Issue Date: 30 Jan 2016 

LNG

LNG‐Gas Supply System for ME‐GI gas‐injec on system Manifold (3 page brochure)…………………………………………  2‐4 

FT 01/10/16:US will be a gas supplier to the world by tomorrow …………………………………………………………………  5‐6 

WSJ 12/02/15: Out‐of‐Bounds CO2 elutes talks………...…………………………………………………………………………………………….  7 

 Gas Marine Fuel 12/03/15: The Majority of shipping vessels are set to run on LNG within 10 years…………………………  8 

 Marine Link 11/03/15: ABS deems Crowley Product Tanker ’LNG‐Ready’……………………………...………………………………..  9 

 WSJ 07/22/15: Economic Anchor. July 22, 2015………………………………………………………………………………………………………..  10 

IGU World LNG Report 2015 edi on—sec on 5 …………………….………………...…………………………………………………………..  11‐23 

Marine Link 06/10/15: DSME launches LNG carrier for Turkey…………………………………………………………………………………..  24 

Motorship 11/27/13: MAN hosts phase of EU LNG ini a ve. November 27, 2013.………………………………………………….  24‐25 

CONTENTS:                         Page: 

Within 10 years the majority of shipping vessels will run on LNG...a cleaner, alternative fuel source. The newest innovation in LNG carrier engine design, M-type, electronically controlled, gas injection (ME-GI) engines, optimize the capability of slow speed engines by running directly off BOG (removing the need to reliquefy the gas) or utilizing fuel oil, and ME-GI propulsion results in less fuel consumption.

Environmental legislation is currently impacting the marine market segment. Ships were traditionally powered by Heavy Fuel Oil (HFO), which produces high levels of harmful pollutants. LNG is one of the only fuel source able to comply with the environmental legislation.

The following pages 2 thru 25, represent various publications/news articles regarding LNG applications, markets, and developments.

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Issue Date: 30 Jan 2016 

The Energy Atlantic, a 290-metre tanker steaming slowly through the Gulf of Mexico, is about to make history. It is scheduled to arrive on Tuesday at Cheniere Energy’s Sabine Pass liquefied natural gas plant on the coast of Louisiana, to be loaded with the first cargo of LNG to be exported from the “lower 48” contiguous states of the US.

The shipment is a momentous event for energy markets, marking the arrival of the US as a gas supplier to the world.

The plunge in oil prices since the sum-mer of 2014 has dragged down the value of LNG, which is often sold on crude-linked contracts, and damped the excite-ment over US exports. The economics of shipping gas from the US were compel-ling two years ago, but are now margin-al. Deteriorating market conditions have put the brake on any new investments in US LNG.

Even so, US LNG exports are likely to have a significant impact, holding down energy costs for consumers in Europe, Latin America and Asia. They will also provide tough competition for anyone hoping to build rival LNG plants, such as the proposed projects in east Africa, the west of Canada, or Russia. By the end of the decade, the US is likely to be the world’s third-largest exporter of LNG, after Qatar and Australia.

Combined with the new supplies from Chevron’s huge Gorgon and Wheat-stone projects in Australia, which are scheduled to come on stream this year, exports from the US are making it a buyers’ market for LNG.

“There is an awful lot of LNG sloshing

around the world at the moment, with even more to come,” says Frank Harris of Wood Mackenzie, a consultancy. “And that is putting downward pressure on prices.”

A decade ago, this prospect seemed wildly unlikely. US gas production was in decline and by the 2010s the country was expected to be a large importer of LNG, not an exporter.

The shale revolution, the result of advances in production techniques that made it possible to extract gas at commercially viable rates from previ-ously unyielding rocks, meant that US production started rising again in 2006, and since 2011 it has been break-ing new records every year.

Charif Souki, Cheniere’s visionary founder who was ejected from the company at the end of last year, was one of the first to see the potential for LNG exports from the US. In 2010, he submitted the first application to regulators to convert the LNG import terminal that Cheniere had built at Sabine Pass, which was being barely used because US domestic gas production was so strong, into a liquefaction plant.

