May 4, 2004

HOUSTON – ABS today announced the availability of its Guidance Notes for Building and Classing Ships Carrying Compressed Natural Gas to assist industry designers and operators on practical applications of novel concepts in CNG technology. As an alternative to LNG technology, CNG offers economically viable and competitive methods of rapidly monetizing natural gas in short-haul trades or certain geographic locations, says William J. Sember, ABS vice president of Energy Development.

“Natural gas has become much more than a secondary oil by-product that must be moved, processed, reinjected or flared. We have new options. As worldwide demand for natural gas increases, ABS can assist the industry with a single-source set of guidelines for safe alternative means of transporting, and therefore of marketing, this cleaner-burning energy source,” said Sember.

Sember advises that the new ABS guide will facilitate CNG industry development by providing a comprehensive framework of reference material while identifying acceptable methodologies for achieving class society approval of new CNG technology.

“We are responding to our energy clients with the necessary technical standards and guidance for transporting, storing, offloading and containing gas,” said Sember.

THE CNG MARKET NICHE
Relatively long distances between the gas sources and markets or difficulties associated with accessing remote, deepwater offshore fields may make pipelines prohibitively expensive for otherwise promising gas projects. Because many worldwide gas-producing fields lack suitable infrastructure for liquefying natural gas, and because terminal regasification facilities may be similarly limited, transportation of this “stranded” gas in compressed rather than liquid form offers cost and operational benefits.

For example, gas can be loaded directly onto newly designed gas carriers from offshore production facilities, increasing safety and decreasing security concerns. The gas can be compressed and contained onboard, eliminating the need for costly liquefaction and re-gasification processing.

In some designs, CNG carriers also can discharge gas directly into terminal facilities located offshore, further minimizing potential impact to population centers and areas of high environmental sensitivity.

These operational benefits are indicative of the potential for CNG market growth as new technological milestones are reached, says Philip Rynn, ABS senior engineering staff consultant.

“ABS is helping industry stay ahead of the curve, defining criteria for the technology validation process,” said Rynn.

THE ABS CNG GUIDE AND THE INTERNATIONAL GAS CODE
The CNG guide builds upon the International Gas Code (IGC) of the International Maritime Organization (IMO) as a platform of regulatory standards accepted by the international marine community. However, progressive and novel concepts in CNG may require new directives, says Sember.

“Operators and developers are calling upon us to provide more risk-based classification guidance than ever before. CNG technical advancements call for more application of risk-based risk assessment because the traditional codes and inspection rules don’t apply,” he said.

For example, the present IGC covers the transport of methane as a liquid, but the ABS guide covers the transport of methane as a gas. While liquid natural gas (LNG) is transported at atmospheric pressure (one bar), CNG is transported at elevated pressures of 150 to 250 bars.

LNG is always at a cryogenic temperature of minus 163 degrees centigrade, but compressed gas will range from an ambient temperature of 30 to 40 degrees centigrade to minus 30 to 40 degrees centigrade. Therefore, the design basis and the construction materials for CNG containment systems must differ from those outlined by the IGC.

The IGC specifies four different containment systems for natural gas: membrane tank, type A tank, type B tank and pressure tank. Existing pressure tanks generally utilize one pressure container per tank, but current novel containment concepts have multiple pressurized containers per tank.

In addition, the required inspections of the large number of containment systems, both at fabrication and in service, pose problems if only the present inspection guidelines of the IGC are used.

To achieve optimum balance of temperature and pressure, the ABS guide assists designers in satisfying and building upon the design criteria of the IGC and the American Petroleum Institute (API). Inspection plans for the large number of pressure containers also are addressed in the new guide.

APPROVAL IN PRINCIPLE
The guide addresses the development of novel ship and containment designs with the goal of achieving ABS approval in principle (AIP), a fast-track alternative to prescriptive classification rules and the first step in the regulatory and vessel certification process.

First applied to short hauls of small gas volumes, these developing concepts now promise a new generation of CNG solutions. Recent examples include the TransCanada proposal for a gas transport module (GTM), based upon the company’s composite reinforced pipeline (CPLP). The concept initially concentrates on developing smaller vessels and barges for river application.

