The case for small and large LNG-fuelled container shipsTaken from: LNG World Shipping Editor's Viewpoint 21 May 2012
Germanischer Lloyd and MAN have looked closely at the costs and benefits to be derived from fuelling container ships of various sizes with LNG.
Regional authorities, national administrations, trade associations and port authorities in Europe, North America and Asia are warming to the concept of using LNG as a marine fuel. Powering ships with LNG is increasingly being regarded as an attractive alternative means of complying with a tightening ship exhaust emissions regime, especially that governing sulphur emission control areas (SECAs).
Under certain circumstances the use of LNG also offers commercial advantages over the other two emission reduction options - shipboard exhaust gas treatment, or scrubber, systems and the use of low-sulphur marine diesel oil/marine gas oil.
The use of LNG as marine fuel, however, poses challenges, the greatest being the provision of the required LNG bunkering infrastructure. There are also questions surrounding the finalisation of relevant regulatory controls, crew training, fuel price fluctuations, the cost of engine retrofits to enable the burning of gas on existing ships and project financing which are yet to be fully resolved.
Class societies, engineering companies, shipowners, port operators, engine manufacturers and LNG industry participants are stepping up to the plate to carry out the studies necessary to underpin the provision of safe and viable LNG bunkering infrastructure and associated shipboard LNG fuelling systems. All are agreed that the establishment of competitive LNG fuel supply networks around the world requires both a joint approach across industry and regions and a sharing of the results of the many studies that have been and are being undertaken.
The outcome of these investigations into the use of LNG as marine fuel is afforded added importance in light of similar development work taking place with scrubber systems. Scrubbers represent the alternative technical solution to achieving reduced ship atmospheric emissions and enable the continued burning of heavy fuel oil (HFO) in conventional diesel engines.
Amongst several recently completed studies on the LNG-fuelled ship alternative is a notable joint project by class society Germanischer Lloyd (GL) and engine builder MAN on container vessel power generation systems. The work focused particularly on the costs and benefits of using LNG as a fuel on such vessels.
The GL/MAN investigation concluded that burning LNG as ship fuel promises less emissions and, given the right circumstances, less fuel costs. The attractiveness of LNG as ship fuel compared to scrubber systems is determined by the following three parameters:
(a) investment costs for the LNG bunker tank system on the ship;
(b) the price difference between LNG and HFO; and
(c) the percentage of time the ship operates inside a SECA.
GL/MAN determined that for a smaller size container ship of 2,500 TEU capacity with a SECA exposure of 65 per cent its LNG propulsion system would achieve a payback time of less than two years based on the current price of LNG in Europe. For such a vessel the LNG system would be an attractive option compared to scrubbers as long as the LNG delivered to the ship costs the same or less than HFO, when the fuels are compared on their energy content.
For large container ships of 14,000 TEU, which would typically spend much less of their working lives operating within SECAs, the LNG system yields a shorter payback time than would be the case if the ship was burning HFO and fitted with a scrubbing system, assuming the current disparity in price between LNG and HFO in Europe. The use of an enhanced waste heat recovery (WHR) system on an LNG-fuelled vessel would further reduce the payback time.
One of the difficulties in drawing conclusions from such fuel comparison studies is the variable price of LNG between regions worldwide. Whereas HFO prices are relatively stable globally, the price of LNG in Japan is currently at least four times higher than than currently pertaining in the US.
LNG prices in Europe fall roughly halfway between these two extremes. At the current level of approximately US10 $/million BTU, European pricing makes LNG fuel an attractive alternative, even allowing for with the additional small-scale distribution costs associated with the delivery of the LNG to the ship’s bunker tank.
The GL/MAN study concludes that even with LNG prices as high as 15 $/mBTU a 2,500 TEU container ship running on LNG systems would be at a competitive advantage compared to a ship with a scrubbing system in terms of payback time.
GL and MAN point out that the model they have developed to predict costs and benefits for LNG fuelling arrangements, scrubbers and WHR systems onboard container vessels offers the possibility of studying a wide range of additional variants in terms of vessel size, route profiles, percentage of time within SECAs and the LNG bunker tank configurations on the vessel.