LNG as a marine fuel offers plenty of opportunities, but its take-up among OSV operators has been slow. Mark Pointon looks at why this is and what can be done to expedite its use
With emissions regulation focusing on exhaust gases such as SOx and NOx, there is a growing body of opinion that believes compliance can best be achieved by using a fuel that does not contain the chemicals that produce such components during combustion. This is good news for LNG, the future of which as a marine fuel in the OSV sector now seems quite positive.
There are however clouds on the horizon however, notably the cost of retrofitting an LNG system. Effective 1 January 2020, the global sulphur cap will be reduced from 3.5% to 0.5%. This, coupled with the 0.1% limit for SOx and particulate matter that has been in force since 2015 in emission control areas (EMA), has focused the minds of shipowners on finding a solution that best fits their circumstances.
In the Offshore Oil and Gas sector, some companies have invested in LNG/MGO dual-fuel technology. The world’s first LNG dual-fuelled PSV was Eidesvik’s Viking Energy, chartered by StatOil in April 2003 for delivering supplies to oil and gas platforms in the North Sea from its home port of Haugesund, Norway. It was powered by Wärtsilä 6L32DF dual-fuel engines.
In recent years, notable additions to the LNG dual-fuelled fleet have been made by Siem Offshore and Harvey Gulf International, for example, Siem Symphony, Siem Pride, Siem Thiima, Harvey Liberty, Harvey Energy, Harvey Power and Harvey Freedom. These vessels are classed with DNV-GL and ABS respectively with “Gas Fuelled” and “ENVIRO+ Green Passport” notations.
“The Siem Thiima design offers a combination of environmentally-friendly operation, while having its focus on improving fuel economy,” explained Charlie Baker, operations manager with Siem Offshore Australia, which is operating the Siem Thiima with Woodside Energy. He emphasised the fact that “Significant efforts have been made to assure a tailored combination of LNG operation and optimal hull shape for future cost benefit in the demanding OSV market.”
From discussions with other shipowners and fellow marine professionals, there is a perceived wisdom that goes along the lines of: The challenges presented in the adoption of LNG as a marine fuel can be overcome more easily with a newbuild vessel. When it comes to retrofitting existing tonnage, the perception is that it is too complex and too expensive.
A deeper look at the issues involved with the design, building and operation of LNG-fuelled OSVs supports this line of thought.
The main challenges
The challenges of adopting and implementing LNG fuel in the Offshore Oil and Gas sector are numerous, but broadly fall into four categories: technical; regulatory; operational; and financial.
In terms of retrofits, two of these categories are most troublesome, financial and technical. For many vessels in this sector, their existing engines/generators are likely not capable of dual-fuel operation, potentially representing a significant capex investment.
“The challenges presented in the adoption of LNG as a marine fuel can be overcome more easily with a newbuild vessel. When it comes to retrofitting existing tonnage, the perception is that it is too complex and too expensive”
Dual-fuel engines manufactured by companies such as Wärtsilä, Rolls-Royce and MAN, run on either gas or diesel fuel. In gas mode, the engines run on the Otto-Cycle and in diesel mode they run on the Diesel-Cycle. Dual-fuel engines comply with IMO Tier II regulations, when operating in their liquid fuel oil mode and with IMO Tier III regulations when operating in gas mode.
From a regulatory perspective, The International Code of Safety for Ships using Gases or other Low-Flashpoint Fuels (IGF Code) is the mandatory IMO instrument that applies to all gaseous and other low-flashpoint fuels in shipping, and to all gas-powered ships other than gas carriers. The IGF Code was adopted by the IMO in June 2015 (MSC.391) and came into force on 1 January 2017, establishing an international regulatory basis for the design and construction of LNG-fuelled ships.
The most common rules and guidelines developed by classification societies are:
• DNV-GL Rules for Gas Fuelled Ship Installations
• American Bureau of Shipping (ABS) Guide for Propulsion and Auxiliary Systems for Gas Fuelled Ships
• Bureau Veritas Safety Rules for Gas-Fuelled Engine Installations in Ships
• Germanischer Lloyd (GL) Guidelines for Gas as Ship Fuel
These standards and rules specify arrangements for the installation of engines, equipment and systems for gas-fuelled vessels. The main installations defined are the inherently gas-safe machinery space, the emergency shutdown, protected machinery space and the gas fuel storage tanks.
