A leading gas carrier operator’s ambitious engine retrofit project signals a shift towards LPG dual-fuel propulsion
BW Gemini sailed into history in November as the world’s first very large gas carrier (VLGC) to be propelled by a two-stroke LPG dual-fuel engine. Departing from China for its almost 11,000-nautical mile transpacific voyage to load cargo at Enterprise Port in Houston after its retrofit at the Yiu Lian Dockyards Ltd, BW Gemini is part of a pioneering conversion programme undertaken by Oslo-listed BW LPG. Under the programme, BW LPG will retrofit 12 VLGCs with LPG dual-fuel propulsion by the end of 2021.
Built in 2015, BW Gemini’s two-stroke, low-speed MAN B&W 6G60ME-C9.2 main engine was converted to an MAN B&W 6G60ME- LGIP dual-fuel prime mover capable of operating on fuel oil and liquefied petroleum gas (LPG).
As part of the conversion, BW Gemini was fitted with two additional LPG fuel deck tanks, so as not to compromise the cargo capacity on board, and a high-pressure liquid fuel system for the modified MAN Energy Solutions’ two-stroke engine. BW LPG’s 84,195-m3 VLGC BW Leo is due to undergo conversion next.
Joining BW LPG and Yiu Lian Dockyards on the forward-leaning project were MAN PrimeServ – MAN Energy Solutions’ service and after-sales unit – Wärtsilä Gas Solutions, Isle of Man flag and DNV-GL.
“BW LPG’s smart decision will give it the early mover advantage”
Following its conversion, BW Gemini was certified ‘GF-LPG’ – a new dedicated LPG notation developed by DNV GL specifically as a result of its work on the project. At Marintec 2019, DNV GL announced the release of new class rules and class notations for the LPG market in anticipation of an increased uptake of the fuel as shipping transitions to low-carbon intensive fuels.
For BW LPG executive vice president technical and operations LPG Pontus Berg, the choice of converting the existing fleet was straightforward. “Retrofitting allows us to minimise our carbon footprint – the process emits up to 97% less CO2 compared to a newbuilding construction” and does not increase the global fleet with capacity that is not required, said Mr Berg.
Business case by the numbers
When examining the maths behind the LPG engine conversions, the economic and environmental cases both become even clearer. “As LPG propulsion engine (technology) reduces fuel consumption by 10%, SOx emissions by 99%, particulate matter emissions by 90%, CO2 emissions by 15% and NOx emissions by 10% when compared with the conventional compliant fuel,” said Drewry senior research analyst Ishan Dafaria, “it is a good alternative marine fuel for the 2030 IMO target for reducing emissions by 30% from 2008 levels.”
In his analysis, Mr Dafaria noted: “LPG as a marine fuel for VLGCs offers multiple efficiency gains. Aiming to capitalise on these gains, BW LPG expects output efficiency to improve by as much as 11% for BW Gemini over the use of LSFO.”
Mr Dafaria pointed out that using LPG as a fuel provides easy storage and faster refuelling, and decreases the turnaround time at ports. “LPG as a marine fuel is also future-proof and cost-efficient,” he said. “In addition to savings from reduced fuel consumption, the vessel is also protected from price sensitivity with dual-fuel flexibility.”
While the capex of LPG propulsion retrofitting – more than US$9M per vessel – is significantly higher than that of scrubber retrofits (between US$2M and US$3M per vessel), opex costs in the form of lower fuel consumption are attractive, pointed out Mr Dafaria. “Based on calculations by Drewry, there should be at least a 15% reduction in fuel consumption as compared with high-sulphur fuel oil and 12% reduction in fuel consumption as compared to low-sulphur fuel oil over the next five years,” he said.
“Every time you convert one vessel, you save the world 3,000 tonnes of CO2 emissions”
While LPG is the best bet in terms of fuel consumption, it loses out on fuel costs, said Mr Dafaria. “HSFO leads the tally by only 4% as compared with LPG and a whopping 32% when compared with compliant low-sulphur fuel. This makes LPG an ideal candidate among the three options, which is further affirmed by the earnings per day commanded by each vessel type. Based on our estimations and calculations, an LPG-fuelled vessel should overtake an HSFO-fuelled vessel by 2023,” he said.
