lng a cost-efficient fuel option? - ålands sjö · pdf filednv gl © 2013...

DNV GL © 2013 15.05.2014 SAFER, SMARTER, GREENER DNV GL © 2013

15.05.2014

Océane Balland

MARITIME

LNG – A COST-EFFICIENT FUEL OPTION?

1

Drivers, status and economic viability

Åland Sjöfartens Dag

DNV GL © 2013 15.05.2014

Agenda

1. Drivers for the uptake of LNG as fuel

2. Status and expected development on LNG fuelled ships

3. Technology availability and development

4. Business case for LNG fuelled ships

2

DNV GL © 2013 15.05.2014

Drivers for the uptake of LNG as fuel

3

DNV GL © 2013 15.05.2014

1. Environmental regulations

4

*

*EU has decided to implement the 0.50%

sulphur requirement from 2020.

DNV GL © 2013 15.05.2014

New ECAs – fact or fiction?

5

Turkish Straits in 2017? Hong Kong /

Guangdong?

DNV GL © 2013 15.05.2014

Environmental regulations

Emission component Emission reduction with LNG as fuel

Comments

SOx 100% Complies with ECA and global sulphur cap

NOx, 4-stroke engine 85% Complies ECA 2016 Tier III regulations

NOx, 2-stroke engine 40% Need EGR to comply with ECA 2016 Tier III regulations

CO2 25-30% Benefit for the EEDI requirement No other regulations (yet)

CO2-equivalents 0-30% No regulations (yet)

Particulate matter 95-100% No regulations (yet)

6

DNV GL © 2013 15.05.2014

2. Fuel cost

7

0

10

20

30

40

50

60

70

80

90

Pri

ce

[E

UR

O/

MW

h]

Year

Historical fuel prices on marine fuels and natural gas [EURO/MWh]

HFO 380cst MGO Europe Gas (Average import border price) US Gas (Henry Hub)

Sources: Clarkson, Worldbank

DNV GL © 2013 15.05.2014

The main drivers for LNG as fuel varies between regions

Gas price ECA Government requirement

Incentive schemes

Norway * (NOx-fund)

Europe

North America

8

* The Norwegian Government was the forerunner by including NOx-reduction requirements in ferry and

coastguard vessel tenders. Now the NOx-fund is the most important driver for initiating new LNG projects.

= primary/strong driver

= driver

DNV GL © 2013 15.05.2014

Status and expected development

9

DNV GL © 2013 15.05.2014

Background

For transport of natural

gas over long distances

Transport by large

vessels (>100.000m3)

>100 LNG import/export

terminals world wide

(>1.000.000 tpa)

LNG as fuel for ships

(<10.000 m3)

Currently

– 49 ships in operation

– 61 ships in orderbook

– >100 discussed projects

– <15 bunkering locations

“1000 LNG fuelled ships by

2020” (DNV GL)

All oil majors are currently

looking into LNG as fuel

(Shell in the lead)

10

Large scale LNG LNG ship bunkering Missing link

Break bulk facilities

Small scale liquefaction

plants (<500.000 tpa)

Standardized bunkering systems

DNV GL © 2013 15.05.2014

49 LNG fuelled ships in operation worldwide

11

Year Type of vessel Owner Class

2000 Car/passenger ferry Fjord1 DNV

2003 PSV Simon Møkster DNV

2003 PSV Eidesvik DNV






2008 PSV Eidesvik Shipping DNV


2009 Car/passenger ferry Tide Sjø DNV



2009 Patrol vessel Remøy Management DNV







2010 Car/passenger ferry Fosen Namsos Sjø DNV

2011 PSV DOF DNV

2011* Chemical tanker Tarbit Shipping GL


2011 PSV Solstad Rederi DNV


2012* Car/passenger ferry Fjord1 DNV

2012 PSV Eidesvik DNV

2012 PSV Olympic Shipping DNV

2012 PSV Island Offshore DNV

2012 General Cargo Nordnorsk Shipping DNV


2012 PSV Island Offshore DNV

2012 Car/passenger ferry Torghatten Nord DNV



2013 PSV REM DNV

2013 RoPax Viking Line LR


2013 Harbor vessel Incheon Port Authority KR

2013 General Cargo Eidsvaag DNV

2013 RoPax Fjordline DNV

2013 High speed RoPax Buquebus DNV

2013 Tug CNOOC CCS

2013 Tug CNOOC CCS

2013 Car/passenger ferry Norled DNV

2014 Car/passenger ferry Norled DNV

2014 Tug Buksér & Berging DNV

2014 RoPax Fjordline DNV

2014 Patrol vessel Finish Border Guard GL

Ships in operation

* Conversion project Updated 12.05.2014

Excluding LNG carriers and inland waterway vessels

DNV GL © 2013 15.05.2014

61 confirmed LNG fuelled newbuilds - DNV GL also first choice for future projects (1/2)

