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LNG as a shipping fuel

all LR presentations
by

Lloyd's Register Marine

on 28 August 2014

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Transcript of LNG as a shipping fuel

1
1st Stage Process
Methodology
2
3
4
5
6
7
8
1
2
2nd Stage Process
Establish current and planned oil-based and LNG bunkering infrastructures
Derive voyage distances, average bunker consumption
and equivalent LNG consumption per ship types/sizes
Identify supply of LNG export and import terminals
Identify bunker ports in close proximity to ECA zones
Define high volume deep-sea trade routes per ship sizes/types
Isolate routes in stage 4 that trade in or out of ECA zones
Survey of shipowners to understand current options for mitigating emissions regulations
Port survey to validate Top 10 most likely LNG bunkering locations
LNG bunkering demand model
Reality-based approach validation of findings by stakeholders
For additional information and support to discuss topics related to LNG as a fuel for deep-sea shipping please contact Lloyd’s Register’s and MSI specialists listed below:
Jesper Aagesen
Latifat Ajala
Stuart Nicoll
Senior Surveyor, Ship Design Specialist
Lloyd's Register EMEA

E: jesper.aagesen@lr.org

Senior Marine Market Analyst
Lloyd's Register Group Ltd

E: latifat.ajala@lr.org

Consultant
Maritime Strategies International Ltd

E: stuart.nicoll@msiltd.com

Lloyd's Register
LNG Bunkering
Infrastructure Study

Lloyd's Register is a trading name of Lloyd's Register Group Limited and its subsidiaries.
For further details, please see our website www.lr.org/entities
Latifat Ajala
Senior Marine Market Analyst
Lloyd’s Register

9th October 2012

Overall visions of the study
Identified strategic ports and locations worldwide for possible LNG bunkering infrastructure facilities, and gathered the opinions of bunkering ports on their likely provision of LNG bunkering facilities in future.

Assessed the likely scale of demand for LNG-fuelled new construction and LNG as a fuel for deep see shipping up to 2025, using a propietary interactive demand model.
Lloyd’s Register LNG bunkering infrastructure study was carried out in co-operation with a London-based shipping economic consultancy firm, Maritime Strategies International Ltd (MSI).
Process completed & findings publicised
LNG bunkering demand model – (base, high & low case scenarios)
The interactive model is driven primarily by three main factors applied as follows:
LNG bunkering demand model
Ship types included with the model are: container ships, oil tanker, dry bulk carriers and cruise ships. Below are the trade routes selected per ship type:
Other ship types included are:
Chemical & LPG tankers (>5k DWT): based on oil tanker fleet % uptake
Car carriers (>5k DWT): based on container ships % uptake
General cargo ships (>5k DWT): based on dry bulk carriers % uptake
LNG bunkering demand model – fuel price assumptions at 2012
LNG regional prices base case: (Known market prices as of April 2012 from various market sources;
Price includes delivered LNG and (bunkering infrastructure costs to ship)
HFO (effective) is HFO with any variant of sulphur content >3.5% ~ 0.5%) higher than ECA or global limits at the given period.
LNG bunkering demand model – newbuilds demand assumptions
1. % propensities of global newbuild deliveries to adopt for LNG-fuelled engines based on % voyage time (ECAs & Global limits)
2. Savings on LNG bunker compared with alternative HFO (scrubbers)/Distillates
Other basic assumptions applied include:

Additional costs for LNG as fuel or scrubber installation
Installed main engine power and design speed for various ship types
Operational speed and fuel consumption estimated for various ship types
Port survey results
Research into LNG as a fuel has been carried out by over half (54 %) of the respondents so far.
About two thirds (62 %) of the ports that responded see themselves as key drivers of change with regard to the use of LNG as a fuel.
Shipowner survey results – all ship types
LNG bunkering demand model – newbuilds for deep-sea trades – base case outputs
Base case scenario

653 LNG-fuelled newbuilds (4.2% of global deliveries from 2012-2025)

LNG bunker demand is expected to reach 24 MnT by 2025 (1.5% of global LNG production and 3.2% of global HFO bunker consumption)
+
LNG bunkering demand model – newbuilds for deep-sea trades – base case outputs
LNG bunkering demand model – fuel demand – deep-sea trades – base case outputs
LNG bunkering demand model – fuel demand – deep-sea shipping – base case outputs
LNG bunkering demand model – newbuilds for deep-sea trades – high case outputs
High case scenario

