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LNG World Shipping

Keppel LNG carrier conversions set the benchmark

Wed 24 Oct 2018 by Mike Corkhill

Keppel LNG carrier conversions set the benchmark
Keppel workers celebrate completion of work to upgrade Hilli into a floating LNG production vessel

Keppel Shipyard’s experience as the go-to facility for floating LNG production and regasification vessel conversions is in demand once again

In July 2018, Keppel Shipyard once again demonstrated its ability to breathe new life into conventional LNG carriers (LNGC) through conversion. BW LNG contracted the yard to reconfigure its 162,500 m3, 2009-built BW GDF Suez Paris as a floating storage and regasification unit (FSRU).

To be completed by the end 2018, the project will be the Singapore yard’s fourth and the world’s sixth FSRU conversion. Sembawang in Singapore and Drydocks World Dubai are the only other yards to have completed an LNGC-to-FSRU conversion.

Keppel has another LNG conversion feather in its cap. Late last year the yard completed the transformation of the 1975-built, 125,000 m3 LNG carrier Hilli into Hilli Episeyo, the world’s first converted floating LNG production (FLNG) vessel.

The LNG carrier FSRU and FLNG projects augment the Singapore facility’s extensive experience in the conversion of oil tankers into floating production storage and offloading (FPSO) and floating storage and offloading (FSO) vessels.

Three decades of repairs

In the early days the majority of LNG carrier drydockings at Keppel involved spherical tank ships

Keppel is also an established player in the repair of LNG carriers, handling everything from routine drydockings to more rigorous life-extension projects. The yard handled its first LNGC repair in 1990 and, in the early days, was known for its expertise in the repair of Moss spherical tank LNGCs.

However, GTT membrane tank cargo containment systems are now featuring much more prominently in the annual tally of completed projects. The workload aligns with the growing popularity of membranes, to the extent that membrane-tank ships now account for 70% of the global LNGC fleet.

In addition to the LNGC repair work it carries out in Singapore, Keppel is a partner in another major LNGC servicing facility. Operated by the Nakilat-Keppel Offshore & Marine (N-KOM) joint venture, the Erhama Bin Jaber Al Jalahma Shipyard is a purpose-built facility located in the Qatari port of Ras Laffan, across the harbour from the country’s large LNG export complex.

Nakilat, with a fully- or part-owned fleet of 65 LNGCs, four large LPG carriers and an FSRU, is a major customer of N-KOM’s gas carrier repair services. However, a number of other LNGC owners, including Shipping Corporation of India (SCI), Maran Gas Maritime, Teekay, Shell, Mitsui OSK Lines, K Line and NYK Lines, also make use of the Ras Laffan yard for scheduled drydockings.

N-KOM handled its first LNGC repair in April 2011 and since that date has successfully delivered in excess of 800 marine and offshore projects of all types. Between them, Keppel Shipyard and N-KOM handle more than one-third of the world’s routine LNGC drydockings each year.

"The capital cost of the Hilli Episeyo project highlights the attractiveness of FLNG conversions as a route to rapid and cost-effective LNG exports from relatively small gas fields in remote, offshore locations"

Current FSRU work

BW LNG is having BW GDF Suez Paris converted into a floating regas vessel at the Keppel yard in Singapore on a speculative basis. The vessel is to be provided with the capacity to regasify up to 5.6M tonnes per annum (mta) of LNG, a healthy output level even for a newbuilding FSRU.

There is currently a resurgence of interest in such vessel upgrade contracts, as LNGC conversions offer an even quicker and cheaper route to LNG import project realisation than FSRU newbuildings.

Cost is a critical factor in any endeavour but is particularly so for those LNG projects where initial import requirements are likely to be modest and the development of market demand slow and uncertain. For example, the Alexandoupolis FSRU scheme in northern Greece, the Croatia LNG initiative tabled for Krk Island and Total’s plan for an LNG terminal at Vridi near Abidjan in Ivory Coast are proposed projects for which FSRU conversions are said to be an attractive option, due to the pressure to adhere to tight budgets.

As regards Keppel’s BW GDF Suez Paris contract, conventional thinking has it that older LNGCs make the best FSRU conversion candidates. As ageing LNGCs do not command freight rates as high as those offered to newer vessels in conventional trading, a switchover to regasification duties offers a veteran a new lease of life, as well as a healthy and steady late-in-life revenue stream for the owner.

Yet BW GDF Suez Paris, a GTT NO 96 membrane tank ship built by Daewoo Shipbuilding & Marine Engineering (DSME), is not that old. Also, it is powered by a dual-fuel diesel-electric (DFDE) propulsion system, an arrangement that still commands relatively healthy freight rates in the conventional LNGC sector.

In fact, four-stroke DFDE propulsion systems are favoured for FSRUs, even recently contracted newbuildings. The improved fuel consumption figures provided by the new generation of dual-fuel, two-stroke engines are not so critical for regas vessels, due to the predominantly stationary nature of their employment.

Because the DFDE propulsion system only began to make its mark in the LNGC fleet midway through the previous decade, ships so powered are relatively young. Thus, there should be no need to carry out an extensive design evaluation of the ship structure and membrane tank containment system if considering such a vessel for an FSRU conversion. The new intended service life as a regas vessel should not exceed the 40 years’ fatigue life to which the cargo containment system has been designed.

Those membrane tank ships whose cargo containment system was provided with enhanced reinforcements at the newbuilding stage, in order to minimise the risk of sloshing damage, would be looked upon with special favour as an FSRU conversion candidate.

