LNG carriers (LNGCs) wanting to use the enlarged Panama Canal when the multi-billion dollar expansion project is completed at the end of next year will for the most part require modifications before they undertake the transit. However these will generally be minor and in most cases will not require ships to be taken out of service.
So says the Society of International Tanker and Terminal Operators (SIGTTO), which has just published a report that it describes as “essential guidance for any owner, operator, charter or ship master wishing to take their LNG vessel through the new locks”.
In an interview with Gastech News, SIGTTO’s General Manager Andrew Clifton said: “We were involved in a risk assessment with the Panama Canal Authority (ACP) and Lloyd’s Register about three years ago. Following that, it was pointed out by our general purposes committee (GPC) that SIGTTO should do a full-scale publication – because it was then realised that there were modifications and various other things unique to LNG which the industry needed to know about.
The 86-page report is claimed to be “essential guidance for any owner, operator, charter or ship master wishing to take their LNG vessel through the new locks”.
“The Panama Canal Authority was part of the working group and we had great co-operation with them all the way through. So everything in the publication is approved by them . . . It’s the first publication by anyone regarding the new locks of the Panama Canal, which is to SIGTTO’s credit. It gives advice regarding all technical aspects of an LNG vessel transit through the canal. It doesn’t go into toll fees because that’s outside SIGTTO’s remit.”
A new route for LNG: LNGCs have not been able to use the existing canal facilities up to now, mainly because of size restrictions. The existing Panama locks have a 32 metre limit on the breadth of ships that can make the transit. All but a few of the almost 400 LNGCs in service have beams greater than 32 metres.
The new locks are 55 metres wide so ships with a beam of up to 49 metres will be permitted to go through. “As things stand,” says Clifton, “that will allow everything except the Q-Flex, the Q-Max [the very large Qatari LNGCs] and the two ‘Pacific Max’ ships, which are the biggest Moss ships in the world.”
However, the new locks will have fendering, unlike the existing locks, and it may be that after a period of operational experience the ACP may relax the safety margin and allow ships with a beam of 51 metres. That would open the route to the smaller Q-Flex ships.
One of the most significant parts of the new report is the section that deals with modifications, says Clifton. “There will be modifications needed to most LNG vessels, mostly of a minor nature that can be done in-service. The publication highlights exactly what’s required . . . One big thing is the wires, because the ACP doesn’t allow wires or tails.
“The ACP didn’t have any real experience of LNG vessel operation – things like gas-burning etcetera – and initially they said ‘no gas burning through the canal’. We pointed out to them exactly how an LNG vessel operates, and as a direct result of SIGTTO’s working groups they’ve agreed that LNGCs can gas-burn through the canal. That’s a win-win situation for everyone because we’ve educated the ACP on LNG vessel operation. It’s been good for them, as well as for us and the industry.”
Volume-based toll fees: While Clifton stresses that SIGTTO does not concern itself with commercial issues, he adds that the ACP has said that tolls will be based on volume not tonnage, which has significant implications. “That takes away the Moss/membrane advantage that Suez has. Suez favours membrane ships because for the same cargo-carrying capacity the ship is physically smaller and they charge by gross tonnage.
“The other thing is the heel – where a vessel is considered loaded – is only 3% of the cargo-carrying capacity in Egypt, which is not very much. So a lot of vessels that are in ballast have to pay the higher toll fees, as if they were loaded. With Panama they’ve gone up to 10% – so for a 150,000 cubic metre vessel that’s 15,000 cubes of heel. It’s unlikely any vessel will have anything approaching that coming back to the US shale exports from Asia. So ships in ballast will be treated as in ballast for toll fees. That’s pretty good for the ship-owners.”
As for how large an impact the new canal facilities will have on the LNG industry, Clifton says: “It’s not going to change the market overnight. It’s like the northern sea route. It’s another option for LNG shipping. The obvious market is US shale exports to Asia. But there are other things that people haven’t focused on quite as much, such as Peru exports coming through the canal. And even LPG. We could get large propane, butane or even ethane carriers using the new locks, in addition to LNG vessels.
“There are only six transits each way per day, so not that many ships will be using the new locks. One LNG vessel in each direction per day equates to about 30 mtpa.”
By Alex Forbes
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