The long-awaited acceptance of LNG is ever more in evidence

Malcolm Latarche
Malcolm Latarche
ShipInsight

16 February 2018


As the realisation that the 2020 global cap on sulphur is drawing inexorably closer gradually dawns, the long-awaited acceptance of LNG by the shipping industry is ever more in evidence.

It is difficult to know if the increasing orders for vessels able to run on LNG is indicative of a ‘greener’ attitude among shipowners or if it is merely a response to the uncertainty around available fuel choices once the 2020 sulphur cap kicks in. Almost certainly, far fewer potentially gas-fuelled vessels would have been ordered had there not been a growth in the number of bunkering opportunities.

In recent months most of the significant new vessel orders have been for ships with dual-fuel engines or conventional diesel engines of a type that can be easily converted to run on LNG or some other gas fuel at a later date.

The idea of gas ready ships took off in 2014 when classification societies began offering a gas ready notation. Today all the leading class societies offer this voluntary option, although its granting to a particular vessel is not confirmation that the ship will eventually run on LNG.

The first vessel to enter service as LNG ready was United Arab Shipping Company’s Sajir. The A15 class 15,000teu ship was handed over in December 2014 by Hyundai Heavy Industries, Ulsan and classed by DNV GL. It has a MAN nine-cylinder S90ME-C10 main engine as do its 10 sisters while six larger 18,800teu ships of the same owner have a ten-cylinder variant of the same engine.

Today there are 75 vessels with conventional diesel engines considered gas-ready in service including the sixteen mentioned above, and a further 70 newbuildings to be delivered. There are however, many more candidates for conversion that were either built before the class notations were developed or where the owner has not seen the necessity to apply for such a notation.

There were a small number of early conversions from oil to LNG such as the tankers Bit Viking and Bergen Viking in 2011 and 2015 respectively but they were complete engine changes and not the conversion of the existing engine. The first two engine rebuild conversions were the Fure West in 2014 and Coral Anthelia in 2015. In both cases, Caterpillar converted MaK M43C diesel engines to 6-cylinder M46DF engines.

Last year, MAN Diesel & Turbo completed the Wes Amelie LNG conversion project. The project involved the retrofitting of the 1,036-teu feeder container ship’s MAN 8L48/60B main engine to a multi-fuel, four-stroke MAN 51/60DF unit that enables dual-fuel operation.

At the Europort exhibition in Rotterdam in November last year Wessels Reederei the owner of Wes Amelie signed a letter of intent with MAN Diesel & Turbo regarding the conversion of three more of its fleet to dual-fuel gas operation. The ships are sisters of Wes Amelie so the experience gained in the first conversion should allow for an easier task on each subsequent conversion.

Conversions – even when an engine has been designed with future conversion in mind – are not cheap. For the early pioneers such as the Bit Viking and Wes Amelie, there has been assistance available from the Norwegian NOx fund and Germany’s Federal Ministry of Transport and Digital Infrastructure respectively. That financial assistance may not be available in all cases and it will be up to the owner to fund the work.

Last October, Wayne Jones, OBE, Chief Sales Officer of MAN Diesel & Turbo said at the Ocean 17 Conference in Malta that to encourage more owners to convert, MAN Diesel & Turbo was pledging a €2 million discount for ten more conversions such as carried out on Wes Amelie.

Milestone projects for US

MAN has since secured two further conversion projects with US operator TOTE Group. The container operator has become an enthusiastic supporter of LNG fuel for its liner services that operate mostly in the US ECA zones. TOTE’s interest in LNG came to prominence in 2013 when the owner won the NorShipping Next Generation Award for its Marlin class LNG-fuelled container ships.

The 3,100teu Isla Bella and Perla del Caribe have the distinction of being the first LNG-fuelled container ships and the first vessels fitted with MAN B&W ME-GI engines. Isla Bella also has the dubious distinction of being the replacement for the ill-fated El Faro lost in 2015 in Hurricane Joaquin.

The Marlin class ships were not conversions but built as LNG-fuelled from the outset. Last June, TOTE signed a letter of intent for four 3,600teu boxships to operate on its Hawaii service at Philly Shipyards which was already building similar ships for another US operator, Matson. In January this year, that order was put on hold because of a perceived problem with the berths in Hawaii.

