The World’s First Ever Very Large Ethane Carrier (VLEC)

Gastech, Chiba Tokyo, 4~7 April, 2017

 
Adnan Ezzarhouni 
General Manager 
GTT China 
Suite 3502 BEA Finance Tower, 66 HuaYuanShiQiao Road, Pudong, Shanghai 200120 
[email protected] 
 
Patrick Janssens 
VP, Global Gas Solutions – Global Marine 
ABS (American Bureau of Shipping) 
5th floor, Silver Tower, n°85 Taoyuan Road, Luwan District – Shanghai 200021 
[email protected] 
 
Francois Durand  
Innovation Division ‐ Project Leader 
GTT (Gaztransport & Technigaz), 
1 route de Versailles, 78470 Saint‐Rémy‐lès‐Chevreuse, France 
[email protected] 
 
Mélodie Noris 
Business Development Manager, LPG 
GTT (Gaztransport & Technigaz), 
1 route de Versailles, 78470 Saint‐Rémy‐lès‐Chevreuse, France 
[email protected] 

I. ABSTRACT

The recent US shale gas revolution has created significant change in the world natural gas
markets. It has also significantly changed the petrochemical feedstock market. US shale gas
contains significant quantities of ethane, which cannot be monetized in the short and medium term
in the US. This new supply provides opportunities for European and Asian petrochemical
companies to substitute ethane feedstock for conventional naphtha in the production of ethylene
and other derivative products.

Ethane has never been traded in very large quantities. Ethane or ethylene carriers have typically
been capable of transporting around 22,000 m3 of cargo. It is only in the last few years that larger
ships were constructed to specifically carry ethane, such as Evergas 27,500 m³ ships delivered
from Q3 2015 and Navigator Gas 37,500 m³ ships, delivered from Q3 2016. Much greater capacity
is needed to yield attractive transportation costs from the US Gulf coast to Asia, of an order of
magnitude three to four times the largest built when the FID of this world first VLEC was made.
Very Large Gas Carriers, which are equivalent to this larger capacity, are in service but they are
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typically fully refrigerated and operate around the boiling point of LPG (-48 to -52ºC). Referred to
by industry as “Very Large Ethane Carriers”, large ships accommodating ethane and other
derivatives with lower boiling points (circa -89ºC) had never been designed before. While its boiling
point lies between those typical of the LPG and LNG shipping industries. Liquid ethane also has a
higher density, closer to that of LPG. The appropriate ship architecture is thus a blend of VLGC
(Very Large Gas Carrier) and LNG carrier (LNGC).

The purpose of this paper is to give basic insights into the ethane trading phenomenon and
highlight the challenges that engineers faced in designing this first of a kind VLEC to meet the
demanding cargo requirements of ethane and blend the characteristics of LPG and LNG carriers.
The paper also identifies the state of the art design of the first ever Very Large Ethane Carrier
including the reasoning behind adoption of the membrane type containment rather than other
systems. Technical analyses and tests of the world’s first multi-gas membrane cargo containment
system will also be presented, in order to demonstrate the application for ethane, ethylene, LPG,
propylene and other derivative gases. Finally, the status and lessons learned are shared for the
world’s first six VLEC/Multi-gas carriers currently under construction in Korea for delivery this year.

The world’s first VLEC “Ethane Crystal” was recognized as one of the top five of the “Great Ships
of 2016” by the prestigious “Maritime Reporter & Engineering News”.

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II. US ETHANE MARKET

The recent US shale gas revolution has created significant change in the world natural gas
markets. It has also significantly impacted the petrochemical feedstock market. US shale gas
contains significant quantities of ethane (up to 60% for Marcellus and Utica natural gas liquids
streams). Ethane, which is produced in raw form as a byproduct of oil and gas production (see
graph below), is a colorless and odorless hydrocarbon (C2H6).

Ethane has been used traditionally for ethylene production or left in the natural gas stream for
consumption in electric power, heating or other uses. The ethane market was considered as a low
potential trading market. However, with the rise in shale gas output, all the available quantities of
ethane could not be monetized in the short and medium term in the US. Surplus ethane has
subsequently found a niche market outside the US, attracting new customers from South America,
Europe and Asia for export in liquid form.

Typical natural gas and NGL processing. (Source: American Ethane)

US domestic consumption of ethane is expected to surge, as eight new crackers will be

commissioned by 2020, and additional projects are currently under study. However, Poten &
Partners estimated in September 2016 that seaborne export contracts should not be in jeopardy
and ethane availability will exist for selected potential global ethane export projects (see graph
below).

