Valve makers were steaming full ahead in the shipbuilding sector for a long time. Yet business in this sector was also wrecked during the economic crisis at the end of the last decade. Thankfully, the sector is setting course for calmer waters and better business, thanks to rising demand for LNG, which, naturally, has to be transported by specialized vessels.
Summed up, the last four years have been a rather dry stretch. „The pre-crisis level of 2007 was neither reached in Germany, nor by the worldwide shipbuilding industry“, sums up Werner Lundt, president of the German Shipbuilding and Ocean Industries Association VSM. Orders rose to around 2,7 billion and 2,9 billion euro in 2010 and 2011 respectively, recovering from a low point in 2009 with orders worth half a billion euro. Nonetheless, the capacity utilisation rate is still low, below the levels of 2008.
Changing market structures
A crisis with clear consequences: „The worldwide crisis has not only led to a sustained slump in demand, but also to a change in market structures“, states Lundt. Several shipyards had to file for insolvency in order to adapt their capacity to the changing market situation. „Tougher competition, particularly from highly subsidised shipyards in the Far East, has made construction of standard vessels in Germany uncompetitive.
This especially is the case for container ships, which have been built in vast numbers by German shipyards“, says the association’s president. „Cancellations and postponements defined the crisis“, explains Dr. Olaf Mager, of GL Groups corporate communications office. At the same time, competition between Korea and China and between Asia and Europe had increased, as considerable shipbuilding capacities were built up in Asia.
Lundt: „Subsidies allow Asian shipbuilding companies to offer low prices“. Large volume building of standard merchant vessels is shifting to Asia. An upheavel with consequences for the valve sector, too.
Alternative fuels as a chance
Yet there is a promising and profitable alternative for the shipbuilding industry and valve makers. As environmental awareness grows, the sectors are set to benefit. „Problems cause rising CO2 levels and the extremely high fuel prices for ship companies call for energy-saving ship designs and propulsion systems“, declares Lundt.
The German shipbuilding industry has been advocating for stricter limits for sulphur dioxide and nitric oxide in international regulations. Shipbuilders and suppliers would be able to offer the proper technological solutions to implement environmental regulations. „These include the introduction of new materials allowing to save energy through reduced weight, as well as the development of new propulsion systems for alternative fuels, such as LNG on ships.“ New products for these fuels offer new opportunities for the valve sector.
New regulations, new innovations
Some ideas have already become rules – and this is where the German shipbuilding industry is successfully coming in to play. On 1 January 2013, the globally binding Energy Efficiency Index (EEDI) will be implemented, an efficiency standard for new ships. A specific energy efficiency ratio will be calculated for each individual ship design.
In 2015, a further rule will come into effect, with great consequences for shipping. A new environmental convention from the International Maritime Association’s (IMO) called MARPOL 73/78 will designate certain seas as special areas, „meaning a sea area where for recognized technical reasons in relation to its oceanographical and ecological condition and to the particular character of its traffic the adoption of special mandatory methods for the prevention of sea pollution by garbage is required“, explains valve maker Herose in an issue of its „valvescommunity“.
The Baltic Sea and parts of the North Sea belong to such special areas. „Amongst others, emission limits for sea and harbour and the maximal sulphur content in fuels are defined.“ In 2015, the sulphur content must be lower than 0,1 percent. In addition, the EU has set a sulphur limit of 0,1 percent for all calls over two hours within the EU.
Companies now have to focus on saving operating costs and strengthening environmental protection, whilst ensuring the safety of both ship and crew.
As a consequence of the IMO convention, around 50.000 ships worldwide need to be retrofitted with, for example, new ballast water systems. Siemens‘ Industry Automation unit has developed a chloropac system just for this purpose. An electrolysis process produces hypochlorite from the salt found in sea water. Needless to say, valves are part of the process.
The new Siemens system combines filtration with a following electrolysis step and a dosage unit, which controls the addition of hypochloride. Only around one percent of treatable ballast water is lead through the system’s electrolysis cells. „That way only small components are needed, which can be integrated flexibly into existing ships,” states Siemens.
