An Overview of LNG as bunkering option post 2020

Emission reduction targets are driving a new way of thinking and a range of technological solutions within the shipping and port sectors. So far, four major solutions have been identified for cleaner ship fuels: (i) Marine Gas Oil, (ii) Heavy Fuel Oil + Scrubber, (iii) Liquefied Natural Gas – herein referred to as LNG, and (iv) Methanol. From those alternatives, most experts recognise LNG as the most developed fuel solution, both in the short- and in the medium-term. In 2014, the United States Energy Information Administration (EIA) as well as the International Gas Union (IGU) reported a significant growth of terminals for LNG liquefaction and regasification. Moreover, the European Commission, as part of its Clean Power for Transport package, has adopted in 2014 a Directive ‘on the deployment of alternative fuels, recharging and refuelling infrastructure’. Nevertheless, there are several constraints that need to be addressed yet, more particularly in LNG importing countries in order to meet the future demand of the expected LNG-powered fleet. They include facilities for storage and transhipment of LNG for fuelling berths, barges and ships. This text provides an overview of the use of LNG for the maritime industry and examines its potential for future growth on the basis of the LNG-powered fleet (current and in order) and planned expansion of LNG bunkering facilities, mainly in European ports. Most data here presented come from a variety of sources including international databases such as IHS Maritime, ports websites, and reports from LNG-related organisations. In addition, the results from past and current EU-funded projects in this field were reviewed and consultations were conducted among representatives from participating ports. Overall, it was found that the LNG powered fleet is expanding slowly and the trend is towards building LNG-propelled vessels for smaller ship sizes and short distances. Although Norway is the newbuilding front runner, other countries, mainly in Europe (e.g. the Netherlands, Denmark, Italy, and Malta), have ordered an important amount of new buildings. Similarly, European ports are expanding considerably their LNG bunkering capacities. Remarkable are the activities conducted by the ports of Spain and Italy.

LNG is the fuel of the century and even of the future. According to DNV, the use of LNG fuelled vessels can reduce CO2 emissions by 15-20% (DNV, 2012). Being the cleanest among all fossil fuels, LNG is one of the favourite energy sources in many countries. This is true for Norway which has played the highest influential role in Europe but mainly in the Baltic region. Norway´s experience in using LNG as a fuel backs to the year 2000. The first LNG classed vessel was indeed Norwegian, and by the end of 2013, the Norwegian fleet of LNG fuelled vessels comprised already 17 ferries, 7 platform supply vessels and 4 cargo vessels (Rodrigues A.P., 2013).

A recent study from the Danish Maritime Authority estimated an increase of nearly 140% in the use of LNG in the SECA area by 2020 (IAPH, 2013). Similarly, based in three scenarios, Adamchak F. & Adede A. (2013) foresaw a maximum demand worldwide of 33 million tonnes by 2020 and 65 million tonnes by 2030. These authors also forecasted that while the Asian Pacific region will heavily depend on imports, Europe and the US will mainly rely on domestic production.

Of course, regulations have been the main driver for these developments but ports are becoming more proactive too. Several authors have suggested that if no effective infrastructure planning is implemented carefully, LNG scheduling issues may arise, so congestion might intensify in ports, mostly in European ports, not only due to cargo (container) handling but also due to ships’ LNG bunkering needs.

A survey conducted by Lloyd’s Register in 2014, among 22 ports, showed that ports are taking the initiative themselves and have adopted local requirements that in many cases go far beyond international regulations (Lloyds Register, 2014). Indeed, a big difference is reported between the figures of the 2011 and 2014 surveys. While in 2011, only 7% of the respondents declared to have started working in international LNG initiatives, this figure dramatically increased in 2014 when more than half of the respondents said that they were actively participating in projects including the World Ports Climate Initiative (WPCI) which operates under the umbrella of the International Association of Ports and Harbours (IAPH). A dedicated LNG working group currently consists of 14 active and 11 consultative port members. 