In concluding his analysis, Mr Dafaria felt BW LPG would have a first-mover advantage. “According to Drewry’s assumptions of earnings and fuel consumption, it is noteworthy that when taking into account the US$9M upfront capital expenditure, the payback period for a newbuild vessel costing close to US$80M increases by about eight months. This presents a lucrative opportunity, as any earnings beyond that period would enhance the cash flows.
“Also, it would appear that it makes both economic and environmental sense to switch to dual-fuel LPG engines, mainly for young or new mid- to large-sized vessels. BW LPG’s smart decision will give it the early mover advantage which may last for a while, as the other vessels will start making their way into the market at least a year after BW LPG.”
A shift in the market
BW LPG’s ambitious programme is part of an overall shift in the market from oil fuels to gas fuels, according to MAN PrimeServ head of sales, retrofit projects Klaus Dahmcke Rasmussen.
Speaking at Riviera Maritime Media’s LPG: the green pathway demystified webinar, Mr Rasmussen noted that of the roughly 70 newbuilding LPG carriers larger than 2,000 m3, 55 will be built with LPG fuel engines. Among these are three 93,000-m3 LPG carriers ordered in November by Petredec Holdings (Eastern) PTE Ltd from China’s Jiangnan Shipyard that will each be equipped with MAN B&W 6G60ME-LGIP dual-fuel engines.
Mr Rasmussen said there is also potential for conversions well beyond the 12 LPG carriers being retrofitted for BW. “We also know that there’s another 100 of the same vessel type that have been delivered since June 2014. Those would also be potential candidates for future conversions.”
Based an analysis in his presentation, Mr Rasmussen estimates each conversion could yield significant CO2 emissions reductions. “Assuming a vessel like that consumes between 6,500 to 7,500 tonnes of fuel per year,” Mr Rasmussen said, “every time you convert one vessel, you save the world 3,000 tonnes of CO2 emissions.”
From a fueling standpoint, LPG is widely available and competitive with both traditional bunker fuels and alternative fuels when compared on a dollar per gigajoule basis, contended Mr Rasmussen. He said normally LPG follows HFO in terms of pricing, “but recently, we have actually seen that it has almost dropped to the same level as LNG. So, it is a competitive fuel, and it’s a fuel you can get pretty much everywhere.”
Using LPG as fuel works well for LPG carriers that transport propane and butane as cargo, but
does it make sense for other vessel types? Mr Rasmussen believes it does. “We see especially within crude oil and product tankers that there’s actually quite a number of vessels that could be converted,” he said. “The reason these vessels are candidates is that they already have established ex zones on their deck so they’re familiar with operating flammable fuels and explosive fuels.” He said there are more than 300 tankers that have the same engines as those in BW’s VLGCs, about 200 of which were delivered after 2016.
For newbuildings, he sees panamax and aframax size carriers as promising and LR1 and LR2 products tankers as possible conversion opportunities.
Working with LPG for the last 25 years – including time at sea as a marine engineer on an LPG carrier – Mr Rasmussen believes the environmental benefits of LPG as a marine fuel are too compelling to ignore. “Every time you build new or convert, you save the world for 3,000 tonnes of CO2 per year per vessel. For 150 LPG-fuelled vessels, you develop a 1M tonne LPG market and save the world roughly a half million tonnes of CO2 emissions every year.”
New dual-fuel LPG engine facility
With growing interest in LPG as an alternative fuel, enginebuilders are gearing up to handle an uptick in demand for two-stroke engines. Hyundai Heavy Industries Group is establishing a production facility to manufacture dual-fuel engines for the market.
A licensee of MAN Energy Solutions, the engine and machinery division of South Korea’s Hyundai Heavy Industries (HHI) has recently built a new facility to assemble and test parts of the two-stroke LPG dual-fuel engine (ME-LGIP). The engine and machinery division began mass production, starting with Hyundai Mipo Shipbuilding’s 7,159-kW engine and the installation of the LPG gas supply unit for gas operation.
At the end of October, HHI applied a newly developed shaft generator to a 22,371 kW engine. In combination with the LPG dual-fuel engine, the shaft generator produces electricity from the shaft, reducing fuel costs compared to separate engines for power generation. HHI said the product is designed to be integrated into the front of the engine, reducing the space requirements by more than 40% compared to existing products.