LNG For Marine Transportation - The Worldwide Market

The global fleet of 42 LNG-powered ships will almost triple by 2014 and increase 42-fold to almost 1,800 vessels by 2020, according to DNV GL, the largest company certifying the merchant fleet for safety.

In all, 37 new LNG-fuelled ships and two conversions are on order, scheduled for delivery in the next three years. Recent years have seen an increase in marine LNG activity in the US, but other parts of the world, especially Europe, seem farther down the road.

Europe

The Viking Grace is a 5,600 tonne vessel that can accommodate up to 2,800 passengers. Powered by Wärtsilä LNG fuelled engines, is the “greenest and quietest ferry in the world”, according to its operator, Viking Cruise Lines.

Sailing between Stockholm and Turku, Finland, she completes LNG bunkering five or six times a week in the heart of the heavily populated Swedish port – in just under an hour. Bunkering is done ship to ship via the Seagas, a purpose built fuelling vessel that supplies between 60 and 70 tonnes of LNG to Viking Grace each day. The ship is obviously a European vote of confidence in the safety and efficiency of marine LNG technology.

“A lot of large energy and gas producers said bunkering a vessel with passengers coming on and off and cars, in the centre of Stockholm – that won’t happen. We put every safety aspect into line to mitigate all risks,” says Capt. Johan Gahnström, senior project & business development manager at SSPA Sweden AB.

Norway and Sweden have been most successful in developing LNG bunkering infrastructure so far. Military, coast guard and platform supply vessels are all running on LNG in Norway. Three main suppliers have built LNG bunker facilities along the entire coast: Gasnor in mid Norway, Skangass in the south and Barents Naturgass in the far north.

Viking, meanwhile, is watching closely the development of bunkering infrastructure in ports where its ships call, such as Turku, Tallinn and Helsinki. Turku has given permission to Gasum to start designing an LNG production plant close to the port and a similar project is already under way in Tallinn. Helsinki may also follow suit.

In neighbouring Sweden, Linde subsidiary AGA Gas opened the country’s first import terminal at Nynashamn in 2011, extending LNG bunkering into the Baltic. AGA can get LNG from Skangass or from its co-owned 15,000 ton/yr LNG unit at Tjeldbergodden in mid Norway.

Further south, port authorities in Rotterdam and Antwerp are also studying the feasibility of break-bulk terminals that could bunker small ships or Rhine barges with supplies from adjacent large import terminals. Rotterdam has commissioned Germany’s Linde to carry out a study on the best site for a bunker terminal.

Canada

Just as in Europe, the Canadian market is also seeing heavy investment in LNG for marine use, with several key developments also seen as reinforcing activity in the US market.
In July 2013 British Colombia Ferries announced its intention to acquire three new LNG ferries, while in Quebec, Société des Traversiers du Quebec (STQ) also has three LNG-powered ships under construction, all of which will be powered by Wärtsilä dual fuel gas engines. “We can always find diesel if we need it if, for whatever reason, we can’t bunker LNG,” says Benoit Cormier of STQ. “These ships need to support a wider government contingency response, for example, and we may need to operate them in other, more remote areas.”

Of the three STQ ships, two 92-metre ferries are being built by Davie in Quebec, while a 130-metre third vessel is under construction at Fincantieri’s yard south of Naples. The two ferries being built at Davie will serve the vital Tadoussac – Baie Sainte Catherine route across the mouth of the Saguenay River. The 130m ferry will operate out of Matane on a longer ‘V’ shape route across the St. Lawrence, connecting alternately with Godbout and Baie-Comeau on the northern side of the river.

The dual-fuel vessels ordered by British Colombia Ferries, meanwhile, will replace the vessels currently operating on the Tsawwassen-Southern Gulf islands route and the Comox-Powell River route. The company says switching to LNG could cut fuel costs by 50% – it spent about $120m on fuel last year.

In April 2013 Shell said it would build a liquefaction unit at its Sarnia Manufacturing Centre in Ontario, which will supply LNG throughout the Lakes, as well as serving northern U.S. states, Canadian provinces and the St Lawrence Seaway. Shell is also installing a smaller liquefaction unit in Alberta for road and high horsepower applications.

Asia

Beyond Europe and North America, meanwhile, Nantong COSCO KHI Ship Engineering Co Ltd (NACKS) and LR China have announced their joint development of an LNG fuelled 28K dwt type General Cargo Ship – a new ship design to incorporate dual fuelled propulsion to be built to LR’s class requirements.

Singapore is also active. The Maritime and Port Authority of Singapore (MPA) and Lloyds Register have completed a study on key areas that need to be addressed before Singapore can adopt LNG bunkering, including safety and training. The MPA is now ready for industry consultation with a view to moving forward in offering LNG bunkering.

Liquid natural gas (LNG) as a marine fuel made significant progress in 2013, in both Europe and North America, and 2014 has so far seen further gains. Analysts say further progress in the short term is therefore still likely to focus on niche markets within environmental control areas (ECAs), including ferries, Jones Act trade and US and Canadian lakers in the Great Lake system. The prospect of deep-sea global LNG powered trade, by contrast, is some way off.