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LNG and methanol boom for box ships
Box ships are leading the pack when it comes to LNG and methanol – and are also eyeing up ammonia
Box ships grabbed the largest slice of 2022 LNG and methanol orders.
According to a 2022 round up of order figures from DNV’s Alternative Fuels Insight (AFI) platform, 74% of 222 LNG ship orders were for container vessels and pure car and truck carriers. Out of 35 methanol-powered ships ordered, 30 were box ships.
The total number of ships with alternative fuels ordered in 2022 was 275, excluding battery-operated vessels. LNG led the way with 222 ships or 81% of total orders.
DNV comments, “2022 turned out to be almost on par with the record year of 2021 for LNG-fuelled ship orders, which saw 240 LNG-fuelled ships ordered.” LNG-fuelled ships in operation and on order now total 876. 104 new LNG-fuelled ships entered operation during 2022, representing a 41% growth within the sailing fleet.
AFI figures show methanol is the second-most popular alternative fuel choice, with 35 ships ordered, bringing the total count to 82 ships.
Eighteen ships capable of running on hydrogen fuel were ordered, ranging from small crew transfer vessels for the offshore wind industry, which are built to operate fully on hydrogen, to large cruise vessels installing hydrogen-powered fuel cells that cover a smaller portion of the energy demand on board.
“A diverse portfolio of LNG-fuelled ships was delivered in 2022, with large crude oil tankers in the lead and container ships in second place,” says DNV Maritime Advisory principal consultant Martin Wold. “Far from all are currently operating fully on LNG fuel but there are geographical pockets where LNG is still competitively priced and being bunkered regularly. The underlying growth for LNG fuel is very strong and the market will likely return with a boom at some point, with bunkered volumes expected to triple within a very short time span.”
Mr Wold adds, “Looking ahead, we expect 2023 to turn out similarly to 2022 in terms of newbuild orders for alternative fuels. The orders will likely materialise across somewhat different ship types and sizes compared with last year, moving with the newbuild market in general.”
DNV says similar to last year, most ships ordered with alternative fuels in 2023 are expected to be LNG dual fuel. “The elevated price levels for natural gas will continue to delay the widespread adoption of LNG as fuel in the marine industry, however from a big-picture perspective, delivery times for newbuilds aligns well with when global gas and LNG prices are expected to cool down,” a statement accompanying AFI 2022 figures says.
According to Mr Wold’s analysis, orders for methanol dual fuel vessels are also likely to continue, and possibly grow. Compared with LNG, methanol fuel systems are less costly and easier both for the yard to fit – in particular on smaller vessels – and for the owners to operate. 2022 was the year in which methanol established itself as an alternative to LNG with engine makers reporting record high interest for methanol capable engines.
He concludes, “Concerns around sourcing and the scalability of green methanol in the short to medium term will remain the slowing factor here. Whereas competition will be between conventional fuels, LNG and methanol in 2023, we expect to see a further positive trend for ordering hydrogen-fuelled ships and expect to add the first officially confirmed ammonia-fuelled ship to our AFI database this year.”
LNG has rapidly gained momentum within the container shipping market over the last two years – driven in part by the prospect to switch to bio or synthetic LNG.
GTT head of business development Alexandre Tocatlian says, “It has accelerated in 2021 and 2022, with other big owners and operators following the pioneer CMA CGM. We have players like Seaspan and ZIM ordering LNG ships, while giant MSC switched more recently and decided to have LNG as fuel for almost the whole newbuilding fleet. This trend has spread to many more owners and operators than before, and it helps support the rest of the market.”
The growth of LNG as a fuel within the container ship sector is clearly shown, with a market share of 54% in 2022, more than doubling the 26% market share of 2021. Just on the GTT side, in 2021, there were 27 orders, shooting up to 42 box ship LNG orders in 2022.
Previously, a mix of the lower environmental impact and low price were driving factors for LNG, but in 2022, due to extremely high costs, this was not such an advantage. But as Mr Tocatlian points out, “Owners should stop focusing on the 2022 LNG spot price, which is the result of a shock on the market and need to look at the long term – their vessels will be delivered in three years and be used until 2050. What keeps LNG interesting in the long term is its decarbonation pathway, with progressive and realistic incorporation of bio and e-LNG in the future.”
He points out that there is an increasing amount of bioLNG production.
GTT has recently spent time ensuring its LNG tanks help future-proof ships by providing the flexibility to accommodate future fuels later.
Ammonia- and methanol-ready
Mr Tocatlian says, “We’ve been investigating and developing ammonia solutions for more than two years, to improve ships that wish to use this fuel at a future date and be ammonia-ready. It is difficult and there are a lot of challenges; there is a major safety issue in case of leak, a lack of mature engines and when you look at the tanks, ammonia is a challenge. Our system is made of stainless steel which is compatible with ammonia, but we do not see this coming soon.”
GTT has several orders with ammonia-ready notations.
If the ship is converted to methanol at a later stage, the simplest option would be to remove GTT tanks. Still, it does not make much sense to convert from LNG to methanol, as bioLNG and synthetic LNG have better and more affordable decarbonation properties.
GTT has also launched a recent development that boosts the tank’s thermal efficiency. Instead of losing cold power when vaporising the LNG before the engine, this cold energy is used to recondense the natural boil-off gas. “It is a simple way of handling boil off gas, increases flexibility and is quite a cheap solution,” says Mr Tocatlian. The company received its first order last year and it now has 10 orders for container ships.
