Pioneering programme hails shift to LPG as fuel

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.”