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US Ethane supply/demand forecast including potential ethylene projects. (source: Poten & Partners,
September 2016)

Between 2017 and 2023, the start-up of seven ethylene crackers causes a decline of the supply
availability. Beyond 2022, a large increase of ethane surplus is estimated, which could be added to
the seaborne market. However, the ethane surplus is highly sensitive to the number of additional
cracker projects that will ultimately come on-stream.

This change in the domestic market does not rely entirely on oversupply, but also on the high
spread between ethane prices in the US and naphtha prices in Europe and Asia. Some ethane
export contracts are linked to the Mont Belvieu ethane price in the US, to which are added terminal
fees, shipping costs and an import cost to arrive at a landed cost. Other indexation formulae exist
based on the natural gas price index, naphtha price index, or other potential references, so ethane
margin economics can be different depending on the contract (see graph below). Globally, since
the slump in oil prices at the end of 2014, project negotiations have ceased. Over the last few
months, discussions have been re-materializing. Will this trend continue in the future? The market
analysts would agree that:

- In the case of a linkage to Mont Belvieu ethane: seaborne buyers would be exposed to a
surge in ethane demand, which could cause ethane prices to skyrocket. However, firming
of oil prices in the US would also encourage more drilling, potentially adding to the ethane
supply.

- In the case of a linkage to naphtha: the relationship of naphtha price to oil prices, which are
expected to remain low in the next few years, could provide the most competitive linkage
for petrochemical plant margins in the near term. As much as naphtha is the alternative
feedstock to ethane, it would make sense. However, margins could shrink dramatically if oil
prices recover.

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NW Europe ethylene plant incremental margins (source: Poten & Partners)

The authors believe that the main consumption areas will import ethane for petrochemical
feedstock. A number of contracts have already been signed for exports of ethane in liquid form,
from the East Coast and the US Gulf Coast to Europe and India. These contract volumes have
been estimated to be around 210,000 b/d.

III. TRADING ETHANE: SHIPPING CAPACITY

Liquefied ethane has generally not been shipped at sea. The emergence of the US as a major
ethane producer introduces the opportunity and the challenge of transporting large quantities of the
product to new overseas markets. Looking at the existing gas carrier fleet very few ships are
actually designed to transport liquefied ethane. With a density 10-15% higher than LNG it is not
suitable to be carried on standard LNG carriers and with a boiling point close to -90°C it can also
not be carried on LPG carriers. In practical terms, carriage of liquefied ethane is restricted to the
existing ethylene carrier fleet.

At the beginning of 2015, the ethylene carrier fleet consisted of roughly 150 ships with an average
cargo capacity of less than 10,000 m3, while the largest vessels have a capacity of just 22,500 m3.
From the beginning it has been clear that in order to support the emerging ethane trade over long
distances, larger ships were required.

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Existing gas carrier capacity in 2015 (sources: Navigator Gas/ViaMar)

Evergas, Ocean Yield and Navigator Gas responded with orders from 2013 onwards for larger
ships specifically aiming at ethane transport. These orders were in many respects upgrades of the
existing ethylene carrier designs using semi-pressurized IMO type C cargo tanks. With cargo
capacities up to 37,500 m3, these new ship were still in the midsize segment, approaching the limit
of what may be considered economical for this type of containment system.

The 37,500m3 LEG carrier “Navigator Aurora” delivered in August 2016. (Source: Navigator Gas/Borealis,
credits: Morgan Hermansson)

In 2014, Reliance Industries, looking to take advantage of its investments in the North American
shale gas industry, was planning to import 1.5 million tons of ethane a year from the United States
to use as feedstock for its crackers. In order to support this long distance trade, larger ships were
necessary to significantly reduce the shipping cost. This resulted in orders for six Very Large
Ethane Carriers (VLEC) with a cargo capacity of 87,000 m3. These vessels employ GTT’s Mark III
Flex membrane-type cargo containment system.

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Emerging market segmentation (Source: Navigator Gas)

IV. TECHNICAL REQUIREMENTS & CHALLENGES OF THE

WORLD’S FIRST VLEC

With the evolution of the ethane trade, especially between the US and Far East, the most suitable
ship size would be the largest possible in order to achieve attractive economics.

The largest possible would have to be similar to the VLGC type for two main reasons:

- To not exceed size limitations imposed by the Houston ship channel, the location of the
main export facility;

- To maintain the flexibility for the vessels to be able to trade LPG as well as ethane, the
VLEC needs to be compatible, from a size standpoint, with major LPG export and receiving
terminals throughout the world.