Examples of the complexity involved in achieving compliance with these rules include a requirement for double wall, air-locked compartments that are equipped with ventilation and gas detection systems. When combined with cold box encasement, these will occupy approximately three times as much space as a conventional marine gas oil tank, containing the same energy-equivalent amount of fuel.
LNG fuel tanks that are fitted inside enclosed spaces require protection from shipside and bottom, external fire and mechanical impact.
To aid protection in the event of a collision or grounding, the tank(s) must be as close to the centre of the vessel as possible and be the lesser of B2/5 and 11.5 m from the ship’s side, and the lesser of B/15 and 2 m from the bottom of the ship. Equally importantly, they must not be placed closer than 760 mm from the shell plating.
In a newbuild scenario, this can be factored in at the design stage, to minimise costs and optimise the utilisation of space.
The application of the IGF code requirements and class rules in a retrofit scenario will add more capex investment to the project. The cost of re-designing the vessel’s structure and carrying out the construction work in dock would be significant. To give an indication of the cost, research indicates that on a newbuild vessel, the cost of compliance with the IGF code element can add 20% or more to the build cost.
The safety concern
Another major challenge that must be addressed in the design or redesign of LNG dual-fuelled vessels involves the safety aspect. According to DNV-GL in its document LNG as ship fuel - A focus on the current and future use of LNG as fuel in shipping, the main safety challenges revolve around the fact that there are significant differences between LNG as a fuel source and existing hydrocarbon fuel sources, such as MGO.
Natural gas, which is essentially methane, has to be lowered to a temperature of -163°C in order to change its state to a liquid. In the event of spillage this can lead to catastrophic failures in structures that are not designed to be subjected to these low cryogenic temperatures and in the case of human exposure, severe frost burn injuries can occur.
Consequently, this introduces the need for the suitable LNG safety measures to minimise these inherent risks.
Further, because LNG is a relatively new type of marine fuel, particularly in the Offshore Oil and Gas sector, the crews who will be operating the vessels are inexperienced in its use. Part D of the IGF Code deals with this issue and places the responsibility onto the shipowning company to document that its personnel have acquired and maintained the necessary knowledge to ensure safe operation according to the standards established in the code.
The training outcomes have been included in Chapter V of the STCW code and training is generally presented in a Basic or Advanced course format, depending on the participant’s position on the vessel. The entire operational crew requires training in gas-related safety, operation and maintenance prior to the commencement of work on board. Crew members with a direct responsibility for the operation of fuel-related equipment on board, such as the master, chief officer, chief and second engineer receive specialist training that includes information on the chemistry and physical properties of LNG, the safe operation and monitoring of an LNG fuel system, the associated health, safety and environmental precautions required and how to perform and monitor LNG bunkering operations.
“Discussions with an Australian fuel distributor highlighted the fact that the only marine diesel available in Australia was Diesel 10, which had a maximum sulphur content of 10 mg/kg”
Sources in a number of companies have indicated that the overall cost of this training in the current economic climate, where there is still downward pressure on rates and an emphasis on cost control/efficiencies, is proving difficult to justify without the surety of a long-term charter for a vessel.
The MARPOL Annex V1-driven changes are going to occur in 2020. Unfortunately, even this late in the day, there are unanswered questions and unknown variables still in the equation.
Owing to uncertainty in the supply chain for LNG globally and because of the widely variable costs of LNG marine fuel in different regions, it is extremely difficult to evaluate the case for LNG/dual-fuel options against other emission requirement options.
A number of operating companies have indicated that they were operating their vessels with “Clean Class” notations and that they were already compliant. Discussions with a source at VIVA Energy, an Australian fuel distributor for Shell, highlighted the fact that the only marine diesel available in Australia was Diesel 10, which had a maximum sulphur content of 10 mg/kg.
As a result of this supply chain uncertainty and the issues discussed above, many OSV operators that have not invested in “Clean Class” technologies to date are taking the view that, in the short term, it is easier to justify a business case for the use of low sulphur fuels and the installation of catalytic converters and scrubber systems across a fleet.
Others who are still considering their options are working with Classification Societies like DNV-GL and ABS, which offer services in this area.
On a positive note, no one is discounting the LNG dual-fuel option completely. Feedback from multiple companies indicates that when the supply chain is assured, the market is more stable, and clients are offering longer-term charters, we will probably see an increase in the number of LNG-fuelled offshore vessels being built.