12


2014 Ro-Ro Norlines DNV

2014 Ro-Ro Norlines DNV

2014 Car/passenger ferry Society of Quebec LR



2014 Tug Buksér & Berging DNV

2014 PSV Harvey Gulf Int. ABS




2014 Gas carrier SABIC BV

2014 Gas carrier SABIC BV

2014* Product tanker Bergen Tankers LR

2014 General Cargo Egil Ulvan Rederi DNV

2014 General Cargo Egil Ulvan Rederi DNV

2014 PSV Remøy Shipping DNV

2014 Car/passenger ferry AG Ems GL

2014* Car/passenger ferry AG Ems GL

2014 Car/passenger ferry Samsoe Municipality DNV

2014 Ro-Ro Sea-Cargo DNV

2014 Ro-Ro Sea-Cargo DNV

2014 Tug CNOOC CCS

2015 Tug CNOOC CCS

2015 PSV Siem Offshore DNV

2015 PSV Siem Offshore DNV

2015 PSV Simon Møkster DNV




2015 Tug NYK NK

2015 LEG carrier Evergas BV



2015 Bulk ship Erik Thun LR

2015 Container Ship Brodosplit DNV GL

2015 Container Ship Brodosplit DNV GL

2015 PSV Siem Offshore DNV GL


2015 Container Ship TOTE Shipholdings ABS

2016 Container Ship TOTE Shipholdings ABS

2016 Icebreaker Finnish Transport A. LR



2016 Chemical tanker Terntank BV

2016 Chemical tanker Terntank BV

2016* Ro-Ro TOTE Shipholdings ABS

2016* Ro-Ro TOTE Shipholdings ABS

2016 Car carrier UECC LR

2016 Car carrier UECC LR

2016 Car/passenger ferry Boreal Transport DNV GL

2016 Car/passenger ferry Boreal Transport DNV GL

* Conversion project

Confirmed orderbook

Updated 12.05.2014 Excluding LNG carriers and inland waterway vessels

DNV GL © 2013 15.05.2014

61 confirmed LNG fuelled newbuilds - DNV GL also first choice for future projects (2/2)

13


2016 Container Ship GNS/Nordic Hamburg ABS

2016 Container Ship GNS/Nordic Hamburg ABS

2016 Container Ship Universal Marine DNV GL




2017 RoPax Brittany Ferries BV

2017 Container Ship Crowley Maritime DNV GL

2017 Container Ship Crowley Maritime DNV GL

2018 Container Ship Matson Navigation DNV GL

2018 Container Ship Matson Navigation DNV GL

* Conversion project

Confirmed orderbook


DNV GL © 2013 15.05.2014

There are currently 110 confirmed LNG fuelled ship projects

14


DNV GL © 2013 15.05.2014

Current development is in line with DNV GL projections Will the exponential growth continue?

15


DNV GL © 2013 15.05.2014

Global LNG bunker demand by 2020

16

South America

North America

Europe & the Baltic Sea

Middle East & India

SEA

Japan & Korea

Australia & NZ

LNG Bunkering demand 2020 Equivalent to 4 -7 million tons

of LNG

LNG Bunkering demand 2012

0.9 – 1.4

million

China

0.3 – 0.4 million

1.4 – 2.2 million

0.3 – 0.8 million

0.3 – 0.7 million

0.4 – 0.7 million

0.1 – 0.2 million

0.3 – 0.5 million 0.07 – 0.09

million

4-7 million tons of LNG p.a is required for 1000 ships in 2020. This corresponds to 0.2-0.3% of global gas production in 2010 or 2-3% of global LNG production

DNV GL © 2013 15.05.2014

Existing and forecast of global LNG bunkering infrastructure

17

Existing Planned (Feasibility study, risk study, proposed locations, pending approval)

Proposed (currently being discussed)