1,963 LNG-fuelled newbuilds forecasted (12.6% of global deliveries from 2012 - 2025)

LNG bunker demand is expected to reach 66 MnT by 2025 for deep-sea trades (4.2% of global LNG production and 8% of global HFO bunker consumption)
* LNG bunker demand is highly dependent on pricing of LNG and its comparable price difference with competing fuels e.g. distillates - this conclusion was also drawn from the bunkering port survey
* Sensitivity testing indicates that shift of the year of implementation of global sulphur limits to 2025 for the low case would generate a zero demand for LNG-fuelled newbuildings
Low case scenario

13 LNG-fuelled newbuilds (0.1% of global deliveries from 2012 to 2025)

LNG bunker demand is expected to reach 0.7 MnT (0.001% of global LNG production and 0.002% of global HFO bunker consumption)
LNG bunkering demand model – newbuilds for deep-sea trades – low case outputs
LNG bunkering demand model – overall outputs
Conclusions
Existing oil bunkering hubs are well positioned to supply LNG bunker for ships, if demanded by owners.
Dedicated global LNG bunkering facilities is still a challenge.
LNG bunkering in short-sea shipping regionally could facilitate investments in deep-sea routes.
Solutions will be ship type and trade route specific
LNG-fuelled engines are a viable options for deep sea trades in long-term (10+ years) particularly on liner trades
Likelihood of global LNG bunkering facilities being established will depend on high demand for LNG-fuel on deep-sea trades, which will be driven by the price of LNG relative to current and future fuel alternatives.
Next steps…
1. Continual yearly updates of the model and press releases of periodic findings.

2. LNG bunkering demand model exploratory discussions with selected key market stakeholders, to seek and investigate appetite for further joint industry projects with potential consultative services.
Gas supplier, engine maker, shipyard, shipowner, port terminal operator
(ongoing process)
.
Options for compliance
Low sulphur fuels/distillates
HFO w/ exhaust gas cleaning system (scrubber)
LNG as fuel – or other alternative fuels...

Lloyd’s Register considers all options as feasible, but choice of option is depending on commercial considerations:
Trading pattern and percentage of time in ECAs
Cost difference and pay-back time
Availability of compliant fuels/abatement technologies
LNG is
a
solution not
the only
solution!
LNG as fuel – any interest?
Green Ship Technology Conference 2011
More than 75% of the attendees expected LNG as the fuel making most progress within the next 10 years

Smart Shipping - Singapore 2011
42% of the public poll opinion respondents expected LNG to be the choice compliance fuel by 2025.
Limitations of the study
LNG-fuelled ship technology, including energy density, specific gravity and tank volumes per fuel option

onshore LNG bunkering technology, including bunkering standards

the implications of other emissions regulations for bunker fuel choice, such as CO2, NOx and particulate matter regulations

other possible fuel options, including LPG, bio-fuels and synthetic fuels.
Top bunkering ports & oil-fuel demand 2004, 2007 & 2010
Top 10 ports
> 35% of global volume

NW-Europe, Singapore and Persian Gulf account for approximately half of the global volume
Proposed known!
Oil bunkering facility expansions/ developments
Morocco, Tangier
– Tangier Med facility, (HTL)
Egypt, Port Said
– oil storage & bunkering development (Maersk Container Terminal)
Egypt, Damietta
– proposed terminal for Damietta (also a location of LNG Export facility)
Turkey, Bay of Iskenderun
– two facilities (Ceyhan pipelines & east side of the Bay).
France, Fos
– new terminal development for storage & bunkering
Spain, Algeciras
– proposed 400k Cu.M capacity terminal
Qatar, Ras Laffan
– proposed multi-user terminal
Iran
– two new bunker facilities – sites TBA
Malaysia, Tanjung Bin
– 1 ,000 Hectare
China
– (Ningbo, Tianjin, Hainan – oil storage & bunkering facilities)
Australia, Newcastle
– proposed terminal
Panama, Colon Port
– new, located Atlantic entrance (Panama Canal)
12 proposed Facilities for Expansions/Development
LNG supply – import and export terminals – bunkering hubs nearby
Oil bunkering & LNG supply locations – Far East
Total oil fuel Bunker requirements: 78.9mnT;
Total LNG Supply: 194 MnT
Japan has 23 LNG Import Terminals

