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Optimising LNG voyages

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LNG Industry,


Pekka Pakkanen, NAPA Shipping Solutions, Finland, discusses how to use better data to tackle shipping’s most complicated voyages.

Pekka Pakkanen, NAPA Shipping Solutions, Finland, discusses how to use better data to tackle shipping’s most complicated voyages.

The rise of data in shipping is unlocking the answers to a set of fascinating challenges. Big data tools allow us to crunch more numbers faster than ever, providing us with access to ever-richer and more reliable data, such as better automatic identification system (AIS) coverage. This enables us to get better, more dependable insights from the solutions we create.

One of the most interesting challenges to look at tackling, when taking into consideration our industrial wealth of information, is LNG carriers. LNG carriers are unique in that many of them use their own cargo as a fuel source, a practice which is set to further increase in popularity following the implementation of IMO 2020. At the same time, an LNG carrier’s cargo shrinks as it travels, due to inevitable boil-off. This is especially the case on ballast voyages, where some LNG must be used to cool down the tanks in preparation for taking on new cargo. All these factors create a potentially mind-boggling challenge for operators and charterers to solve – how to operate both safely and efficiently, whilst arriving on time, and with the maximum amount of cargo intact. It would be challenging enough if it was simply a question of speed, time and distance. However, this question is further complicated by the inherent unpredictability of shipping. Factors external to the vessel itself, such as the waiting times at ports and canals, play a major role in this equation, and that is before we begin to consider the impact that weather can have.

It is clear that, with increased market growth, the stakes for better operations will grow too. The global fleet is growing quickly, therefore any benefits gained from implementing better operations now will be magnified in the coming years.

Currently the growth of LNG as an energy source is driving significant investment in the LNG carrier market. DNV GL’s recent outlook for the oil and gas industry report predicted that overall energy consumption would see oil “decline steeply” as we see a spike in LNG over the next 30 years.1 In the next few years, even though we are likely to see cycles of both over and under supply, we are also likely to see continued steady growth in the LNG-carrying fleet. According to KNect365, the LNG carrier market is one of the most attractive segments of the global shipping fleet for new investment, buoyed by the ongoing build out of liquefaction capacity initiated in 2016.2 Shipping intelligence company Clarksons, anticipates that the LNG carrier fleet will expand 6.9% in 2020, which is impressive, but less than the expected growth in LNG trade, which is set to increase by 7.4% in 2020.3

Crucially, IMO 2020 is affecting the propulsion methods for LNG carriers in the same way that it is transforming propulsion for the rest of the global fleet. While many LNG carriers are already using forced boil-off gas (BOG) as a propulsion source, a recent McKinsey report finds that IMO 2020 is likely to increase its use as it becomes harder for vessels that use heavy fuel oil (HFO) in conjunction with BOG to do so.4

As the cycles of over and under supply continue, and while spot prices continue to fluctuate, it is imperative for LNG carriers over the next few years to ensure that each part of every voyage is optimised for maximum profitability.

LNG voyages – digital optimisation

It is only through building a complete picture of every aspect of a voyage, and taking into account the unique properties of LNG as a cargo, that we can accurately consider every angle that factors into the profitability of an LNG voyage.

For example, if we are to take an increasingly popular route, Panama to Japan and Korea, based on an LNG carrier, we can see the many factors which need to be considered if journeys such as this are to be optimised. This route exhibits many of the challenges inherent in the sector. Firstly, it is new to many LNG operators. As the economics of LNG rapidly evolve, the industry will require better solutions to quickly work out how best to conduct new voyage routes. The route is also long and often victim to rough and heavy weather, which in turn means a higher potential to save costs with route and speed optimisation. Analysing this voyage allows us to better consider external factors, such as the waiting times associated with the Panama Canal, and reflects the many instances for disruption and unpredictability.

There are important questions to answer at each stage of the journey. Many of the factors are common to all shipping sectors. For instance, what route should be selected, and what revolutions per minute (RPM) profile? How should the voyage planners manage the fact that weather forecasts tend to become less accurate the longer the voyage? Should forecasts be trusted and, if not, what should be done instead?

