Europe—ready to dock
European passenger boats are looking to LNG for fuel
European port authorities and shipping companies, particularly ferry operators, are developing more liquefied natural gas bunkering facilities as they head towards a gas-powered future.
According to a study released in July by Norwegian classification society DNV GL, by 2030 up to 2m cubic meters a year of LNG will be bunkered for ships in the Iberian Peninsula and 8m cm/y by 2050. The estimates, which cover 40 ports, assume a cost of around €1bn ($1.18bn) by 2030 to develop the LNG supply chain.
A corner may have been turned in terms of guarantee of supply. The study talks of "a huge potential for LNG as a marine fuel that will utilise the current spare capacity of the existing LNG import terminals".
Meantime, more and more ferry companies in the wider region are adopting LNG as their primary or exclusive fuel ahead of deadlines on rules for tougher sulphur emissions. BAI Bretagne Angleterre Irlande, owner of Brittany Ferries, confirmed in late June an order for the first French LNG-powered cruise ferry that is scheduled to begin operations from 2019. The company has agreed a long-term contract with Total subsidiary TMFGS to supply LNG bunkering at the port of Ouistreham in Normandy. In a rallying cry for gas, Brittany Ferries' port and operations director, Frederic Pouget, announced that the company "intends to make LNG the preferred fuel for its future, owned newbuilds".
Finland's Viking Line is also pinning its future on chilled gas. The group has just commissioned a second LNG-fuelled, RoPax vessel with a capacity of 2,800 passengers. The ferry is scheduled for delivery in 2020, just in time for the new emission deadlines. Earlier this year, Spanish ferry company Baleària followed suit by announcing a €320m investment in three new "smartships" driven entirely by natural gas, the biggest commitment to date in the Mediterranean.
8m cm/y - DNV GL's estimate of LNG bunkered in the Iberian Peninsula by 2050
Another Baltic company adopting LNG is Norway's Torghatten Nord, which has commissioned two, 130-metre-long hybrid-powered gas-electric ferries at a total cost of $70m. Man Diesel & Turbo's Cryo unit, which is building the onshore supply systems, believes the time has arrived for LNG. "We see a clear trend in the market with an increasing number of enquiries for fuel-gas systems," says the unit's managing director Mikael Adler.
As the LNG-powered ferry fleet increases in number, just one of the several ports in the Baltics boosting LNG infrastructure is Gothenburg in Sweden. The port will open a quayside LNG-bunkering facility in 2018. Swedegas, which owns and operates the country's gas grid, sees the facility as a starting point for serving not just shipping but the domestic transport sector and industry. "Regardless of the sector, it ultimately comes down to making the transition from oil-based products," says chief executive Johan Zettergren.
Receiving terminals in the Baltics, Caspian Sea and the east of the Mediterranean are multiplying in number, with more on the drawing board. Poland's Swinoujscie may soon expand with the installation of a third tank. Lithuania's floating terminal at Klaipeda Seaport began small-scale reloading earlier this year. Norway has a terminal at Snøhvit and Sweden has one at Brunnsviksholme. A further five are either under construction or in the planning stage.
By general consent the tougher standards on sulphur emissions in the region have triggered the swing to LNG in shipping in the region, as indeed elsewhere. The timetable imposed by the International Maritime Organisation requires a global limit for sulphur used in fuel oil on board ships of 0.50% mass-by-mass from January 1, 2020. But this is only the global limit. In designated emission-control areas in the Baltic and North Seas, coastal areas off the US and Canada, around Puerto Rico and the Virgin Islands, the current limit is 0.1% m/m.
But the industry is also influenced by the greater efficiency of the modern gas-fuelled engine. A just-released study by Shell and engine-manufacturer Wärtsilä shows substantial gains in long-term costs over conventionally fuelled engines. According to the calculations, the total lifecycle cost of running two gas-powered units, each producing 1584 kilowatts, on a small vessel works out at $23.58m compared with $27.43m for a similarly sized vessel using heavy fuel oil. For medium-sized vessels, each running two 4050KW engines, the comparative figures are $51.29m for LNG and $68.70m for oil. For large vessels powered by two 9240KW units, the comparative figures are $89.99m and $128.99m. The fuel costs are based on bunker prices at January 2017.
Rolls-Royce Marine's business development and sales manager, Oscar Kallerdahl, isn't surprised by the swing to gas power in the maritime sector: "LNG makes good sense for passenger ships including cruise ships," he says. "It's increasingly seen as a competitive advantage by the cruise industry because it creates a clean environment."
Port authorities are also forcing the pace. Some clean-air-conscious ports in Spain and Portugal offer substantial discounts to ferry companies with gas-powered vessels. The pressure is likely to increase. The International Association of Ports and Harbours has taken a tougher stand against greenhouse gas emissions drawing up new regulations to be released in March 2018.