Last week in Perth, Australia, the International Gas Union (IGU) released its 2016 World LNG Report, which demonstrates how the global LNG industry is poised for growth and plays a key role in expanding access to natural gas in the world’s future energy mix. Although the report is a high-end overview covering supply and pricing, discussion on LNG as a marine fuel is included. Natural gas is a vital energy resource that can lead to a lower carbon future, cleaner air in metropolitan areas, and a prosperous economic future.
The volume of LNG trade in 2015 was the largest year ever. Although the Pacific Basin remains the largest source of demand, growth was driven by Europe and the Middle East. New regasification markets formed in Egypt, Jordan, Pakistan and Poland, just in time to benefit from near record-low prices. The Philippines LNG import infrastructure will be completed in 2016. Other new LNG markets may ensue (Extract, pg. 16):
“If global demand proves to be weaker than expected, placing further downward pressure on prices, other proposed markets may accelerate their plans to add import capacity, potentially providing an unexpected outlet for new flexible LNG supply.”
The decline in oil prices and growing weakness in Pacific demand led all global LNG price markers to fall in 2015, from an average $15.60/MMBtu in 2014 to $9.77/MMBtu in 2015.
While the natural gas industry is undergoing fundamental changes as it operates in a historical low-price environment, the global social and political momentum illustrated by the COP21 agreements suggests that natural gas can be a critical part of the globe’s future energy mix more than ever.
“Natural gas accounts for roughly a quarter of global energy demand, of which 9.8% is supplied as LNG. The 2016 IGU World LNG Report shows that a major expansion of LNG supply through 2020 positions LNG to further increase its market share. The LNG industry has developed to a point where the necessary foundations have been built to turn natural gas into a truly global commodity, enhancing both energy security and meeting growing demand,” said David Carroll, President of the IGU.
From the marine fuel perspective, the Report notes that since 2000 millennium, propulsion systems specific to LNG carriers have undergone major innovations and enhancements, particularly to reduce fuel cost during an LNG voyage. Ther IGU Report comments on two LNG fuel alternatives.
MAN Diesel & Turbo introduced the ME-GI engine in 2011. Around 37% of vessels in the orderbook are designated to adopt the ME-GI engine, which utilize high pressure slow-speed gas-injection engines. ME-GI engines optimize the capability of slow speed engines by running directly off BOG – or fuel oil if necessary. This flexibility allows for better economic optimization at any point in time.
A 170,000 cm, ME-GI LNG carrier – operating at design speed and fully laden in gas mode – may consume around 15-20% less fuel than the same vessel with a TFDE propulsion system. While there is an improvement in fuel consumption, the reliability and extent of operational flexibility is still to be determined as the first LNG carrier with a ME-GI propulsion system was only delivered in the second half of 2015. Nevertheless, the NGV Global News article of February 2015 reports sales of the ME-GI engine surpassing 100 units.
Wärtsilä introduced its low-speed 2-stroke dual-fuel engine in 2014. This alternative propulsion system offers capital expenditure reductions of 15-20% via a simpler and lower cost LNG and gas handling system. On the operating expenditure side of the equation, significant gains can be achieved because no high pressure gas compression system external to the engine needs to be operated onboard the vessel, and NOx abatement systems are not required.
The World LNG Report, a flagship publication of IGU first published in 2010, provides key insights into LNG industry developments through the end of calendar year 2015. While the Report’s focus remains, as in years past, upon recent historical data on world LNG activity, the Report also provides key insights on issues addressing world LNG activity going forward. To download the full report, please visit www.igu.org
The IGU organises the World Gas Conference (WGC) every three years, with the forthcoming event — WGC 2018 — taking place in Washington, D.C., United States, in June. The IGU’s working organisation covers all aspects of the gas industry from exploration and production, storage, LNG, distribution and natural gas utilisation in all market segments.