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Hammerfest LNG set sails for Japan via Arctic route

Researcher Gunnar Sander with the Norwegian Polar Insitute in Tromsø follows the development of Arctic shipping following rapidly shrinking sea-ice due to climate changes. Photo: Helge Markusson

First ever tanker loaded with liquid natural gas (LNG) sails the Northern Sea Route with gas from Norway to energy hungry Japan. “New development,” says Gunnar Sander with the Norwegian Polar Institute.

Location

“This voyage is interesting because it shows how the shale gas has turned the gas market upside down,” says Senior Researcher Gunnar Sander. He coordinates a project aimed at studying how climate changes impact economic activity that may take place in the Arctic Ocean.

The tanker “Ob River” has loaded LNG from Statoil’s gas plant on the Barents Sea coast for the last few days. The plant, opened in 2007, was believed to ship major part of its LNG to the North American market. With commercial exploration of domestic shale gas, the US hunger for LNG disappeared. Hammerfest gas plant had to search for new markets.

Being the world’s northernmost LNG plant, its remote location could have been a disadvantage when searching for new customers. Not so for this week’s cargo. With rapid melting sea ice, Hammerfest LNG is located at the entrance gate for a possible new shipping route near the top of the globe to the energy hungry markets in Asia. The distance to Japan is nearly half via the north compared with sailing the more traditional Suez Canal route. The Northern Sea Route is estimated to save up to 20 days for the distance Hammerfest to Japan.

“Ob River” will first sail north-eastbound the Barents Sea towards Novaya Zemlya before her voyage enters the waters north of Siberia. Only a few years ago, the Arctic waters up here towards the Bering Streight were nearly impossible to sail in mid-November due to the freezing ice.

“Ob River” has a capacity to carry 3.1 Bcf of gas equivalent, or 63,668 mt of LNG.

When the tanker makes port call in Japan in less than two weeks’ time, her LNG cargo is highly appreciated by energy companies. In the wake of the Fukushima disaster in March 2011, Japan is in nearly desperate need for energy sources to replace nuclear power. So far, only two reactors have been restarted after all of Japan’s plants were shut down for stress tests after Fukushima. Anti-nuclear movements have good times in Japan.

Drastic reduction in nuclear power generation results in huge import needs of fossil fuels, and LNG is easy to get contracts for after the collapse in the US market.

“Japan needs gas as an alternative and pay high prices for it. The market has literally speaking turned 180 degrees,” says Gunnar Sander. The Norwegian Polar Institute collaborates with SINTEF and the University of Tromsø. 14 of the member institutions of the Fram Centre in Tromsø in northern Norway also participate in the research cooperation studying what now happens in the Arctic.

“It is too early to say how this will boost off in number of voyages. First, more ice-classed LNG-tankers should be built. But, the markets in Japan and Asia is for sure interesting,” argues Gunnar Sander.

“Ob River” was built in 2007 and is one of very few tankers with ice-classed hull. In October, she sailed the Northern Sea Route for the first time, then without cargo, as reported by BarentsObserver. On that voyage the crew collected data to verify the commercial viability of the Northern Sea Route for the whole LNG trade.

The LNG-tanker will be escorted by Russian nuclear powered icebreakers for most of the route along the north coast of Siberia. The 2012 season for sailing the route will be historical for two reasons; never before has the sailing season been so long – and never before has so much cargo been shipped along the route.