A Compelling Future for LNG Discussed at NGV Global 2017

| The Netherlands, Rotterdam
Keller at Plenary Day 2 Rotterdam Mar2017

Peter Keller discusses marine LNG’s progress and potential at NGV Global 2017.

Peter Keller, chairman of SEA\LNG, a multi-sector industry coalition created to accelerate the widespread adoption of liquefied natural gas (LNG) as a marine fuel and currently an Executive VP of TOTE, addressed the Opening Plenary of NGV Global 2017 on the very positive and unfolding role of LNG in the maritime sector.

SEA\LNG looks at LNG from molecules all the way through to the propeller. Founded in August of last year, the organisation now has about 25 members and continues to grow, covering all aspects of the supply and value chain. It’s members agree there is a compelling message for the use of maritime LNG long term.

Like for the trucking industry, there is a lot of work to be done, not just on the regulatory side, but also capex and who is going to pay for innovation, and issues associated with a lack of understanding about LNG as a viable maritime fuel. Issues vary depending on locations and communities where implementation is proposed, and Keller emphasised much effort needs to be put in to educate and inform these communities.

The IMO is driving global change in the maritime industry, tightening emissions regulations over the last few years with a resultant increase in demand for very low-sulphur fuels and other solutions. The IMO has instituted the global sulphur cap of 0.5% for all marine fuels, coming into effect for 2020. Keller remarks it will be interesting to see what shipping companies and others will do to comply.

“The current glut of international shipping capacity and low returns will have a major impact on implementation. One choice is to use low sulphur fuel but it is not easy to find and it is expensive, possibly costing 30 to 40 percent more than current maritime fuels. Also, similar to what happened for the trucking industry a decade ago, the shipping industry faces problems in engine rooms that don’t have the capability to use this type of fuel,” Keller said.

Tote recently completed ship conversions to low-sulphur fuel, including fuel supply systems, for operation in the ECA zones of North America. The cost of conversion to avoid engine damage was about USD 0.5 million, Keller said.

The problem of accommodation also exists for scrubber technology albeit it is a viable solution. Keller asks: “Where do put the scrubbers? How do you generate enough water supply in the ships themselves that operate the scrubbers. And at the end of the day, somebody is going to ask the question, ‘what do you do with the material that you scrub out of the fuel?’”

The Age of Maritime LNG

And then there is LNG. “LNG conversion is difficult, it is expensive and probably not viable long term. However, as the maritime industry again moves forward with newbuilds once the current glut of tonnage is out of the way, I think you will see a lot of the newbuild technology going to LNG and we are already starting to see that right now.”

Why LNG?

Keller: “It is pretty obvious. It solves the SOx problem. It deals in large measure with NOx. It solves the particulate matter (PM) which is a growing issue. It does not solve the CO2 GHG problem, however, it does move the ball down the road by 20-25% (depending on the technology used) and that is certainly better than no change at all.”

Asking the audience to think more about the concept than the figures used, Keller points out that of the total cost of delivered LNG only about 20% to 21% is the actual cost of the fuel, compared with between 50% and 60% for crude. That means when considering the volatility of fuel pricing, LNG is flatter and therefore much more predictable over, say, five to ten years. For that reason alone, using LNG provides a major economic advantage.”

Right now, there are only about 100 LNG-fuelled ships, of which only two are ‘large’ (both containerships operated by Tote), and there are about the same number of new-builds in progress. There have also been several LNG-ready vessels built that can operate at relatively short notice on LNG, presumably with minor modifications.

Effective Bunkering Solutions

Applied Cryogenics Technologies bunkers Isla Bella 2016

Applied Cryogenics Technologies designed the bunker system for LNG-fulled Isla Bella

Bunkering is happening already – by the end of 2017 there will be six bunkering vessels in operation around the world. In Jacksonville, there are two LNG liquefaction plants coming online mid 2017 that will supply maritime customers with LNG. Keller explained that because ships in port cost money, it is critical to be able to bunker and move cargo simultaneously. Tote does this; it has developed a system that can transfer 25 trailer loads of LNG without methane slip to each containership in less than five hours.

Keller explains: “We did that by building an innovative skid that is actually a 53’ container. The energy source is also LNG, containerised as well, so it is totally mobile. The skid is stored methane-rich so we don’t need nitrogen to purge our systems. Those kinds of innovations are very important in helping LNG going forward.”

Tote is also building a bunker barge using GTT technology, capable of being operated unmanned.

LNG a Fuel for Multiple Transportation Appications

Keller mentioned LNG fuel is now being utilised by the Florida East Railway Company (FERC), which operates an LNG-diesel dual fuel train between Jacksonville and Miami, further enhancing the environmental footprint of cargo supply routes. 24 locomotive engines are being converted for natural gas power.

“If you are really committed to it, and have the capitals and the leadership to make it work, you develop a lot of market not just for maritime but also all the ancillary requirements that go with it. Wherever there is maritime there is a lot of trucking, there is rail and there is other industry that can benefit from using natural gas.”

“We really believe that over the next ten, twenty years, there is a very significant market long term for the LNG sector, and that as we look at the benefits of LNG especially as it relates to Sox, NOx and PM it is going to be a compelling fuel for the future.”

LNG Global 2017

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