LNG: waiting is not an option

Paul Gunton
Paul Gunton
ShipInsight

18 April 2019


Last week I attended a presentation about a long and detailed study into the well-to-wake (WtW) benefits of using LNG fuel compared with HFO. Its backers said its findings provided definitive figures for GHG emissions and the man behind the analysis, Dr Oliver Schuller, principal consultant at the German consultancy thinkstep, justified that claim.

“What makes this study unique is that it is very comprehensive in terms of the engine technologies considered” when compared with others that have looked at particular engine types, he said. In addition, it used primary data from manufacturers, rather than recycling old data from previously published material.

Midnight-Sun-One-of-Totes-Orca-Class-ships-From-TOTE-Website

In my news item about the analysis I included a link to the full report, which included the headline figure of 21% less greenhouse gas emissions (GHGs) for LNG fuel compared with HFO in a WtW comparison for a two-stroke engine. Yet only two weeks earlier, another lengthy report had also provided a WtW figure – a ‘lifecycle’ figure, it termed it – of just 2.17%.

That report was published on March 29 by the Seattle-based consultant Ecology and Environment, which prepared a ‘final supplemental environmental impact statement’ (FSEIS) for the Puget Sound Clean Air Agency (PSCAA) in connection with a proposed LNG project for Tacoma.

The study is to help the agency make a final decision on whether to approve construction of an LNG liquefaction, storage, and marine bunkering facility, which would use gas sourced from Canada. If it goes ahead, a key component of the scheme will be a bunkering station for the US containership operator TOTE.

I confess that, when I attended last week’s event, I was not aware of that project, otherwise I would have raised it at the time. I later asked the speakers whether they have a view as to why there is such a big difference between the two findings. In reply, Peter Keller, chairman of SEA\LNG and formerly executive vice president of TOTE – which has two LNG-fuelled container ships – told me yesterday (16 April) that the team “[had] not studied the PSCAA document in detail and cannot comment on their parameters or assumptions.”

If it goes ahead, its bunkering station will serve two Orca-class vessels operated by TOTE, once they have been converted for LNG fuel. They are ro-ro ships built for the Alaska trade and one of them, the 22,437dwt North Star, began its conversion journey in February 2018 when it had two LNG tanks fitted, the first of four work stages to complete the conversion.

Its sister ship, Midnight Sun, was due to follow suit by the end of 2018, but the whole programme has been delayed by a year to align its re-entry into service with the expected completion of the Tacoma LNG facility. If the final decision on whether to build the facility will be made on the basis of whether a 2.17% lifecycle benefit is sufficient or not, I would feel a little nervous if I were a TOTE executive. I have asked the PSCAA to clarify how it will use the FSEIS and when a decision will be made on whether to go ahead with the LNG project.

It might seem that I am making a meal out of these studies and the Tacoma project, but I am focusing on them because they herald more of the same worldwide. Mr Keller pointed out last week that over the past year or two there has already been significant investment by ports in bunker facilities in readiness for new fuel options and if LNG is going to play the role that he and others anticipate, both shipowners and port operators need to assess their plans against analyses such as the two I have discussed here.

An example of the sort of investment that will be needed was included in a statement last Friday (12 April) by DNV GL in which it announced a framework agreement to boost the uptake of LNG as ship fuel. “In light of the upcoming IMO 2020 SOx regulations, LNG as marine fuel is viewed as one of the most viable options for deep-sea shipping,” the statement said.

This agreement brings together the class society and Keppel Marine and Deepwater Technology (KMDTech), which is a subsidiary of Keppel Offshore & Marine, and covers potential newbuilding projects including LNG bunker vessels, small-scale LNG carriers and floating storage regasification units (FSRUs) and LNG-related assets employing battery and hybrid technologies. Its first outcome will be ‘Approval in Principle’ certificates for two 7,500m3 LNG bunker vessel designs from KMDTech.

We will need more projects like this as LNG becomes more popular so whether you think LNG is an interim fuel or a long term solution, action is needed. Mr Keller put it very succinctly last week: “Waiting is not necessarily a plan. It’s important that we react as an industry now.”

What investment plans are you putting in place to be ready for the sulphur cap? Email me about it now.