There are now 34 LNG-powered vessels that are not LNG carriers in service, while the same number of such vessels are on order. There is also one LNG-fuelled inland waterway tanker currently plying Europe’s rivers and canals and two similar vessels under construction. These totals do not include several projects reported to be underway in China involving the conversion of the propulsion systems on existing vessels to run on LNG.
Liquefied natural gas is one of the three propulsion system options open to ship owners in their quest to comply with the increasingly strict regime governing ship emissions that is being introduced. The extent to which the LNG option wins out over the alternatives of exhaust scrubber systems and the use of low-sulphur marine diesel oil will depend primarily on the price of natural gas in the various regional marketplaces.
All three options have their advantages and disadvantages and there is room for all three in the massive commitment required of the global shipping community in its drive to meet the new emission controls. Each of the alternatives will no doubt be the chosen solution for certain specific operating scenarios.
Although the take-up for the LNG option to date has been relatively modest, the pace at which gas-powered ships are being ordered is accelerating. Ten such vessels have been completed this year and in 2013 a total of 21 LNG-powered ships are due to be delivered.
Norway is responsible for the momentum so far achieved in the use of LNG to power ships. The availability of plentiful supplies of North Sea gas in tandem with a nitrogen oxides (NOx) emissions tax system which favours ships running on clean-burning natural gas kick-started the drive. A measure of the commitment that has been made is given by the fact that all 34 LNG-powered ships in service are sailing in Norwegian waters. Of this fleet 18 are cross-fjord passenger/car ferries and 11 are offshore support vessels (OSVs).
A look at the LNG-powered ship orderbook reveals that the concept is spreading. Although ten of the contracted vessels are earmarked for Norwegian domestic service, the remaining 24 are earmarked for other locations. Ten will operate on international routes, seven will serve in US waters, three in Canada, two in China, one in Finland and one in Korea.
The range of ship types and the size of vessel for which LNG is being considered are also being extended. In addition to the usual OSVs and short-crossing passenger/car ferries, the current orderbook also contains Ro/Ro cargo ships, tugs, container ships, ethylene carriers, a high-speed RoPax vessel and a RoPax cruise ferry. The latter ship will be one of the first LNG-powered ships to be delivered in 2013. At 57,000 gross tons, it will also be the largest ship in the world that is not an LNG carrier to run on LNG.
Every ship owner considering the LNG fuel option must also pay close attention to the logistics and safety aspects of supplying the vessel with cryogenic fuel at its carriage temperature of minus 162˚C. The steps entailed in transferring LNG from a large storage tank to a ship’s bunker tank present a challenge that has hindered the shipping industry’s take-up of gas-burning engines.
In a classic case of the chicken-and-egg dilemma investors have been reluctant to sanction the provision of an LNG bunkering network in the absence of sufficient gas-powered ships. Similarly, ship owners have been loth to nominate gas propulsion systems for their vessels in the absence of the required LNG supply infrastructure.
The growing interest in LNG bunkering arrangements on the part of port authorities, governments, bunker suppliers, energy majors, cryogenic engineering specialists, ship owners and bunker vessel designers is evidence that the momentum for a bottleneck breakthrough is building to a critical level.
The provision of bunkering infrastructure is poised to add a major new dimension to the LNG supply chain. Each port authority will require its own unique bunkering arrangement. That arrangement will then need further customising according to the size, type and numbers of vessels requiring gas fuel. Possible variables in a port’s LNG logistics solution will include bunker vessels, road tankers, LNG coastal distribution tankers, storage terminals, fuelling stations and other hub facilities.
Norway has provided a mix of coastal bunkering stations to supply its LNG-powered fleet. Harbour storage tanks are restocked by means of road tankers and small coastal LNG carriers and in some cases LNG is transferred on the quayside direct from a delivery road tanker to the vessel requiring fuel. Because Norway does not, as yet, have a requirement for an LNG bunker vessel, no such ships are in service.
That is about to change. The 57,000 gross ton passenger car ferry due to go into service early in 2013 will sail between Finland and Sweden on a daily basis and will burn some 23,000 tonnes of LNG over the course of a year. The vessel will be fuelled at its Stockholm terminal using a dedicated LNG bunkering vessel, the world’s first. The vessel in question is a former small Norwegian coastal ferry converted for its new role through the provision of a 300 m3 cylindrical LNG fuel tank positioned on deck.
The LNG in question is to be trucked north from an LNG storage terminal in Nynäshamn to the bunker vessel’s own dedicated berth located elsewhere in the port of Stockholm. From there the bunker vessel will shuttle across the harbour to the ferry terminal each day and transfer LNG to the large ship on its seaward side while passengers and vehicles are being handled on the jetty-side.
As the originally nominated sulphur emission control areas (SECAs), the North and Baltic Seas are set to make a major commitment to LNG as a ship fuel in the years ahead. A year ago the Danish Maritime Authority concluded that, on the basis of research it had commissioned, gas-fuelled vessels operating in Northern Europe could be consuming up to 4 million tonnes per annum (mta) of LNG in their engines by 2020. More recent developments now indicate that that figure could be too low.
Another LNG bunker market that is poised for growth is the US. A SECA regime was introduced in North America in August 2012 and the most recent LNG-powered vessels to be ordered, earlier this month, are a pair of 3,100 TEU container ships specified by Totem Ocean Trailer Express (TOTE). To sail between Florida and Puerto Rico, the ships are the first to be specified with slow-speed gas-injection engines.
The other attraction of LNG fuel in North America is the relatively low price of natural gas in the region. For example, as a result of the discovery of large deposits of shale gas across the US, consumers are spending only one-third of what Europeans are paying for their gas and one-fifth of the prices currently prevailing in Asia.
A number of operators of underutilised US LNG import terminals are proposing the construction of liquefaction plants at their facilities to enable the start of LNG exports. In their new bi-directional role these terminals will prove to be a ready source of LNG supplies and, as such, a major incentive for vessel owners to consider the LNG fuel option.
Source: BIMCO