* See detailed map

Europe*

Busan Dubai

Singapore

Incheon

Nanjing

Wuhan

Buenos Aires

New York

Fourchon

Tadoussac

Tacoma

Duluth

Gaolan

Hambantota

Turkish strait & Marmara Sea

Jacksonville

Pyeongtaek Shanghai

Zhoushan

Santander

Algeciras Cartagena

Valencia

Barcelona Ferrol

Seattle Vancouver

Sarnia

Mississippi river

DNV GL © 2013 15.05.2014

1 22 2 3 4 5

8

12

13

6

14

36

15

19

16 21

20

7

18

23

7

29

31 27

26

32

28

9

25

28

34

35

33

Existing and forecast of LNG Bunkering infrastructure in Baltic & North Sea ECA

18

1. Florø

2. CCB

3. Halhjem

4. Snurrevarden

5. Risavika

6. Stockholm

7. Bodø

8. Vestbase

9. Moskenes

10. Lødingen

Existing:

Planned: 11. Turku

12. Øra

13. Lysekil

14. Tallin

15. Hirtshals

16. Brunsbüttel

17. Hamburg

18. Rotterdam

19. Antwerp

20. Zeebrugge

21. Ghent

22. Mongstad

23. Gothenborg

24. Helsinborg

25. Copenhagen

26. Aarhus

27. Lubeck

28. Roscoff

29. Helsinki

30. Hammerfest

31. Swinoujscie

32. Rostock

33. Cuxhaven

34. Grain

35. Tornio

36. Klaipeda

37. Hou

Harbour

Proposed:

37

10

11

30

DNV GL © 2013 15.05.2014

Forecast of LNG bunkering infrastructure in North American ECA

19

Seattle

New York

Jacksonville

Duluth

Fourchon

Tacoma

Vancouver

Mississippi river

Sarnia

Planned: 1. Fourchon

2. Sarnia

3. New York

4. Jacksonville

5. Mississippi

river

6. Duluth

7. Tacoma

8. Seattle

9. Vancouver

10. Tadoussac

Proposed:

Tadoussac

DNV GL © 2013 15.05.2014

Summary of global LNG bunkering infrastructure

20

Global LNG bunkering infrastructure

Existing Planned (feasibility study, risk study,

proposed locations, pending

approval)

Proposed (currently being discussed)

Baltic and North Sea ECA

Florø, CCB, Halhjem, Snurrevarden, Risavika, Stockholm, Bodø,

Vestbase, Moskenes, Lødingen

Øra, Lysekil, Talinn, Hirtshals, Brunsbuttel, Hamburg, Rotterdam, Antwerp, Zeebrugge, Ghent, Turku, Mongstad, Gothenborg, Helsinborg,

Copenhagen, Aarhus, Lubeck, Roscoff, Helsinki, Hammerfest

Swinoujscie, Rostock, Cuxhaven, Grain, Tornio, Klaipeda, Hou Harbour

North American ECA and US Caribbean ECA

Fourchon Tacoma, New York, Jacksonville, Seattle, Mississippi river

Canada and the Great Lakes

Sarnia Tadoussac, Port of Duluth, Vancouver

South America Buenos Aires

Mediterranean Sea Ferrol, Santander Turkish Strait and Marmara Sea, Valencia, Barcelona, Cartagena, Algeciras,

Asia Pacific Incheon , Gaolan (Zhuhai)

Busan, Pyeongtaek Singapore, Zoushan, Nanjing

Wuhan, Shanghai, Shangdong, Hambantota, west coast of India

Middle East Dubai

DNV GL © 2013 15.05.2014

Technology availability and development

21

DNV GL © 2013 15.05.2014

Current gas engine concepts

Gas only engines

– Low pressure gas supply

– Mixture formation outside of the cylinder

– Spark ignition

Dual fuel 4-stroke engines

– Low pressure gas supply

– Mixture formation outside of the cylinder

– Ignition by pilot fuel oil

Dual fuel 2-stroke engines

– Low or high pressure gas supply

– Mixture formation

– during compression stroke (Wärtsilä) or

– at the end of the compression stroke

(MAN)

– Ignition by pilot oil

22

Picture courtesy: Rolls Royce

DNV GL © 2013 15.05.2014

All engine concepts are in use for ship propulsion

23


DNV GL © 2013 15.05.2014

0 5 000 10 000 15 000 20 000 25 000 30 000 35 000 40 000

RT-flex50DF

X52DF (2016)

X62DF (2015)

X72DF (2016)

X82DF (2016)

X92DF (2017)

