A new era for LPG and chemical gas shipping

A new era for LPG and chemical gas shipping

All that LPG has ever needed to flourish is a distribution infrastructure.

For decades gas was the unwanted byproduct of crude oil production and vast quantities were wasted through flaring. Meanwhile, local populations that lacked other fuel stripped their land bare to burn wood and other vegetation in their fireplaces.

Today, thankfully, there is much more awareness of the perils of deforestation, desertification, atmospheric pollution and the waste of valuable sources of fuel.

There are also, again thankfully, much greater volumes available of natural gas and its natural gas liquid (NGL) byproducts, including LPG and ethane. Exploitation of the vast shale oil and gas resources in the US, in particular, is bringing major new supplies of LNG, LPG and ethane to the global marketplace.

This has prompted a wave of gas carrier and terminal construction. The LPG shipping sector that has felt the most immediate and striking impact is very large gas carriers (VLGCs) of 75,000 m3-85,000m3.

In 2013-2014 the VLGC orderbook expanded at an unprecedented rate. There are now 75 VLGCs on order, equal to 41 per cent of the existing fleet in capacity terms. All but a handful will be delivered by the end of 2016.

Most new VLGCs will carry US LPG exports on long intercontinental routes to customers in Asia. VLGCs continue to enjoy record-high freight revenues, even though the influx of newbuildings has begun in earnest – suggesting that the market can support the large volume of new tonnage.

For the moment no other type of cargo vessel can match the earnings logged by large LPG carriers. The rest of the LPG and petrochemical gas carrier fleet is enjoying the trickle-down effects of buoyancy in the VLGC sector.

Despite not commanding anywhere near the revenues of the larger vessels, smaller ships are intrinsic to gas-shipping expansion. A significant percentage of large-parcel cargoes discharged by VLGCs at major hub terminals is then distributed by coaster to regional depots.



Meanwhile ethane, an important petrochemical feedstock, is becoming available in quantities beyond the needs of US domestic industry. The surplus of this attractively priced product is of interest to chemical producers in Europe and Asia.

The launch of US ethane exports has spurred construction of new loading and receiving terminals and existing ethylene crackers are being upgraded to process the new feedstock.

US ethane has also sent naval architects back to their drawing boards to design innovative gas carriers to bring economies of scale to shipping this demanding cargo over long distances.

A new gas-shipping era is dawning and the maritime industry has risen to the occasion to ensure that the new supplies of fuel and chemical feedstock coming to market reach as many customers as possible.



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