Therefore the overall dimensions of the VLEC would be a length of ~230m, a breadth of ~36.6m
and a draft of ~11.5m. The general layout of the VLEC below complies with these limitations.

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GTT’s Mark III Flex

General VLEC layout (source: MOL)

1) Discussion of cargo tank containment type and containment systems:

In the shipping industry, the IGC Code addresses the rules for the design of gas carriers:

Different tank technologies as per IGC code (Source: GTT Training)

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Basically, there are two key tank families: integrated and non-integrated.

The integrated (so called Membrane tanks) are designed for atmospheric pressure (up to
700mbarg) with a full secondary membrane as a secondary barrier.

The non-integrated, self-supporting tank family includes three types:

- Type A is used for most of the VLGC fleet. The tank is designed for atmospheric pressure,
with a full secondary barrier.

- Type B is used in a few VLGC’s. The tank is designed for atmospheric pressure, with a
partial secondary barrier.

- Type C, are designed to withstand a specified service pressure and do not require a
secondary barrier.

For this size of ship in LPG service, the typical containment system would be a self-supporting
tank, usually Type A or B. But this type of technology comes with drawbacks due to its customary
design.

First, for type A, which is the reference technology for VLGC, the tank is designed for cargo
warmer than -55°C. For an ethane carrier, the tank steel grade would need to be changed to
nickel-steel, stainless-steel or aluminum. In addition, the IGC code requires that tank types other
than type C have a double hull for cargo temperature lower than –55°C. The typical single hull type
A VLGC design does not meet this requirement. Furthermore, full secondary insulation and liquid
barrier would need to be added, independent from the ship’s hull, in order to fulfill the full
secondary barrier requirement.

Typical VLGC cross section (left) and the hull change requirement to transport ethane (Source: GTT)

Consequently, the type A solution becomes complicated and type B would be the base case for the
self-supporting tank family. However, as the structure of the tank is in addition to the structure of
the hull, the ship is heavier. This leads to higher fuel consumption as well as some draft limitations.

As these tanks are externally insulated, the tank’s structure requires high grade steel (Nickel-steel,
stainless-steel or aluminum). As a consequence, the material cost of the containment system is
very high. Finally, the overall CAPEX, especially for an ethane trade competing with naphtha,
needs to be carefully evaluated.

In this regard, the membrane system appeared to be the optimum solution to overcome these
issues. Indeed, membrane’s main principle is to use the hull of the ship to support itself, so the

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impact of the lightship weight on the cost would be limited. GTT decided to start a new
development in order to fill the technological gap existing in cargo containment systems for multi-
gas applications.

Cargo tank technology comparison (Source: GTT)

For GTT, the main difficulty to overcome was the change in the properties of the cargoes. Indeed,
in GTT’s historical LNG cargo containment system, the cargo boiling point is around -161°C, liquid
density is circa 425 kg/m3 and vapor density is ~1.9 kg/m3. To adapt to multigas, GTT’s system
would have to accommodate a wide range of products with a new range of properties:

N-Butane I-Butane Propane Propylene Ethane Ethylene

C4H10 C4H10 C3H8 C3H6 C2H6 C2H4

Boiling point 0.5°C -11.8°C -42.1°C -47.7°C -88.6°C -103.8°C

pressure
@atm.

Liquid density 601kg/m3 594kg/m3 581kg/m3 609kg/m3 544kg/m3 568kg/m3

Vapor density 2.71kg/m3 2.83kg/m3 2.41kg/m3 2.36kg/m3 2.05kg/m3 2.09kg/m3

Boiling point 14.2°C 2.5°C -29.5°C -35.4°C -78.4°C -94.2°C

@700mbarg

Liquid density 585kg/m3 578kg/m3 566kg/m3 594kg/m3 531kg/m3 554kg/m3

Vapor density 4.43kg/m3 4.6kg/m3 3.94kg/m3 3.84kg/m3 3.32kg/m3 3.41kg/m3

Latent heat of vaporization 385.7kJ/kg 365.1kJ/kg 428.3kJ/kg 440.2kJ/kg 489.4kJ/kg 482.4kJ/kg

LEL 1.8%V 1.8%V 1.7%V 2.0%V 2.4%V 2.7%V

UEL 8.4%V 8.4%V 10.8%V 11.1%V 14.3%V 36.0%V

Liquid gases general properties (Source: GTT)

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GTT’s efforts were focused on validation of the containment system for this new range of products
and properties.

The temperature increase is not necessarily favorable. In one hand it tends to decrease the
thermal stress in the system. But on the other hand, it also lowers the strength of the materials,
reducing its resistance to stresses induced by hull bending, cargo pressure or sloshing loads.

