To LNG or not to LNG

Liquefied Natural Gas. A new source of fuel able to meet the strict emission requirements that will soon come to pass. Maritime by Holland Magazine delves into the world of LNG and finds that though technology is right there, regulation, infrastructure and pricing could prove challenging.

“I think there is a discrepancy in what people think when they hear LNG”, states Bert de Vries of the Holland Shipbuilding Association. “LNG has been transported for decades, the trend we are seeing now is using the gas to fuel a vessel. The oldest and most well-known use of LNG in fuel is the use of the boil-off. This occurs when LNG is warmed slightly during transport, resulting in a change in pressure in the tank, which can be used as fuel. Norway is far ahead LNG-wise. About ten years ago Norwegian companies had to change their attitude towards fuel to stricter and more pricey emission regulations. This was a major influence for the change to LNG. One of the oldest LNG vessels is the short sea gas tanker Pioneer Knutsen, used as a supply vessel. Nowadays, the country boasts many LNG-fuelled vessels for the offshore as well as for other industries.” Also, Norway has a large supply of natural gas, alongside the fact the country is well developed and innovative.

Measurable distance

De Vries continues: “In the Netherlands the first signals towards LNG occurred around five year ago. The city of Amsterdam has a number of canal boats which run on CNG, Compressed Natural Gas. Different to LNG as it is not in a liquefied but in a gas state. The substance may be different, but the engines are the same. This was the Netherlands’ first encounter with an actual natural gas powered vessel. The bunker challenges we face now are not an issue for the tourist vessels in Amsterdam. The distances they encounter are not the same to what inland shipping vessels do, though LNG is more practical than CNG, you can transport more in the same tank liquefied than you can compressed. So, with the same tank, you can achieve a further distance. An inland vessel can bunker LNG in Rotterdam, the Netherlands, and then travel to Basel, Switzerland, and back on that tank. It may not mean much to others, but to some of us, this is a very measurable distance. The first LNG vessel to reach the inland shipping industry was the Argonon by Deen Shipping. LNG was unheard of within their industry and a lot of people still find it a little scary. In fact, it is forbidden to use natural gas within this industry. It is forbidden because regulation states that vessels cannot sail on fuel that has a burning point lower than 55 degrees Celsius.” More information on rules and regulations can be found on page <<nummer>> in the article ‘Fuelling regulation’.

The Argonon

Gerard Deen, owner of Deen Shipping comments: “Naturally, there were more options to meet the emission requirements. We could have chosen a downstream option or a different type of fuel. I was never very positive about the downstream option. As an entrepreneur, I am willing to invest in the future and for the environment. However, I also feel you should see a return on your investment and as such the only option for me was LNG.” Proposing this idea was tricky. When Deen approached the CCNR, the Central Commission for the Navigation of the Rhine, with this option, he was turned down. “They said, I could not develop the idea, if I did not a have a project”, explains Deen. “Shortly thereafter the project Argonon was developed and ordered. So now I needed consent for LNG within a year’s time. That put some pressure on the CCNR. Luckily, the Argonon is dual fuel. Just in case we did not get the approval in time, we would travel on a different fuel.”

Building and bunkering

Part of solving the puzzle is building vessels like the Argonon. Being able to bunker the fuel is another hot topic. DNV advises those leaning towards using LNG as a fuel. Matthe Bakker, head of solutions Netherlands for DNV, states: “Leading in the bunkering-topic in the Netherlands is definitely the Port of Rotterdam.” In 2011 the GATE LNG terminal came into operation, but it is unlikely it will be used for bunkering activities directly. Next to the GATE terminal planning is ongoing for a smaller LNG break-bulk terminal. Bakker: “Though, I must add that it will not be the place where vessels come to ‘fill-up’. This break-bulk terminal will be a bunkering place where bunkering vessels and tank trucks will come to be supplied.”

Norwegian influence

As Norway is leading LNG-wise, bunkering related questions are first researched in Norwegian experience. Bakker: “Their basic principles are very useful to us, although techniques have changed and even developed. For instance, bunkering can be done by attaching a hose from a truck or bunkering vessel by bolting the hose down, which is the most often used practice in Norway, being the best practice about ten years ago. Although this is a safe method, in case of an emergency the connection cannot be easily disconnected. Technology is evolving and nowadays new coupler systems have been developed that do not have to be bolted down, which means easier and safer operations with minimal LNG release in the case of an unintended disconnection. Such developments take time and the experiences from Norway help us to improve and evolve. It does pose an interesting question. Much like, back in the day, when people could go for VHS or BETA. Some people chose BETA and had to come back from that decision as VHS had become the better option. You have to consider what will work for years to come.”

