What is LNG bunkering?
Bunkering is the supplying of fuel to ships for their use; in other words, refueling. The term itself dates back to the days of steamships; the storage compartment for coal; the fuel at the time, on a steamship was known as a bunker and the term itself came to be associated with fuel storage of ships. In today’s context, the term bunker applies to the storage of more modern fuels such as the myriad of petroleum derivatives, LNG, etc. and also the logistics of refueling ships. The more niche business of fuelling and storage of LNG on ships as fuel is known as LNG bunkering.
IMO’s emission goal & LNG
With the increasingly stringent emission standards being imposed by the IMO, cleaner fuels such as LNG and low sulfur marine gas oil are a very lucrative replacement to the heavy fuels currently being used. The most recent directive from the IMO has been to reduce the sulfur content of marine fuels to 0.50% m/m (mass by mass). This quickly rendered the sulfur heavy fuels obsolete and has caused the majority of the shipping industry to switch to Very Low-Sulfur Fuel Oil (VLSFO) or Marine distillate fuels. There is also the consideration of other long term solutions such as LNG, Ammonia, or Hydrogen fuel cells. The forecasted stability of LNG prices and the reliability of natural gas as a resource has caused many to believe that LNG may be the fuel of the future. A survey conducted by Deloitte of over 80 senior executives in the Asia Pacific region revealed that LNG indeed is the fuel of choice for shipping companies but the current lack of bunkering infrastructure is preventing widespread adoption of LNG as a fuel. With IMO’s more ambitious goals approaching in 2030 and 2050 and many companies such as Total banking on LNG, the relevant infrastructure is rapidly being developed.
Reasons for switching to LNG
From an environmental perspective, the superiority of LNG over conventionally used fuel oils is indisputable, especially in a marine context. It produces far lower emissions of C02; boasting a 20-25 % reduction and negligible emissions of sulfur oxides (reduction of 90-95%), particulate matter, and nitrogen oxides compared to heavy fuel oil or marine diesel. Not to mention the mitigation of spills of heavy fuel oil (HFO) and other marine oils.
There is also an economic argument to be made; LNG is generally cheaper than marine gas oil. The majority of the cost of undertaking a voyage is bunkered fuel so the overall gain in switching over to LNG will be material. An increasing number of governments are supporting LNG vessels taking the initiative and grants are being issued for the construction of LNG infrastructure, which on completion will possibly reduce the costs of LNG further.
The IMO’s directive in 2020 reduced the sulfur limit from 3.5 % to 0.5%, as a result, SOx emissions were reduced by 8.5 million metric tons per year. A switch to LNG will have a much more pronounced effect as it has negligible SOx emissions.
The present and future of LNG:
There is substantial infrastructure already in place for bunkering. Organizations such as the International Association of Ports and Harbors (IPAH) are exhorting ports around the world to develop LNG bunkering facilities. The majority of bunkering facilities are in Northern Europe, however, facilities are cropping up in Southeast Asia and the US. Japan has recently developed LNG bunkering facilities and plans to be a global supplier through the port of Yokohama and the ports in Tokyo bay.
There are operational facilities in Port of Rotterdam, Hammerfest, and Barcelona in Europe. In the US there are LNG bunkering options in Port Fourchon, Louisiana, and Jacksonville port, Florida. There are also facilities in Montreal, Panama, and the Dominican Republic in this continent. In Asia, Yokohama; Japan, Kochi; India, and Singapore boast already operational LNG bunkering.
There are planned and upcoming facilities in the port of Gibraltar, Dunkirk; France, and Hamburg; Germany in Europe. In Asia, Busan in South Korea and Zhoushan in China are ports where bunkering will be available in the future.
There is significant interest from the private sector and various governments across the world in the LNG sector. Total is developing a project in the port of Sohar in Oman to build a liquefaction plant that provides one million mt/ton per year and in the port of Dunkirk. The port of Rotterdam is cooperating with several entities to create an LNG logistic chain in Europe.
In light of recent events such as the sulfur cap by IMO, the LNG bunkering industry is expected to grow at a steady rate according to Total. The general manager of Total marine Fuel global solutions, Xavier Pfeuty stated at the global LNG bunkering summit in Amsterdam that LNG bunker demand is expected to grow to ten million mt/year from the current one million mt/year and LNG bunkering vessels will triple in number in the coming two years. He further stated that by 2030 LNG would make up around 25 to 30 percent of the global LNG bunker mix.
The challenges we face:
There are however significant challenges to LNG bunkering. LNG is a gas and therefore has a higher volume than the conventional fuels, it takes up more space on the ships for storage and use. In addition to this, the fuel must be stored cryogenically, so after bunkering additional energy must be expended to keep it in its low-temperature state in essence rendering it a perishable good.
The greatest problem in the implementation of LNG bunkering is the leakage of methane from the engines. Currently, most of the engines are dual-fuel operated and are not dedicated LNG engines. The combustion process is unable to consume the methane in LNG completely and methane escapes into the atmosphere which is a greenhouse gas about 28 times more potent than CO2. But with the usage of LNG that is derived from Biogas this can be mitigated. In addition as engines are built that use LNG exclusively, design improvements can be made in the future that reduce methane slip.
Hapag-Lloyd is the first in the world to take the plunge in converting a large container ship to LNG. The ship, SAJIR, is the first of a 17 ship fleet intended by Hapag-Lloyd to be converted to LNG. This much-publicized retrofitting is taking place in China’s Huarun Dadong Yard. The engines in SAJIR which formerly used heavy fuel oil will now be converted for dual fuel operation with LNG and low-sulfur fuel oil.
Considerable investment and commitment are required on both the ends; the suppliers and the consumers to build the infrastructure. But the benefits dwarf the possible costs as a huge number of premature deaths will be avoided; risks of stroke, asthma, cardiovascular and pulmonary diseases will be reduced, acid rains and the acidification of the oceans will be controlled saving many aquatic species from possible extinction.
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