DNV champions LNG

Executive vice president Remi Eriksen of DNV Executive vice president Remi Eriksen of DNV
Industry Database

Det Norske Veritas (DNV) has reiterated that it is looking towards natural gas fuels as the single most significant solution to shipping's carbon footprint.

“Global shipping can reduce its CO2 emissions by 30% in the next 20 years through measures that are profitable for the shipping companies. The single most effective move is to introduce LNG as fuel,” said executive vice president Remi Eriksen at a shipping summit in Shanghai. A DNV study of 59 ship segments representing the major ship types and sizes of identified 25 different measures that can contribute to reduced emissions. Each of these segments has been modelled separately with regard to operational assumptions, the reduction potential of each measure, the cost of each measure and the year when available measures are phased in.

The study concluded that for 17 of the 59 vessel types and sizes it is cost-effective to install gas-fuelled engines assuming a gas price equal to the price of marine diesel oil. The study, called “Pathway to Low Carbon Shipping” demonstrates that CO2 emissions by 2030 can be reduced by 30% below baseline through measures that save cost for the operators, and by almost 60% if all the identified measures are included.

“Many believe that gas is tomorrow’s fuel. We at DNV think it is already here. LNG as a fuel offers obvious environmental benefits,” said Eriksen. “These benefits include nearly 100% reduction in SOX and particle emissions, 85-90% reduction in NOX emissions and 15-20% reduction in CO2 emissions.”

“For a switch to LNG to happen certain elements need to be in place,” Eriksen pointed out. “The technology is there, as many manufactures are offering LNG fuelled engines already. A challenge is the loss of cargo space due to cylindrical LNG storage tank. For newbuildings it is fairly simple to find space for the larger fuel tanks, while this may be more difficult for retrofitting on existing ship”.

“There is an abundance of natural gas in the world. When we add unconventional resources  like, for example, shale gas, there is a 250-year supply at current usage. The spot price of LNG is already at one fourth to one third the price of diesel oil. LNG needs to be offered with a price linked to the spot market price rather than the prices of the marine diesel that it may replace.”

“The main challenge is the lack of LNG bunkering infrastructure. As an example, distribution of LNG as fuel for ships in Norway is done through dedicated terminals for ships in point-to-point traffic (ferries) or for ships always returning to the same port (supply vessels). Larger scale development should be based on making LNG available at existing bunkering stations. When it comes to sourcing of LNG, this must be based on economic considerations” Eriksen said.

Vietnamese agreement

DNV is already supporting the Vietnamese Government, which has decided to start importing liquefied natural gas, and gasification terminals are already under development. Vietnam’s Deputy Prime Minister Hoang Trung Hai recently witnessed the signing of a memorandum of understanding (MoU) with DNV at its headquarters in Oslo. This sets the framework for DNV to work proactively with Petrovietnam and its subsidiary PV Gas to safely and efficiently introduce and distribute LNG within Vietnam, and to assist in creating an appropriate legislative safety regime.

“We have a great belief in the Vietnamese market.and we look forward to contributing to the development of Vietnam in the wider sense through our broad range of competence including in LNG. Today’s frame agreement will take our already strong position in Vietnam a step further,” says DNV CEO Henrik O. Madsen.

The agreement enables DNV to assist Vietnam on risk management issues associated with the use of LNG, how to use the waterways to distribute LNG and how to use LNG as fuel for coastal shipping and river transportation. Vietnam has a growing demand for energy and will in future be dependent on imports. At the same time, it is, with Bangladesh one of the two countries that will be most affected by the expected rise in sea level due to climate change. The nation is trying to find a balanced solution, and energy sources such as hydropower, wind energy and LNG as well as oil and coal will be part of the final solution.

By the end of 2010, PV Gas plans to select an aggregator to buy LNG in the spot market for three years before committing to long-term supplies. The supplies will be received at a floating storage and regasification unit to be completed in 2012; this is a fast-track option before finalising the location of a proposed 1 million tonne-per-year gasification terminal scheduled to be ready in 2015. Its capacity will be increased to 3 million and 6 million tone/y in 2020 and 2025 respectively.

DNV points out that it has provided services to 30% of the world LNG terminal projects, and, in 2001, was the first class society to introduce rules for LNG-fuelled ships. It has invested in research and development work to ensure further improvements. 20 LNG-fuelled ships – all classed by DNV – have been delivered and are in operation.

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