LNG marine fuels: Gains market share as emissions’ and costs’ benefits are hard to ignore
Interview by Mr. Schaap, Commercial Director Marine, Titan LNG
The recent decision by the IMO to limit the amount of sulphur emissions from vessels is bound to have a significant effect in the shipping market, as it will reduce the global sulphur cap to 0.5% from 2020 onwards. As such, alternative fuels, such as LNG are bound for a take-off in the years to come, with industry players ready to implement the changes needed in order to achieve the goals set. Mr. Schaap, Commercial Director Marine, Titan LNG, discussed with us the possible implications, noting that LNG as a marine fuel is a leading solution at the moment, as it makes sense both in environmental terms, as it grants compliance to the new rules, as well as from a business’ point of view.
Titan LNG recently announced a new LNG delivery solution for the safe delivery of LNG to both seagoing and river barges in ports in the ARA (Amsterdam – Rotterdam – Antwerp) region. Can you tell us more about it and how has it been received by the market so far?
The Titan LNG Flex-Fueler is the first LNG bunkering pontoon in North West Europe. The solution will enable the safe delivery of LNG to both seagoing and river barges in ports in the ARA (Amsterdam – Rotterdam – Antwerp) region, which is Europe’s largest bunkering hub. It has been designed to be extremely flexible, as it can supply inland waterway vessels from a fixed location, but can also be navigated to larger sea-going vessels and safely supply LNG while cargo is being loaded or unloaded. In addition, the Titan LNG Flex-Fueler is currently more economical than conventional LNG bunker barge delivery due to its low operational and capital expenditure (CAPEX and OPEX) requirements.
The Titan LNG Flex-Fueler has received much applause from the market as an innovative delivery solution. Preliminary feedback from customers, fellow competitors, ports, equipment suppliers, and class societies has validated the original scope of the project, to provide the “missing link” that the market has been waiting for. We are confident that our solution will be instrumental to enabling safe, economical and speedy LNG delivery in the ARA region.
What are your future plans for this new delivery solution of LNG fuel to the marine industry? Do you see this as a “pilot” to expand in other regions as well? Is this feasible?
The official launch of the Titan LNG Flex-Fueler bunkering pontoon is in Q1 2018. In the meantime, we are continuing to work with several industry stakeholders, including ports, ship owners, operators, and class societies to further develop the design and classification. The hope is to be able to duplicate the current model for various regions and ports. There certainly seems to be an appetite from the market, as we have received several enquiries in relation to the capacity and capability of the pontoon to function in other ports. Notwithstanding the fact that every port is unique, a key requirement for the pontoon to function at an optimal level is sheltered waters, as it needs to be able to quickly, easily, and safely manoeuvre. Therefore, if there’s a consistent calm sea, it’s certainly possible to duplicate it into other ports.
Titan LNG is among the leading companies in LNG bunkering services in the North West Europe. According to your opinion, which will be the main future hubs for LNG bunkering globally? For instance, just this week, it was announced that Lithuania will also perform LNG bunkering operations from its LNG terminal.
There is no denying that several future hubs for LNG bunkering are emerging. One need to only look at recent news that follows the busiest trade routes in the world to see that initiatives are being announced which open up longer trade patterns for LNG fuelled vessels – whether they are in Singapore, or in the Mediterranean, or around Fujairah. There’s also a lot of buzz around LNG bunkering hubs. Unsurprisingly, the US is pushing ahead as expected, and Europe although not necessarily paving the way, is developing steadily. What is very exciting is that the scope of the project goes from very small (e.g. tugs) to very big vessels (e.g. cruise vessels), reaffirming the need for a flexible solution that can be deployed in various locations.
LNG has been touted by well-established maritime leaders, like DNV GL and others, as the fuel of the future for the business. Which are the main benefits when it comes to its use as fuel for ships?
The main benefits of LNG as a marine fuel are two-fold – there’s the environmental and the business case. Ship owners and operators are under increasing pressure to comply with evolving legislation, which seeks to ensure the shipping industry plays its part in reducing greenhouse gas emissions. Just last week, the IMO’s Maritime Environmental Protection Committee ruled in favour of global regulations to limit the amount of sulphur emissions from vessels. The regulation which will come into force from 2020 has significant implications for the industry, reducing the global sulphur cap to 0.5%. The committee also ruled in favour of the establishment of a North Sea and Baltic Sea nitrogen oxide (NOx) emission control area (ECA), or NECA for vessels built from 01st January 2021 onwards. LNG will therefore play a key role in assisting owners and operators in complying with ever tightening environmental regulations. We strongly believe in LNG’s potential as a ‘future fuel’ as it is less costly than traditional marine fuels, and offers significantly lower emissions of nitrogen oxide, sulphur, and particulate matter. Progressive owners and operators are already taking the necessary steps to future-proof their vessels, and as the business case for LNG as a marine fuel continues to improve, it’s becoming an increasingly attractive solution for the long term.