Many in the industry were skeptical that the project could be made to work but the plan took a decisive step for-ward in October 2011 when Britain’s BG Group signed a 20-year contract to buy most of the production from Sabine Pass’s first “train”, as LNG production units are known. After that contract was signed, the trickle of proposals for

similar projects turned into a flood.

The US Department of Energy has received applications to export LNG for 54 projects. If they all went ahead, they would have the capacity to liquefy about 60 per cent of the entire gas production of the US.

So far, however, just five plants have started construction: Cheniere’s

Sabine Pass and its Corpus Christi project in Texas; Freeport LNG, also in Texas; Cameron LNG in Louisiana; and Cove Point LNG, on the east coast in Maryland.

Those projects have been able to make progress because they were fast enough at signing up customers on long-term contracts that guarantee their revenues. Since the end of 2014 those customers, mostly utilities in Europe and Asia, have been reluctant to make any further commitments.

The price of LNG delivered in north-east Asia, including Japan and South Korea, the world’s two largest mar-kets, has fallen along with oil. It has dropped to about $6.65 per million

US will be a gas supplier to the world by tomorrow– January 10, 2016 http://http://www.ft.com/intl/cms/s/0/f1773832-b5ee-11e5-b147-e5e5bba42e51.html#axzz3yHh5aaug

British thermal units, just a third of its price of almost $19 per mBTU two years ago, according to Argus, the information service.

At that price, with benchmark US gas at about $2.40 per mBTU, plus liquefaction costs of $3 to $3.50 per mBTU, plus transport at about $2 per mBTU, LNG from Louisiana or Texas does not look commer-cially attractive.

Similar calculations apply in Europe. Bench-mark UK National Balancing Point gas has dropped by almost a half since 2013 to about $5.20 per mBTU, meaning that LNG exports from the US to Britain are unlikely to cover all of their costs.

Since 2013, most of the new LNG projects launched worldwide have been in the US. However, the deteriorating economics make it unlikely that any new plants will be approved for a while.

The plants that have already started con-struction, though, are highly unlikely to be stopped. This is because the companies buying LNG from one of these plants have typically made firm commitments for 20 years under which they have to pay the charges they have promised, even if they do not use the capacity.

The US LNG projects will add to global over-supply. Bernstein Research has estimated that the world’s liquefaction capacity will in

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Issue Date: 30 Jan 2016 

Continued—US will be a gas supplier to the world by tomorrow-January 10, 2016 h p://h p://www. .com/intl/cms/s/0/f1773832‐b5ee‐11e5‐b147‐e5e5bba42e51.html#axzz3yHh5aaug 

the next three years rise by 90m tonnes per annum, which is about 35 per cent of present demand.

Nikos Tsafos of Enalytica, a research com-pany, says US LNG should help hold gas prices down for a few years at least.

When the global oversupply is finally ab-sorbed by rising demand, the next wave of plants in the US, including projects backed by ExxonMobil and Kinder Morgan, will be poised to benefit.

There are other promising potential new sources of LNG in the world, including the projects to develop large gas discoveries

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Issue Date: 30 Jan 2016 

World leaders are hammering out ways to cut their countries’ carbon emissions in Paris. But what about all the carbon dioxide—from planes and ships—emitted outside any one coun-try’s borders?

Airlines and the global maritime indus-try count among the world’s biggest CO2-emitting industries. Unlike emis-sions from power plants or passenger cars, CO2 from planes and ships ply-ing international routes aren’t tabulat-ed as part of any one country’s total emissions. Those totals are the main subject of haggling in Paris this week and next, aimed at coming up with a concrete plan to limit man-made climate change.

That omission is ratcheting up pres-sure on negotiators in Paris to figure out how to handle that uncounted CO2, and whether to force the industries’ global watchdogs to come up with a credible, separate plan to rein in air and sea emissions.

