DNV GL Foreshadows LNG Fuel Reality for North America

| USA, Houston TX

To meet the rapidly growing demand for a wide variety of LNG related services, including the adoption of Liquefied Natural gas (LNG) as a fuel for the marine industry, DNV GL has established a group of LNG experts in North America — the Houston-based ‘LNG Solutions Group – Americas’. Bjørn-Harald Bangstein, Director of Operations Maritime Advisory, Americas explains the rationale for the initiative: “Judging from our list of recently completed projects, you can clearly see the market is about to reach a tipping point, from market, feasibility and risk studies to actual new-buildings, export and bunkering facilities.”

With the increasingly strict regulation of sulphur emissions in force next year and the already tightened Emission Control Area regulation for the US, ship owners are likely to feel more pain by the rising fuel prices. For instance, due to the new regulations, Marine Gas Oil (MGO), will likely see a price jump in three months, possibly as high as 30% in the short term, and a minimum of 20% in the long term. This has impact well beyond the maritime industry.

As of July 2014 there are 116 LNG fuelled vessels in total (50 vessels in service and 66 on order). Of these, 75 are classed by DNV GL (46 in in service, 29 newbuildings), which gives DNV GL a market share of 65%.

”More than any other company, DNV GL has championed LNG as a solution for some of the main challenges facing the maritime industry: fuel cost and emission reductions. Combined with the abundance of cheaper natural gas in North America this contributes to a surge in LNG activities. We are happy to now see shipowners, yards, ports, bunkering operators and LNG proponents in general acting to be well positioned for LNG,” says Bjørn-Harald Bangstein.

Regulatory certainty underway
“Through our interfaces with the US Coast Guard, both formal and informal, we know that they are now finalizing the remaining regulatory requirements on a detailed level. They are doing so in an open and consultative manner that involves the industry and prevents surprises and misunderstandings. Naturally there could be additional state, county and municipal regulations. But with a national regulatory framework designed to prevent major hazards using a risk based approach, particular local variations can be addressed through risk assessments, allowing for a consistent and predictable national regulatory framework,” he says.

A selection of DNV GL’s recently completed LNG projects in North America show a trend towards a tipping point:

  • For IMO, DNV GL carried out a Feasibility Study on the use of LNG as fuel in North America.
  • Waterway Suitability Assessments for several planned North American LNG export terminals
  • A comprehensive risk assessment study on LNG bunkering for MARAD, the US Government’s Maritime Administration.
  • Security and Risk assessment study for Washington State Ferries
  • Market feasibility study for LNG America
  • Classification of two LNG ready container ships for Matson
  • Classification of two LNG fueled RoRo Container ships for Crowley
  • Hosted visits from USCG and Transport Canada for familiarization with LNG as a fuel in Norway
  • Technology qualification for flashing liquid expanders
  • Quantitative risk assessment studies for North American export terminals
  • Termpol 3.15 risk assessments for all planned LNG export terminals in Canada
  • Industry-wide LNG Fuel Advisory Council headed by DNV GL’s Tony Teo in 2011.

DNV GL has published several widely referenced industry documents such as Rules for Classification: Gas Fuelled Ship Installations (last update Jan 2014), Recommended Practice for Development and operation of liquefied natural gas bunkering facilities (Jan 2014) and Competence Related to the On Board Use of LNG as Fuel (April 2003).

(Source: DNV GL)

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