S80 ME GI

S70 ME GI

S65 ME GI

S60 ME GI

S50 ME GI

S40 ME GI

Power [kW]

Gas engines [range in kW]

MA

N D

iese

l & T

urb

oW

ärts

ilä

There is now a range of available and announced 2-stroke gas engines

24

DNV GL © 2013 15.05.2014

0 2 000 4 000 6 000 8 000 10 000 12 000 14 000 16 000 18 000 20 000

L20DF

L34DF

V34DF

L50DF

V50DF

C26:33 L

B35:40 L

B35:40 V

M34DF

M46DF

L51/60 DF

V51/60 DF

L28/32DF (2014)

L23/30DF

L35/44DF (2014)

V35/44DF (2014)

GS12/16R

Power [kW]

Gas engines [range in kW]

Ro

lls

Ro

yce

MA

N D

iese

l & T

urb

oW

ärts

ilä

Mitsubishi

Cat

er-

pill

arAnd there is a also range of available and announced 4-stroke gas engines

25

DNV GL © 2013 15.05.2014

A

B

Only type C tanks have been applied for ship fuel tanks so far, but ships with prismatic tanks are soon a reality

26

Type C tank

Designed for pressure build-up

Commonly used in LNG fuelled ships

Leak free tank, leaks only possible from valves

Type B tank

Only minor leaks of the tank structure possible

Limited liquefied gas release has to be handled

Type A and membrane tank

Complete first barrier failure not excluded

Liquefied gas release has to be handled

C

DNV GL © 2013 15.05.2014

Excellent safety record of LNG fuelled ships and bunkering operations

27

Heading

LNG as ship fuel experience

LNG has been safely used as fuel for non-

LNG carriers for 14 years

No reported major events, e.g. fire,

explosion, grounding etc. caused by LNG

fuelled engines or ancillaries on DNV GL

classed vessels

No reported incidents with significant LNG

release in more than 50 000 bunkering

operations

LNG carrier experience

LNG has been safely transported by large

LNG carriers for more than 50 years

Few incidents reported and no major

accidents

Good safety level achieved through

design, construction and safe operation

Special attention to crew competence and

training

DNV GL © 2013 15.05.2014

LNG as fuel

28

+ A proven and available

solution

Reduces NOx, SOx, PM, CO2

Comply with EEDI

Particularly suitable for fixed trading routes

Can give supreme NPV

- Additional CAPEX needs

Retrofit difficult

Inadequate LNG bunkering grid

LNG tank steals space onboard

Lagging 2-stroke market

No experience from industrial shipping

Additional training and certificates

? LNG fuel prices?

De-coupling of LNG price from oil price?

Price pressure from land based LNG consumers?

Rate of bunker grid expansion

Development of space-efficient LNG tanks

Dual fuel vs mono fuel engines?

DNV GL © 2013 15.05.2014

Business case for LNG fuelled ships

29

DNV GL © 2013 15.05.2014

Our experience

30

Updated 18.03.2014

0 2 4 6 8 10 12 14

Others

Gas carriers

Tankers

Containers

Bulk carriers

Different designs assessed Comments

Ship owners across all segments are

currently planning LNG fuelled new

builds

Most interest has been from the bulk

and container segment

Interest has primarily been spurred by

known or likely LNG availability in

relevant ports

Most projects have proven the

potential for a good business case

DNV GL © 2013 15.05.2014

There are three LNG ready options depending on the case

Case

LNG is not likely to be

available in near future

Concept

Minimum initial

investment required

Higher retrofit cost

increasing total

investment cost

Benefit

Vessel ready for retrofit

when needed

31

LNG Ready

Level 1

LNG Ready

Level 2 LNG fuelled vessel

Case

LNG will likely be available

in near future

Concept

Higher initial investment

required than level 1

Lower retrofit cost than

level 1

Benefit

Vessel ready for retrofit

when needed

Case

LNG is or will be available

around vessel delivery

Concept

Complete investment

required

No retrofit required

Benefit

Vessel ready to operate on

LNG immediately

DNV GL © 2013 15.05.2014

Case 1 : LNG retrofit of a container feeder trading in the Baltic

32

DNV GL © 2013 15.05.2014

LNG retrofit of a container feeder trading in the Baltic

Case description

Conversion of main engine to dual fuel

Retrofit of LNG system

100% LNG operation

The vessel will bunker twice per roundtrip

33

Vessel specifics

Capacity: 1,000 TEU

Length O.A: 152 m

Breadth MLD: 24 m

DNV GL © 2013 15.05.2014

A 14 day roundtrip in the Baltic and North Sea

34

Nr. Route

1 St. Petersburg

2 Helsinki

3 Teesport

4 Rotterdam

5 Brunsbüttel

6 Hamburg

7 Brunsbüttel

8 Kiel

9 Helsinki

10 St. Petersburg

4

5 6

7 3 8

9 1 2 10

Issues to consider

From 1 January 2015 all vessels operating in designated SOx ECAs need to comply with the 0.1% sulphur regulation