Just a few days ago, a network of ports from Antwerp and Rotterdam to Singapore and Zeebrugge was formed to develop the world’s first set of harmonized LNG Bunkering standards. How do you evaluate this initiative in terms of your business?
Global standards are certainly beneficial with regards to ensuring a harmonised approach to LNG Bunkering. We welcome the efforts of the Society for Gas as a Marine Fuel (SGMF) for example, who are working towards standardising and streamlining the bunkering procedures for transferring bunkers, including custody transfer, emergency shutdown systems (ESD), and other safety checks and parameters. We are very much looking forward to actively participating in standardising these procedures, once we have our pontoon on the water. This is one of the key reasons we are currently testing the market with our solution, to ensure that we have the maximum flexibility and capability to deliver LNG to the array of vessels which are currently being built or are already operating on LNG.
However, it is worth noting that while global standards are helpful, operators must ultimately ensure that they adhere to local practices, rules, and regulations. They must ensure that infrastructure is compliant with local legislation, and that this may at times require changes from port to port.
Do you think it will help grow ship owners’ confidence in using LNG for their vessels?
Global standards are far more effective and easier to enforce once adapted for local suitability. But experience also plays an important role in buoying confidence and common practice will prove more compelling than rules “from above”. However, what we believe will have a far more tangible effect, is positive ‘word-of-mouth’ recommendations from operators currently trialling LNG as a marine fuel, to reassure the market that it’s simply ‘business as usual’ and reiterate that the business case is continuously improving.
Which are the main hurdles to a wider adoption of LNG as fuel for the maritime industry?
There are more and more LNG powered vessels in operation, which not only demonstrates that experience is maturing, but that the barriers to uptake are coming down. The cruise sector, as an example, has seen several recent announcements of various key operators endorsing the suitability of LNG as a marine fuel. To support wider adoption, it will be important that first movers from every segment of the industry are vocal about the benefits of LNG as a marine fuel.
Do you think that this will be the long-term solution for shipping fuels, at least for next two decades, or will conventional bunker fuels, even in high-sulphur form, be the prevailing fuelling solution for many more years?
LNG will undoubtedly play a crucial role in the future fuel mix, particularly for those vessels that are continuously trading in environmentally sensitive areas or in environmentally controlled areas. Given the recent IMO decision to enforce a 0.5% global sulphur cap from 2020, we will see a dramatic shift in the conventional fuel landscape, with heavy fuel oil and gas oil being heavily impacted. This will drive significant changes in the various product streams, but it’s perhaps too soon to stipulate exactly what that will look like.
What is certain however is that LNG will have a percentage of the market, although it may not be more than 10% at any time soon. Hastening the speed of LNG uptake requires a positive combination of evolving legislation and regulation, a continuous favourable business case for LNG as a marine fuel, and an evolving supply chain. As they are all linked, if everything goes to plan, the rise of LNG as a marine fuel will be quick. But equally, if one of them falls behind, this will inevitably have a negative impact on the wider adoption of LNG as a marine fuel. For now, all three areas are looking very positive.
Which shipping segment is more aggressively exploring LNG as a viable alternative (i.e. cruises, tankers, dry bulk, container etc.)?
We’ve seen first movers in almost every shipping segment, which is very positive news as it demonstrates that LNG is suitable as a marine fuel for a large variety of vessels. However, we’ve definitely seen some front runners, for instance in the cruise and tanker segments respectively, as well as some dredgers. For tankers, the main advantage is that ships can place LNG storage tanks on deck, meaning they don’t necessarily lose cargo space – a key consideration that is often raised as an obstacle for considering LNG as a marine fuel. There will be more and more incentives for operators as ports and governments look to develop a more sustainable way of operating within port parameters, either in the form of tax reductions for example, or gradually awarding contracts to operators with the lowest emissions profiles.
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Source: SeaJobhunt