However, there are also many LNG-specific issues that require independent optimisation, even on ballast voyages. How should the tank cooldown process be managed? Should the vessel continuously keep tanks cold, and at proper pressure, or let all but one heat up to tropical temperatures and cool down on the last day of the voyage? Taking this into consideration, what is the ideal amount of LNG to carry for the cooling of the tanks and for fuel?

When we take into account sections of the voyage, more specifically in the approach to Houston and Panama, route optimisation becomes even more valuable. Waiting in anchorage increases boil-off, which therefore means early schedule management and speed optimisation are vital. Similarly, on the Panama to Japan/Korea route, speed optimisation, and whether to start slowing down if the weather forecast shows adverse weather for arrival, must also be considered.

Based on these factors, it is possible to estimate how much extra revenue could be earned if LNG carried on ballast voyages is minimised, and the impact of speed optimisation and early schedule management are taken into account.

Upon conducting a rough estimation on an LNG carrier, the savings on a single direction of the voyage were found to be over US$150 000. More research is needed to determine savings for different vessel types and routes, but the implication is clear – better data, and using it to plan voyages more effectively, can have a significant commercial impact.

Building the solution

In tackling these challenges, LNG vessel owners have two main challenges.

The first is to ensure that the data collected is as accurate as possible. The second is to ensure that the data does not retire to quiet solitude in a black box. It must be turned into useful information that can reduce emissions in a commercially optimal way.

Both of these challenges face a significant obstacle: data quality. DNV GL recently claimed that data quality was the number one problem for its data platform, Veracity, declaring that, “The market for data quality dwarfs the market for big data.”5

Solving this problem comes down to a question of cost. Earlier this year, NAPA surveyed owners and managers about their data collection and voyage optimisation habits. The survey discovered that, while a wide range of options are used, in every case noon reports are relied upon no matter what else is used alongside.

What this tells us is that the measurements we need to accurately assess a vessel’s performance might not always be available. For example, a ship may not be equipped with adequate sensors to measure the power of the propeller, or, even if it is, the data may not necessarily be disclosed to all the stakeholders. The owner might not reveal the measurements to the charterer who might be paying for the fuel and is interested in the actual level of performance of the vessel. In this regard, a noon report is a good starting point when it comes to accessing information, and this is often used to deduce the level of performance.6

However, a noon report’s simplicity inevitably imposes limitations. If there is only one daily data point on consumption, how much credibility can you truly give it? Moreover, the weather might change during the day quite significantly, thus substantially altering consumption – neither of which can be reported in the noon report. Because the relationships between factors such as wind speed, wave height and fuel consumption are non-linear, this means that variations in weather that cannot be included in a noon report can have a disproportionate effect on vessel performance.

For instance, NAPA has found that on voyages it has studied, there can be a significant variance in weather conditions during a single day on one in three days sailed. Noon reports only record a single value for the wind speed and the wave height, which may be reported or not. These weather variations have an important influence on the fuel consumption of the vessel; within the 4 Beaufort range, which is considered good weather, in order to maintain the same speed throughout, a captain would need to increase fuel consumption by 50% in adverse weather. If operating at constant engine output, one could expect to see as much as a 15% reduction in vessel speed.

A common solution to add richness to this data is to correlate weather information with publicly available AIS data, which allows us to overlay ship positions with weather data. This also has its limits, however. if a vessel is not equipped with sensors (and many are not), it is difficult to make assumptions about a vessel’s performance. This is where it is necessary to leverage knowledge from the realm of vessel design and modelling. By taking all the information from the AIS and the publicly available information about the ship, NAPA can build a digital twin of the vessel, based on its knowledge and experience of naval hydrodynamics and ship design. As a result, some of the challenges created by the lack of available data from the noon report can be overcome.7

This solution enables the construction of generic models that can cover any ship of choice, providing a base from which to begin analysis. This analysis can then be combined with automation signals from 200 vessels that do have sensors installed, which produces further datasets to enhance these models, incorporating data learning methods to continually improve them. With the help of the digital twin, information can be extracted, the performance of a vessel can be monitored, and better, more precise planning of operations can be conducted. NAPA’s digital twin is based on the company’s ship performance model, applying a hydrodynamic model, which considers the coupling effects of wind, waves, current and shallow water, combined with a full model of the propulsion and engine system. This makes it possible to address the force balance of all these factors at the actual location of the ship, at the real operational speed, and in actual wind and wave conditions.8

By increasing the quantity of data available, greater accuracy can be achieved. When studying a fleet for three years, on average, after three months of data collection, the uncertainty of the consumption estimates is less than 7.5%. After half a year, the uncertainty is less than 5%.

