In fall 2018, Royal Dutch Shell delivered its first ship-to-ship bunkering of LNG fuel through its specialized LNG bunker vessel Cardissa.
PHOTO COURTESY OF SEA\LNG
It might have come as a surprise to some people to hear this from SEA\LNG Chairman Peter Keller: “We’ve never said that liquefied natural gas is the be-all and the end-all. It is not.”
But, he added, “it is the only alternative fuel that is available right now [to meet International Maritime Organization targets]—and doing nothing does not always represent a plan.”
It was a refreshing breath of reality as media members crowded into the room at London’s Chandos House for the unveiling of SEA\LNG’s independent, yearlong study measuring the emissions reduction potential of marine LNG compared to heavy fuel oil and other fuels on the market.
Today, ships carry more than 90 percent of the vital goods we enjoy worldwide, with an economic impact in the hundreds of billions of dollars. But with all that traffic—roughly 75 percent of which is still powered by heavy fuel oil—come both greenhouse gas emissions and airborne particulates, including health-damaging sulfur oxides and nitrogen oxides.
That will change in a matter of months, thanks to global mandates coming down from the International Maritime Organization.
Shipowners and others in the marine industry have two clear dates marked on their calendars: Jan. 1, 2020, which is when a 0.5 percent sulfur cap will be enacted; and the year 2050, which is when GHG emissions must be reduced by 50 percent or better, compared to levels in 2008.
In 2014, the organization’s report, Third IMO Greenhouse Gas Study, set the stage for what could happen if such limits weren’t enacted. The latest data found that international shipping accounted for around 800 million tons of carbon dioxide emissions then, but those emissions could grow between 50 percent and 200 percent by 2050.
In 2016, another IMO study examined the health impacts of sulfur oxide emissions from ships and found that the associated pollution would contribute to more than 570,000 premature deaths worldwide in just a five-year timeframe (2020–2025) if changes weren’t made.
For many people in the shipping industry, LNG represents the best answer to reduce those health impacts, protect the environment and meet IMO mandates. And for those in the utility industry, LNG—whether for marine or other uses—could provide a growth market well into the future as ships and others look to the fuel to provide an important primary or backup supply.
In terms of fuels, the options for marine transportation outside of heavy fuel oil remain fairly limited for now. There’s heavy fuel oil used in combination with an exhaust gas cleaning system. There’s marine gas oil and low-sulfur fuel oil. There’s LNG, as well as bioLNG or synthetic LNG. There’s also liquefied petroleum gas and methanol. Then there are fuels that exist only in the imagination today but could be developed between now and 2050.
“The ambitious targets set out in the greenhouse gas strategy [Initial IMO Strategy on Reduction of GHG Emissions From Ships] can and should drive innovation and R&D toward zero carbon and alternative fuel options,” said Natasha Brown, media and communications officer for the IMO.
The final report of Life Cycle GHG Emission Study on the Use of LNG as Marine Fuel—completed by thinkstep on behalf of SEA\LNG and the Society for Gas as a Marine Fuel—hopes to provide the necessary information to drive that innovation. “So, this is a challenging time for the shipping industry. Shipowners need to make their investment decisions based on real, hard objective data,” agreed Steve Esau, general manager and project coordinator of the study.
The analysis used primary data provided by engine manufacturers on fuel combustion in two-stroke and four-stroke engines. Combined, these encompass about 90 percent of the global shipping fleet. Study organizers also took a well-to-wake approach—a first—which gives data on all the emissions produced during the entire life cycle of gas use, but which can also be broken down to look more specifically at certain areas within that life cycle. The study was also extensively peer-reviewed to ensure the viability of the data.
The results, said thinkstep’s Dr. Oliver Schuller, were “quite significant.” They confirmed LNG’s role in reducing GHG emissions when compared to heavy fuel oil, from 14 percent to 21 percent less for two-stroke engines and 7 percent to 15 percent less for four-stroke engines.
The reductions were even higher when examining the tank-to-wake life cycle, up to 28 percent in the two-stroke high-pressure system, said Keller. Then, adding 20 percent bioLNG to the fuel mix can create further reductions—to the tune of 13 percent when compared to pure LNG.
As far as the 2020 mandate goes, LNG ships are the clear winner: Sulfur oxides go to zero when using LNG, while nitrogen oxides are reduced by 95 percent and particulates by up to 99 percent when compared to heavy fuel oil.
“I think it’s fair to say that we certainly see the path,” said Keller. “It’s just going to be a question now as to how many other pieces come into that path.”
One question is methane slip, which is the term used to describe methane that escapes during bunker transfers or the small amount that is unburnt and exits engine exhaust pipes. Percentages measured during the study ranged from insignificant to significant, “but we see the industry getting involved with looking at how to be more energy-efficient and meet the GHG targets,” said IMO’s Brown.
Fuel-cell technology, for example—already commonly used on land—may be one technology that could transfer onboard ship, offering zero-emission operation and savings on fuel and maintenance costs. Ships and ship engines also continue to be built to higher efficiency standards. “Every ship that’s designed is somehow better than the last ship,” said Keller. “And the ships that, let’s say, I worked on five years ago, were we to redesign those today, there would likely be certain improvements just because that’s the way the technology works.”