China has 5 current LNG terminals: Guangdong, Fujian, Ningbo (Zhejiang), Shanghai & Dalian; with plans for 6 more in future!
Bunkering hubs
LNG export
LNG emport
Capesize fuel consumption on top 10 routes
* Bunker consumption is based on a round trip and includes port days.
Trade routes & consumption – container ships
Figures are based on a round trip average FOC of a Panamax approx. 127 t/day and a Post-Panamax approx. 190 t/day excluding port time.
Europe – USEC
Europe – S Africa
Med – ECSA
Asia – Ind. Sub
Asia – Mid East
Asia – S Africa
Asia – USWC
Trade routes & consumption – VLCCs
Figures are based on a single laden voyage with average.
FOC of a VLCC abt. 97 t/day excl. port time.
W Africa – USEC
Persian Gulf – USEC
Asia – Ind. Sub
Asia – Mid East
W Africa – Asia
Persian Gulf – USWC
Trade routes & consumption – capesize bulkers
Figures are based on a single laden voyage with average FOC of a Capesize bulker abt. 60 t/day excl. port time.
Brazil – China/Asia
Canada – Europe
Colombia - Europe
S Africa – China/Asia
Aus – China
Aus – Japan
Aus – Europe
Shipowner survey
26 companies approached within different segments
14 replies received
High volume shipowners and ‘early adopters’
Information gathered is as follows:
Main bunkering ports
Trading routes of fleet per ship type and size ranges
Options to mitigate ECAs in short, medium and long-term strategy
Future interests in developing the Bunkering Study
Shipowner survey results – cruise ships
Shipowner survey results – containerships
Shipowner survey results – tankers
Port survey
25 ports approached globally
13 replies received
Assessing the awareness of ports of LNG as a viable fuel option for deep-sea shipping and what plans they may have to provide LNG bunkering in the future
Ideally this will identify the future global locations of LNG bunkering and the conditions that need to be met in order for LNG bunkering to take place
Ports selected & basis of selection
Tier 1 Ports:
Known bunkering ports.
Known to be exploring the potential to be an LNG bunkering site.
The supply of LNG is close to the port (within a 50 mile radius).
The port is located along a main deep-sea trade route with high trade volume.

Tier 2 Ports:
Ports considered as early adopters.
Bunkering ports that ships may be able to deviate to before entering an ECA.
Trade volume specific to particular ship type; container & bulk cargoes at Sydney & Gladstone respectively.
Port survey results
Port survey results
Port survey results
LNG bunkering demand model
Containerships, oil tanker, dry bulk carriers and cruiseships were included
Factors considered per shiptype:
All findings and strands of results from the steps 1-7
Selected representative deep-sea trade routes per shiptype
Confirmed ECAs and global sulphur limits
Propensities to bunker LNG as fuel depending on time in ECAs and estimated savings potential
Bunker price developments relative to LNG bunker prices regionally vs. MGO vs. HFO prices between 2012-2025
Sets of fluid assumptions were adopted based on the above
Dynamic and interactive model – developed to sense the level of adoption of LNG-fuelled ships per ship type
Development of the model – finalised June 2012
LNG bunkering demand model – container ships
Case Study – Lloyd's Register’s Involvements in Viking Lines LNG as Fuel Project
Thanos Koliopulos
Special Projects Manager, London Energy Operations
Lloyd’s Register

9th October 2012
A Changing Role of Classification in the Design Approval of LNG Fuelled Ships
Edward Fort
Global Head of Engineering Systems
Technical Policy Group
Lloyd’s Register

9th October 2012

LNG-fuelled deep sea shipping - the outlook for LNG bunker and LNG-fuelled newbuild demand up to 2025
For more information please contact:
Peter Catchpole
Principal Environmental Specialist
Lloyd’s Register

E: peter.catchpole@lr.org
Lloyd's Register is a trading name of Lloyd's Register Group Limited and its subsidiaries.
For further details, please see our website www.lr.org/entities
For more information please contact:
Edward Fort
Global Head of Engineering Systems
Lloyd’s Register

E: ed.fort@lr.org
Lloyd's Register is a trading name of Lloyd's Register Group Limited and its subsidiaries.
For further details, please see our website www.lr.org/entities
For more information please contact:
Thanos Koliopulos
Special Projects Manager
London Energy Operations
Lloyd’s Register

E: thanos.koliopulos@lr.org
Lloyd's Register is a trading name of Lloyd's Register Group Limited and its subsidiaries.
For further details, please see our website www.lr.org/entities
Reality-based approach validation of findings by stakeholders
Validation of set assumptions used within the model –
done

