As it is revealed that a quarter of the tonnage on the global cruise fleet orderbook is LNG powered, major players open up about their gas strategies. Rebecca Moore reported from Seatrade Cruise Global
More and more cruise ship operators are turning to the use of liquefied natural gas (LNG) to fuel their future fleets.
That was the message at a special forum focusing on the use of alternative fuels at the recent Seatrade Cruise Global in the USA.
Of the 97 cruise ships on order on the global fleet orderbook, 13 are due to be dual-fuelled by LNG. Scrape the surface and it becomes apparent that the figure is more impressive than it sounds. Paolo Moretti, RINA marine and transport chief commercial officer, told the audience: “When you make the comparison using gross tonnage, we are actually talking about a quarter of these vessels being fuelled by LNG. The number 13 out of 97 does not sound much, but with the gross tonnage ratio one in four is dual-fuelled.” This is impressive, given – as Mr Moretti said – “the novelty of the technology.”
A lot is going on behind the scenes to develop LNG as a marine fuel for the cruise sector. Aziz Bamik, general manager of GTT North America, explained that the company was working on a number of strategies to achieve this, including developing the network infrastructure to make sure that LNG can become a commodity. It is doing this by providing technology. It has been involved in the first LNG bunker barge owned by container shipowner TOTE, developing a standard bunkering barge to “drastically reduce the logistical cost” and increase compatibility between bunker facilities and cruise ships.
The company is training personnel to use the TOTE barge, including using a bunker barge simulator.
Mr Bamik said that, furthermore, GTT’s LNG containment tank technology optimised deck space. The company carried out a generic cruise ship study that permitted more cabins by allowing space to be taken from a deck. This was deck four, in the example he gave.
Shell Americas team lead for LNG business development John Grubic explained why LNG was the most likely alternative fuel to be taken up by the cruise sector. “It will be some time before hydrogen develops. We do see some opportunities within biofuels, but they will go to the highest priced market. They command a much higher price in other sectors than marine. The other fuels may not be available or acceptable to the shipping market so we put a lot of our emphasis on LNG.”
He said that as new environmental legislation emerged, the “future proof aspect of LNG is one of its core benefits.”
Shell has been working hard to make LNG available to the cruise market. “We are working with Carnival Corp to help with early implementation and the accessibility of LNG as a bunkering fuel,” Mr Grubic explained. It is already a global market and there is a lot of infrastructure already present to help make the fuel available in the marine market.
He said that for the cruise industry, a clear focus is on The Netherlands, the Middle East, Singapore, and the USA, where bunkering is available.
“We have a liquefaction plant in Savannah, which is the closest large scale plant to Florida, and we see a great opportunity to leverage that to bring LNG to the cruise market. We are also working in the Western Mediterranean, in places such as Barcelona, so providing this market and other main cruise markets is a real possibility. We see opportunities to provide LNG to the market in north Europe, through Rotterdam, as well.”
He emphasised: “Carnival is a really important relationship for us that we want to see evolve and develop. We are keen to make LNG a widely acceptable and available fuel in this market. The journey has just started but the future is bright.”
Of course, all eyes are on Carnival as it pioneers LNG in the cruise sector. Tom Strang, Carnival’s senior vice president of maritime affairs, spoke about Carnival’s quest to make its ships more efficient. This covers a wide variety of initiatives, including the use of LNG. Mr Strang said: “We have invested a lot of money, technology and intellectual property and effort in making our new ships much more efficient. Saving fuel comes directly off the bottom line, which is a big incentive for us. Fuel prices are low at the moment, of course, but prices are crawling back up.”
He said that Carnival used around 32 million tonnes of fuel a year. While the pay-back on the investment in fuel saving was longer when fuel prices were lower, it was still worth doing. Indeed in the last three years Carnival Corp has spent over US$200 million on energy saving products across its group. These include:
Speaking about the 2020 regulation of sulphur emissions, Mr Strang said: “We have invested heavily in gas exhaust emission systems, and we have put in a lot of effort with LNG.”