Meanwhile, it’s not just the marine shipping industry that’s looking closely at studies like SEA\LNG’s. The cruise industry launched its first LNG-fueled ship at the end of 2018, Carnival Corporation’s AIDAnova, with 13 more on order and 25 set to be in operation by 2030, said Sarah Kennedy, director of public relations at the Cruise Lines International Association. “LNG as a marine fuel in the cruise sector, especially for new ship builds, presents a compelling alternative for certain designs that otherwise might utilize traditional fossil fuels and require specialized fuel or additional equipment to remove emissions from engine exhaust to meet the various international, regional and national air emissions regulations globally,” she said.
Kennedy also echoes Keller’s statement: “As an industry, we are always looking at all opportunities to help reduce our footprint, and LNG is the first step on the path that we can take.”
As the industry’s interest in LNG grows, suppliers have responded. “As is the case with so many projects, it’s a little bit of the chicken and the egg. You have the pull from the market and the push from supply. Bringing the two things together is the secret sauce,” said Tim Hermann, president of Pivotal LNG.
Pivotal LNG—a part of Southern Company Gas, a wholly owned subsidiary of Southern Company—has a long history of supplying LNG to transportation fuel markets throughout the United States, including Puerto Rico. In 2014, TOTE Maritime, a leading transportation and logistics company that serves markets in Puerto Rico and Alaska, began talking to Pivotal about supplying LNG for two new LNG-fueled containerships, which would be based in Jacksonville, Florida, and carry products to Puerto Rico. The result was JAX LNG, the first small-scale waterside LNG facility in the United States with marine- and truck-loading capabilities, a joint venture of Pivotal LNG and NorthStar Midstream.
On the other side of the United States, Puget Sound Energy had a similar experience. Its Tacoma, Washington, LNG plant was designed for backup supply during peak periods, but TOTE asked about the possibility of LNG for its ships traveling from the Port of Tacoma to Alaska. “There was this synergy between our needs and the needs of this commercial customer,” said Jonathan Harris, senior business development manager at Puget LNG.
“It’s a good time to be in [the LNG] space as we are seeing a number of long-term opportunities.”
Both ports fall within designed emission control areas, or ECAs, which since 2015 have limited emissions of sulfur oxides from the fuel used to 0.1 percent, reducing particulate emissions. These areas include not only designated coastal areas off the United States and Canada, but also the Baltic Sea, the North Sea, Puerto Rico and the U.S. Virgin Islands.
That created a natural pull toward LNG, said suppliers. But the IMO 2020 global mandate has spurred interest in LNG even further. “We are getting a lot of interest, especially for LNG delivered across our dock,” said Hermann. “It’s a good time to be in this space as we are seeing a number of long-term opportunities.”
It’s estimated that there are more than 50 peak shaving facilities in the United States today, according to ADI Analytics, with more than half of them located in the Northeast and one-quarter in the Midwest. Even those more land-locked facilities might find opportunities with marine: Pivotal’s JAX LNG plant came online in late 2018, but Pivotal had been supplying TOTE ships with LNG since 2015, trucking it in from Southern Company Gas’ network of LNG plants in Alabama, Tennessee and Georgia during construction of JAX LNG and the Clean Jacksonville LNG barge.
The United States has ports all along its Atlantic Seaboard, in the Gulf of Mexico and on the West Coast. Utilities and others interested in this market space should carefully consider first whom they can partner with. “Finding a key customer you can build the project around is an important piece,” said Harris. “It’s a big investment without that key customer.”
Just as important are partnerships with local stakeholders, from the port itself to the Coast Guard to local leaders, both in government and in business. Pivotal conducted numerous tours and educational demonstrations leading up to the permitting, construction and startup of its plant in Jacksonville. “It’s part of the process of getting people comfortable with how LNG has been used safely for many years and how that track record translates to marine applications,” said Hermann.
Naturally, challenges are part of the process, too. In Tacoma, Harris found that each side had an opportunity to teach the other, even down to the terms they each used. “There’s a lot of education back and forth. We didn’t know the maritime industry very well, and they didn’t know the natural gas industry,” he said. “When building a new plant like this, there’s an understanding that we need to work on this as a team to bring the project to fruition. That’s better for both of us.”
Scalable growth represents another challenge—and an opportunity. Hermann said that on the Atlantic Coast side, LNG-fueled European vessels are eager to find a port where they can refuel.
“I think we feel that we’re at the very early start of adoption,” he said. “We’re seeing more and more vessels looking to come here from other ports in the United States and other ports in the world … Over the course of the next two years, we believe there will be more and more ports that are driving toward LNG solutions.”
Marine Transportation By the Numbers
70-plus
Locations worldwide with LNG bunkering facilities
130-plus
LNG bunkering ports in Europe
1
Bunkering port in the United States, with four expected in the coming years
282
LNG-fueled vessels in operation and under order
139
Additional “LNG-ready” ships with the capacity to accommodate LNG fuel systems
SOURCE: U.S. ENERGY INFORMATION ADMINISTRATION, FEBRUARY 2019