One big challenge: It’s hard to peg just how much CO2 the two industries are emitting in the first place.

A recent European Parliament report estimated between 3% and 4% of global, man-made CO2 emissions came from inter-

national commercial flights and ship-ping. Left unchecked amid efforts to reduce emissions elsewhere, that share could grow to as much as 40% of global emissions by 2040, the re-port warned.

The International Civil Aviation Organi-zation, a United Nations body, puts the current contribution from internation-al aviation to global C02 emissions at 1.3%. Its shipping counterpart, the International Maritime Organization, said in a report last year that from 2007 to 2012 such emissions reached an average 3.1% of the global output.

The issue hasn’t been at the top of the climate-change agenda among negoti-ators in the yearlong run up to the Paris talks. But the threat of a more forceful approach to reining in air and sea emission has long shadowed those industries. It is also flaring anew as an irritant for environmental groups, which say executives haven’t done enough to come up with a plan on their own.

“Progress has been insufficient,” said Andrew Murphy, a representative for Transport & Environment, an envi-ronmental advocacy group.

A preliminary paragraph in the draft of the Paris accord—a document global leaders hope will spell out a final, concrete plan—could require that countries work through the U.N. agencies to slice up emissions from such international trips by air and sea and apportion them to individual coun-tries.

The ICAO and IMO have taken leading roles in trying to broker the details of any agreement, and representatives of both are in Paris now.

Countries with rapidly growing air-lines, or those heavily dependent on tourism, argue any moves to limit flight emissions will favor more ma-ture markets, such as those in the U.S. and Europe. The airline industry, meanwhile, has fought against what it worries would be a patchwork of national regulations and taxes that would govern its emissions.

The European Union has, for instance, threatened that the lack of a global agreement on international flight emissions could spur it to revive efforts to include them in its carbon cap-and-trade mechanism, something carriers so far successfully have fought.

“We are supportive of ICAO putting together a framework that gov-erns the entire planet,” said Mark Dunkerley, chief executive of Ha-waiian Airlines par-

Out-of-Bounds CO2 Elutes Talks—by Robert Wall and Costas Paris– December 2, 2015

For the shipping

industry, the IMO

has imposed an

efficiency

standard for

ships built since

2013.

Carbon‐dioxide emission from ships don’t count toward na onal totals. 

h p://www.wsj.com/ar cles/out‐of‐bounds‐co2‐clouds‐emissions‐tallying‐1449107855 

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Issue Date: 30 Jan 2016 

 

Environmental legisla on is 

the key factor currently im‐

pac ng the marine segment. 

While ships were tradi onally 

powered by Heavy Fuel Oil 

(HFO), which produces high 

levels of harmful pollutants, 

including sulphur dioxide 

(SOx), interna onal law now 

states that shipping fuel can 

contain no more than 3.5% 

sulphur. Further, the limit in 

Emission Control Areas (ECAs) 

or Sulphur Emission Control 

Areas (SECAs), which current‐

ly include coastal areas such 

as the Bal c Sea, North Sea 

and the waters surrounding 

North America and the Carib‐

bean, is 0.1%. 

LNG is one of the only fuel 

sources able to comply with 

these strict limits and, with 

the majority of vessels oper‐

a ng in coastal areas, the 

need for LNG‐compliant solu‐

ons is set to become a must 

for operators in the very near 

future. Ten years from now, 

the majority of vessels will 

run on LNG and conven onal 

vessels will have very limited 

trading op ons. This supports 

the CapEx argument – while 

you may have to pay more 

for your LNG‐compliant solu‐

ons in the short term, there 

will be significantly more val‐

ue to be gained from it down 

the line. 