The new conversion project that TOTE has with MAN was agreed last year but involves ro-ro vessels and not container ships. The ships involved are the 2003-built Orca class North Star and Midnight Sun operated by TOTE Maritime Alaska. Each ship’s quartet of MAN 58/64 four-stroke engines will be converted to dual-fuel variants marking an initial reference for conversion in the US. Unlike the Wes Amelie project, the engines on the two ro-ro vessels were not designed with future conversion in mind. However, MAN PrimeServ has developed a conversion strategy based on its well-proven 51/60DF retrofit.

Canadian ferries Polish conversion

Following the award in 2016 by Canadian operator BC Ferries of a contract to Remontowa Ship Repair Yard in Gdansk, Poland; Spirit of British Colombia the first of two Spirit Class vessels scheduled for conversion to dual-fuel was withdrawn from service in September last year. In addition to the LNG conversion of the BC fleet’s flagships, the vessels’ passenger areas will be upgraded.

In what is something of a reversal of most of the newest conversion projects, the BC Ferries vessels will each have their four MAN 6L40/54 engines replaced with Wärtsilä dual-fuel alternatives. The full scope of Wärtsilä’s supply includes four Wärtsilä 34DF dual-fuel engines with fuel gas systems, integrated automation systems and power management systems, the Wärtsilä Pro-Touch propulsion control system, the power transmission systems comprising two gearboxes, the Wärtsilä LNGPac comprising the fuel storage tank, bunkering station, gas detection system and process control automation, Wärtsilä rudders, site representation and integration engineering, and crew training. The upgrading work will involve surveying the stern tube and renewing components, surveying and overhauling the controllable pitch propeller (hubs, redesigning and renewing the propeller blades, surveying, renewing and overhauling the oil distribution boxes, and renewing two bow thrusters and E motors.

Going Dutch

The most recent conversion project announced was in mid-December 2017 when Damen Shiprepair & Conversion was awarded a contract by Rouen-based GIE Dragages-Ports for converting the 117m, 8500m³ trailing suction hopper dredger Samuel de Champlain. The conversion is part of an EU-supported initiative to promote LNG propulsion in short-sea vessels operating along the European Atlantic coast.

Under the contract, Damen is delivering a turnkey package that includes engineering, procurement and support. The current propulsion system of the Samuel de Champlain is diesel-electric burning MGO, and so the package includes the change of generators to dual-fuel models and the installation of onboard LNG storage facilities. The vessel was built in 2002 and is the largest vessel in the GIE Dragages-Ports fleet. Like the earlier mentioned European conversions, this project has also attracted outside funding; in this case from the European Commission’s Innovation and Networks Executive Agency (INEA) via its Connecting Europe Facility programme.

The € 20.8million contract includes a major phase for the replacement of gensets, and the inboard installation of LNG tanks and networks, and an optional phase for the maintenance of the genset and associated equipment for a period of 8 years. Studies and equipment orders started during summer 2017. The conversion operation itself will last three and a half months beginning this September.

The Samuel de Champlain’s current diesel electric propulsion system is powered by three gensets comprising a pair of Wärtsilä 16V200 and a 12V200 engines. After the conversion it will be equipped with three new dual-fuel MAN 6L35/44DF gensets and two C-type tanks with a working capacity of 153 m3 each.

The numbers game

Although the rate of conversions from oil to dual-fuel is increasing and projects completed or in hand are now into double figures, the number is still very small compared to scrubber installations. More to the point the number of ships with the latest generation of modular engines that have been designed for potential conversion is also quite small.

Converting two-stroke engines that were installed before the big two designers had really focussed attention on gas-fuelled variants is not impossible but depending on fuel availability after 2020, a scrubber installation may prove more economic. Although both LNG and exhaust gas cleaning will achieve cleaner exhaust emissions, it would seem that organisations such as the EU are more in favour of the former. That may mean that financial assistance for conversion projects may be more readily available than for scrubber retrofits although neither can be guaranteed.