Explaining Carnival’s decision to use scrubbers for its existing fleet rather than LNG, he said: “We looked at retrofitting for LNG but it is really not feasible because of the nature of the vessels we are operating. We therefore took a decision to look at scrubbers. There are seven ships – LNG fuelled – on order, and 101 ships in the fleet and we needed to look at the most efficient way to operate continuously through to the future. The vessels in our fleet range from less than a year old to 20 years.
“Personally, I believe LNG is the best fuel for the future at the moment, but we have a large existing fleet we need to deal with.”
Roro and container ship operator TOTE is helping to drive the way forward for the maritime industry to use LNG as fuel. Peter Keller, executive vice president, spoke at Seatrade Cruise Global about TOTE’s experience of using LNG. Its two Marlin class vessels are the first container ships in the world to operate on LNG. It is also converting two roro ships in its existing fleet to run on the fuel.
Mr Keller said: “LNG is the most viable fuel right now. Scrubbers are a viable alternative, too, but we also understand that in the longer term the environmental community will probably start to ask questions about how scrubbers operate. That will not be a happy day. We believe that the most viable alternative is LNG. I do not believe that it is great for conversions, although we are doing this ourselves, but it is certainly an option for newbuilds, especially if you look ahead to the next 20 or 30 years.”
“Personally I believe LNG is the best fuel for the future at the moment, but we have a large existing fleet we need to deal with.” Tom Strang (Carnival)
He warned: “The clock is ticking – 2020 is coming. We may not like it, but it is coming. In 2020 we will all have to deal with the global sulphur cap, and the likelihood of other regulatory requirements over and above that sulphur cap is right there, together with death and taxes. It is not arguable in my view.”
One of the reasons that TOTE chose LNG, according to Mr Keller, was that most of the costs associated with LNG are fixed, unlike the volatility of the price of other fuels. “LNG is only working against the volatility of natural gas prices. As a shipowner, that helps me understand what my costs going are, going forward. That was a huge issue for us when we commissioned the world-first LNG powered container ships.”
In order to support its LNG-powered ships, TOTE has inked long-term procurement contracts. It currently has under construction a liquefaction plant in Florida and one in Tacoma, Washington state. Mr Keller explained: “We have learned to transfer LNG in multiple ways to vessels, through truck transfer. We are building a barge, and we have a cryogenic pipeline to our berth in Tacoma.
“The plant and barge are not ready so we are bunkering off trucks.”
TOTE has developed a methodology for simultaneous operations, loading 50 trailer loads of LNG a week. Twenty-five trucks can deliver the LNG in five hours. Crash barriers are set up to create an exclusion area in TOTE’s terminal so that the ships can be bunkered. TOTE worked with the coastguard to develop this solution.
TOTE’s barge is near completion, with gas trials slated to take place in the middle of this year.
TOTE is a member of multi sector industry coalition SEA\LNG. “We have learned that this is a broad process.” Mr Keller explained that it was essential to have control of the entire chain of activity, from purchasing molecules to the ship. SEA\LNG includes molecule producers, class societies, shipping lines, middlemen and others. “We all need to work together to break the commercial barriers that we know exist,” Mr Keller emphasised.
“There are a number of players we have to address. It is a very immature market. There is inaccurate information out there. We need to break down those barriers and move on, by collaborating from molecules to propeller. We need to show what we do as TOTE, and communicate both internally and with the outside world. We need to do this in a meaningful way, so that what we say is not seen as a market pitch or a sales pitch, but something to drive this exercise forward,” he summed up.
Mr Grubic drove home the point that collaboration was critical. He said: “LNG requires a series of commitments from customers – shipowners – in terms of new vessels and where to locate them. And we, Shell, need to marry up investments to match that.” He said that challenges could be overcome with longer-term commitments. “The notion that you can pitch up in every port and have fuel available is not reality, so true collaboration is needed to deal with this.”
He added: “A big part of the costs is the cost of the infrastructure that is needed to bring LNG to market. But we have seen significant reductions as we achieve scale and standardisation, so that will be dramatically reduced. We believe that LNG is affordable in the long term compared with alternatives. We would be willing to underwrite contracts to provide reassurances about affordability.”