Against this backdrop, SMi’s 

Gas as a Marine Fuel master‐

class will examine the grow‐

ing demand for LNG as a ma‐

rine fuel as a result of an in‐

creasing emphasis on envi‐

ronmental performance and 

how to best prepare for it by 

examining how this is be‐

ing implemented world‐

wide, with focus on recent 

developments in Europe and 

the US. The full‐day pro‐

gramme will also explore the 

recent technical and regula‐

tory developments and how 

you can best adapt to these 

changes.  

Source: E-mail from energy@semiconference.co.uk

“LNG is one of the

only fuel sources

able to comply

with these strict

limits…”

The Majority of Shipping Vessels are Set to Run on LNG within 10 years, with Conventional Vessels having very Limited Trading Options | Gas as a Marine Fuel .

Gas as a Marine Fuel | 3rd December 2015, Central London, UK

Register online to network with latest attendees in-cluding ExxonMobil: www.smi-

online.co.uk/2015gasmari

nefuel.asp 

Alterna vely, con‐

tact Mar n Hughes on tel 

+44 (0) 20 7827 6078 or 

email mhughes@smi‐

online.co.uk  

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Issue Date: 30 Jan 2016 

“ABS has played a fundamental role in supporting the ambitions of the maritime industry as it moves to embrace the opportunity of LNG as fuel,” said ABS Chairman, President and CEO Christopher J. Wiernicki. “This milestone builds upon our work to provide owners with the guidance and support they need to move ahead with shipbuilding projects that allow them the flexibility to respond to changes over the lifetime of their vessels.”

According to ABS, who published the Guide for LNG Fuel Ready Ves-sels in 2014, its LNG-Ready endorse-ments allow shipowners and yards the flexibility to limit initial investment while planning for the future conver-sion to dual fuel or gas-powered combustion engines.

Rob Grune, senior vice president and general manager petroleum services

Posted by Eric Haun

Four-ship series built to ABS class is first to take advantage of LNG-Ready approval for potential conversion to LNG fuel in the future

ABS has issued the first LNG-Ready approval in accordance with its Guide for LNG Fuel Ready Vessels to a product tanker, granting LNG-Ready Level 1 approval and approval in principle for Crowley Maritime Cor-poration’s new Jones Act tank-er Ohio, the first in a series of four ships built by Aker Philadelphia Shipyard

By achieving compliance with the ABS Guide for LNG Fuel Ready Vessels, Crowley has the option to convert the product tankers to LNG propulsion at a later date having already been granted a conceptual review.

for Crowley, said, “As our business continues to shape itself to better meet the requirements of our custom-ers, these vessels that stand ready and able to operate on a cleaner, alterna-tive fuel source are our way of antici-pating future demands.”

Crowley will christen Ohio today at the Tampa Cruise Terminal. The 50,000 dwt, 330,000-barrel-capacity ship has already made two voyages to date carrying clean petroleum prod-ucts to Florida.

The three remaining product tankers are expected to be delivered through 2016.

ABS Deems Crowley Product Tanker ‘LNG-Ready’- November 3, 2015 Source: (http://www.marinelink.com/news/lngready-crowley-product400340.aspx)

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Issue Date: 30 Jan 2016 

 Fleet Size 

Source: The Wall Street Journal | Wed. July 22, 2015 |

Rows of shipping containers at the freight terminal at Piraeus port in Greece last week. PHOTO: SIMON DAWSON/BLOOMBERG NEWS  

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electrical systems and the 

introduc on of a passive par‐

al reliquefac on system add 

to these LNG vessels’ efficien‐

cy and further help to reduce 

the unit freight cost.  

Over the next 8 months DSME 

will install the cargo contain‐

ment system capable of 

transpor ng 174,000 m3 of 

LNG and put the ship and its 

equipment through the re‐

quired tests and trials. 

Posted by Eric Haun 

Teekay’s first M‐type, Elec‐

tronically Controlled, Gas 

Injec on (MEGI)‐powered 

LNG vessel, Creole Spirit, was 

floated out at the Daewoo 

Shipbuilding & Marine Engi‐

neering (DSME) shipyard in 

South Korea on May 29. The 

vessel is on charter contract 

with Cheniere and is expected 

to enter service early 2016, 

making it the most efficient 

LNG ship on the water with 

the lowest unit freight cost 

in the world fleet. 