Other recent developments in LNG production in countries like the US and Australia have also prompted numerous ventures towards the construction of LNG bunkering facilities in ports. The US and Australia are now gas exporting nations, being formerly gas importers. With new methods of gas exploration and production, gas resources have become available. These had not been available at all or only at costs which had not made it economically feasible to explore them. Consequently, the higher than ever availability of gas is another important driver. It is correct to say that the forecast of available gas reserves is positive and also the source countries have become more diverse. This is the case of Mozambique (Anadarko), Algeria, Angola and Nigeria which can become important suppliers to the demand in Asia (See OECD/IEA, 2014). Lastly, security policies aimed at reducing the dependency on Russia are an important driver in increasing the number of LNG import (regasification) terminals in Europe, particularly for Poland and other Baltic countries.

At international level, Emission Control Areas (ECAs) are now placed in Europe, US and the Canadian coasts. In Asia, Hong Kong recently implemented an ECA zone, albeit the regulations are a bit different in Hong Kong when compared to those of the European and American ECA zones. The sulphur limit in Hong Kong is so tight that ship operators are forced to either implement technical solutions to filter the exhaust gases or the shippers switch to lower sulphur alternative fuels. It is also expected that by 2020 or later, a 0.5% sulphur limit in emissions will apply worldwide. At regional level, the European Union has adopted a Directive for the deployment of alternative fuel infrastructure, as part of the Clean Power for Transport Package, which requires Member States (MS) to submit to the European Commission by 2016 their national policy frameworks. Furthermore, MS must support the market of LNG both by road and sea. It means that a minimum number of LNG refuelling stations should be deployed along the TEN-T core network on road and in seaports by 2025 as well as in inland ports by 2030 (EC, 2014).

In addition to that, the IMO adopted last June 2015, the International Code of Safety for Ships using gases and other Low-flashpoint fuels (IGF Code). The Code is mandatory under the International Convention for the Safety of Life at Sea (SOLAS). The Code will enter into force in 2017 and apply to newbuildings as well as retrofitted ships except gas tankers.

Following the STCW amendments, the question which remains is if current maritime education and training centres have got the resources needed to prepare personnel on the safety aspects of LNG bunker and engine propulsion fuel.

As the number of vessels in operation using it for propulsion purposes is still reduced it can be expected that before the entry into force of the amendments, through the interim guidance, shipowners will require Maritime Education and Training (MET) institutions, possibly in collaboration with manufacturers, to include more specific training both in terms of LNG bunkering as well as using it as means of propulsion. When the amendments enter into force, it will then be a responsibility of the different maritime administrations to recognise such training and to issue certificates of proficiency to the seafarers. Other administrations may decide to recognise such certificates of proficiency in line with what happens with other certificates issued to personnel operating on board tankers.

It should be noticed that while the international shipping community only adopted legislation for crews on board LNG powered vessels recently; in Norway, regulations dated from 2002 and require that personnel receive permanently the required knowledge to perform their gas-related duties. This includes the requirements for (i) crews to undertake basic gas-related training and conduct periodic gas-related drills, and (ii) companies to prepare and maintain a training plan and manual (Rodrigues A.P., 2013). The experience gained by Norway could be useful for other countries and MET institutions.

Safety standards

Presently, most regulations apply to LNG transported as a cargo rather than as fuel. Although LNG in its liquid form cannot burn or explode, if spilled it can form a pool on the water. Since LNG boils at ambient temperature, a vapour cloud would then be formed in the air and easily dispersed with the winds. While the risk of fire or explosion increases in confined spaces like a ship or building, there is not sufficient evidence of LNG fire or explosion in open spaces (ABS, 2015).
Terminals must ensure safety for the protection of local communities where the receiving terminals are based. In other words, they must clearly understand the hazards of LNG bunkering. According to ABS (2015), four risk scenarios can be considered:

1)    Leaks from LNG pumps, pipes, hoses and tanks.

2)    Accidental disconnection of hoses.

3)    Overfilling and or overpressure in tanks; this can happen if the operator keeps filling the tank when it is already full.

4)    External impact which can be originated if the cargo accidentally falls over the bunkering equipment, collision between vessels or collision between the truck and bunkering equipment.