Is LNG the Fuel of the Future?

The economic and environmental benefits of LNG-fueled vessels are compelling – and surprisingly affordable.

By Art Garcia

Like most major industries, transportation contributes to the growing global problem of airborne emissions, fouling the air and resulting in major health problems in the U.S. and around the world. In the maritime sector, a big rebound in shipbuilding is expected with international ordering of new ships projected to jump 35 to 80 percent over the next several years, largely to replace aging tankers. More vessels means more air pollution, unless companies design newbuilds and convert existing vessels to reduce pollutant emissions.

What’s the best solution to this global problem as operators face continued tightening of emission regulations that begin taking effect in the U.S. and Canada in August of next year? Many marine veterans and experts argue it’s liquefied natural gas (LNG).

The Emissions’ Challenge

U.S. shipping in 2008 emitted 3.6 million tons of nitrogen oxides (NOx), 2.1 million tons of sulfur oxides (SOx) and 127 million tons of CO2, reports Det Norske Veritas (DNV), the Norwegian classification company, in its February report entitled “Greener Shipping in North America.” The marine NOx emissions, it said, are comparable to the emissions from more than 200 million cars and the CO2 emissions to those from 24 million autos. The journal Environmental Science and Technology warns the global marine sector could be responsible for 60,000 deaths annually. In just the U.S., estimates the Environmental Protection Agency, shipping is responsible for between 8,100 and 21,000 premature deaths and 8.9 million cases of acute respiratory symptoms.

With the broad backing of local and regional regulatory agencies around the world, the International Maritime Organization (IMO) is toughening environmental requirements for the entire industry. The North and Baltic seas were designated as special Emission Control Areas (ECAs) last year, and ECAs will be introduced in the U.S. and Canada beginning in August of next year. There’s talk of extending ECAs to Mexico, Japan and the Mediterranean Sea. “By 2020, there will be a number of areas where shipping is going to be trading within ECA areas,” predicts Kenneth Vareide, Director of Operations for DNV’s North American maritime operation in Houston.

North American ECAs

The IMO requires that, beginning August 2012 in the North American ECAs, fuel sulfur content be cut to below 1.0 percent and further reduced to below 0.1 percent beginning January 1, 2015. To comply, ships must either change fuel quality or fuel type or clean the exhaust gas to a corresponding emission level. After 2016, NOx emissions from newbuildings must be reduced by approximately 75 percent. The European Union has already introduced 0.1 percent sulfur as a maximum level for a ship’s fuel when in ports and on inland waterways.

Emissions reduction requirements are being implemented gradually and will be in full force by 2015 and 2016, “leaving shipowners a limited number of options for modifications to their ships so as to continue trading in North America,” said DNV’s Vareide. Shipowners and operators “basically have three options to choose from ? switch to low-sulfur fuel within the ECA areas, install scrubbers to remove the sulfur from the exhaust gas, or switch to LNG as fuel,” he added.

What do the ECA requirements mean for coastal shipping? DNV’s report concludes the short answer is that shipowners “need to do something to their existing fleet of ships to comply. This is a ticket to trade in the future. Leaning back, closing their eyes, hoping this will pass is the surest way out of business.” The long-term answer, it emphasizes, is to turn to LNG-fueled engines as “the best option.” Heavy fuel oil is not an option. Alternatives have to be introduced, and LNG is the “obvious choice” to satisfy future ECA requirements, particularly for short sea shipping. “LNG is here to stay, and short sea shipping is the most obvious place to start,” noted Tor Svensen, DNV’s President.

Forerunners and Prototypes

Proponents of LNG note that more than 20 vessels in operation in Norway have proven the technical feasibility of LNG as a fuel. The first ship with LNG propulsion was a ro-ro passenger ferry launched in 2001 to meet a requirement of the Norwegian government that a specific ferry route be operated by a gas-fueled ship. Next came an offshore supply vessel, followed by several more ferries and supply ships and three Norwegian Coast Guard patrol vessels. Current order books for ships running on LNG include ro-ro and passenger vessels, liquid bulk tankers, special-cargo ships and high-speed ferries.

Washington State Ferries (WSF) in Seattle sails 21 ferries, soon to be 22, burning a No. 2 diesel on 15 of the craft and a B-5 bio-diesel blend on the others. “We’re very interested in exploring the LNG option, perhaps on our new construction and maybe on a retrofit, but we’re in the very early stages of exploring that option and the challenges associated with it,” said Paul Brodeur, Director of Vessel Maintenance, Preservation and Engineering for the agency. “We’re in the fairly early stages of investigating the feasibility and practically of using LNG in this country, given that we’re 10 years behind the Europeans.” Norway, with the largest fleet of LNG-fueled ships in the world, has a number of new LNG vessels coming online. Six of those in service are car ferries, the others passenger ferries and offshore supply vessels.