The increase in liquid density directly impacts the hydrostatic and hydrodynamic loads. 40%
increase in cargo density compared to LNG means a 40% increase in the force of the subsequent
liquid motions inside the tanks. The sloshing impacts on the tank walls will also increase by 20%.

Considering these changes, the first step of the development was to update GTT’s methodology
used for the validation of its Cargo Containment Systems. This work was done with the major
Classification Societies and ended with their approval of the necessary assessment to be provided.

Applying this methodology, the Mark III Flex and Reinforced NO 96 cargo containment systems
have been developed, validated and proposed to Shipyards and Ship-owners.

The world’s First VLECs are using Mark III Flex system, since the shipyard is Samsung Heavy
Industries. Mark III Flex is an evolution of the Mark III system, providing enhanced performance:

- Improved Boil Off Rate: Typically, the thickness has been increased from 270 mm to 400
mm. As a result, with the standard foam density and a global thickness equal to 400 mm, a
guaranteed boil-off rate of 0,085% of tank volume/day can now be proposed for a typical
174k LNG carrier, using efficient reinforced polyurethane foam (R-PUF).

AND/OR

- Improved compressive strength: In order to meet requirements for sustaining higher

sloshing loads or heavier liquid gases (like ethane and LPG), the R-PUF density can be
increased up to 210 kg/m3 (more glass fibers) which provides higher compressive strength.
Compressive strength can be more than doubled. Depending on the intensity of the
expected sloshing loads, intermediate densities can be used. The amount of reinforcement
can be varied to meet loading predictions for specific areas.

Reinforced insulation

Standard insulation

Example of GTT reinforcement repartition for a LPG-Multigas Membrane ship (Source: GTT)

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While Mark III Flex with reduced BOR has been implemented in many ships (21 on order and 46 in
service), the Mark III Flex using High Density R-PUF was a first reference in a mass production.
This Mark III Flex using High Density has been selected for the world first VLEC’s.

Static and fatigue tests Bending tests Impact tests

Material tests Finite Element Analysis Large‐scale mock‐up (SHI)

Qualification program of Mark III flex technology (source : GTT)

Aside from these structural issues, the change of the cargo from LNG-only to multiple gases
introduced an important operational issue. The vapor density of the multigas products is always
heavier than that of LNG. But, more importantly, it is also heavier than the vapor density of
nitrogen.

Membrane system integrity is monitored by pressurizing the insulation spaces between the primary
and secondary barriers and the inner hull with inert gas. The inert gas in GTT’s systems is
nitrogen. On an LNG carrier, the nitrogen is heavier than LNG vapor so in case of a leak, the
hydrocarbon would gather at the top of the tank insulation spaces. Naturally, gas detection and gas
exhaust systems are located on the top of the tank.

But on a VLEC, this principle has to be reversed; placing gas detection and gas exhaust systems
at the bottom of the tank. As a result new solutions have been developed in order to modify the
interfaces of the nitrogen system with the insulation space.

2) Discussion of cargo tank pump type

The selection of pump type inside the tanks was also evaluated carefully. While typical VLGC’s use
deep well pumps, the typical pump type on LNG ships and Membrane ships are submerged
pumps. Accordingly, GTT developed a Membrane tank solution compatible with deep-well pump
technology.

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Tripod mast using deep-well main cargo pump (source: GTT)

In addition, bottom sumps for the pumps (either deep well pump or stripping pump) have also been
studied in both Mark III and NO96 systems.

Sump well designs (Mark III and NO96) for Membrane tanks (Source: GTT)

While the deep well pump provides some benefits for maintenance management, it was the first
time a deep well pump was designed for ethane and LPG liquid with a long shaft to reach the
bottom of a Membrane tank. Consequently, it was decided to minimize the risk by using
conventional submerged pumps for this first VLEC, thereby following a proven design.

3) Discussion of propulsion type:

The ethane as fuel engine was not ready in 2014. However, the current propulsion is a typical MAN
two-stroke (MAN B&W 6G60ME-C9.5) build under MAN License by DOOSAN in Korea. The
engine can be retrofitted for ethane as fuel.

The ME engine concept consists of a hydraulic-mechanical system for activation of the fuel
injection and the exhaust valves. The ME-C engine is the shorter, more compact version of the ME
engine. It is well suited wherever a small engine room is requested.

For MAN B&W ME/ME-C-TII designated engines, the design and performance parameters comply
with the International Maritime Organization (IMO) Tier II emission regulations.