Reiteration of some values used within the model –
done


Following one of our stakeholder’s review, the model has now been adapted recently to focus on a specific region and quantify demand for LNG bunker fuel within the region -
ongoing process

Sensitivity testing and validation of the model will the done at intervals as the market evolve –
ongoing process
Financial




Availability geopolitical
MARPOL Annex VI fuel oil maximum sulphur content outside of ECA-SOx reduces from 4.50% to 3.50% from January 1, 2012.
North American Coastes ECA-SOx from August 1, 2012
North American and US Caribbean ECAs will also be ECAs-NOx from 2016
US Caribbean ECA-SOx from January 1, 2014
Maximum fuel oil sulphur content within all ECA-SOx after coming into effect:

Up to December 31, 2014: 1.00%

From January 1, 2015: 0.10%
Baltic and North Sea ECA-SOx
Sulphur oxides (SOx)
Challenge: how to decide the best compliance option for the combustion devices installed?
% Sulphur (m/m)
1.00
0.50
0.10
0.00
HFO
Scrubbed HFO
Distillate
Duel Fuel LNG
100% LNG
Inside ECA-SOx up to 2012
Outside ECA-SOx after 2020
Inside ECA-SOx after 2015
Nitrogen oxides (NOx)
Energy Efficiency Design Index (EEDI)
Effective from Jan 2013
Assigned to ships on delivery
CO2 emissions from combustion of natural gas ≈ 80% fuel oil
Low EEDI may make ships commercially attractive
Market based measures (MBMs)
Under discussion at IMO
Two main approaches
Levy on fuel purchases
Pay for CO2 emitted
Consequence will be an additional operating cost linked to CO2 emissions
Where will CO2 emissions be ring fenced?
Primarily regulated by the IMO, requirements are engine specific, and their applicability is based on the construction date of the ship
Advanced pollution control equipment is required to comply with Tier III requirements that apply to ships built from 2016 operating inside ECA-NOx
Selective catalytic reaction (SCR)
Exhaust gas recirculation (EGR)
100% natural gas engines are currently exempt
S
x
N
x
C
2
i
ee
Ports that have carried out research into LNG bunkering
Ports that see themselves as drivers of change to LNG as fuel
Confirmed ECAs
Will affect the majority of World merchant fleet
More ECAs to come?? Unexpected
Challenging emission regulations – sulphur limits
Low-sulphur fuel oil is seen as a short-term option for compliance with SOx emission regulations.

Abatement technologies are seen as a medium term option.

LNG-fuelled engines are a viable option in the long term, particularly for ships on liner trades.
Environmental Restrictions
Deciding how to comply?
Complex decision based on:
fuel cost
CAPEX costs
ships' operational profile
availability of fuels
cargo owner preferences
maturity of technology
compatibility of technology
future legislative requirments
flexibility
risk management
Green Ship Technology Conference 2011
Existing/proposed LNG bunkering projects/locations
Existing LNG Bunker locations: ad-hoc operational basis.
Truck to ferries operations
Minimal STS transfers possible in small scale via LNG carriers

Proposed LNG bunkering terminals
Rotterdam Gate
(regulatory driven)
Singapore
(commercially driven??)








Planned projects North Sea & Baltic areas for small-scale LNG bunker
Port Hirtshals, Denmark - Gasnor
Zeebrugge, Belgium - Fluxys
Additionally,14+ other projects located within Baltic & North Seas ECA
Proposed LNG bunker projects/locations
Small scale – LNG bunkering projects
Contents
Critical Areas
Case Studies
Viking Risk Assessment Overview
Introduction
Routes to approval
LR Marine Risk Assessment Process
Conclusions
Introduction
Routes to approval
LR Marine Risk Assessment Process
Conclusions
Introduction
Routes to approval
LR Marine Risk Assessment Process
Conclusions
Introduction
Routes to approval
LR Marine Risk Assessment Process
Conclusions
A prescriptive approval route…
Design and approvals can be readily costed but offers little scope for deviation
Or a risk based approval route…
Allows innovation but design and approval more demanding
Risk based design approvals
Risk based design approvals for ships systems are becoming commonplace…








