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Vol. 13, No. 24 Week of June 15, 2008
Providing coverage of Alaska and northern Canada's oil and gas industry

Icebreaker LNG carriers for Arctic Alaska gas an interesting but challenging concept

An April announcement by the American Bureau of Shipping about a joint initiative between the bureau and the Russian Marine Register of Shipping to jointly develop classification rules for Arctic LNG carriers raises an interesting question. Could emerging technologies for icebreaking LNG carriers provide an alternative to a pipeline for exporting gas from Arctic Alaska?

In November Petroleum News reported on a revolutionary new icebreaker design, known as a double-acting system, in which a vessel carves its way in reverse through pack ice, propelled by diesel-electric powered propellers mounted on rotatable pods under the stern. The propellers break up the ice, thus enabling the ship to move through the ice more efficiently astern than forward. In open water the stern pods rotate 180 degrees to drive the boat forward in a conventional manner.

Container ship

An icebreaking container ship using this technology was successfully tested offshore northern Russia in 2006. Aker Arctic Technology, a leading Finnish icebreaker design and consulting company, has said that it is in the process of designing a double acting LNG carrier for use in Russia’s Yamal field in the Kara Sea, north of Siberia. And in May the American Bureau of Shipping said that it has teamed with BMT Fleet Technology and Hyundai Heavy Industries to investigate the structural integrity of various cargo containment systems under different ice impact scenarios.

According to an April report in MarineNorway, Russia plans to use as many as 25 LNG carriers to ship LNG from the giant Shtokman gas field in the ice-laden Barents Sea.

But the American Bureau of Shipping has said that there is no service history for the use of LNG carriers in ice-breaking conditions.

So, could the use of LNG carriers really be a feasible option for shipping gas from Alaska’s North Slope or, perhaps, from a future gas field in the Beaufort or Chukchi seas? Before anyone grabs a phone to call Governor Palin about postponing decisions on AGIA and a North Slope gas line, they might want to consider some of the many pitfalls facing an LNG project on the northern coast of Alaska.

Shallow water

The biggest hurdle facing anyone wanting to ship LNG from the Beaufort Sea or Chukchi Sea coast would likely prove to be the water depths — the water remains shallow for a long way offshore around the Arctic coastline of Alaska.

A typical LNG tanker draws about 39 feet when loaded, Jim Craig, U.S. Minerals Management Service geologist and economic evaluator, told Petroleum News. Allowing normal safety margins for clearing the seafloor would require water depth of 78 feet in a dock and a channel depth of 117 to 156 feet for transiting to and from the LNG facility.

These requirements “would be an impediment for much of the Beaufort and Chukchi coastlines where these depths would not occur within five miles of land,” Craig said.

And then there’s the question of what to do with the LNG shipped from, say, the North Slope, which the federal government wants to see brought to the United States, not shipped to foreign markets.

Shipments to the U.S. West Coast would be limited by LNG terminal capacity — the only operational terminal on the West Coast is in Mexico’s Baja California and that terminal has fully contracted supplies according to reports on its May 2008 opening.

“No new terminals are under construction on the U.S. West Coast and any deliveries to future terminals would require Jones Act ships,” Craig said.

The Jones Act mandates that only U.S.-flagged vessels with U.S. crews may carry goods between domestic ports.

“There are no Jones Act LNG ships operating today and no LNG ships have been built to operate in ice-infested waters,” Craig said.

Export license

Exporting LNG overseas, say to Japan or one of the other Pacific Rim countries, would require an export license from the U.S. Department of Energy. A DOE export license can be denied if DOE determines that the export of the gas would not be in the public interest, perhaps as a consequence of domestic U.S. need for the gas.

The export of gas that originates from the U.S. outer continental shelf, perhaps from a future gas field in the Chukchi or Beaufort seas, would currently be prohibited under federal law and would require an exemption from Congress and the president.

Having said all of that, the Russians seem intent on using LNG carriers in ice-infested waters and anything may be possible using new technologies and exemptions from laws such as the Jones Act. But anyone wishing to export LNG by sea from Alaska’s Arctic coastline would surely face some formidable challenges.

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