Backed by a major charterer and VLGC owners, the use of LPG as a fuel is set to expand, with at least 31 VLGCs to be fitted with dual-fuel propulsion
Emerging as a ‘future fuel’ in dozens of gas carrier newbuilds and refits, liquefied petroleum gas (LPG) as a fuel could receive a further boost from Equinor’s climate roadmap to decarbonisation.
Launched in February, the Norwegian oil and gas producer’s climate roadmap aims to decarbonise shipping while ensuring a competitive and resilient business model, fit for long-term value creation and in line with the Paris Agreement. As part of its strategy, Equinor plans to introduce large-scale use of LPG as a fuel in 2021.
“As a producer and user of maritime fuel, Equinor has a good opportunity to help decarbonise shipping,” said Equinor executive vice president for marketing, midstream and processing Irene Rummelhoff. “From our position on the Norwegian continental shelf, we will develop new solutions contributing to substantial emissions reductions, together with the maritime industry in Norway and internationally,” she added.
About 6% of total greenhouse gas (GHG) emissions in Norway are generated by the maritime sector, while international shipping is responsible for 2.2% of CO2 emissions globally.
As a charterer, Equinor has around 175 vessels on contract at any one time. Aligning its goals with those of IMO and Norwegian authorities, Equinor’s aim is to cut its maritime emissions in Norway by 50% as compared with 2005 levels. By 2050, it plans to cut its global emissions by 50% as compared to 2008 levels.
As a supplier of fuel to the maritime sector, Equinor plans to ramp up its production and use of low-carbon fuels by 2030 and, by 2050, ‘strongly increase’ production and use of zero-emissions fuels.
Chartering LPG-fuelled vessels
When it comes to LPG, Equinor is already ‘walking the walk’. It is chartering two LPG dual-fuel very large gas carriers (VLGCs) that are under construction at China’s Jiangnan Shipbuilding (Group) Co, Ltd.
Brussels-listed shipowner Exmar said the first 86,000-m3 VLGC, Jiangnan H2667, will be delivered in Q2 2021, with Jiangnan H2668 to follow later in 2021. Exmar placed the first order for MAN B&W 6G60ME-LGIP (liquid gas injection-propane) engines in 2018.
“Unlike LNG, LPG contains no methane, eliminating the need to address methane slip”
Equinor has also agreed to charter three newbuild LPG-propelled 38,553-m3 gas carriers from Singapore-headquartered Eastern Pacific Shipping. Under construction at Hyundai Mipo Dockyard, the newbuild gas carriers will be delivered in 2022.
The deal aligns with Eastern Pacific Shipping’s Environmental, Social & Governance Policy, which calls for the use of alternative marine fuels to lower shipping’s carbon footprint. These gas carriers will “pave the way towards decarbonisation by emitting significantly lower GHG and will be IMO-compliant years ahead of schedule,” said the company.
With about a 14% market share of the world’s LPG VLGC fleet, Oslo-listed BW LPG has taken a different approach to using LPG as a fuel in its fleet. Instead of newbuilds, BW LPG is retrofitting 12 of its VLGCs with LPG-powered dual-fuel engines.
BW LPG placed its first retrofit orders for the MAN B&W ME-LGIP LPG-powered engine in 2018. The initial contract involved the retrofit of four MAN B&W 6G60ME-C9.2 HFO-burning engines to 6G60ME-C9.5-LGIP LPG-propelled dual-fuel engines. Now BW LPG plans to retrofit four vessels in 2020 and another eight in 2021. BW LPG estimates that it will spend US$40M in 2020 on capex upgrading its vessels and another US$72M in 2021.
Each of the vessels will be fitted with 1,800-m3 deck tanks that will be connected to the cargo system. The deck tanks will allow fuel to be carried that would otherwise be stored in the cargo tanks, enabling a return voyage between the US and China.
At Riviera Maritime Media’s LPG webinar, part of Marine Fuels Webinar Week, in July, BW LPG executive vice president technical and operations Pontus Berg said that retrofitting existing ships would yield substantial environmental and payback benefits.
“The construction of a new vessel generates about 70,000 tonnes of CO2, but taking a retrofit approach reduces this massively, down to about 2,000 tonnes,” said Mr Berg. “And while operating on LPG as opposed to fuel oil saves close to 5,000 tonnes of CO2 per year, the environmental payback for a newbuild is 15 years; for a retrofit that falls to less than six months,” he added.
He also made the point that LPG does not require as large an investment in infrastructure – such as bunkering facilities – in contrast to other, gaseous fuels.
As a widespread energy source, availability is high and LPG is easier to store and handle, compared with cryogenic gaseous fuels. The ability to use LPG cargo as a supplemental fuel source provides significant cost savings for LPGC owners or charterers, including reduced time and fees for fuel bunkering.
Fellow panellist MAN Energy Solutions promotion manager and business development dual-fuel engines Peter Kirkeby cited data showing 31 VLGCs were to be fitted with MAN B&W ME-LGIP engines, with options for another 12 newbuilds. He also said LPG “has begun to gain traction in other segments” besides LPG VLGCs. Mr Kirkeby also pointed out that unlike LNG as a fuel, LPG contains no methane, eliminating the need to address methane slip.
When compared to LNG, Mr Berg said, LPG is far more widely available and easier to handle. “LNG has a slightly higher energy content, but is not as readily available and has rather high capex and opex costs in comparison [to LPG],” he said.
Declared Mr Berg: “We see this as a medium- to long-term fuel, especially with Bio-LPG on the horizon.”
Joining Mr Berg and Mr Kirkeby on the panel, World LPG Association technical director Nikos Xydas pointed out in his presentation that all types of vessels could benefit from LPG as a fuel.
One of the world’s largest suppliers of LPG, Japan’s Astomos, is considering LPG-fuelled VLGC, before promoting LPG as marine fuel for other vessel types, such as car carriers, container ships and bulk carriers.
World’s biggest LPG terminal
While it is finding increasing use in shipping as a fuel, LPG is more widely used for cooking, heating, transport, refrigeration and power generation.
In the UK, for example, LPG is an important source of energy for households and commercial properties that are not connected to the UK’s natural gas grid network. Some 16%, or about 2M properties, are rural off-grid homes that rely on LPG, according to trade association UKLPG.
Demand for LPG is expected to grow as the UK’s off-grid businesses and homes transition from high-carbon fossil fuels to a low-carbon alternative, as part of the government’s Clean Growth Strategy.
In anticipation of increased LPG demand, UK LPG supplier Flogas Britain UK has begun the conversion of a former LNG facility into what will become the largest LPG storage terminal in the UK. Under £40M (US$50.4M) investment, the former National Grid LNG facility at Avonmouth, Bristol, will be converted to store 34,564 tonnes of LPG to supply commercial and residential customers in the UK.
The site will be operationally ready by H2 2022. The new Avonmouth facility will also be ‘bio-ready’ from the outset, capable of storing bioLPG, a chemically identical, renewable alternative to LPG.