Posidonia: LNG to Lead Alternative Fuel Revolution

Demand for alternative fuels is expected to rise especially in the face of volatile oil prices, the ever changing regulatory framework and the projected exponential growth of global deep sea shipping tonnage, according to propulsion system makers and classification societies gathered in Athens this week for Posidonia 2016.

LNG is said to be the front-runner with anticipated 11 percent market share.

“Regardless of any geopolitical scenario, global tonnage is predicted to double by 2030 due to growing middle class populations in India and China,” said Nick Brown, Marine Director, Lloyd’s Register Marine.

“Our studies suggest that while heavy fuel oil will continue to be the most popular in terms of usage by the shipping industry there will be an increase in the diversity of the fuel mix with LNG predicted to account for up to 11 percent of deep sea shipping fuel. Two more drivers leading to the advent of alternative fuels can be classified in two broad categories: Regulatory requirements and environmental concerns, and availability of fossil fuels, cost and energy security,” he added.

“We are working with designers, owners and equipment manufacturers to ensure their specific projects are considering all different alternatives including LNG as a viable alternative for localized trading in regional seas such as the Baltic Sea or the Mediterranean,” he concluded.

Indeed, engine manufacturers participating at this year’s Posidonia Exhibition seem to be in agreement that demand for alternative fuel propelled engines is on the rise. Michael Jeppesen, Mechanical Engineer at MAN Diesel & Turbo, believes that gas fuels are emerging slowly but surely.

“The infrastructure has significantly improved, the network of bunkering stations worldwide is fast increasing and oil companies are finally seeing the viability of the alternative fuels market for the shipping industry,” said Jeppesen.

“These positive developments have led to an increased interest from shipowners who are becoming more receptive to the idea of alternative fuel as the main energy source for their fleets.  We currently have 150 alternative fuel engine orders in our portfolio for two stroke engines and this is mainly from Greek shipowners for deep sea LNG carriers. While two thirds of these orders are for LNG carriers the rest account for container vessels.

“We have also developed the design concept for other fuel types such as methanol, LPG and ethane and we are already working to deliver nine methanol engines and five more for ethane. Ten per cent of our total order portfolio comprises non conventional fuel orders,” he added.

There are currently about 500 LNG-fuelled ships using their own cargo to meet their energy needs and a few tens of others specially converted to use this type of fuel for propulsion purposes. But if infrastructure development continues unabated, in the next ten years it is estimated that there will be a 50-50 split between conventional and new fuels, mainly LNG and LPG, according to Jeppesen. 

Wartsila’s spokesperson Dyonisios Antonopoulos, General Manager, Marine Solutions, agrees that LNG is the future due to its environmentally-friendly qualities coupled with the revolution of shale gas.

“We are particularly optimistic about the LNG use in the cruise industry which has significantly upped its investment in this segment of newbuildings,” he noted.

According to Theodosis Stamatelos, from Lloyd’s Register, the cost is key.

“The two key drivers that will convince owners to convert to alternative fuels or order ready newbuildings is regulation and the commercial fuel split with the latter being on everybody’s lips in terms of what will be the difference in price between low sulphur heavy oil versus LNG. With the shale oil phenomenon we are seeing an increasing decoupling between the price of oil and the price of gas. Once the differential becomes clearer then we will see more projects start,” he concludes.

Highlights of the Day 3 at Posidonia are shown in the video below:

Video Courtesy: Posidonia