IS LNG THE FUTURE MARINE FUEL?

Is liquefied natural gas (LNG) the future of marine fuel – or just a future marine fuel? That is the billion-dollar question. Cleaner, safer, more affordable and easier to obtain – as the variety and interest in new marine fuels grows, shipowners and operators are more likely to opt for the prosaic than the exotic, says John Bradshaw.

LNG has a bright future as a marine fuel. However, it is worth stepping back and looking beyond the media headlines.

The number of LNG-fuelled ships being ordered is a small proportion of the total and, in terms of the existing fleet, statistically insignificant. For LNG to supplant oil it needs a fuel supply infrastructure to be in place, requiring significant investment. North American wholesale LNG prices are quoted to promote it as a cheap fuel, but these are not representative of LNG bunker prices.

What are the alternatives? We need to ask what society demands of future fuels. If we consider this, we will answer the question of what the future of fuel might look like.

Emissions drive ? Interest in alternative marine fuels has been driven to some extent by changes to nitrogen and sulphur oxides (NOx and SOx) emissions limits. LNG is low in sulphur and gas engines have lower NOx emissions than oil engines. The ferry sector in particular is embracing alternative fuels. The economics are particularly attractive for ferries operating in emission control areas, as witnessed by the delivery last year of the 2,800-passenger LNG-fuelled ferry Viking Grace and Stena’s planned conversion of the Stena Britannica to methanol.

Outside shipping, the emissions debate is dominated by carbon dioxide. Shipping will be expected to reduce its carbon intensity as society demands affordable, secure low-carbon energy; the ideal clean, readily available fuel is hardly attractive if it is too expensive.

The dilemma is facing not just shipping, but society as a whole. Society wants unlimited, cheap and clean energy. We have yet to find a fuel satisfying all three demands and are unlikely to reach this energy nirvana soon. The objectives pull in different directions and any two of them can be achieved relatively easily. There is cheap and readily available fuel if environmental impact is considered unimportant, and clean, fully renewable fuels if affordability is irrelevant. Yet while compromise is often used as a pejorative expression, achieving an optimum energy compromise is an aspiration, not a failure.

Are we running out of fuel?  When considering energy security there is increasing angst that fuel is about to run out. Is this view based on fact or fiction? Reliable sources show known oil and gas reserves have steadily increased by approximately 60 per cent since 1992. Demand is also growing, but there is no reason to panic about oil or gas and it is generally not understood that elemental carbon and hydrogen can be reformed into almost any synthesised hydrocarbon fuel using existing technology.

The economics of synthesised fuels, such as coal to liquid processes, are not attractive. However 20 years ago, this was also true of extracting shale oil and gas. Other hydrocarbon fossil fuels, including ethane and liquefied petroleum gas (LPG), can be utilised as fuel relatively easily.

Few things look as old fashioned as yesterday’s vision of today and we should remember that assumptions of future energy trends are just that – assumptions. Two extreme future scenarios are a write-down of fossil fuel reserves to combat global warming, or synthetic photo synthesis making carbon dioxide yesterday’s problem. Neither scenario is impossible, demonstrating just how energy assumptions might change.

Environmental concerns : So we should not lose too much sleep worrying about the world’s supply of fuel going dry. But what about the environmental impact? Carbon intensity of fuel depends upon how the energy system is defined. The marine Energy Efficiency Design Index (EEDI) carbon factors are based on stack emissions, but society increasingly expects a more holistic view, considering extraction, refining and supply. This could fundamentally change the carbon intensity of marine fuels.

Natural gas is cleaner than oil, but is it greener than combusting a waste product when emissions can be cleaned? Arguing that combusting residual fuel oil is environmentally responsible may seem flippant, but it is certainly possible to support such an argument, thus challenging accepted wisdom. Exhaust gas cleaning is a mature industrial technology and some exciting systems designed for the marine market are now available. Ships equipped with these systems can combust high sulphur residual oil in emission control areas.

To misquote Mark Twain, rumours of the death of oil are greatly exaggerated. Oil remains the dominant marine fuel and, with clean emissions technology, will continue to compete against the newer fuels entering shipping.

SUCCESS STORIES: AUSTRALIA EMBRACES LNG AS MARINE FUEL

In an Australian first, EVOL LNG has been approved by Fremantle Ports to bunker LNG, providing access to the cleaner shipping fuel alternative for LNG-powered marine vessels visiting Fremantle Port.

The availability of LNG as a bunker fuel, which will be delivered from EVOL LNG’s Kwinana LNG plant, will pave the way for LNG-fuelled ships to visit the port, and provide the option for local ferries and workboats to switch to the lower-cost, lower-emission fuel.

It will also see Fremantle Port become part of a growing global LNG bunkering network which includes major ports in Europe, North America, Qatar, Singapore, Japan and Korea as well as more than 40 other ports from around the world which bunker LNG, or have plans to do so.

EVOL LNG’s Business Manager, Nick Rea, said he was confident that global fleet of LNG-fuelled ships would continue to grow, and that EVOL LNG was well placed to support the growth.

“Our decision to provide LNG bunkering to the shipping industry is based on a long-term strategy,” Rea said. “Over the past decade, we’ve seen the number of LNG-fuelled ships in operation worldwide increase steadily from a handful to more than 70, with an additional 80 to be built in coming years.

“As emission reduction efforts continue to increase in importance, including in Australia, we expect the adoption of LNG as a low emission marine fuel to increase. Apart from the environmental benefits, we expect to see a widening gap in the fuel price spread, as well as the cost of LNG-fuelled ships reducing as the technology matures. The business case for ship owners to invest in LNG-fuelled ships is becoming more and more compelling.”

EVOL LNG will be able to supply its customers with LNG at a price that is competitive with low-sulfur marine diesel, it says, and will be able to refuel ships at up to 45 tons per hour of LNG, which is comparable to refuelling with traditional bunker fuels.

“We’re looking forward to working with Fremantle Ports and believe it is well-placed to support future LNG-fuelled workboats servicing Fremantle, the offshore oil and gas fields in the north west of Western Australia, as well as itinerant LNG-fuelled vessels travelling between Australia and south-east Asia,” Rea said.

“If interest is there, EVOL LNG will obtain licenses from other major Australian and regional Western Australian ports to conduct LNG bunkering operations. It’s certainly an offering we’d like to expand, particularly as truck-to-ship LNG bunkering can be achieved without the need for new fixed infrastructure to be built.”

The news comes after the announcement in April that Woodside and Siem Offshore Australia, using Wärtsilä design, dual fuel engines, will be launching their first LNG fuelled offshore support vessel in 2017.

Additionally, SeaRoad Shipping will launch the LNG fuelled vessel Searoad Mersey II later this year. It is expected to enter six-days-a-week overnight Bass Strait service between Devonport and Melbourne in December and has been at the forefront of LNG as marine fuel technology in Australia.