A Long-Term Role For Oil As A Marine Fuel Mix

• Future fuels are challenging to implement on some routes
• Biomethane next step for LNG
• Biofuels a near-term decarbonization pathway, at a cost

Oil could remain part of the marine fuel mix for a couple of decades due to the challenges in bringing alternative bunker solutions to all ships and routes, said TotalEnergies’ vice-president marine fuels Jerome Leprince-Ringuet, according to an article published in S&P Global.

Scrambling industry 

The shipping industry is scrambling to decarbonize and a range of different fuels are presenting themselves, with LNG, methanol, ammonia, and biofuels dominating the headlines and in varying states of readiness.

“The diversity of the vessels that you see in our industry is such that not all of them can go to LNG, not all of them can go to ammonia or methanol,” Leprince-Ringuet told on Feb. 16. 

“At the end, you will have the hardest-to-abate vessels, those who are tramping places where you will not bring out these fuels in the first instance and therefore you will certainly have a tail of vessels running on oil in the long run,” he said.

Use of technologies for energy efficiency

This does not mean that oil-based bunkers will not be cleaner — there will be greater energy efficiency and use of technologies such as carbon capture. Energy efficiency measures such as greater use of digitalization, specialized hull coatings, and slow steaming are being suggested for improving carbon efficiency. 

Carbon efficiency is receiving greater attention, ahead of IMO targets to increase it by 2% annually in the global fleet between 2023 and 2026.

“It is difficult to say we will keep totally away from oil in the next couple of decades but we will certainly try to do that,” Leprince-Ringuet said.

IMO targets

The company is targeting net-zero by 2050 across its operations although the target for net-zero in its shipping business is muddied by being pegged to mandates by the International Maritime Organization, which may change over the next few months.

The IMO currently targets a 50% cut in greenhouse gas emissions across the global fleet by 2050, compared with 2008 levels, although this target is up for review next year and there is a push from companies and governments to upgrade it to 100%.

Beyond oil

TotalEnergies, which is a significant gas producer, sees infrastructure is on track to meet growing LNG demand. Platts estimates that LNG bunker demand accounted for 15 million mt, or 5% of global bunker demand in 2021, and this will rise to 25 million, or 7%, in 2025.

Hydrocarbon production

The company’s total hydrocarbons production averaged 2.819 million b/d of oil equivalent in 2021, down from 2.871 million boe/d in 2020, the company said in its 2021 full-year report.

The order book of LNG-ready vessels is growing and some industry sources see LNG as a route to complying with the IMO’s mandates to cut carbon intensity in the global fleet by 40% by 2040, compared with 2008 levels and by 70% by 2050, and to comply with requirements for increasing carbon efficiency from 2023.

Platts Analytics said Feb. 3 it sees LNG-powered vessels accounting for 68% of the current orderbook for vessels running on alternative fuels, 51% by 2030 in an aspirational case, and 73% by 2030 in a reference case.

Biomethane 

As the next step in LNG’s evolution, biomethane can further decarbonize shipping. The biomethane market is growing and presents opportunities to become a global industry, TotalEnergies said in a report released in December 2021.

There are numerous locations where biogas can be produced and TotalEnergies plans to develop this capacity, via its business unit dedicated to biogas.

How much will be available to the shipping industry is hard to say as there will be competition for this energy solution. For a start, biogas may reach the sector in the form of certificates, such as Guarantees of Origin (GOs) certificates, Leproce-Ringuet said.

“Over the next 5-10 years, I am confident the industry will develop capabilities to scale liquefied biomethane for its delivery as a marine fuel,” he said.

Biofuels a key-part

In the immediate future, biofuels are a key part of the growing marine fuels mix for shipping. TotalEnergies has made biofuel deliveries in the Netherlands and Singapore and will be looking to provide a commercial biofuel solution dedicated to shipping this year.

Biofuels can be used as drop-in fuels without any technological developments required on vessels for bunkering and present a ready pathway to meet the IMO’s carbon intensity targets, Leprince-Ringuet said.

The challenge

The challenge is setting up the supply chain to bring biofuel blends to customers, he said. “TotalEnergies Marine Fuels is scaling up their local biofuel supply chains to bring the offer to the customers in the different regions,” he said.

Biofuels come at a premium. Regulatory measures will have to be introduced to address the higher cost of biofuels if shipping is to increase the commercial, long-term use of this fuel choice, TotalEnergies marine fuels strategy & projects director Frederic Meyer said in a blog in October.

Platts assessed FAME (RED) FOB ARA biodiesel at $1,657/mt Feb. 16, compared with $695/mt for delivered 0.5% sulfur fuel at Rotterdam.

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Source: S&P Global Platts

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