With an existing fleet of nine LNG carriers and four FSRUs, Golar LNG is already recognised as an industry leader in LNG transportation and regas. But with an ambitious newbuilding programme now underway, Golar LNG has moved quickly to capitalise on rising global demand for natural gas.
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Text:Kongsberg Maritime Communication
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Gunvor Hatling MidtbøVice President, Communications
Golar has been operating in the LNG segment for 30 years under various ownership and brands. Since 2001, when investor John Fredriksen took control of the company, Golar LNG has grown from a modest fleet of six LNG carriers to nine, and has added four FSRUs – all on long-term contracts.
According to Golar Chief Technical Officer, Hugo Skår, Golar LNG’s rapid development owes much to the entrepreneurial spirit of Fredriksen. “While stock listed in Oslo and New York, the company has a measure of autonomy that allows us to act quickly when we spot an opportunity,” he says. “Rather than create restrictive longterm plans, we monitor the market carefully and act decisively when the timing is right.”
A FORCE FOR PROGRESS
Golar LNG’s stated goal is to be a progressive player in the LNG sector and in particular help to push the market towards greater flexibility. “We champion LNG as an alternative fuel and believe LNG should be on equal terms with oil with regards to improved flexibility of trades and shipping,” says Skår. “These beliefs have been at the core of our successful effort to expand into the LNG value chain.”
Over the past five years, the company has tried to encourage the industry to embrace proven technologies from other shipping sectors. According to Lars Erik Egeberg, Project Manager at Golar Wilhelmsen Management, one Golar LNG specialists were heavily involved in the development of the first IMO Gas Code, which was developed in the mid seventies. “The industry is relatively conservative, so many of these principles are still in place which is good,” says Egeberg. “However, we are also trying to encourage a more flexible and progressive attitude, particularly in the floating regas segment.”
PROVEN TECHNOLOGIES
Egeberg notes that there are examples of proven technologies in other shipping sectors that would have a positive impact on LNG shipping if the sector were only willing to adopt them. For example, the industry has long been cautious about the ship-to-ship transfer
of LNG, even though similar transfers between oil tankers and LPG vessels have been taking place for decades. As part of a development project to be the first company to convert an LNG carrier into an FSRU, Golar LNG required the approval of industry guidelines for ship-to-ship transfers. “Ship-to-ship transfer is not based on any revolutionary technology,” notes Skår. “In fact, much of the technology the industry is currently debating has actually been around for a long time.”
Likewise, the technology behind Golar LNG’s concept for floatingproduction (FLNG) is already available. “Our predecessor Gotaas- Larsen actually developed a prototype for FLNG as early as 1977, but there are still no FLNG units in operation. So it shows how long it takes to develop technology and surpass the commercial and contractual hurdles in order to actually bring it to market.”
But all that might be changing. Last year, Shell announced last year that the company plans to construct the world’s first FLNG facility, which will be placed about 200 kilometers off the Australian Coast to serve the Prelude gas field. “What made the project commercially feasible was that Shell controls the whole supply chain,” notes Skår. Once completed, the Prelude FLNG facility will not only be the world’s first FLNG facility, but will hold the title of the world’s largest floating object ever constructed. “It will also help change how energy companies see floating production,” predicts Skår.
PROOF OF CONCEPT
Skår notes that Golar LNG goes to great lengths to provide proof of concept when getting the industry on board. When developing the FSRU projects in Brazil, Dubai and Indonesia, we worked together with reputable International Oil companies who proved and demonstrated our concept through their technical assurance program. We have zero tolerance for downtime and recognise that it is healthy to be a little conservative, but when we identify clear advantages to certain technology, we make a strong case.”
Skår says that the industry is beginning to see the light. “The FSRU concept has proven to be a safe, reliable, flexible and affordable alternative to land-based LNG terminals and as we have demonstrated over time, ship-to-ship transfers are routine,” he says. “And with more FSRU projects now in the planning stage than ever before, energy companies are showing signs that they appreciate the value these new concepts can provide.”