The converted FSRU’s power plant will also need to be able to handle the excess boil-off gas (BOG) volumes generated during the ship-to-ship transfers of LNG from the delivery tanker. The possibility of these likely BOG volumes being over and above the ability of the vessel’s gas combustion unit (GCU) to cope with will need to be studied before proceeding with a conversion.

Solutions include a re-evaluation of the membrane tank containment system, to see if the tanks could be safely assigned a higher maximum vapour pressure rating (of up to 0.7 bar) and the provision of a means to oxidise any excess vapour still arising.

Cost-effective solution

Golar LNG gave Keppel Shipyard the go-ahead to commence work converting its Moss spherical tank LNG carrier Hilli into an FLNG vessel in August 2014. The project, which was completed in September 2017, served to strengthen Keppel’s ties with Golar, as all three of the FSRU conversions handled by the yard to date were for this shipowner.

Following testing and associated commissioning procedures, the FLNG vessel commenced commercial operations in benign waters 14 km off the coast of Cameroon in West Africa in June 2018. Hilli Episeyo is moored by means of an external frame turret arrangement which allows it to weathervane. Cargo transfers to loading LNGCs are being carried out with the two vessels positioned side-by-side (SBS).

Hilli Episeyo is only the LNG industry’s second FLNG vessel to go into service, following the pioneering Petronas floater PFLNG Satu. A newbuilding FLNG vessel, PFLNG Satu was ordered in March 2012 and began producing LNG at its station off Malaysia’s Sarawak coast in December 2016.

The conversion of a spherical tank LNGC into an FLNG vessel has both advantages and disadvantages. Chief among the advantages is the robustness of the cargo containment system; the aluminium spheres are not prone to cargo sloshing damage, irrespective of the tank filling level.

The main disadvantage with the conversion of a spherical tank ship is the lack of main deck space to mount all the required liquefaction and associated process equipment. On Moss ships, most of the top half of each spherical cargo tank protrudes above the main deck.

Golar and Keppel got around this problem by constructing large sponsons on each side of Hilli, according to a design patented by Moss Maritime, the developer of the ship’s spherical tank containment system.

Each of Hilli Episeyo’s two sponsons is 206 m long and 10.5 m wide. Among the modules that Keppel mounted on these structures were four Black & Veatch liquefaction trains, each able to produce 0.6 mta of LNG.

Among the 37,000 tonnes of new steel and equipment that Keppel added to Hilli Episeyo were 9,000 tonnes of process equipment and 8,900 tonnes of steelwork, utilised in the fabrication of the sponsons and the bow mooring structure. The shipyard also pulled 1,800 km of new cabling onboard and installed 250 MW of power-generating equipment.

From a manpower point of view, 4,300 Keppel and subcontractor personnel attended the vessel during the three-year conversion project. A total of 15M man-hours were logged through to project completion.

Keppel completed regas plant installation work on Golar Spirit, the world’s first FSRU conversion, in June 2008

Conversion costs

The capital cost of the Hilli Episeyo project in Cameroon is put at US$1.2Bn, yielding a very low cost per tonne of LNG produced and highlighting the attractiveness of FLNG conversions as a route to rapid and cost-effective LNG exports from relatively small gas fields in remote, offshore locations.

Comparisons with tonnes per annum (tpa) costs of other LNG liquefaction projects, both onshore and offshore, show that the Cameroon scheme’s cost of US$500/tpa is a best-in-class performance. The figure is below even that for a low-cost, integrated onshore project where a new train is added to an existing export terminal.

In this case, the availability of a ready-made, company-owned LNGC hull and the use of the Black & Veatch low-weight, single-mixed refrigerant liquefaction technology were key contributors in achieving the low-cost performance.

Another factor was the availability of a specialised facility like Keppel Shipyard, where the necessary skills and resources for a complex conversion project are readily to hand. Fabricating a complete floating liquefaction facility at dedicated premises also avoids the many challenges associated with erecting a plant in remote onshore locations.

Golar LNG has two further spherical tank LNGCs in its fleet, both of similar age to Hilli, which it has earmarked as future FLNG conversion candidates. Keppel has a standing agreement with Golar under which the Singapore yard will handle any further FLNG conversions that may be required.

While Fortuna LNG - a planned Equatorial Guinea export project seeking to make use of a converted Golar LNGC - appears to have stalled, another possible scheme gathering strength and weighing up the converted FLNG option is the joint Mauritania/Senegal initiative to develop the offshore Tortue field.

BP is leading the 2.5 mta Tortue project and has struck a preliminary deal with Golar covering the provision of an FLNG vessel. Golar has identified Gimi, a sister ship to Hilli, as the most likely conversion candidate for this scheme. BP and project partner Kosmos Energy have indicated that a final investment decision (FID) on Tortue by the end of 2018 is the target, to enable the Golar floater’s first LNG to flow before the end of 2021.

For its part, Golar points out that the success of Hilli Episeyo has stirred interest in its FLNG conversion technology and that other possible projects are being assessed. The evolving scenario could reap major rewards for Keppel.

Membrane partnership

In September 2018 Keppel further strengthened its ties with GTT when it signed a technical assistance and license agreement (TALA) with the designer of the market-leading Mark III and NO 96 LNG membrane containment systems.

Under the terms of the agreement, the global network of 17 shipyards under the Keppel Offshore & Marine (Keppel O&M) group umbrella will be able to offer GTT's LNG membrane systems in projects involving the design, construction and maintenance of LNGCs, LNG bunker vessels, LNG-fuelled vessels and FSRUs.

The shipyards within the Keppel O&M group are involved in not only LNGC repairs and conversions but also the construction of LNGC, LNG bunker vessel and LNG-fuelled ship newbuildings.

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