First-hand experience of LNG underlines conference success
The fourth ‘Motorship’ Gas Fuelled Ships Conference took place onboard the ‘Viking Grace’ cruise ferry sailing out of Stockholm en route for Mariehamn and Turku.
Day one chairman, Martin Shaw of MOAMS, introduced the conference with his view of the prospects of LNG as a Global maritime fuel for the future, adding a word to the conference title.
Mr Shaw reminded us that the success of LNG as ship fuel depends on several issues, which he assessed using a traffic light system First, economics, as against distillates and HFO/scrubbers. Last year there was a prediction, that on purely economic grounds, there should be 5,000 LNG fuelled ships now. But the economics are still not definite, so an amber light. Looking at environmental drivers – the benefits for ECAs do provide a clear green light. Greenhouse gas – amber, because the industry is still awaiting IMO’s global decision. NOx, despite Norwegian efforts, is still amber. The existence of a global supply chain is still in development, though well under way, so another amber. Technology and regulation – very much in progress, much is already in place, but limited availability of capital for newbuilds and conversions is holding things back, so amber. Undefined sentiment and caution – shipowners are cautious, various issues are still holding LNG back in many owners’ minds – so amber.
So, asked Mr Shaw, how do we give LNG the green light for the future?
Viking Line project manager for Viking Grace, Kari Granberg , introduced the ship and spoke about the enormous interest shown in Viking Grace since entering service in January 2013. Experience shows that there has been good cooperation and open mindedness among all stakeholders, suggesting that benefits of LNG will be considerable.
Following a presentation by Erik Skramstad of DNV, who gave an update on the international LNG bunkering guidelines and another by Turid Stemre, chair of the IGF Working Group at IMO who outlined the latest developments in the code, Dragos Talvescu, of Sund Energy, looked at LNG’s competitiveness as an IMO-compliant fuel.
Shale gas has influenced price, to the extent that LNG is no longer driven by the oil market. Small scale LNG is moving towards reality; infrastructure is changing and making LNG an easier choice. Availability is not expected to be a problem in Europe, but LNG is being diverted to Asia where higher prices are paid. In the US, the gas is cheaper still, so there is considerable variation. As new producers enter the market, gas is becoming more affordable, and OPEC-type moves to keep prices up seem unlikely. Spot pricing is gaining popularity.
David Bull of Ocean Shipping Consultants analysed the economics. Although gas fuelled ships are currently a very small proportion of world fleet, mostly LNG carriers, the installed base is growing. Bunker infrastructure in Europe is expanding, with new vessels entering service. Retrofits are gaining orders. Altogether around 40 ships are on order, including reasonably large container ships, will have LNG capability. Even at present rates LNG is competitive in the US but market devices may be needed in Europe. Newbuild costs are estimated around 10% higher, while lower capacity, higher operating and insurance costs will all influence decisions. A fuel cost saving of 3-7% is likely for container ship with LNG at 80% cost of HFO. For feeder vessels, LNG-powered Panamax and Capesize tankers and bulkers could offer significant savings on fuel cost alone. For ro-pax, LNG savings are highly significant. In the PSV market LNG has proved itself in the harsh North Sea environment. Everything works, but the sticking point is still the actual cost of the LNG.
Shell’s Arjan Stavast looked at general competiveness of LNG. The amber light for economics is still not totally green but has a “greenish hue around the amber”. The benefits of gas have tipped the balance. Not every business case will work in LNG’s favour, but looking at several studies LNG stands up well. Shell believes LNG is a competitive future fuel in the right applications.
The bankers’ perspective was given by Frederik Mordal Hessen, DNB Bank. The industry is facing major changes resulting from environmental legislation. The general financial markets took a big and unexpected hit after 2008, though Nordic banks did reasonably well. Activity has picked up recently and lending capacity is better, though still slow. Banks are now more selective, and have a cautious optimism, going for sound shipping markets. One caution is that because financiers like to take safer options, it may be more difficult to finance an LNG project before the forthcoming environmental rules are fully in place, and there is still uncertainty over both the 0.5% global sulphur limit and the carbon question.
Three shipowners gave their differing operational experiences. First, Kari Granberg of Viking Line returned to the podium to talk specifically about the Viking Grace. One remarkable fact is that the ship is far below the EEDI target, thanks not only to the use of LNG as fuel but to many other energy saving technologies. These include ABB’s EMMA, and NAPA’s optimisation system. Keeping to the timetable is very important, with speed restrictions in the archipelagos en route meaning that a late departure can take a long time to recover. The Aland Sea provides one of the few opportunities to speed up, albeit with an adverse effect on fuel consumption.