Risk assessment process must be rigorous
Risk assessment process must be appropriate (scalable)
Risk assessment process must be consistent
Risk based design approval must be independent of design
Rules and Regulations for Classification of Ships, Part 7 Chapter 15, 1.7 Risk Management
MSC 285(86) Interim Guidelines on Safety For Natural Gas Fuelled Engine Installations in Ships, 2.1.1 Risk analysis
Rules and Regulations for Classification of Natural Gas Fuelled Ships, 3.2 Safety and reliability analysis
MSC Circ.1002 Guidelines on Alternative Design and Arrangements for Fire Safety, 3. Engineering analysis
MSC Circ.1212 Guidelines on Alternative Design and Arrangements for SOLAS Chapters II-1 and III, 3. Engineering analysis
Marine Risk Assessment Process
The Marine Risk Assessment Process is a clearly defined, scalable process, consistent with applicable Rules and Regulations
Classification versus Consultancy
Stage 3. Qualitative/Quantitative Studies
Stage 1. Scoping Study
Stage 1. Scoping Study
Stage 2. Concept Design HAZID
Stage 4. Final Design HAZOP
Conclusions
Risk Based Design approvals are becoming commonplace
Risk assessment process must be rigorous
Risk assessment process must be appropriate
Risk assessment process must be consistent
Classification services must be independent of consultancy
Bunkering System – Critical Areas
Bunkering infrastructure at port (jetty or barge)
Bunkering system engineering / components
Ship’s bunker station / bunkering system compatibility
Fuel capacity / bunkering turn around requirement
Port Authority compliance
Case Study
Case Study
Case Study
Case Study
LNG fuel spillage during bunkering
Cryogenic protection / vapour detection
Size of manifold / QCDC valve / hose coupling
Station Hazardous Area Classification

Solution
Relocate near air ventilation inlets
Stainless steel plating / drainage / water curtain
Commercial systems / Type Approved / Flow capacity
Air Locks / Control Room / CCTV
Safe segregation/no leak philosophy
Fuel Tank / Cold Box structural integrity and supports
Fuel Tank safe isolation
Cold Box leak protection and ventilation
Tank filling limit
Master Isolation Valve failure / leakage inside the Cold Box
LNG liquid filling Cold Box impact on down stream components
Overload, torsional loads, vibrations impact on combined structure
Stress loads at double piping connections

Solution
Address valve reliability (FMEA) / seal integrity plan
Verify load capacity of tank collar
Position thermo couple
Address accessibility / maintenance
Actual tank filling limits
Tank location / sloshing loads
Vapour space requirement
Relief valve protection / LNG liquid impact

Solution
Maintain vapour space at inlets at 22.5 deg list
Address tolerance of various gauges / tank margins
Address volume expansion factor
Calculation to address 2-phase flow
Guidance per latest Rules for the Classification of Natural Gas Fuelled Ships
Tank Room – Critical Areas
Ventilation System – Critical Areas
Impact of systems / operations to ventilation inlets
Impact of outlets on deck safe areas and EER
Ventilation of louver intakes port / starboard
Double wall open ended continuous air circulation
Impact on ferry / port operations
Minimise vent outlets / maximise distance from decks
Blow-down and purging
Emergency venting Cold Box / piping / GVU

Solution
Common high velocity vent stack aft/ N2 supply
Address plume dispersion / max relief event
Address strength / wind loads on stack
Strength of outer pipe tested to 1 bar / spools to 10 bar
BSc CEng FIMarEST
BSc CEng FIMarEST
Case Study
Short bunkering time during port operations
Single point failure in common bunkering / cold box
Fire pump sizing for gas system protection

Solution
Short bunker piping, ability of draining / purging towards ship
Bunker piping pressure relief to the tank
ESD Philosophy addressed common / spurious shutdowns
Max fire water fed in two different main vertical zones with one pump out of action plus tank deluge
Safe Operations – Critical Areas
Ability to bunker STS / STJ
Cool down / bunkering turn around time
Combined operations (bunker / loading / engine)
Tank over-pressurisation / vapour management
ESD, emergency relief and purging
Area Classification / ignition protection
Emergency procedures
Viking Risk Assessment Overview
HAZID – Layout optimisation for Class Plan Approval
HAZOP – Bunkering / Gas fuel system evaluation for Class Plan Approval
Safe Return to Port (SRtP) – Acceptance validity of scenarios

21 Actions Identified and Closed-out to the satisfaction of Class / Flag
Class is changing and early engagement is crucial…
Environmental
Drivers
Full transcript