BREAKING NEW GROUND
There is perhaps no better example of Golar’s willingness to lead from the front than its conversion of LNG carriers to the industry’s first FSRUs. Initially put forward by Golar LNG’s main engineering partner Moss Maritime in 1997/8, the FSRU concept was not new. Indeed, for many years, environmental concerns, congested ports, security issues and cost considerations resulted in the delay or cancellation of building new land-based terminals or expanding existing facilities. By placing the terminal offshore, many regulatory and environmental issues could be avoided.
With the full support of Fredriksen, Skår initiated a project to convert LNG carriers to the industry’s first operational FSRUs. The Golar Spirit was chartered by Brazil’s energy giant Petrobras soon after the conversion had started. Today, Golar LNG is one of the major players in the regasification market, with four FSRUs currently in operation and two more on order. Skår says the speed of installation and operational flexibility makes the FSRU concept an attractive option for energy companies seeking access to new markets. “FSRUs are an efficient, low-cost entry to LNG for consumers and countries that do not have the necessary infrastructure for land-based LNG operations,” he says.
“We champion LNG as an alternative fuel and believe LNG should be on equal terms with oil with regards to improved flexibility of trades and shipping”
FLOATING POWER PLANTS
Golar is also exploring several other opportunities in the LNG supply chain. One such idea is the development of floating power plants. Rather than exporting gas from a floater to a port, both units are combined on one floater so that electricity can be exported rather than just gas. Skår states that as is often the case in the LNG sector, this initiative is being prevented by the lack of an appropriate commercial arrangement. “We are ready to go on this from a technical point of view. If we find the right commercial set-up we can deliver this solution in 30 months,” he says.
RAPID EXPANSION
Despite Golar LNG’s significant focus on FSRUs, LNG carriers make up the majority of its fleet. With the LNG sector booming and vessels attracting healthy day-rates, Golar LNG is now rapidly expanding. Initially, the company ordered four, but as market conditions improved, kept adding to the order book. Today, the company has 13 vessels on order.
All of the vessels are equipped with a TFDE propulsion system and are built with the basic LNGC design. There are seven sister ship LNG carriers, two FSRUs with slightly different designs and two winterised and ice class vessels ordered at SHI. Apart from one of the FSRUs being 10-cbm larger than its 160-cbm counterpart, the vessels are very similar and equipped with many of the same systems. In addition, two conventional TFDE LNG Carriers have been ordered from Hyundai Heavy Industries (HHI). All newbuildings will have state-off-the-art increased insulation thickness in order to reduce the cargo boil-off to better match the higher efficiency of the Tri-Fuel engines.
FUEL EFFICIENCY
As with all newbuildings, these vessels are designed to optimise efficiency. According to Egeberg, managing fuel efficiency for an LNG carrier requires a different mindset.
‘’On LNG carriers, you have to look at how the propulsion system use the boil off gas. Two-stroke engines are more fuel efficient, but it is also important to ensure that the boil off gas is utilized efficiently in all operation modes.” Golar LNG insisted that Kongsberg systems be installed on all of its vessels, including, automation and the custody transfer system, K-Gauge CTS. Egeberg says the company has always been satisfied with Kongsberg as a partner. “Kongsberg offer us a excellent support in the operation phase which is very important because of the long lifecycle of LNG vessels. The company’s attention in critical situations is invaluable to us. We also know Kongsberg is financially stable and therefore a long-term partner.”
BRIGHT FUTURE
Skår says that while a number of competitors have emerged, he is confident that Golar LNG will be able to maintain a position of strength. “This is where the industry conservatism is in our favour because experience and a good reputation are very important in LNG,” he says. “We have both the design and operational experience and have been very successful at leveraging this experience to secure FSRU opportunities. We see a bright future not only in transportation and regas, but in FLNG as well.“