DNV GL © 2013 15.05.2014

Conversion of main engine to dual fuel engine

Issues to consider

Not all diesel engines can be converted to dual fuel

Cost efficiency of converting auxiliary engines is in

general low due to low fuel consumption and high

conversion cost

Future use of vessel in other areas of the world where

emission taxes apply

Assumptions and comments

The main engine will be converted from a diesel engine to

a dual fuel engine

The engine output is significantly reduced

35

Engines

Existing diesel engine: MAN 8L48/60B Engine size: 9,600 kW Engine speed: 500 RPM SFOC@75% load: 190 g/kWh

Converted dual fuel engine: MAN 8L51/60DF Engine size: 8,000 kW Engine speed: 500 RPM

SGC@75% load: 151 g/kWh Source: MAN

DNV GL © 2013 15.05.2014

A tank size of 270 m3 is needed if bunkering every week


Dual fuel only for main engine

100% operation on LNG

Bunkering frequency: Weekly (twice per roundtrip)

85% tank utilization

5% engine consumption margin added

15% safety buffer for propulsion has been added on main

engine consumption

Issues to consider

Flexibility and range on LNG. Changes in sailing plan may

cause higher tank size requirements

LNG availability along the route (existing and future)

36

0 50 100 150 200 250 300

REQUIRED TANK SIZE

Total Consumption

Main engine maneuvering

Main engine sailing

LNG volume [m3]

LNG tank capacity needed for operation [m3]

DNV GL © 2013 15.05.2014

Technical considerations for retrofit

Issues to consider

Special attention must be paid to class requirements for

LNG tank location

LNG tank location with respect to existing and future regulations

Tanks on deck will most likely need a full enclosure (steel casing) to

withstand the force of a falling container. Containers can be placed on top

of and around the steel casing

Tank room must have sufficient space for inspection and cold box

Installation of double wall vacuum insulated pipes

Bunker station with valves and connections to shore

Stability calculations must be performed due to potential

impact Removing the HFO tanks and replacing containers

with the LNG system could have an high impact on the

vertical gravity centre

37

3

2

4 1

37

Different tank locations

DNV GL © 2013 15.05.2014

CAPEX estimate for LNG system


Estimates based on experience from previous DNV GL

projects

The LNG system price includes the tank, the tank

connection spaces, the bunkering station and the

automation and interfacing system

The yard cost assumes a "normal" addit ion for risk and

overhead/profit from the yard, but this may vary

significantly with market conditions

Issues to consider

For the same LNG volume carried, different tank

dimensions can represent high variations in investment

costs.

38

6,1

1,5

1,5

3,1

0 1 2 3 4 5 6 7

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Engines andGVUs

LNG system

Yard cost

Total cost

[MUSD]

Total additional cost of the LNG system [MUSD]

DNV GL © 2013 15.05.2014

CAPEX estimate for hybrid scrubber system


Hybrid scrubber for cleaning the exhaust of the equivalent

diesel fuelled engine

The cost estimate for the equipment is based on

estimations from experience

Yard cost is a case-to-case specific parameter with high

variance

Issues to consider

Choosing the correct scrubber solution among closed

loop, open loop and hybrid scrubber should be

investigated in detail. A Technology Qualification process

is also recommended to increase the likelihood of a

successful installation

Operational costs of scrubber systems may be significant

and need to be accounted for. Costs vary with scrubber

type

39

5,4

3,2

2,2

0,0 1,0 2,0 3,0 4,0 5,0 6,0

0% 20% 40% 60% 80% 100%

Scrubberequipment

Yard cost

Total cost

[MUSD]

Total additional cost of the hybrid scrubber system [MUSD]

DNV GL © 2013 15.05.2014

LNG investment evaluated against HFO + Scrubber and MGO at 8 % discount rate for three LNG price scenarios