A study commissioned by WSF found that LNG use is “both practical and cost-effective.” It said that although the capital cost of the LNG engines and tanks is high versus conventional diesel equipment, the fuel cost savings are estimated at $870,000 a year based on 2010 prices. For pure gas propulsion engines, NOx emissions would be reduced at least 90 percent and particulate matter and SOx emissions would be virtually eliminated, while CO2 would be trimmed by approximately 20 percent. 

Brodeur said WSF, which carries 23 million passengers a year, sees LNG as “a path forward, not only for cost savings, with fuel costs the way they are, but also for green aspects, the emission benefits that come with gas. But there are some challenges,” he admitted, “regulatory for one, and also public perception of LNG, which is a really tough sell, with safety the number one consideration.” WSF plans to “get out ahead early” and educate people within and outside the organization. “I hope we can get some good momentum behind the issue because I believe LNG is the fuel of the future and you’re not dependent on crude oil and the crude oil spikes that we’re currently seeing in the market place,” he said. “It’s exciting.”

Gas-Fueled Engines

Indeed, but is LNG, as Brodeur contends, really the “fuel of the future?” DNV maintains the technical feasibility of LNG is proven by the more than 20 ships in operation in Norway. And Wartsila, Rolls-Royce, MAN Diesel and Mitsubishi Heavy Industries produce gas-fueled engines currently available on the market.

Rolls-Royce will provide natural gas engines and main azimuth thrusters for a double-ended passenger/vehicle ferry for Norwegian operator Fjord 1. It will be the world’s largest gas-engine ferry. Five ferries powered by Rolls-Royce gas engines fueled with LNG already operate these services. Nor Lines, operator of a fleet of liner vessels that serve ports in northern Europe and Russia, turned to Rolls-Royce for its planned fleet renewal program that’s based on efficient vessels that meet current and future needs with a minimum impact on the environment. The ro-ro vessels operate in ECAs, so exhaust emissions are of prime importance. The company has signed on with Rolls-Royce for ship design and its gas-engine technology. The lean burn engine reduces CO2 by about 22 percent, said Rolls-Royce, and NOx by more than 90 percent compared with liquid-fuel engines, while sulfur oxides and particulates are negligible.

Robert Loseth, Rolls-Royce Senior Vice President for Merchant Propulsion and Engines in Oslo, Norway, believes “An Age of LNG is going to happen. That’s why we have invested in developing engines for burning LNG or gas from LNG.” The company has manufactured 500 LNG engines, primarily for the land-based market, and 24 LNG engines are running on ships, mainly ferries. About 16 engines are in the order book, half ferries and half cargo vessels. A second-generation natural gas engine is being manufactured for two transport vessels for Bergen, Norway-based Sea Cargo. In 2009, Rolls-Royce invested £864 million in research and development, two-thirds of which was to improve the environmental aspects of its products, in particular emissions’ reduction.

Captain Kevin Coyne, Executive Vice President of the Americas for Germanischer Lloyd classification society in Houston, “definitely” sees LNG as tomorrow’s fuel for the maritime industry, saying “It makes sense on many fronts, first on an environmental front. Just the pollutants’ reduction alone is worth the change to LNG. When you look at the availability, there will be more LNG available in the future on a volume basis,” although some innovative technologies will have to be employed.

“We’re converting a small bulk carrier right now for dual-fuel usage,” said Coyne, who’s responsible for maritime and environmental compliance at GL. His company is working with Wartsila on conversion of a bulk carrier vessel to run on heavy fuel oil or compressed natural gas. He expects “more progressive” companies to look closely at dual fuel because that can be done with some existing engines. GL has developed prototype designs for a gas-fueled bulk carrier and has a design for a gas-fueled coastal container ship. For storage, the design calls for a dedicated place in either the cargo block for a container ship or bulk carrier or on the deck for a tanker. “It’s almost like a container rack that can be fitted and locked onto the deck,” he explained. “You’d have these modules fueled ashore and then brought to the ship. It’s almost like putting batteries in and taking batteries out.”

Pay Me Now, or Pay Me Later

An LNG-fueled propulsion plant might add about $3.6 million to the cost of a typical domestic cargo ship. But over the operating life of the vessel, at today’s gas rates, LNG fuel would save more than $4 million over scrubbers and $12 million for low-sulfur fuel, reported Vareide of DNV. “LNG is particularly attractive for vessels with a fixed trading pattern, which should fit well with the biggest segments ? ferries, offshore support vessels and tug/push boats,” he said. “Besides, much of the coastal trade in the U.S. is fixed in its trade pattern and we have been in contact with several companies that are considering LNG for newbuildings and conversions.”

“If you’re looking at a vessel for construction from 2015 on and you’re not really seriously looking at gas,” added Coyne, “you’re making a mistake.” Take note, MarEx readers. – MarEx

 

Art Garcia is a West Coast-based correspondent for The Maritime Executive.