A further advantage of the new system is not only its ability to treat ballast water, but that it can also treat a ship’s cooling water cycles.
The gradual switch from less environmental friendly forms of fuel such as diesel or heavy oil to the greener liquid natural gas (LNG) will also create new opportunity for the valve sector. Not only will the latter fuel be far cleaner for ship companies, but also a lot cheaper, declares Hermann Ebel, head of the Hamburg-based Hansa Treuhand.
Double-wall valves in demand
„Valve makers need to set their sights on new fuel types such as LNG“, states Dr. Olaf Mager, of GL Groups communications office. „The number of ships being refitted for dual fuel will increase, as will demand for approved double-wall valves for cyro applications, for example compensators and piping systems for the gas supply.“
VSM president Lundt has no doubts the switch will be successful.
„Within the VSM, the relationship between German shipbuilders and suppliers traditionally is characterized by close cooperation.“ The greatest synergetic effects can be realised by integrated cooperation between shipbuilders and suppliers in the planning phase. „Technological quality and dependability are the prerequisites to create innovative products together“, adds Lundt. And both are highly needed for check valves, control valves, safety and slide valves on board and at the terminal.
LNG supply needed
Yet a supply infrastructure is needed to allow ships to use LNG without causing any headaches. Ideally, such infrastructure should be present where cargo is discharged. The switch will only be successful if the eco-friendly fuel can be tanked up around the globe. One thing is namely certain – tanker ships will not steer towards a separate port to tank up on LNG. Here, action is still needed.
Newly developed and refined valves for controlling and aiding ship propulsion are one opportunity for innovative valve makers. Another challenge for the ship industry is transporting LNG itself. „Germanischer Lloyd“ estimates that the global tanker fleet will increase twofold within just a few years. More than 400 LNG tankers will be navigating oceans worldwide already by 2015.
Transportation of LNG requires special valves for waste gas. LNG tanks need to exhaust gas during transportation, in order to maintain a constant pressure and temperature level, keeping LNG in its state.
The greatest priority for LNG tanks is making sure the highly flammable gas doesn’t ignite and explode. The company Pepperl+Fuchs is focussing on this issue. It fits tankers with intrinsically safe remote I/O systems. These serve as an interface between sensors and valves in areas prone to explosion and the control system, situated in the secure area.
In addition, control and safety valves are needed for liquefication and regasification terminals and in storage tanks. German company Herose has been involved in manufacturing LNG shut-off and safety valves for quite some time. Due to rising safety requirements, the trend is towards fire-safe approved stainless steel valves for tankers and terminals.
More and more LNG tankers
The future has already begun. Production of LNG tankers is increasing continously. Meyer Werft will hand over its first LNG carrier to Dutch shipping company Anthony Veder, further ships will follow. This is no surprise, as large energy corporations, such as Germany’s Eon, are increasingly resorting to LNG. LNG’s existence in the shadows is drawing to an end.
“Trading of LNG is one of our strategic pillars in our procurement portfolio, next to LNG futures and the development of LNG plants, especially regasification terminals“, declares Helmut Roloff, of Eon’s political affairs and corporate communications global gas.
Safety of supply through trade
LNG trading also helps Eon diversify its suppliers and adds to safety of supply. In the long term, LNG will be Eon’s third pillar of energy supply, next to pipeline-based gas transportation and the company’s own gas production. Eon is engaged in regasification terminals in the whole of Europe and has booked capacities of around 4,7 billion cubic metres.
Eon can supply its German and Northwestern European costumers „very well with LNG“ through the LNG terminal „Gas Access To Europe“ (Gate) in Rotterdam. However, things can still be improved. „Eon plans to intensively extend its LNG procurement activities in the short, medium and long term.“
A lot to do
LNG is set to face a rosy future on the global level, too. It not only is more eco-friendly than other fuels, but it also makes it possible to provide the furthest corners of the earth with energy. Tankers and trucks can go where no pipeline will ever go, and where no power plants produce energy. There still is a lot to do – fitting tankers and terminals with valves is one of the many steps.
Companies that can offer products of the highest quality will become part of the growing LNG business. The sector is set for full steam ahead.