Assessing the risk factors for an LNG retrofit
Shell’s LNG bunkering vessel Cagarin Prospect Photo: Shell
A range of technical and commercial factors must be considered to determine whether an LNG retrofit is worth the investment given the need to upgrade the fleet in line with new emissions restrictions.
Doing nothing is not a realistic option for shipowners, but it would also be foolhardy to throw money at the problem without knowledge of the optimal alternative fuel that can secure their fleets for the long haul and ensure payback under a green shipping regime.
A multitude of fuel options are now on the industry’s radar screen to replace more pollutive fossil fuels, including low-carbon liquefied natural gas (LNG), as well as carbon-neutral fuels such as ammonia, methanol and hydrogen.
These alternative fuels are all at different stages of maturity in terms of availability, cost and performance, with carbon-neutral fuels mostly still at a relatively early stage of development.
While the number of LNG-fuelled ships is on the rise, it still accounts for only a fraction of the global fleet - with 199 such vessels presently on the water - and there have been few LNG retrofits to date as shipowners hedge their bets on the best alternative fuel option.
Wärtsilä’s Head of Marine Sales (Norway), Cato Esperø, acknowledges that LNG retrofits are expensive, but points out that owners willing to make the investment now will be in a better position to migrate to other alternative fuels as they become available.
“It is important that owners secure fuel flexibility to fit their operational profile, in the short, mid and long term. For most owners, a dual fuel LNG set-up reduces business risk and provides flexibility with regards to availability of new fuels during the transition.”
Planning for fuel flexibility will be a key consideration in upgrading the fleet to ensure it remains competitive as regulations tighten in future and carbon-neutral fuels become available, given an average vessel lifetime of around 20 years.
A dual-fuel LNG solution can be easily adapted in future for the use of low-carbon drop-in fuels such as bio-LNG and synthetic LNG.
In determining which fuel is most economically viable, shipowners must consider the fuel price, availability and cost of implementing it onboard vessels through retrofits to adapt engine systems and provide onboard storage.
Wärtsilä is a pioneer in the development of sustainable engine systems as it seeks to achieve zero-emissions shipping, but Esperø says: “Until we succeed, we believe LNG retrofits represent the best, most viable option.”
There has been concern over methane slip from gas-fuelled engines, whereby unburned methane gas can escape at the exhaust into the atmosphere, but this type of leakage has been drastically reduced with modern high-pressure engines.
Gas is a much cleaner fuel with excellent combustion and no need for fuel heating, offering technical benefits such as no sludge and less wear-and-tear on engine parts, thereby cutting maintenance costs.
Furthermore, LNG has sufficient energy content (or calorific value) to power vessels, is technically feasible to carry onboard ships, relatively affordable and widely available, according to Lianghui Xia, managing director of UK-based ship repair and retrofitting group Newport Shipping.
Consequently, DNV sees a significant part of the global fleet adopting LNG as fuel towards 2040, with carbon-neutral fuels gaining ground around mid-century.
But Xia says collective action is needed to facilitate the shift to LNG through measures such as tax incentives for vessel conversions, wider bunkering access, and lower production and delivery costs for the fuel from energy companies.