40

LNG at 16 USD/MMBtu

LNG at 14 USD/MMBtu

LNG at 12 USD/MMBtu

2 years

1 year

0.7 years

6.5 years

5 years

3.7 years

LNG price scenario Payback to

HFO + Scrubber

Payback to

MGO

DNV GL © 2013 15.05.2014

-2

0

2

4

6

8

10

12

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032

Co

st

[M

US

D]

Year

Cumulative discounted cost difference to HFO baseline [MUSD]

HFO baseline ScrubberFuel switch LNG @ 16 USD/MMBtuLNG @ 14 USD/MMBtu LNG @ 12 USD/MMBtu

HFO

Scrubber

Fuel switch

The LNG price spread shows which price levels are required for certain payback times. It serves as a good basis for decision making and negotiation with LNG fuel suppliers and system suppliers

LNG appears as an attractive alternative for LNG prices around HFO parity

41

Indicates payback time of LNG investment compared to MGO and HFO + Scrubber

Explanation Each line represents the additional

cumulative costs of the respective configuration

compared to baseline (HFO).

LNG has a high investment cost, but depending on

the fuel price the

operational savings can be significant.

MGO price 930 USD/tonne 23 USD/MMBtu

HFO price 615 USD/tonne 16 USD/MMBtu

DNV GL © 2013 15.05.2014

LNG is expected to be available on the trade route

42

Issues to consider

The availability of

bunkering LNG in

an area/port does

not necessary

mean that

bunkering will be

possible for a

specific ship

(pending slot

contracts and

compatibility)

Confirmed

Potential

Rotterdam

Helsinki

Hamburg

DNV GL © 2013 15.05.2014

Case: LNG newbuild of an MR tanker performing a cross Atlantic trade

Case description

Building an MR tanker with full DF capabilities

44

Vessel specifics

Deadweight: 51,500 dwt

Length O.A: 183 m

Breadth MLD: 32 m

DNV GL © 2013 15.05.2014

Overview of trade route: Europe to North US

45

Rotterdam

Houston

Operational profile

Total distance (round-

trip): 10,300 nm

Distance in ECA

(round-trip): 3,800 nm

Total sailing time: 32 days

Sailing time in ECA: 12 days (38%)

Speed: 13.5 knots

Complete round-trip

voyage time (incl.

sailing, port time,

idling):

49 days

Total time in ECA: 30 days (60%)

Issues to consider

Vessel build after 1st of January 2016 would need to comply with NOx Tier III regulations when operating in NOx ECAs,

reducing NOx emissions with 80% from todays level. Possible solutions would be LNG, SCR and EGR

From 1st of January 2015 all vessels operating in designated SOx ECAs will need to comply with the 0.1% sulphur regulation

New York

DNV GL © 2013 15.05.2014

Technical considerations: Engine selection

Main engine output: 8,850 KW

Auxiliary engine output: 850 kW Main engine output: 8,850 KW

Auxiliary engine output: 850 kW

46

0 5 000 10 000 15 000 20 000 25 000 30 000 35 000 40 000

L20DF

L34DF

V34DF

L50DF

V50DF

2 stroke - LP (2014)

C26:33 L

B35:40 L

B35:40 V

M46DF (2014)

S80 ME GI

S70 ME GI

S65 ME GI

S60 ME GI

S50 ME GI

S40 ME GI

L51/60 DF

V51/60 DF

9L28/32DF

7L23/30DF

L35/44DF (2014)

V35/44DF (2014)

GS12/16R

War

tsila

Ro

lls R

oyc

eC

ate

rp

illar

MA

N D

iese

l & T

urb

o

Mit

su

bis

hi

Power [kW]

Gas engines [range in kW]Main engine Auxiliary engine

DNV GL © 2013 15.05.2014

Technical considerations: Engine

Issues to consider

Amount of low load operation should be considered when

choice of engine type, size and technology

Engine performance

Operational costs

Size of the engines

Tier III requirement


Dual fuel capabilities on all engines

47

DF engines

1 x MAN 6S50ME-B9.2-GI Engine size:8,890 kW Engine speed: 99 RPM SGC: 135.8 g/kWh

SPOC: 8.5 g/kWh 3 x MAN L23/30 DF Engine size: 850 kW Engine speed: 900 RPM

Source: MAN

DNV GL © 2013 15.05.2014

Technical considerations: 1. Tank size needed for a voyage using LNG globally– 1500 m3


Dual fuel capabilities for all engines

The vessel will use LNG for the complete voyage

Bunkering frequency: twice per roundtrip (e.g. Rotterdam and Houston/New Orleans)

85% tank utilization

5% engine consumption margin added

15% safety buffer for propulsion has been added on

transit operation

Issues to consider

Unpredictable operation might cause higher tank size

requirements

Frequency of LNG bunkering

LNG to be used only in ECA or globally

LNG quality at the bunkering location (density, energy

content, etc.)