Elsewhere, TGE Marine Gas Engineering has received an order from Chinese shipbuilding group China Merchants Heavy Industry for the delivery of eight fuel gas systems and multi-fuel gas tanks to be installed on the new Aurora class of Oslo-based shipowner Höegh Autoliners.
The Aurora-class vessels will be the largest and most environmentally friendly car carriers ever built, with DNV’s ammonia- and methanol-ready notation for the installed tanks. They are the first in the PCTC segment capable of being converted to operate on zero-carbon ammonia with a moderate future investment.
TGE Marine senior sales manager Dieter Hilmes tells CST, “Our multi-fuel gas tanks can receive LNG, ammonia and methanol. This concept could be transferred to container ships.”
“We needed to change the tank material, as for ammonia-ready, you need stainless steel. This works with methanol too. They can use the same tank containment system, meaning there is no need to replace the tanks. They are very heavy, and it is almost impossible to replace tanks later in the ship. The owner is flexible; when ammonia main engines are available, they can retrofit.”
The contract also shows another new TGE Marine development – its recondenser system, an innovative concept for handling the boil-off gas.
Mr Hilmes says, “For engines requiring high fuel gas supply pressure of 300 bar, compressing the boil-off gas to this pressure is extremely challenging and expensive.”
“Such high-pressure compressors also come with high opex costs. But this recondenser is a smart way to handle boil-off gas. The boil-off gas is compressed to a significantly lower pressure and and it uses the boil-off gas to serve the main engine.”
TGE Marine’s innovative concept has minimal opex costs and the whole fuel gas systems is supporting the increase of ship efficiency and the reduction of greenhouse gas emissions.
TGE Marine is looking at retrofit solutions for vessels using LNG as fuel, to ammonia.
“We are developing our own ammonia fuel gas supply system and so we are looking for clients who would be interested in being one of the earlier movers.
As well as ammonia and methanol, Mr Hilmes highlights how bio and synthetic LNG (SNG) can be used on LNG engines and systems without any modification on the fuel gas system. “At the moment bio/synthetic LNG is very expensive but with the industry ramping up, it might become cheaper and of more interest for ship operators.”
Another potential option to support the pathway to decarbonise the marine industry can be onboard carbon capture. Mr Hilmes says, “TGE Marine is the leading company in CO2 ship transport supporting CCS logistics. TGE Marine is ready to provide CO2 cargo systems as well as liquefaction systems.
TGE Marine has worked on some of the leading LNG-fuelled vessels within the container sector.
The German-headquartered company was involved in the first LNG retrofit in the box ship sector. In 2017, Wes Amelie, now named ElbBlue, was retrofitted with a dual-fuel engine made by MAN Energy Solutions to operate on LNG. TGE Marine provided the fuel gas tank and LNG fuel gas system for the project. In September 2021, in a world-first for the marine industry, Unifeeder-operated ElbBlue was fuelled with SNG for a trial voyage.
Elsewhere, the Liberian Registry has pursued participation in joint industry projects since 2016 with a focus on optimisation, application of new technologies, and use of alternative fuels as part of its support to decarbonise international shipping. Simultaneously, it is also helped to develop new rules and regulations for international shipping through IMO. This includes the development of the IGF Code that entered into force 1 January 2017 and mainly covers LNG as fuel.
Liberian Registry senior vice president, commercial, head of LNG and alternative fuels Dallas Smith says, “LNG has generally been considered a transitional fuel and not a long-term zero-emissions fuel. However, IMO are currently developing guidelines for lifecycle assessment of fuels based on a well-to-wake concept, and this could potentially lead to LNG, if extracted, processed, refined, transported and distributed using renewable energy, to become a long-term fuel.
Long-term look
“If combined with onboard carbon capture technology, LNG as fuel could reach net zero-emissions fuel, that would also be a viable option for the container ship sector. The Liberian Registry has the deepest draft dual-fuelled LNG vessels on the water today. Many of these vessels are container ships with more expected to be delivered next year.”
Looking to the future, Mr Smith singles out how LNG could have a long-term future. “If IMO will allow the well-to-wake concept together with onboard carbon capture technology to be applied to international shipping, it could be realistic for LNG as fuel to become one of the long-term solutions for the container ship sector. LNG is the most ’shovel ready’ alternative fuel and will be a huge player now and in the future. With IMO looking at well-to-wake, LNG could be around long past 2050.”
The Liberian Registry has been reviewing fuel designs for many alternatives such as ammonia, hydrogen, methanol and biofuels. Mr Smith says these fuels will be players in the container ship market in the future.
Liberian Registry executive vice president innovation and regulatory affairs Thomas Klenum says, “In our pursuit to decarbonise international shipping, it is extremely important to consider the most important operational assets on board a vessel: the seafarers. Whether we are considering alternative fuels, innovation, or new technologies, it is imperative to consider the human element and how to reduce the risks to seafarers. For example, ammonia as an alternative fuel is extremely toxic and the hazards and risks to the seafarers needs to be carefully considered from bunkering, storage, fuel supply systems. The seafarers need the necessary education, qualifications and training in conducting their duties and responsibilities on board the vessels safely and reliably. Technically, we will continue to explore innovations and further expand the technology to ensure these fuel sources can be economically viable and implemented safely.”
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