 The two‐stroke engine tech‐

nology provided by MAN 

Diesel, the MEGI propulsion 

system, is driving a step 

change in global LNG vessel 

efficiency. While the most 

efficient Dual Fuel Diesel Elec‐

tric (DFDE) propulsion sys‐

tems have daily consump‐

ons in the region of 125‐130 

metric tons including sea 

margin, the MEGI vessels 

have a consump on of 100 

metric tons. That being said, 

it is not just the fuel con‐

sump on that makes the two

‐stroke story so compelling. 

The reduc on in the num‐

ber of cylinders requiring 

overhaul, the reduc on in 

the size of the complex 

Special points of interest:

The two-stroke engine technology provided by MAN Diesel, the MEGI pro-pulsion system, is driving a step change in global LNG vessel efficiency.

DSME Launches LNG Carrier for Turkey—June 10, 2015

Creole Spirit (Photo: Teekay) 

Source: http://www.marinelink.com/news/launches-carrier-teekay392752.aspx)

MAN Diesel & Turbo has marked the final phase of the EU-funded Helios project by hosting an industry conference at its PrimeServ Academy in Copenhagen.

The Motorship attended the event, at which the results of the Heli-os project, aiming to develop a research platform for an LNG-fuelled two-stroke marine Diesel engine. Helios is part of the EU 7th framework programme, and MAN as lead organisation was partnered by Germanischer Lloyd, Kistler Instruments, Sandvik Powdermet, TGE Marine Gas Engineering and four universities - Uppsala, Erlangen, Jonkoping and Lund. (continued on 3 of 17)

MAN Hosts Final Phase of EU LNG Initiative– November 27, 2013

MAN Diesel & Turbo ME‐GI engine 

http://www.motorship.com/news101/lng/man-hosts-final-phase-of-eu-lng-initiative

 The MAN Diesel MEGI 

propulsion system, is 

equipped with Dynamic 

Control’s: 

 Gas Supply System for ME‐GI 

gas‐injec on system 

Manifold.  

Refer to pages 2,3,4 of 25. 

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Issue Date: 30 Jan 2016 

The project centred around MAN's ME-GI research engine and it was enlightening to see the two different approaches to gas-fuelled two-stroke developments following our visit to Wartsila in Trieste two weeks ago. MAN's high pressure gas system is un-doubtedly more complex than the competing low-pressure technolo-gy, burns a higher percentage of pilot fuel, and will need EGR or SCR in order to meet IMO Tier III emissions limits. However, it appears to be engineered with an even more highly fail-safe ap-proach to problems with the gas system and a simpler retrofit pos-sibility. In addition, the company says that it offers shipowners the most flexible choice of fuel possi-

ble, and although NOx emissions are currently above Tier III limits, methane slip is very low, so car-bon emissions - and hence EEDI - implications are highly positive, the engine is tolerant to variations in gas quality, and it can run on gas at loads of 10% or lower. MAN is confident that with fur-ther development the pilot fuel percentage can reduce further, and NOx emissions can be cut.

The Helios project has explored wider aspects of LNG as fuel in Europe, including availability, pricing and infrastructure, as well as lubrication and wear issues resulting from using ultra-low sulphur fuels.

The ME-GI engine has already attracted orders, the first being for TOTE container ships, which was

not expected by MAN, as well as Teekay LNG tank-ers and for two larger con-tainer ships for US compa-ny Matson. No doubt the low price of LNG in North America has influenced these orders. MAN ex-pects the market for dual-fuel two-stroke engines to grow rapidly as the lower ECA sulphur limits come into force.

Continued—MAN Hosts Final Phase of EU LNG Initiative– November 27, 2013 http://www.motorship.com/news101/lng/man-hosts-final-phase-of-eu-lng-initiative

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