LNG AS A MARINE FUEL by Ocean Dynamex

LNG MARKET AND ENVIRONMENTAL PERFORMANCE

How can the maritime industry power such floating giants, the global shipping fleet which enables a complex web of logistics, while eliminating its carbon footprint? Now that is the billion-dollar question for an industry which is responsible for the transport of almost everything that we use. At Ocean Dynamex, we investigate various solutions, and we question every gap to reach out a trajectory that would survive the test of time, economies of scale and compatibility with the future of opportunities. In this report, we provide an insight and foresight for the development of natural gas as marine fuel from the perspectives of environmental, economic and engineering performance. 

In search of our answer to this challenging inquiry, we asked four essential groups of questions and explored them in four parts:

• Is it rational to assume the security of natural gas supply at reasonable prices? What is the current and prospective status of natural gas market? How do the biogas and syngas industries influence the nature of this ecosystem?
• Can natural gas really solve the ship emission problem? What is the environmental performance of natural gas? What extent does the methane slip affect the ship emissions with high pressure diesel engines?
• Is it feasible to store, carry and refuel the liquified natural gas as marine fuel?
• Does natural gas also outperform in terms of life cycle inventory of waste and emissions? Does shipping play a significant role in the well-to-tank emission inventories?
• Is it really necessary to expect a broader network of LNG bunkering for implementing the solution? Once the natural gas is adopted by stakeholders, what would be the pathway where the natural gas evolves to?

Our research team has gathered the knowledge and data from multiple fields to deal with each part, and we illustrated our findings in a concise and comprehensive way to pave the way for improving the decision-making process of stakeholders.

This report comes with original content for the first time in the industry. You will find our LNG bunker price assessments, an approximation of LNG bunker prices, for delivery at certain regions. By this, we would like to improve the visibility into the cost of LNG fuel market and gain predictability. The investment decisions are well affected by the predictability of cost drivers, and therefore, LNG bunker prices is an important component of the analysis. We also created a list of LNG bunkering facilities around the world. For this, hundreds of documents and media releases have been scanned, every port with LNG bunkering trials is reported in the list. In addition to that, some potential new locations are also provided for further considerations.

Among many important results of this report, a number of key takeaways can be reported as follows:

• LNG as marine fuel has the technical characteristics to achieve the level of power generation for ship propulsion. Natural gas has much higher energy content, and it is super clean in terms of black carbon and particulate matters.
• Since LNG is a thin substance, the components of engine room are well maintained compared to fuel oil with thick and sludgy texture. It does not require pre-heating or filtering.
• LNG is very cheap fuel, usually remains below most fuel oil and diesel oil grades.
• By introduction of biomethane and synthetic methane, the environmental performance of natural gas is significantly improved (the well-to-tank).
• By utilizing high pressure two-stroke diesel cycle engines, the methane emission from LNG fuel is extremely low; there is no reason for causing notable amount of methane slip.
• Oil and gas industries invest in emission control through the extraction, production, gathering and transport stages in recent years. Governments and supra-national organizations (e.g. European Union) raise funds to assist the transformation of the oil and gas ecosystems.
• Instead of burning natural gas, it can also be used as an input for LNG fuel cell mechanism in which hydrogen fuel is generated from methane. By upcoming improvements and upgrades, LNG fuelled shipping fleet can be installed with LNG fuel cell units to replace auxiliary engines. Similar to solar panels, the cost and efficiency of fuel cell technology improves dramatically with more public interest and entrepreneurial activities in the marine energy space.