48

DNV GL © 2013 15.05.2014

Technical considerations: Possible LNG tank locations


An LNG type C pressurized tank has been considered

Rearrangement of some piping and equipment on deck

will be required.

Impacts on design/operation:

Move cargo pumps to the side

Double gangway around the tank

LNG tank to be enclosed

Cargo tank inerting will be required for chemical cargo if you have a

LNG tank on deck

Issues to consider

Special attention must be paid to class requirements

LNG tank location with respect to existing and future regulations

Sight line from the superstructure

Tanks on deck may need an enclosure for protection during loading and

unloading procedures

Aim to keep tank size within limits of the suppliers

standards

49

DNV GL © 2013 15.05.2014

CAPEX estimate for LNG


Estimates based on experience from previous DNV GL

projects.

The LNG system price includes the tank, the tank

connection spaces, the bunkering station and the

automation and interfacing system.

The yard cost assumes a "normal" addit ion for risk and

overhead/profit from the yard, but this may vary

significantly with market conditions

Issues to consider

For the same LNG volume carried, different tank

dimensions can represent high variations in investment

costs.

LNG systems to be considered in addition to regular

costs:

Low pressure versus high pressure systems

Number of bunkering stations

Piping

50

5.8

0.5

4.4

0.9

0.0 1.0 2.0 3.0 4.0 5.0 6.0

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Engines and GVUs

LNG system

Yard cost

Total Cost

Million $

Total additional cost of the LNG system [M$]

DNV GL © 2013 15.05.2014

CAPEX estimate for hybrid scrubber system


Hybrid scrubber for cleaning the exhaust of both the main

engine and the auxiliaries.

The cost estimate for the equipment is based on

estimations from previous experience

Yard cost is a case to case specific parameter with high

variance

Issues to consider

Choosing the correct scrubber solution among closed

loop, open loop and hybrid scrubber should be

investigated in detail

51

3.3

0.5

2.8

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Equipment

Yard cost

Total Cost

Million $

Total additional cost of the LNG system [M$]

DNV GL © 2013 15.05.2014

Business case: Payback time of LNG compared to scrubber+HFO and MGO

52

Indicates payback time of LNG investment compared to MGO and HFO + Scrubber

Explanation Each line represents the additional cumulative costs of the respective configuration compared to baseline (HFO). LNG has a high investment cost, but depending on the fuel price the operational savings can be significant. MGO price 890 USD/tonne 22 USD/MMBtu HFO price 595 USD/tonne 16 USD/MMBtu An LNG price of 12 USD/tonne (LNG = MGO – 45%) ensures a payback time of 3,5 years

compared to MGO and 2,5 years compared to Scrubber + HFO.

-2

0

2

4

6

8

10

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Cu

mu

lati

ve d

isco

un

ted

co

st [

MU

SD]

Year

Cumulative discounted cost [MUSD]

Fuel Switch HFO Base line Scrubber LNG @ 12USD/MMBtu LNG @ 14USD/MMBtu LNG @ 16USD/MMBtu

HFO

Scrubber

ESTIMATES ONLY

1. LNG at 12 USD/MMBtu2. LNG at 14 USD/MMBtu3. LNG at 16 USD/MMBtu Fuel switch

LNG

1

2

3

DNV GL © 2013 15.05.2014

High level overview of LNG availability in the visiting ports

53

Rotterdam

New Orleans

Issues to consider

The availability of bunkering LNG in an area/port does not necessary mean that bunkering will be possible for a specific

ship (pending slot contracts)

Available bunkering

Potential bunkering option

No evidence of LNG bunkering development

Maturity towards 2016

New York

Houston

DNV GL © 2013 15.05.2014

Final thoughts

LNG will become a major fuel for shipping, it is only a question of when

For commercial projects to succeed in this early phase, partnerships and close

cooperation is required

Important to understand and utilize local commercial conditions for development

of LNG fuel

The (commercial) risk of choosing LNG is considered high – but what is the risk of

not considering LNG fuel?

54

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