LPG - BIMCO Bulletin


TECHNOLOGY AND EFFICIENCY | lPg November 2017 LNG bunkering in bronze position but flowering By Mike Corkhill, Consultant Editor at LNG World Shipping LNG bunker tanker Engie Zeebrugge has sophisticated manifold arrangements to accommodate a range of fuelling scenarios Although destined to be the least popular of the three propulsion system fuels available to shipowners, LNG will power a rapidly growing fleet in the years ahead. l NG is always going to be the least popular of the three fuel choices available to shipowners as they seek to comply with the increasingly strict international regime governing ship atmospheric emissions. IMOs October 2016 decision to introduce a reduced global sulphur cap of 0.5% at the earliest possible date of 1 January 2020 has boosted the prospects for gaspowered ships. However, LNGs share of the marine fuel market will still be comparatively small over the foreseeable future. It is estimated that by 2025 approximately 75% of merchant vessels will be running on low-sulphur distillate oils while about 20% will be fitted with exhaust scrubbers to enable the continued use of heavy fuel oil, currently the most prevalent ship fuel. That leaves 3-5% of the marine fuel market to LNG. In ship number terms that equates to 1,6502,750 vessels out of a global fleet of some 55,000 ships of 500 grt and above. Mike Corkhill But even this small overall share will require a significant investment in LNG bunkering infrastructure if the environmental and operating cost benefits of using clean-burning natural gas as marine fuel are to be optimised. LNG commitments LNG offers the optimum environmental solution as it ensures compliance with all existing and anticipated emissions regulations and promises reduced ship lifetime maintenance bills There are currently just over 100 LNG-powered ships in service and almost 120 on order. The ships on order are, on average, larger vessels than those currently in service, as the LNG fuel concept is now spreading to embrace vessels engaged in the deepsea trades. Recent newbuilding contracts include series of Aframax size tankers and 16 large cruise ships, most of which will require LNG bunker tank capacities of around 3,500m3. These in-service and on-order fleets of LNG-powered vessels would be larger than they are today were it not for current low oil prices. The cost advantage that LNG now enjoys over low-sulphur marine gas oil on an energy equivalency basis is marginal, to the extent that it has deterred many owners from opting for capital-intensive shipboard LNG bunkering arrangements and gas-burning propulsion systems. At the same time fuel suppliers are reluctant to invest in the necessary shorebased and marine LNG bunkering infrastructure without the assurance of viable market demand. The majority of the LNG-powered ships in service and bunkering facilities in place have been supported by some level of subsidy. Of the three available ship fuel options, LNG offers the optimum environmental solution as it ensures compliance with all existing and anticipated emissions regulations and promises reduced ship lifetime maintenance bills. Many governments, keen to get the ball rolling and reap these environmental rewards, have incentivised the choice of LNG. Such efforts are complemented by the commitments of a number of energy majors, as part of developing their natural gas markets, and far-sighted shipowners, bunker suppliers, class societies, port authorities, maritime administrations and engineering firms seeking to bring their capabilities to bear in support of the LNG cause. Taken in aggregate, these commitments are helping to strengthen the momentum behind LNG as marine fuel. Over the first nine months of 2017 a number of ports have handled LNG bunkering operations for the first time, including Singapore, Hammerfest in Norway, Immingham in the UK, Freemantle and Melbourne in Australia, Pori and Helsinki in Finland, Brunsbuttel and Bremerhaven in Germany and Barcelona and Bilbao in Spain. Also, the first three purpose-built LNG bunkering tankers have been delivered this year. They are the 5,100m3 Engie Zeebrugge, the 6,500m3 Cardissa and the 5,800m3 Coralius. All three are engaged in ship-to-ship (STS) fuelling operations in the North and Baltic Sea emission control areas (ECAs). Most existing LNG vessel bunkering arrangements feature jettyside transfers from LNG road tankers. However, going forward, such fuelling will not be as cost-effective or convenient as STS transfers for the larger LNG-powered ships now being delivered. Group initiatives The European Union has been LNG bunkerings greatest benefactor to date. Substantial funds have been made available under the Trans European Network Transport (TEN-T) programme to put towards the construction of LNG-fuelled vessels and LNG fuelling stations. Coralius bunkers product tanker Fure West in an LNG ship-to-ship transfer operation in the Kattegat in September 2017 Mike Corkhill is a technical journalist and consultant specialising in oil, gas and chemical transport, including tanker shipping. A qualified naval architect, he is Consultant Editor at LNG World Shipping, having stepped down as Editor after serving in the post for 11 years since the publications 2004 inception. Furthermore, EU Directive 2014/94/EU of October 2014, covering the deployment of alternative fuels infrastructure (AFID), calls for member states to have LNG bunkering facilities in place at specified maritime ports by end-2025 and inland waterway ports by end-2030. The rulemaking impacts 139 ports. Spinning off from the promotion of LNG in Brussels are a growing number of regional European co-operative efforts whose public and private participants are seeking to introduce optimised gas-fuelled shipping operations within their region. These include Poseidon Med II, LNG Med Gas and Gainn4Mos in the Mediterranean, the Breakthrough LNG Deployment in Inland Waterway Transport initiative, Blue Baltics and the Spanish/ French Sustainable Atlantic Motorways of the Seas Using for Engine Fuel LNG (S/F SamueLNG) scheme. Similar programmes are getting underway outside Europe. Particularly notable are the LNG Bunker Port Focus Group, now with 11 ports and maritime administrations worldwide as members, and SEA\\LNG. An inter-industry initiative formed only in July 2016, SEA\\LNG now has 29 members dedicated to accelerating the widespread adoption of LNG as a marine fuel. Singapore, the initiator of the LNG Bunker Port Focus Group, aims to develop a major presence in LNG bunkering over the coming decade, to complement its current status as the leading oil bunker port. Pavilion Energy and a Keppel Offshore & Marine/Shell joint venture have been licensed to sell LNG bunkers in the busy port while Total, ExxonMobil and Shell have signed up to purchase quantities of this fuel. Total is also part of a study group investigating possible propulsion system and bunker fuel options, including LNG, for the nine 22,000 TEU container ships that CMA CGM ordered in September 2017. Container ships are the gas guzzlers of the shipping world, accounting for one-quarter of current bunker consumption, and if LNG is to be specified for the CMA CGM behemoths, it would represent a further major breakthrough for the gas fuel concept. Singapore, the initiator of the LNG Bunker Port Focus Group, aims to develop a major presence in LNG bunkering over the coming decade, to complement its current status as the leading oil bunker port Ships of the size ordered by CMA CGM would require an LNG bunker tank capacity of around 10,000m3 to cover the vessels intended Asia-Europe roundtrip distance. Besides the Total connection and the ports pro-LNG policy, another factor favouring the option of bunkering with LNG in Singapore is the fact that in 2016 CMA CGM acquired Neptune Orient Line, a container ship operator based in the South East Asian port. Irrespective of the CMA CGM final propulsion system choice, there are already ultra-large container ships in service which are LNG-ready, to undergo some modest conversion work once the necessary LNG bunkering infrastructure is in place. Connect with BIMCO Facebook Twitter Linkedin YouTube