LNG experience has been totally positive, after a few initial adjustments no disturbances have been noted. Even the untried LNG bunkering has worked well. Engine cleanliness is good, less expensive lubricants can be used and time between oil replacements is longer than with HFO. Exhaust has proved invisible and odourless, with no soot on deck, or soot damage to passengers’ property. Time between overhaul is longer and general maintenance is cheaper. Even potable water consumption is better, thanks to the clean fuel. Five months of all-LNG operation has given a slightly higher consumption than on MDO, but this has been offset by savings due to lower hotel loads and other positives. Further savings will be possible in the future through waste heat recovery and energy storage. Energy savings of around 60% have been recorded by Grace versus the smaller Isabella.
Fjord1’s Oscar Bergheim then gave his company’s long experience with LNG- fuelled short-route ferries. Fjord1 was the first company to operate gas fuelled passenger ships; 12 are now in service, including one conversion project. Four key elements add up to the success of the service:
- education, both on shore and on board;
- bunkering, at a dedicated terminal or by truck taking up to 2 hours;
- gas plants, where Mr Bergheim admitted a known small leakage problem, in process of being fixed, but otherwise satisfactory; and
- engines, Rolls-Royce in the larger ferries and Mitsubishi in the smaller ferries, which have proved exceptionally clean running with low maintenance.
Initial thoughts were that with LNG, maintenance could be more expensive, but in practice this has turned out to be similar, or slightly less, than with diesel engines.
Ed de Jong of Deen Shipping spoke about the dual-fuel Argonon barge, and two new proposed gas-fuelled bunker barges. He drew comparisons between the 100-years-ago situation when the diesel engine first came in, and now. His company is in competition with rail and road transport which demands low cost and cleanliness. Scrubber technology is too bulky for inland vessels, so cleaner fuel was the solution. Using natural gas represents a high investment; Argonon uses a conventional Caterpillar diesel engine modified to run on a mix of MDO and gas, resulting in the development of a safe and versatile inland vessel. Gas is held in a central tank, and the ship boasts a special lightweight high strength hull structure designed for the high safety requirements for inland vessels. This structure has proved itself in tests and could be scaled up for larger-size seagoing ships. Significant benefits in emissions have been noted, with a saving of 30% in fuel costs, plus the bonus of quiet operation. Argonon is currently used for bunkering HFO in Rotterdam, and is fuelled by road tanker. Experience of this project shows that yards need greater knowledge to ease the construction of gas fuelled vessels, the infrastructure and bunkering need expansion, and finance is proving hard to obtain. LNG Group, a partnership between Deen Shipping, Veka, and others, has been set up to build LNG fuelled ships and associated infrastructure – including a bunker station in Rotterdam - in the Netherlands, and offer training in LNG.
Following the presentations, the question and answer session threw up a point about training for gas fuelled ships operation which seemed to be at variance with IGC and STCW requirements; but it was generally acknowledged that the issues were being addressed at the IMO and in the industry.
Siri Sundal Shield of Shell then described the company’s plans for a global supply chain, initially in Europe, and in particular the Brunsbuettel project on the Elbe. Dr Gerd-Michael Wuersig of DNV looked back at actual experience with Fjord 1 and other operators, and forward to the moves to establish supply in Asia and the Middle East. With the DNV-GL merger now approved, prospects look brighter still for a global LNG supply chain. North America was the focus of a paper by Sean Bond of ABS, who presented a highly optimistic outlook for LNG on economic as well as environmental grounds. The final session looked at specific infrastructure issues and experiences, with Juergen Harperscheidt of TGE Marine speaking on the specific issues of small-scale LNG supply based on TGE’s own experience, and Carl-Lennart Axelsson of AGA Gas explaining the solution set up for bunkering the Viking Grace in Stockholm.
Chairman Martin L Shaw summed up the day’s proceedings. He concluded that whereas last year the theme was that LNG as fuel was still mainly in the future, this year proves that LNG actually works. The delegates then enjoyed tours of the Viking Grace engine rooms and machinery spaces, prior to the conference dinner, held in the ship’s a la carte restaurant and sponsored by GE Marine.