All of this can be used to plan vessel operations with better accuracy, with better information on the effect of fouling, the sea margin, estimated consumption and voyage time. The model also helps with the planning of maintenance.

It is vital to combine this information with a detailed understanding of the operation of LNG vessels, however. The reason that optimising voyage or operation of LNG carriers is so complex is because of the complexity of the overall ship systems. Indeed, in most cases, LNG carrier cargo containment, cargo management and propulsion systems are all inter-linked. There are a variety of fuel options; natural BOG (NBOG), forced BOG (FBOG), HFO and marine gas oil (MGO), which are also connected to the overall economics of a cargo transportation deal, in addition to environmental and safety related factors. Therefore, just optimising voyages by weather route and speed might not necessarily provide overall optimisation of the economies of LNG carrier operations, even though all players in this sector are already well aware of the increasing potential benefits of optimising voyages.

This is complicated by the fact that few in the industry have a truly holistic understanding of entire LNG vessel systems and their operations, which makes it challenging to accurately simulate their operation, and build the software and IT solutions that would go alongside this. This is why NAPA is working closely with leading LNG companies in the industry to develop these models and help them integrate the appropriate voyage optimisation solutions.

Reality bites ship owners and operators in all sectors, not just LNG, should expect increased scrutiny over their voyage efficiency, both from a commercial perspective, and also driven by increased awareness of the need to reduce carbon emissions from vessels. In May 2019, for example, Trafigura added a clause to its standard terms and conditions with shipowners, requiring information that will allow it to track how much fuel is consumed per metric tonne of cargo loaded while transporting Trafigura-controlled cargoes. This signalled a powerful shift in the way the industry approaches the topic of fuel efficiency. To provide a sense of the scale of this move, Trafigura concludes more than 4000 shipping fixtures per year, and in 1H18 had a total traded volume of oil and petroleum products that was in excess of 5.8 million bpd.

Conclusion

LNG shipping presents unique challenges for optimising and planning voyages to minimise fuel and cargo loss. However, by making better digital solutions, based on decades of maritime data, available to the widest possible segment of the fleet, NAPA believes that it will be possible to solve these problems and increase the global LNG fleet’s efficiency and financial resilience in the long term.

References

  1. DNV-GL – Energy Transition Outlook 2019
  2. ‘Key trends in the LNG carrier market’, Hellenic Shipping News, (13 August 2019), https://www.hellenicshippingnews.com/key-trends-in-the-lng-carrier-market/
  3. LIANG, L.H., ‘Growing LNG trade fuelling fleet growth’, Seatrade Maritime News, (26 July 2019), https://www.seatrade-maritime.com/europe/growing-lng-trade-fuelling-fleet-growth-clarksons
  4. BAKKALI, N., and ZIOMAS, L., ‘Forced boil-off gas: The future of LNG as a fuel for LNG carriers’, McKinsey & Company, (July 2019), https://www.mckinsey.com/industries/oil-and-gas/our-insights/forced-boil-off-gas-the-future-of-lng-as-a-fuel-for-lng-carriers
  5. HAND, M., ‘Quality top issue for big data use’, Seatrade Maritime News, (3 June 2019), https://www.seatrade-maritime.com/europe/quality-top-issue-big-data-use-dnv-gl
  6. MANDERBACKA, T., ‘Methods for improving operational efficiency’, SAFETY4SEA
  7. HULKKONEN, T., MANDERBACKA, T. and SUGIMOTO, K., ‘Digital Twin for Monitoring Remaining Fatigue Life of Critical Hull Structures’, COMPIT2019
  8. ASHIDA, T., MIZUTANI, N., PAKKANEN, P., VÄISÄNEN, A. and MANDERBACKA, T., ‘Performance Monitoring Insight at MOL’, in HullPIC2019

Read the article online at: https://www.lngindustry.com/special-reports/11022020/optimising-lng-voyages/

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