage capacities of the Finnish receiving terminals are understood to range from 10 000 m3 to 370 000 m3, although there would be scope for expansions as more gas-intensive activity develops. With the demand for small scale LNG often due to a lack of pipeline infrastructure, the receiving terminals need to be adjacent to a company that can take the baseload boil-off capacity while the rest of the LNG is re-packaged and sold elsewhere.
“Logistically it has to be quite a tight operation,” one terminal owner said.
Different demand clusters are needed throughout the supply chain to ensure sufficient offtake at every step along the process.
While Scandinavian demand is slowly taking shape, there are still missing parts of the supply chain, with a lack of investment in feeder vessels as a particular cause for concern. At US$ 20 million, feeder vessels are seen as expensive, and without a basket of customers to make use of the vessel, it becomes difficult to justify that investment, sources said.
Stop-gap trucking measures
With 40 vessels under construction to take LNG as a fuel, but hardly any feeder vessels to provide those bunkers, trucks are considered as capable of filling part of the void, but not for all vessel types, according to shipping consultant David Bull.
Although trucks are currently used to load LNG bunkers onto small vessels, the most efficient way of providing bunkers to large vessels such as ferries or containerships is via a ship-to-ship transfer. The transfer time is commercially important as ferries in particular need quick turnarounds in port. Truck-to-ship transfers can be conducted at a versatile number of locations, but if more than five truck loads are needed to fill a vessel, the manoeuvre starts to lose its commercial viability, Bull said.
Part of the break-bulk ambitions of the Gate LNG terminal include truck-loading services, with requests for proposals due in the first quarter of 2014. Zeebrugge already offers the service and expects to load around 500 trucks this year, an increase from 300 in 2012 and 65 in the previous year, according to terminal operator Fluxys.
In a bid to secure yet more trucking business - given it is still a long way from its 4000/year or 15/day capacity - the operator has now decided to offer a more flexible service in an auction for 2014 and 2015 truck capacity ending on 7 November. Whereas trucks were previously only able to load from 09:00-17:00 hours local time on weekdays, the company said the service from next year will be available 24/7.
GDF SUEZ has a 12-year agreement with Shell Gasnor to supply it with 7.5TWh (500,000 tonnes per annum) from Zeebrugge on board trucks that started in January 2013. In most of Europe, trucks cannot legally carry more than 24 t, or approximately 55 m3, at a time.
There are signs that the critical minimum of investment in the supply chain will not be ready in Europe by 2015 to warrant the 4.3 million tpy base-case projection to 2020 of an EU-funded study last year.
Speaking at a recent conference in Rotterdam, Andrew Clifton of the Society for Gas as a Marine Fuel, indicated a standardised set of rules and regulations on the subject known as the IGF code will now not come into force before July 2017 at the earliest.
He added the interim guidelines are not mandatory and that “many major issues” are yet to be agreed on, reiterating earlier concerns on the discrepancies in the timelines of regulators.
Outside of Europe, Singapore in particular is keen to rapidly develop its attributes as an LNG hub and has started work on assessing how to best offer LNG bunkering.
Most LNG bunkers will only be used inside ECAs until global regulations tighten, but buyers such as the United Arab Shipping Co. (UASC) that are aiming to deploy LNG ready vessels from Asia to Europe from late 2014, would be interested in taking LNG bunkers before entering ECAs. UASC has placed a US$ 2 billion order for 10 large 'LNG-ready' containerships, which when in LNG bunker mode would likely consume much more than any current ship on the water, according to Bull.
Written by Ludovic Aldersley, Global LNG Markets Deputy Editor, ICIS.Edited by Callum O'Reilly
This is the second of a two part special report on small scale LNG. Read the first part here: Small scale LNG developmentFind out more about ICIS LNG coverage
Read the article online at: https://www.lngindustry.com/small-scale-lng/18112013/small_scale_lng_developments_part_two_447/