The second day began very early, as the Viking Grace arrived in Stockholm after her overnight passage from Turku. Delegates had the opportunity to witness live bunkering with LNG and to see the bridge. Bunkering was a smooth, drama-free operation, with AGA Gas’s barge Seagas alongside. The actual connection and disconnection of the hoses could be seen over a video link.
The conference resumed with day two chairman Lars Robert Pedersen, deputy secretary-general of BIMCO, introducing a long first session looking in detail at the bunkering and transfer methods, such as the early risers had just seen at first hand. Viking Line’s Kari Grandberg took the podium again to run through the bunkering video in time lapse and explain the procedure. What happens to the fuel once it is taken on board was the focus of the next paper from Mathias Jansson of Wärtsilä who used the example of not only Viking Grace, using ship-to-ship bunkering, but also the LNG-converted tanker Bit Viking, which takes on fuel from a land-based terminal. Both ships use the Wärtsilä LNGPac system. Henning Pewe of Germanischer Lloyd focused on a study by EMSA into LNG bunkering safety issues and a further German study. Bunkering is not without risks, as several other speakers had reminded us, although there have been no incidents yet. Finally, Trelleborg’s David Edwards looked at the experience of the infrastructure built up by the LNG industry in general in formulating standards for gas transfer, which he applied to maritime applications on ships and in land-based terminals.
Two further presentations looked at design aspects and chartering. Paul Davies of Lloyd’s Register related to risk assessments meeting the draft IGF code, and a corresponding future update to LR’s Rules for LNG-fuelled ships. Lars Robert Pedersen explained BIMCO’s view that current charter party provisions did not reflect the special considerations applicable to gas fuelled ships. The use of dual fuel, and the effects on EEDI, are particular aspects that need re-thinking in terms of charter agreements.
Paul Blomerus of US company Westport Innovations described the use of his company’s high pressure engine technology in an ocean-going escort tug application, including a business case for LNG propulsion for such vessels and the expected potential market.
The use of LNG fuel could reopen the business case for gas turbines as ship propulsion, said GE’s Jeremy Barnes. The small size and high power density advantages remain, and the recent success of Incat’s Francisco 58-knot fast ferry for Buquebus in South America, powered by GE LM2500s running on LNG, has once again focused attention. Mr Barnes suggested that a COGES configuration, using supercritical CO2 technology, could be applicable to many ships but looks particularly attractive for LNG carriers.
Wärtsilä‘s Carlo Contessi described how the latest generation of dual fuel engines was being developed to meet IMO Tier III and EPA requirements, the latter having particular relevance thanks to the latest installations on Harvey Gulf OSVs in the USA.
Dr Philippe Gorse and Peter Kruz of MTU gave a presentation of the various high-speed engine LNG options available, and why MTU favours the lean-burn Otto cycle pure gas solution for its 4000 series engine.
Although most of the focus on gas fuelled ships has been on newbuilds, there is a growing market for conversions. Kasper Winroth of Rolls-Royce described two completed ferry conversions, and another in progress, showing how changes to engines, fuel systems and propulsion systems can combine to make such projects viable. Conversions need to be undertaken on suitable ships, operating where there is an LNG infrastructure in place, and, most importantly, in association with competent business partners, i.e. shipyard, owner, designer and equipment suppliers. These can combine for lower exhaust emissions alongside potential fuel savings which will more than cover the conversion costs.
The question of tanks for LNG occupied the final session, with Carlos Guerro of Bureau Veritas looking at the relative benefits of both the established Type C tanks for small-scale installations and the new generation of low pressure systems. Norwegian company Torgy has established a good market position in small-scale LNG, being a preferred supplier to Rolls-Royce. Torgy’s Edward Glossop described various solutions for different uses, including bunker barges, small tankers, small-scale floating and static terminals, and tanks for ship propulsion systems.
Chairman Lars Robert Pedersen summed up the event, which with a large attendance, a perfect venue and highly relevant technical visits directly to hand, could only be described as a great success. Thanks were given to the sponsors, Wärtsilä, Bureau Veritas, DNV, Bestobell, Lloyd’s Register, GE Marine, ACD, Houlder, Rolls-Royce, ABS, Trelleborg, GL, AGA Gas, Cryo, STX France and SGMF. Further acknowledgements were offered to the supporting organisations, speakers, delegates and of course to Viking Line. It will be a hard act to follow with the fifth Gas Fuelled Ships Conference, to be held in November 2014.
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