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4) Discussion of cargo handling system :

The VLEC includes full re-liquefaction, equaling the function of a VLGC, to condense boil off vapor
during the voyage, since it cannot be used as fuel. The liquefaction technology used is the open
cascade, which is widely used on ethylene carriers and is well suited for ethane applications.
However unlike ethylene, which is generally carried as a product with a high purity level, the
composition of commercial ethane is variable. In particular, the presence of high level of methane
in the cargo has required a custom made reliquefaction system.

For this world first VLEC, Wärtsilä Gas Solutions (WGS) has provided engineering and component
supply of the complete cargo handling system including:

 Detailed engineering of the cargo handling plant (including 3D model, P&IDs, ISOs, MTOs)
 Reliquefaction plant delivered skid mounted for easy installation at the yard
 Nitrogen plants for inert operations as well as ventilation of cargo membrane tank insulation
spaces
 Cargo control console including software / Mimic for operating the cargo handling systems
 Motor control center (MCC)
 Cargo deck tank
 All instrumentation for pressure, temperature and level measurements
 All valves (hydraulic actuation / manual) for cargo handling operations, including safety
valves
 ESD / SIGTTO system
 Gas detection

The main components of each of the three re-liquefaction plants consist of a cargo compressor a
re-liquefaction system and a refrigeration system:

The re-liquefaction system is equipped with the following main equipment:

 Cargo compressor
 Refrigerant compressor
 Cargo condenser for LPGs (condensation towards SW) and desuperheater for the cascade
 Ethane condenser (condensation towards refrigerant system)

The refrigerant system uses propylene in a cascade application to liquefy the low-temperature
cargo (ethane). The only process interface with the cargo system is through the tube side of the
ethane condenser in each of the reliquefaction systems).

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The three re-liquefaction units are connected to both vapor header 1 and 2 through spool-pieces,
and can thus be used on all cargo tanks.

General layout of the re-liquefaction system (Source: Wartsila Gas Solutions)

One out of three re-liquefaction system skids for each vessel (Source: Wartsila Gas Solutions)

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V. STATUS AND LESSONS LEARNED

As of February 2017, six VLECs have been ordered (four already delivered) with the following main
characteristics:

Ship-owner Reliance

Length 227.85m

Breadth 36.49m

Draft 11.5m

Main Cargo Tank Type GTT’s Membrane Mark III Flex (High Density)

Cargo tank capacity 87,187m3 (at 100%), divided in 4 tanks

Liquid cargo type design Butane, Propane, LPG mix, Propylene, Ethane

Re-liquefaction type Cascade type by Wärtsilä Gas Solutions

Main Engine MAN B&W 6G60ME-C9.5 (DOOSAN licensee)

Speed 16.75 knots

Shipyard Samsung Heavy Industries Co., Ltd, Geoje Shipyard (Korea)

Ship management MOL Tankship Management Asia Pte. Ltd. (Singapore)

The world first VLEC “Ethane Crystal” and the second VLEC ‘Ethane Emerald” have been named
on 26th October in Samsung Heavy Industries shipyard in Geoje Island, Korea.

The “Ethane Crystal” loaded its first ethane cargo in December 2016 at Houston-based Enterprise
Products Partners new terminal at Morgan’s Point.

VLEC “Ethane Crystal” during sea trial

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Since 1939, the “Maritime Reporter & Engineering News” (www.marinelink.com) has published its
annual “Great Ships of the Year” list providing details on the world’s most noteworthy ships. The
VLEC “Ethane Crystal” was ranked n°5 of the 18 selected as “Great Ships of 2016”.

After this world first VLEC order, progress on other projects has slowed down, influenced greatly
by the effect of the low oil price. However, the oil price recovery in late 2016 and recent approvals
of ethane export expansions have again attracted some Asian petrochemical players back to the
US market. Shipyards in the gas carrier industry are already promoting a new generation of GTT
Membrane VLEC with further improvements such as:

 Higher capacity within the same overall dimension constraints: targeted volumes are now
between 90,000 m³ and 95,000 m³.

 Reduced filling limits to increase the flexibility of operating levels: for instance, a typical
0~10% & 70~100% allowable filling level operation for LPG can be now improved to 0~15%
& 50~100%.

 Design of LPG-Ethane-Ethylene-LNG compatible VLEC, in order to provide wider

opportunities for the ship over its life: ethane trade SPAs are based on initial terms of 5-15
years. The ship-owner has to think about potential alternative trades if the ethane trades
are not extended. LPG and especially LNG trades for ~80,000 m³ vessels are under
consideration by several Asian utilities, including for use as storage (the VLEC to act as a
FSU).

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