Why LNG is no longer a bridging fuel, but the ultimate marine fuel

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Tony Teo, Founder, LNGaSolutions, LLC
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Experiencing considerable growth, LNG shipping provides a cost-efficient solution to the current shipping requirements and regulations. With climate change very much on industry agendas, the use of LNG as a fuel for ships is an excellent solution to meet the new emission targets coming into force.

To hear more about the market developments, Gastech Insights spoke with Tony Teo, Founder of LNGaSolutions LLC and previous Gastech speaker. Read the interview below to discover his expert views on the evolving industry.

Gastech Insights: What would you say is the key potential for LNG fuel for shipping? Would you say it is an energy source of the future?

Tony Teo: The key potentials are: 

  • With natural gas being plentiful worldwide and so is the LNG production with the US coming onstream in full capacity soon, Qatar boosting her output to 110mtpa and Australia already a major producer, an abundant supply will continue to exist resulting in lower LNG fuel prices over the lifespan of all ships versus the LS Diesel which we expect will rise in prices.
  • The current abundant and growing LNG production can support and ensure a long-term supply availability for the entire world’s fleet even if all ships were to switch to LNG fuel overnight.
  • LNG is like a magic pill that satisfies all the requirements of the stringent maritime exhaust emission regulations on SOx, the EEDI criteria and with the 4 strokes engines on NOx. Even with IMO’s 2050 goal of a 50% reduction in CO2 from the 2008 level, LNG combined with energy efficiency from the hull, machinery and propulsion optimizations can easily meet this longer-term goal.

LNG fuel is already happening with more than 100 ships in operation, more than 100 on order, the new construction of mega-size container and cruise ships and many ‘LNG ready’ ships. These ocean-going ships will inspire others to follow. It is no longer the fuel of the future or a bridging fuel but is happening now and need to be considered as the ultimate marine fuel. As we approach 2020, it is attracting more attention from shipowners as a result of all the above-mentioned benefits.

Scrubbers may be a cheaper solution but will be short lived as:

  • Ship owners will find it complicated to operate and maintain
  • It is corrosive, posing crew safety issues
  • It requires enormous space and has long procurement lead time.

A growing number of countries are starting to forbid its discharge overboard and there is a lack of onshore reception facilities. Basically, in the open seas, scrubbers are just transferring sulphur from the air into the sea and thus contribute to no environmental benefit.

Gastech Insights: What more is needed to be done in the industry ahead of successfully meeting the IMO 2020 sulphur cap?

Tony Teo: The IMO 2020 sulphur cap, unfortunately, will result in an increase in GHG or CO2 emissions as a result of refining plants onshore having to use more energy to produce the ultra-refined fuel for the entire world’s fleet. If this pass-on effect to shore is considered in totality, it does have an adverse effect on the IMO’s 2050 goal. 

Approaching next year, even months before 2020, shipowners have no choice but will be faced with higher prices in 0.5% S. Diesel, as a result, will be costlier in production and will have a sudden surge in demand. Furthermore, some ports may not have sufficient supply during the initial implementation period.

To survive, shipowners who cannot pass on the increased cost to their charterers will need to have a fuel strategy which besides the mandatory requirements of IMO’s SEEMP and upcoming Data Collection System (DCS), consider scrapping of their less fuel efficient tonnage, build new and energy efficient ships or carry out easy improvements to their aft appendage, propeller and rudder areas and consider alternative fuels and powering means. Means such as the battery hybrids and full plug-in battery power are gathering interests to the short sea shipping fleet owners.

On the ocean-going fleet, alternative fuels such as LNG would fit well. The LPG, Ethane and Methanol carriers would want to tap into the cargo that they carry, like how the LNG carriers are propelled.

To help accelerate the LNG bunkering infrastructure, ship owners and their associations or segment clubs need to consider a collective way of sharing the cost in setting these up around the world. Large-scale LNG export terminals need to contribute by catering to the growing small to mid-scale markets. For ocean-going ships, the additional CAPEX in adopting dual fuel systems for newbuilds represent only a small percentage of the total and should be considered. 

Gastech Insights: Sembcorp Marine has announced it’s investing in a fleet of LNG-hybrid powered tugs. Could you share more about this innovative advancement?

Tony Teo: The tugs’ battery hybrid feature compliments the LNG propulsion very well with the required boost in power at low engine revolutions which is essential for a typical tug operation. Hybrids provide the additional benefit in fuel savings during the standby mode. The concept and design at the same time support and are aligned with Singapore’s goal of maintaining its no.1 bunkering port position for the ultimate marine fuel. 

Gastech Insights: Why should industry players attend events like Gastech Exhibition and Conference?

Tony Teo: LNG is about safe & proven technology. There are lots of innovative products to discover and knowledge gain or be updated with by being at Gastech. I enjoy the networking opportunities through the conferences, the business meetings and social events. Anyone attending will be mingling with professional people whose passion and interests help contribute towards a cleaner environment.

Keen to share your expert views? Speak at the world's most influential global gas, LNG and energy conference! Submit your abstract choosing from a variety of strategic and technical themes to have the chance of speaking at Gastech 2019 in Houston.  

                

Image courtesy of LNGaSolutions LLC