Interview: Switch to Gas Needs Speeding Up

WMN: What was the motivation behind starting the SGMF Society?

Bell: “It has been set up as a membership-based organisation and an NGO to represent the best views of the industry, and the best practice within the industry, regarding not only gas as a marine fuel, but also alternative marine fuels of the future. It has been set up to handle the issues dealing with gas and LNG as a marine fuel, which are totally different to the issues around LNG as a transportation cargo.”

WMN: Seeing that you are a relatively new NGO player, what do you intend to bring to the table?

Bell: “The best practice for the industry. We cannot be prescriptive, we cannot write specifications, we cannot tell people what to do, but as a membership-based industry organisation we can issue guidelines which are the best the industry has to offer.”

WMN: Do you see yourself more as a body aimed at raising awareness within the existing regulatory framework or more as a regulatory body for areas that haven’t been adequately covered?

Bell: “In terms of the maritime regulatory framework, it tends to be the framework which is reactive as opposed to being proactive. We have the responsibility to manage the public perception of this new marine fuel, what it means, and what impact it has on society. In terms of its environmental performance, there is much of the awareness to be raised there.”

WMN: What are the key issues that need to be sorted out with respect to facilitating LNG to become the Number 1 marine fuel?

Bell: “The first one is safety. Do not spill it, do not cause an incident, do not harm any people, environment or property. That has got to be the first and foremost.

The second one is to make sure that the best that the industry has to offer for technology is brought together.

The third one should be that the environmental performance matters are met, and probably the fourth one that needs to be dealt with is that everybody can see the commercial advantage to be had when using LNG as a marine fuel.”

WMN: Would you say that the commercial viability of LNG is your strongest argument?

Bell: “No, it is not the number one, but it is the one that affects everybody, everybody wants a competitive advantage, and there are always those to be had.”

Speaking of the recent Resavika leakage incident Bell said: “One should make sure that the communication is there between the organisation, making sure that they do what they said they were going to do. The statement we issued on our website regarding the incident outlines the importance of adhering to guidelines.”

WMN: What are the benefits and what are the challenges you would single out for those who want to shift to LNG?

Bell: “There are many benefits. The challenge is to do it fast enough. The maritime industry is not the fastest moving industry in the world, such a major shift is not going to happen overnight.

However, there are other industries that are moving far quicker towards adoption of gas as a fuel, and certainly in areas such as North America where there is a dash for gas at the moment amongst some other industries such as rail, mining, road.

Maritime industry might find itself a little bit late in the pecking order, so speed I would say would be one of the major challenges. The benefits are many, but once the safety and technological challenges are overcome, the main benefit will be improved environmental performance, which is a major advantage when using gas.”

WMN: Any downsides?

Bell: “A lot of people perceive that using a cryogenic gas in a liquid form is a challenge for the maritime industry, so the downsides of using gas would be for the global bunkering industry to embrace this technology and move forward, and to look at different ways to doing things.

You hear a lot of the industry say it has got to be a bunker barge, it has got to be done in the same way, and that is the way we have always done it. That is the hindrance, and the main challenge is not being able to think differently and do things differently.”

WMN: Recently we have seen many firsts in terms of new ship designs adopting LNG as fuel, like the first drillship fuelled by LNG, announced by ABS and DSME. What direction will the LNG industry take in the future? What are your projections?

Bell:” If you have an existing asset, in general it does not make sense to convert it to this technology, those vessels are amortized and financed over a period of time, so for a buyer to make a major investment mid-way through does not generally make sense, unless the vessel is on a long-term charter, back-to-back service, or in a restricted area.

But for newbuilding it totally makes sense. To not consider this as a viable alternative for any sector of maritime industry would be a mistake. We will probably see a few conversions, but not many. On the other hand, newbuildings are a different story.

For the short-sea shipping, the local shipping  and the inland waterways you will see developments pretty much extensively across the board. The attractiveness of the price of the commodity is irresistible.

Deep-sea shipping is a different prospect, where availability is a major factor. We will probably see sectors such as container ships, maybe vessels that are on 15 to 20-year charters picking this up as the availability increases.

I think we will see deep-sea shipping moving towards this fuel in a major way over the next 5 to 10 years. There are projections that anywhere between 250 and 2,500 ships LNG-fuelled ships will be built within the next 5 years. Even if it goes to 2,500 ships or beyond, that is still a relatively small proportion of the world fleet, but that is probably a rather conservative guess.

When you start looking at larger ships, deep-sea operations and long-term operations, 2,500 ships is still a small portion, but nevertheless a significant one.”

WMN: What about the port infrastructure, are the ports ready for a surge in LNG orders?

Bell: “No. But that is more increasingly being seen as an opportunity. If you look at the existing port infrastructure, it is for commodity LNG.

Now, is that available for bunkering by and large? The answer is no. The advantages of having a clean sheet of paper if you will, is being able to provide strategically the best bunkering solutions for LNG.

The lack of infrastructure is more and more being seen as an opportunity rather than as a problem. You are not stuck with an existing infrastructure, you can put it wherever you want it. One example would be that you could have package liquefaction plant liquefying gas on a small scale for marine bunkering from pretty much anywhere. Or you could have an offshore supply terminal sitting out in an anchorage. The range is almost limitless.”

WMN: Is the introduction of the stricter 0.1% Sulphur Directive, coming into force in January 2015, a positive development for LNG? What are your comments on the UK Chamber of Shipping lobbying to postpone the introduction of the Directive?

Bell: “It is very unlikely that the Directive is going to be postponed any further. The Chamber of Shipping is the voice of shippers who are struggling to comply with their existing assets.

We have got sympathy towards the shippers, but on the other hand, the Directive has been on the table since 2005, so there has been ten years for the industry to get itself together to comply with this Directive.

The switch will take time, and these initiatives are there to try to make the industry move a little quicker. Again, the speed of change is the biggest challenge.”