The move to LNG will almost certainly come more from newbuildings than from conversions and retrofits even of gas-ready vessels, especially as the 2020 date draws closer. The last year or two have definitely been notable for the number of gas-fuelled vessels delivered and ordered. And this will help resolve the chicken and egg situation with regard to provision of bunkering facilities and fuel availability.

Ground breaking contracts

In the context of making LNG as a marine fuel more acceptable to shipowners generally, any and all orders for a ship intended to run on LNG are important. However, so long as the orders were mainly for domestic short-range vessels such as ferries, tugs or PSVs, the long-awaited breakthrough could not be said to have happened.

Last year was a seminal period in the advance of LNG as a marine fuel with one new LNG-fuelled vessel ordered almost every week. Of the 45 vessels ordered, only a handful are tugs or domestic ferries and by number the largest groups are container ships followed by cruise vessels.

The container ships include the order by French operator CMA CGM of nine 22,000teu ships. When built, the ships will for a short time be the largest box ships afloat and will feature 12-cylinder WinGD X92 DF engines. The operator has already said that the fuel capacity of the ships will be such that a single bunkering will allow the ships to complete a round trip between Europe and the Far East, overcoming any limitations of the present bunkering infrastructure.

CMA-CGM’s order takes the advance of LNG into the large container ship sector a step further than UASC’s fleet of gas ready vessels. So far Maersk has ruled out scrubbers as an option for meeting the 2020 cap and although the company has shown interest in LNG – two years ago a joint announcement by Maersk, Shell and Qatargas talked of future co-operation – it has frequently said that lack of bunkering, energy density and lack of space act against it.

Arguably the biggest obstacle for Maersk at the present time is that by positioning itself as an early mover in opting for mega container ships it already has a large fleet of vessels with conventional diesel engines. Unless the Danish operator is prepared to once again leapfrog its rivals, then the only option is to convert the engines on its current fleet.

MSC, another major player in the ultra large container ship segment is committed to outdoing CMA-CGM and has ordered a fleet of eleven 23,356teu ships but has reportedly opted for scrubbers and not LNG. However, its cruise ship counterpart MSC Cruises has selected LNG for its cruise newbuildings joining several other leading operators. Currently there are 16 LNG-fuelled cruise ships on order of which half were ordered in the last twelve months.

MSC signed a letter of intent with STX France for two firm plus two options LNG-fuelled cruise ships in 2016 but it was in May last year that the order was confirmed. The new World-Class ships will be over 200,000gt-plus and have around 5,400 berths. The first vessel is expected to be delivered in 2022. That will be almost four years after Aida Cruises AIDANova is scheduled to become the first LNG-fuelled cruise ship in November this year.

Bunker Infrastructure slowly growing

Ever since LNG as a marine fuel was first proposed, the main hurdle has been the lack of any bunkering infrastructure. That is now changing and according to SEA\LNG there are now 150 locations worldwide where LNG can be obtained in bulk and nine of the 10 top bunkering locations either currently offer or will offer LNG by 2020.

EU policy requires at least one LNG bunkering port in each member state. About 10% of European coastal and inland ports will be included, a total of 139 ports. Coastal port LNG infrastructure will be completed by 2020 and for inland ports by 2025. A new facility at Gothenburg is planned to come on stream this year and recently Amsterdam signed an agreement with Titan LNG to provide an LNG bunkering pontoon in the Dutch port.

There are several ports under development in North America, mostly in the south east, the Gulf of Mexico and around the Great Lakes, but also for ferry and deep-sea operations in the Pacific Northwest. China is extending LNG bunkering infrastructure from inland waterways to coastal areas and is expected to be able to service the LNG demand of all vessel types. South Korea offers LNG bunkering in the port of Incheon and is considering a second facility in Busan. Elsewhere in Asia, in addition to Singapore, Japan and Australia are also working to develop LNG bunkering facilities.

In January, a Japanese consortium involving K Line, Chubu Electric Power, Toyota Tsusho Corporation and NYK Line announced that they have begun joint discussions on the commercialisation of a new business to supply LNG to ships in the Chubu region of Japan.