An alternative to conventional pressure systems is the “Coselle” vessel design, approved in principle by ABS and developed by Cran & Stenning of Calgary, Alberta, Canada. The “Coselle” containment system uses small diameter pipe in coiled cylinders for longer periods of sea transport.

Trans Ocean Gas proposes a unique method of CNG transportation utilizing composite pressure vessels in the hold of a ship. The fiber-reinforced plastic (FRP) pressure vessel gas containment system has applications in the national defense, aerospace and natural gas vehicle industries.

The FRP gas containment system employs modular cassettes for ease of fabrication and installation. ABS awarded approval in principle to the Trans Ocean Gas concept in September 2003.

Further along in commercial application is the VOTRANS (Volume Optimized Transport Storage) concept of EnerSea Transport LLC, Hyundai Heavy Industries Co., Ltd. and Kawasaki Kisen Kiasha, Ltd. ABS awarded approval in principle in April 2003 for this design, which employs 2,400 modular bottles, racked vertically about six inches apart, each 42 inches in diameter.

Enersea’s capabilities will allow it to serve gas development projects with rates from 100-600 million cubic feet per day of gas and to connect gas supplies to markets from less than 200 to more than 3,000 miles away.

ABS REQUIREMENTS
Underlying the approval and classification process, ABS risk studies identify the hazards posed by CNG loading procedures and other ship operation parameters. In assessing these procedures and parameters, the guide conforms to API codes for system safeguards:

• Gas depressurization arrangements
• Piping and electrical systems
• Gas dispersion
• Radiant heat levels
• Fire protection

In addition, the guide applies existing IGC standards for:

• Stability
• Vessel arrangements
• Hazardous areas
• Containment system
• Fire protection

The guide places particular emphasis on allowable alternatives in ship design when considering load limitations and stress intensities, says Rynn.

“At present, there are no existing CNG carriers, so no prior in-service or comparable design review history exists. The new ABS guidance notes will help operators enter and work this burgeoning market by providing our experience in validating novel ship and gas containment designs,” he said.

This process consists of three stages as detailed in the new ABS guidance notes:

• Concept development: in the earliest stage of development, an operator may ask ABS to assess the concept in term of possible class approval. This preliminary assessment is referred to as “approval in principle” or AIP.
  
• Approval for classification: a design that passes AIP would then be subjected to detailed engineering analyses followed by class survey of construction.
  
• Maintenance of class: periodic surveys take place to validate the renewal of a class certificate.

FINAL CRITERIA FOR CNG TRANSPORT
The experience of TransCanada, Trans Ocean, Enersea and others suggests that CNG has the potential to fill a large niche in the gas industry, accessing and monetizing resources located beyond the economic reach of pipelines and with reserves smaller than the typical thresholds for LNG projects.

Before previously stranded gas can be transported, however, flag states signatory to IGC require provision for regulatory equivalents. Coastal states and local authorities at load and discharge must approve safety factors.

Sember advises that communication among all involved parties—including concept developers, system designers, materials manufacturers, shipyards, operators, regulatory bodies, export and import states—can be coordinated by ABS.

“Historically, regulation generally follows after innovation. We are pleased to say that in this instance, development of rules and standards are taking place in partnership with a class society—allowing for innovation and the incorporation of new risk methodologies.

“The new ABS guide assists with a probabilistic approach to identifying hazards, determining departures from existing codes, providing equivalents and evaluating safeguards. This is the role classification plays in helping industry and operators face their development challenges,” he said.

Draft copies of the ABS Guidance Notes for Building and Classing Ships Carrying Compressed Natural Gas will be available at the Offshore Technology Conference, May 3-6, in Houston. The finalized guide will be available soon on the ABS website, Rules and Guides section. (www.eagle.org/rules/downloads.html)

Founded in 1862, ABS is a leading international classification society devoted to promoting the security of life, property and the marine environment through the development and verification of standards for the design, construction and operational maintenance of marine-related facilities.

For more information, contact:
Susan V. Gonzalez, ABS
1-281-877-5853
or sgonzalez@eagle.org