Synthetic Netback Formula Construction under Disrupted Primary Spot Index Conditions
Synthetic netbacks replace broken spot indices by deducting audited freight, canal, terminal, and shrinkage costs from liquid destination hub markers.
Boil-off Loss
Meaning
Unavoidable vaporization of cryogenic liquids into a gaseous state during storage or transport results from heat transfer from the external environment. Boil-off loss affects the total volume of cargo delivered in the liquefied natural gas industry. While insulation systems minimize the ingress of thermal energy, some liquid always converts to gas as it absorbs heat.
Thermal Interaction
Passive heat gain through the walls of a storage tank or vessel hull drives the phase change from liquid to vapor. Within a transport ship, the boil-off loss is often captured and used as fuel for the propulsion system of the vessel. This utilization provides an efficient way to manage pressure while reducing the need for separate bunker fuel.
Onboard reliquefaction plants can sometimes return the vapor to the tanks, but the energy required for this process often exceeds the value of the saved liquid.
Inventory Adjustment
Reconciliation of quantity at the discharge port must account for the volume that evaporated during the voyage. Measuring the boil-off loss requires precise temperature and pressure data to calculate the density of the remaining liquid. Commercial agreements specify the percentage of allowable evaporation before financial penalties apply to the carrier.
Custody Transfer
Transfer of ownership occurs based on the net energy delivered rather than the initial liquid volume loaded. Contracts for liquid gas allow for a specific boil-off loss before price adjustments are triggered. Accurate billing depends on the calculation of the mass of gas lost versus the mass of liquid discharged.