Managing the risk

“In some parts of the world – particularly the US – there is strong lobbying pressure against the rise in LNG trade as some consider each new LNG vessel a ‘ticking time-bomb’ with explosive potential equivalent to an ‘H’ bomb,” said Jan Koren, DNV’s business director for tankers. “However effective rule-making in this area should not be based on misperceptions and political agendas, but rather on an understanding of the big picture.”

Koren explained how LNG shipping, which has evolved considerably during the past four to five decades, has been intrinsically safe and that the LNG carriers in operation, “as of January 2005 about 175” have been built to a very good technical standard, with a high focus on maintenance.

Changing scene

“The development of new technical solutions has been very limited and it may be fair to say that the LNG segment has been among the most conservative and the skills of those involved have been undisputable and safety records for LNG carriers are among the best in the whole shipping industry. No major accidents or release of cargo have occurred,” he affirmed.

But now the scene is changing. New owners, ship managers, building yards, terminal operators, charterers, officers and crews are entering this sector and there is a shortage of most categories of qualified personnel experienced with steam propulsion systems or LNG. “The competition is increasing and the profit margins may go down accordingly,” said Koren, who added: “For this segment, where standards and expectations are so high, there is a continuous need for brand management among owners, not least for newcomers who intend to stay and strengthen their positions.”

Newbuilding

Currently, more than 100 LNG carriers are on order, and the total fleet in operation is likely to double within the next 6–7 years. The size of the vessels has also increased from around 150,000m3 to well above 200,000m3 and this may soon increase further to more than 250,000m3. New technical solutions are now being applied for LNG carriers, although most of them are proven technologies, such as the development from steam propulsion to low speed diesel engines consuming heavy fuel oil or boil-off gas and the introduction of re-liquefaction plants onboard. A life expectancy of up to 40 years seems to have become the industry standard. But, said Koren, this also has an influence on fatigue standard, corrosion margins and corrosion protection standards.

New trades

“New trades in arctic waters like the North Atlantic and Barents Sea have been opened, and cold climate operations with ice and icing conditions are being opened in the Shakalin area. Rougher sea environments and bigger cargo tanks combined with membrane cargo containment systems are increasing the focus on liquid motions and sloshing forces inside cargo tanks in order to ensure that no damage occurs.”

Jan Koren acknowledged that these are all important challenges which the industry has to face with a pro-active approach. “All of us involved have responsibilities and opportunities which can contribute to a constructive development. If we can manage the risks involved and avoid accidents and disasters, LNG shipping may not fall victim to rule making which can be strongly influenced by wrong perceptions and politicians with little understanding of the full picture.”

He concluded “We can then avoid the fate of the oil tanker industry, which is perhaps the segment of shipping which has repeatedly been the target for ‘regulation by disaster’. The LNG industry is believed to have the creativity, initiative, muscle, skills and resources to do what is needed.”

Stuart.D.Brewer@dnv.com

Det Norske Veritas,
NO-1322 Høvik,
Norway,
tel +47 67 57 99 00,
www.dnv.com