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Methanol Bunkering Could Be Cheaper than LNG

Stena

By MarEx 2015-12-18 16:10:53

Running a converted marine diesel engine on methanol could be among the cheapest ways to operate in an Emissions Control Area, say researchers at FC Business Intelligence.

Methanol, a common chemical synthesized from fossil fuel or biomass feedstocks, is used worldwide in industry and as a gasoline additive. Over 70 million tons are produced every year, primarily from natural gas. It is a common bulk liquid cargo and protocols for its transportation are well established. For its use as a marine fuel, relevant rules exist in the IGF Code and in regulations from DNV and Lloyd's.

FCBI cites data suggesting that SOx and NOx emissions from methanol-converted conventional diesel engines meet or exceed IMO Tier III requirements without aftertreatment, and that particulate matter emissions are reduced by 95 percent.

And compared with its competitors – even with MGO – methanol can be cheap. Historically, per unit of equivalent energy, methanol has been cheaper than diesel, although that trend has reversed slightly this year with the slide in oil prices. FCBI points out that its price varies considerably by region and has recently fallen by a third in the U.S.

While it may be more costly than LNG in some places – an estimated $6/mmbtu for methanol at $3/mbtu gas feedstock pricing, versus independent predictions of $2.50/mmbtu for LNG - it has one major advantage: about 95 percent savings for setting up a new bunkering facility.

“Because methanol remains in a liquid state, [bunkering] infrastructure investment costs are low relative to . . . LNG. Installation costs of a small methanol bunkering unit have been estimated at around $430,000, and a bunker vessel can be converted for approximately $1.5 million. In contrast, an LNG terminal costs approximately $50 million and an LNG bunker barge $30 million,” said FCBI.

For ship conversion costs, engine and tank changes to the ro/pax Stena Germanica ran to about $14 million, and FCBI estimates future conversions at $380 per unit horsepower. Costs are predicted to drop by a third once more conversions are completed and the process is standardized.

The downsides? Like LNG, methanol is less energy dense than diesel, requiring additional space aboard for tanks. And it has a wider explosive mixure range, from about 7 to 35 percent air versus 5 to 15 percent for methane (natural gas). Plus it may not be commonly available in all regions – but FCBI suggests that converted vessels can operate on two fuels, permitting the use of MGO or HFO when methanol is not available.

Additional methanol-fueled vessels are on the way. MAN is already converting seven 10,000 kW engines for newbuild methanol tankers under construction for operator Methanex, with the first due for delivery late next year.