LNG Picking Up Pace in Marine Fuel Market

LNG Picking Up Pace in Marine Fuel Market

Nobody has suggested that the emergence of LNG as a marine fuel will be a rapid procedure, although in certain areas like the Norwegian coast, political will and the availability of LNG in close proximity have helped to introduce a number of domestic ferries thus fuelled. But there are signs that the slow march of LNG into the marine fuels market is gradually picking up pace.

While one large ferry is already in operation in the Baltic with others on order, there are now several orders for LNG-fuelled machinery for large US flag cargo vessels. Two former barge carriers, still steam-turbine driven, are to be retrofitted by Horizon Lines with LNG-fuelled diesels, with special dispensation for the machinery to be imported for these Jones Act ships. There are also two 26,000 DWT newbuildings which have been ordered by the US operator Crowley for its service between Florida and Puerto Rico, also a Jones Act trade, and one where the entire voyage will be within an emission control zone.

These two ships, ordered at the VT Halter Marine shipyard will be designed by Wartsila and will be of a “hybrid” container/Ro/Ro configuration. It is design expertise that seems likely to be exported elsewhere.

Meanwhile, a joint venture between Lloyd’s Register and China’s Nantung KHI Ship Engineering facility has been signed which will see the Chinese yard, along with the classification society, develop a multi-fuelled general cargo ship of around 28,000 DWT which will be able to run on LNG as one of the options. The project will aim to prove the feasibility and viability of such a ship, looking particularly at the safety elements of different fuels and the issues of bunkering such vessels safely.

And what of the lack of the LNG “infrastructure” which is obviously necessary before this fuel can be a feasible option for ships operating outside the areas where the fuel is readily available? Here too there are developments taking place that seem to suggest the gradual emergence of a network of refuelling stations. There are, for instance, projects for LNG bunkering in Singapore, with specialist craft being designed.

In Europe, just last week there was a meeting of the EU Council, European Parliament and Commission, which considered a proposed directive on the deployment of an alternative fuels infrastructure. The three bodies debated means of encouraging (and even requiring) Europe’s principal ports to put in place LNG refuelling facilities, which it is believed will go a long way to persuade owners of the viability of this clean alternative fuel. The three also considered a proposed requirement for ports to be legally obliged to provide shore side electricity to enable vessels to “cold-iron” when alongside.

Here there is some concern about compulsion being employed rather than enabling ports to respond to market demand, both for LNG and electricity availability. The European Sea Ports Organisation has suggested that such an alternative fuels network needs to be deployed by 2020 in selected core ports if the sulphur directive is to work properly. It also suggests that co-funding arrangements will also be needed. LNG may turn out to be a cheap fuel in the long term, such is its global availability. Nevertheless, the provision of a safe, properly regulated infrastructure, requires both the best design expertise and commercial acumen.

Source: BIMCO, December 27, 2013