Harris: U.S. Will Be Favored as LNG Bunkering Hub

Jonathan Harris; Senior Business Development Manager Puget LNG

Liquefied natural gas (LNG) is gaining on importance as an alternative marine fuel in anticipation of the IMO’s sulphur limit set to enter into force in 2020. One of the major hindrances to a greater uptake of LNG as fuel in the shipping industry have been infrastructural concerns.

However, over the past few years we have seen a considerable investment in the construction of LNG bunkering facilities across global ports in Europe, Asia and the United States. The U.S. Gulf and East Coast including the ports of Jacksonville and Fourchon have been at the forefront of the initiative, and very soon they will be joined by the Port of Tacoma.

Namely, Puget Sound Energy is building an LNG facility in the port which is expected to provide transportation companies, including TOTE Maritime Alaska vessels, with a cleaner fuel alternative.

TOTE Maritime Alaska is pioneering LNG conversion in the United States as it is retrofitting its Orca Class vessels to run on LNG. The company has already completed the first conversion stage on one of its ships, North Star, and over the next four years three more conversion periods will be required to finalize the transition. The conversion of North Star and Midnight Sun is scheduled to be complete in 2022.

These ships will bunker their fuel at the Puget LNG facility, jointly owned by Puget LNG, LLC (PLNG) and Puget Sound Energy, Inc. (PSE), subsidiaries of Puget Energy.

PLNG will own the portion of the facility serving maritime and other transportation markets, while PSE will own the portion serving the regulated gas customers.

The construction of the facility started in late 2016, and the plant is scheduled to be fully commissioned in late 2020.

Once operational, the plant will have 250,000 gallons per day of liquefaction capacity and an 8 million gallon full-containment LNG storage tank. Gas will be supplied from the Williams NW Pipeline, with the gas being sourced from Northern B.C., Canada. The financing of the construction will be carried out via both equity and corporate debt.

“The facility has a marine loading pier that is designed to directly bunker TOTE’s ships. In the future it will also allow us to provide LNG to a bunkering barge or bunkering vessel,” Jonathan Harris, Senior Business Development Manager at Puget LNG, told World Maritime News.

“We have a relationship with Crowley Maritime and are jointly working on a bunkering barge design that we feel will suit the ship-to-ship bunkering opportunity in our market. Through that relationship there is a pathway for Puget LNG to invest in that barge should we chose to.

“We also have two truck loading racks at the facility, so we do have infrastructure for providing LNG via truck to a variety of customers, both land and water based.”

As explained by Harris, the first year of the project implementation was dedicated to site preparation and ground improvement given the seismic nature of the region and the location in the Port of Tacoma. In the past year construction focus has been on the LNG storage tank.

“This was the longest lead time item in the project as we are building an 8 million gallon (30,280 m3) full containment tank sat on 86 seismic isolators. The tank will be completed by the end of 2018. We have also finished work on the marine loading pier and the tunnel that carries the LNG pipeline to the pier from our tank,” he pointed out.

The next stage of construction will be focused on the liquefaction train and associated infrastructure, along with the truck loading bays and completing the marine loading pier infrastructure.

“All regulatory approval and construction permits are in hand. We are awaiting a minor emitter air permit from the local air agency and that will be our final permit,” he noted.

Commenting on the opposition from the indigenous people, mainly the Puyallup Tribe, to the project development amid environmental concerns, including claims that the process of liquefying and refining LNG releases pollutants into the air, Harris said:

“We share the community’s concerns about the environment, and we want to work to preserve it. We see our LNG project as one that will provide our region with cleaner air and cleaner water. By supporting the maritime sector to transition ships from diesel bunker fuel and towards cleaner burning LNG, it will reduce greenhouse gases by nearly 15 percent and dramatically reduce dangerous particulate emissions by more than 85 percent.”

Aside to TOTE Maritime’s vessels, Harris added that there is a great opportunity in the cruise ship sector for the LNG facility, especially when speaking about cruise lines that venture into the environmentally-sensitive areas.

“We see the list of potential customers growing as more and more shipping lines commit to new vessels designed around LNG as the fuel source. It’s an exciting time for the industry, but also one that is currently filled with a lot of questions about fuel costs post 2020, which for some shipping companies is a key driver to switch to LNG as their fuel of the future. The stable fuel pricing year-on -year that we can offer customers can take away a lot of the doubt and questions that they currently have,” he said.

“The use of LNG in cruise ships aligns so well with the Alaska route and the sensitive environment in which those ships operate. We also see opportunities with car carriers bringing vehicles onto the west coast from Japan as that industry pushes to lower the carbon footprint of its supply chain. I also hope to see an LNG fueled tug operating in our ports in the near future, such as the tug that has been put into service in the Port of Yokohama in Japan.”

Speaking on the future of LNG as marine fuel in the U.S., Harris believes there is a great potential for LNG, especially in the Tacoma region where the economy is so dependent on ocean trade.

“North America is very lucky to have large reserves of natural gas and pricing has been at historical lows for some time now. As a fuel source, this can provide marine customers with a fuel cost that is stable and uncoupled from some of the influences that can affect the price of oil-based fuels. For that reason, we think that the U.S. will be favored as an LNG bunkering hub in the future,” he concluded.

Interview by Jasmina Ovcina Mandra; Image Courtesy: Puget LNG