Public perception

Bunkering also has to be done with regard for the safety of the staff involved and for the environment. This is where our perception of LNG offers a problem. People are generally fearful of natural gas. Although we happily live next to our local gas station, the thought of gas being transferred via a pipe to a vessel suddenly strikes us as posing enormous risks. Bakker: “Of course, it is a gas and there are risks involved when handling gas. The substance itself, however, need not be dangerous. You have to handle it well and ensure that the process is done according to all safety norms. We also see a lot of decisions are made for LNG based on feeling, not fact.” Norway has shown for more than a decade that LNG can be handled in a safe way.

Dutch innovation

LNG bunkering for sea shipping is a hot topic for many European countries. The Netherlands is leading, but Belgium is hot on its tail, followed by Germany, Sweden, Denmark, the United Kingdom and France. Deen: “The Dutch are known to be innovative. It took some persuasion to get the other countries to see the advantages of our project, but other countries are catching up.”

Training regarding LNG is also a hot topic. DNV is working on a competence standard for this subject. Once finished training companies can use this competence standard to offer full training to people who require it. Safety is a major issue, especially with the afore mentioned public fear of the use of natural gas. LNG used to be a commodity for the larger international oil and gas companies, with the arrival of bunkering stations new companies will start working with the gas although handling volumes will be much smaller. LNG has a solid name and track record, much thanks to the way major conglomerates have handled the safety. The question is: Can new companies offer the same safety? And, as such, keep the LNG reputation solid? Bakker: “This is a challenge the LNG bunkering industry faces: what are the risks associated with LNG bunkering and what can be done to minimise the risks? An ISO bunkering standard is expected to be published shortly, with SIGTTO participation facilitating alignment within the industry but next to that local initiatives have to be and are being undertaken.” David Anink, sector manager at the Holland Shipbuilding Association concurs, stating: “Training is a hot topic and once regulation and code are aligned the industry will have a clear view on what is necessary to teach people who will come into ‘contact’ with LNG.”

The future of LNG

“Hmmm, what will the future bring?” murmurs Bakker. “Well, it is a fact that we will start using LNG as a fuel more and more. This is partly down to the very strict regulations regarding SOx and NOx emissions. Yet, there are other options, like installing scrubbers or distillates. So, companies can choose which way they go to meet requirements. I believe it will be mostly dependent on the price. If the LNG prices are high, we will see more scrubbers and distillates sold, if LNG is cheaper, vice versa. There are now 30 LNG vessels, with 30 more in the order books. So, no doubt, LNG is goingto become part of our lives. The break-bulk terminal in Rotterdam will be operational in 2014, as will the LNG terminal in Germany, though LNG bunkering done by tank trucks is operational already. 2015 will see the arrival of the regulations and codes. Asia and America are also becoming more involved, so on a national as well as international scale a lot is being done on LNG.”

“LNG is the future”, states Anink. “The question is what stands in the way? I believe acquiring the right investments may prove tricky. Banks are hesitant in funding such a new technology. Perhaps the Dutch government, who are doing all they can to assist in the leap to LNG, can offer backing to banks, which will allow LNG innovation to persist. Another possible issue will be the price of LNG, though much is said on this subject, many are unsure how it will unfold. Until we have a reasonable amount of LNG fuelled ships and a reasonable infrastructure, prices will prove a guessing game.”

A good alternative

Deen: “LNG will mean so much for the inland shipping industry. We cannot escape the emission requirements, so we need to take action. LNG will also prove valuable for the inland shipping image. Road traffic has the possibility to renew every couple of years, inland vessels do not have the luxury, so we have to take bigger steps to remain environmentally friendly. Perhaps price may prove an issue, although I believe that it will prove cheaper in the long run. Cheaper than the alternatives and certainly cheaper than more ‘typical’ fuels.”

Another interesting side to the influence Norway has is that they look forward to the Netherlands joining the LNG game. Norwegian eyes are focused on the Port of Rotterdam to lead the way. Anink: “It will be a huge opportunity for the Netherlands to be a front runner in LNG. It is seen as clean technology, which is very positive for our wish to be more durable as a maritime nation. The dynamics are all here, so let’s make the most of them!”

Rebecca McFedries