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Korean company unveils icebreaking LNG tankers

  • Author: Craig Medred
  • Updated: July 6, 2016
  • Published November 1, 2014

REYKJAVIK, Iceland -- Coming soon to an Arctic Ocean north of you: Icebreaking LNG tankers?

Maybe.

Daewoo Shipbuilding & Marine Engineering Co., a Korea-based company that is a world leader in marine vessel construction, caught more than a few attending the Arctic Circle Assembly by surprise on Saturday when it unveiled what appeared to be multipage sales brochure for such a vessel to be available in 2016.

The revelation came about halfway through a program on "Business Across the Arctic." Moderator Scott Borgerson opened the session by noting "shipping is 90 percent of world trade."

Ye Weilong, vice president for China Ocean Shipping Company, followed with a presentation on the company's experience in using the Northern Sea Route from China through the Bering Strait and along the Russian coast to ship freight in 2013.

"COSCO is optimistic about the future of the Arctic route," said his PowerPoint presentation, which suggested COSCO would begin shipping that way regularly "in due course."

Weilong spoke in Chinese without a translator, so what exactly he said was known only to the few Chinese speakers in the audience. Most in attendance had to read along with the PowerPoint and hope he was sticking to the script.

After Weilong finished his presentation, Borgerson asked Daewoo vice president Ohyig Kwon about shipping options for the Northern Sea Route, and Kwon played coy. Freight could be moved by ships escorted by tankers, he said, or by ships reinforced to break ice themselves.

Some older vessels could be upgraded to handle the ice for a good part of the summer shipping season as well, he said.

"I have many solutions," Kwon said.

Then the microphone was passed to Anthony Hodge, the president of the International Council on Mining and Metals, who talked a bit about how all Arctic businesses need to do better at communicating with "civil society" if they hope to get public support for Arctic projects. Others followed and the discussion again shifted back to shipping, and the need for new Arctic ports if there is to be Arctic shipping.

Bjarni Benediktsson, Iceland's minister of finance, was worried about the risks associated with building a new port to support Arctic shipping traffic that might or might not come.

A huge investment is going to be required, he said, "and if the project is unsuccessful, it's going to be a disaster."

Scott Minerd, global chief investment partner for Guggenheim Partners, agreed that to make something like ports happen, "the amount of capital that is going to have to go into the Arctic is massive."

It was at about that point that Kwon told Borgerson he'd brought a video he wanted to show the audience. There was some confusion in finding it. Borgerson sent for a technician. Discussions stalled.

Hodge spent a minute or two pondering where the idea had arisen that there was an industry plot to fuel global warming to melt Arctic ice to open shipping lanes and gain access to mineral and petrochemical resources.

"This so-called paradox," as he put it. "That wasn't part of the discussion last year ... Maybe we could set up a room next year to argue about that."

There was laughter in the crowd. Then the giant-screen TV that takes up an entire wall in the Harpa convention hall flickered to life. It showed an artist's rendition of an LNG tanker breaking through Arctic ice.

"Arctic LNG for 2016," said a headline with the picture.

And it quickly became clear Kwon had brought more than just an artist rendition. The PowerPoint presentation showed only part of what appeared to be a 20-page sales brochure. There were architectural drawings for the ship, which has a strange bow that looks almost like it's designed to ride up on ice, and photos of models of the design going through tests in tanks filled with simulated ice flows.

Kwon described the ship as having an "ice-absorbing bow." He predicted it could be used on the Northern Sea Route from July to November, possibly July to December.

"Any environment, we can be the solution," Kwon said.

Borgerson was clearly caught off guard by the presentation. Borgerson had planned to close the session by asking panelists if they were bullish or bearish on the prospects for Arctic development, but then added that he wouldn't ask Kwon because he'd suddenly made it pretty clear what he and his company thought.

The rest of the panelists were with Kwon in being bullish on the region, though they had yet to put any skin in the game a la Daewoo, which had clearly spent money on research and development long before coming to this assembly put together by Iceland President Olafur Ragnar Grimson and Alice Rogoff, owner of Alaska Dispatch News.

There are about 1,300 in attendance at the event this year, representing more than 30 countries.

"This is the greatest (development) opportunity since the end of the Ice Age," Minerd said, though many of the countries presenting at the assembly have mainly pitched what they can sell those who want to work in or witness the Arctic.

The French were earlier Saturday pushing their luxury cruise through the Northwest Passage. The video from Pontant certainly made the trip look interesting, exciting and not at all cold.

Everyone here seems in agreement that the Arctic is warming, and thus in many ways becoming more attractive to life, business and shipping.

Kwon offered no hints on what Daewoo saw as the market for its new tanker. China has been showing increasing interest in natural gas to fuel some of the coal-fired power plants that now make the nation's air among the worst in the world.

In the past, there has also been talk of shipping now stranded Alaska North Slope gas to market by tankers instead of by pipeline. Norway has large supplies of LNG and already ships to the U.S. and Spain. That gas could be moved east via the Northern Sea Route to China or Japan.

COSCO cut nine days off the shipping time from Europe to Asia when it used the Northern Sea Route in 2103 and saved 250 tons of fuel in the process, according to Weilong's presentation. Both time and fuel savings mean big reductions in shipping costs, which is what makes the route very attractive.

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