The Potential Conversion of the U.S. Great Lakes Steam Bulk Carriers to LNG Propulsion Final Report

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Thurnau Professor Emeritus Department of Naval Architecture and Marine Engineering, U of M Patrick J.

1 The Potential Conversion of the U.S. Great Lakes Steam Bulk Carriers to LNG Propulsion Final Report Michael G. Parsons, Arthur F. Thurnau Professor Emeritus Department of Naval Architecture and Marine Engineering, U of M Patrick J. O Hern, Great Lakes Maritime Consultants, LLC, Brussels, WI Richard W. Harkins, Harkins Engineering & Environmental Services, LLC, Rocky River, OH Sam Denomy, Undergraduate UM, now Bay Shipbuilding 1

2 Disclaimer The opinions expressed here are those of the authors only and do not represent the opinions, conclusions, or plans of any of the many companies that have provided assistance to this study. Economic and air emission results are developed by rollup of more detailed estimates within spreadsheets so they contain more significant figures than justified. It is left to the reader to round-off to the level appropriate. 2

3 Outline Vessels under consideration Emission Control Area (ECA) air emissions LNG conversion options Fuel cost and air emission comparisons Conceptual design for single-fuel LNG conversion Conceptual design for dual-fuel LNG conversion Capital cost estimates Remaining life-cycle economics Conclusions 3

4 U.S. Flag Great Lakes Steam Bulk Carriers Ten remaining U.S. Flag steam bulk carriers Three, the AAA Class, are to the same design project focus 4

5 Emission Control Area (ECA) Initially the Baltic Sea and North Sea Requested by U.S., Canada, and France; approved by IMO In effect since August 1, 2012, for non-arctic coastal and inland waters of U.S. and Canada Lower marine fuel sulfur and engine NOx requirements 5

6 MARPOL (EPA) Marine Fuel Sulfur Limits Alternative: use Exhaust Gas Cleaning System (EGCS) closed-loop exhaust gas scrubbers in Great Lakes (NaOH, flocculent, coagulant, weight, space, labor, cost) 6

7 MARPOL (EPA) ECA NOx Emission Limits 80 % Reduction Applicable to engines in conversions and new construction Large diesels will require Selective Catalytic Reduction (SCR) for Tier III (aqueous urea, weight, space, labor, cost) 7

8 Status Status of Emission Control Area (ECA) Air Emissions Requirements Fuels must be available Congressionally mandated steamship exemption; IMO supported to 2020 EPA Heavy Fuel waiver streamlines conversion to a diesel engine(s) with a fuel Sulfur waiver until 2026 Premise for study: Not coming up to EPA ECA emissions standards is not sustainable in the long run 8

LNG Marine Fuel Developments LNG cargo carriers use cargo burn-off for

Glutra (2000), non-lng cargo vessels in Norway primarily now 37 operating

from HFO to LNG Harvey Gulf International contracted for 5 LNG powered

3,100 TEU containerships and conversion of 2 Orca RO-ROs Washington State

9 LNG Marine Fuel Developments LNG cargo carriers use cargo burn-off for fuel approaching 270 vessels; over 40 years now Beginning the ferry Glutra (2000), non-lng cargo vessels in Norway primarily now 37 operating Recent conversion of a 5 year old 25,000 DWT product tanker Bit Viking from HFO to LNG Harvey Gulf International contracted for 5 LNG powered supply vessels (first ABS, USCG) TOTE has contracted for 2 (+3 options) 3,100 TEU containerships and conversion of 2 Orca RO-ROs Washington State Ferries has signed agreement with DNV for help in conversion of 6 Issaquah class ferries i9

10 Norwegian value chain LNG Fuel Price Projections pipeline cost 50-60% liquefaction 25-20% distribution 25-20% Washington State ferries study for 2014 Henry Hub ± $0.50/gallon liquefaction $0.43/gallon trucking (CA) $0.31/gallon total $1.24/gallon U.S. Energy Information Agency early 2013 projections 10

11 AAA Conceptual Design Same delivered power to thrust Acceptable endurance/range ABS/DNV want LNG tanks near centerline min(b/5 or 11.5 m) from side min(b/15 or 2 m) from bottom Room for two 17.5 ft OD x 43 ft. tall tanks P/S 11

12 Requirements Exist but Not Official Yet in U.S. from January 2009 Both reflect: IMO Interim Guidelines on Safety for Natural Gas-Fuelled Engine Installations in Ships, Resolution MSC 285(86), June

13 Candidate Gas Engines 13

14 Plant Configuration Two P/S 160 cubic m useable volume LNG tanks Single natural gas main engine (first example) Rolls-Royce Bergen B35:4012VG engine (rated to 5400 kw) single fuel option requires a 600 kw electric take-home motor CRP propeller driven through single PTI reduction gear Two new diesel generator sets Cat C18 ACERT Tier rpm One new gas and one new oil auxiliary boiler Stern thruster, bow thruster, and unloading the same 14 nothing changed fwd of FR183

15 Assumed Round Trip Voyage Duluth to Gary Re: Parsons, M. G., Singer, D. J. and Denomy, S. J Integrated electric plants in future Great Lakes self-unloaders, Journal of Ship Production and Design, 27, 4,

16 LNG Use in One Summer Round Trip Tank margins: head space 10% cooling margin 10% Operational fuel margin with two 160 cubic m useable volume tanks: 41.7% margin when refueling every round trip 27.5% margin when refueling once per week 16

17 Annual Fuel Cost Comparison Bunker C $695/t ~ $2.59/gallon LNG $690/t ~ $1.21/gallon IFO180 $710/t ~ $2.60/gallon MDO $1025/t ~ $3.31/gallon 17

18 Air Emissions Comparison (t/yr) NOx reduced ~230 t/y compared to IFO diesel conversion SOx, particulate matter (PM) essentially eliminated Green House Gases reduced 39% ~13,700 t/y 18

19 Single-Fuel LNG Conversion Inboard Profile P/S Rolls-Royce Bergen engine version 19

20 Single-Fuel LNG Conversion Poop Deck 20

21 Single-Fuel LNG Conversion Spar Deck 21

22 Single-Fuel LNG Conversion Main Deck 22

23 Single-Fuel LNG Conversion Operating Deck 23

24 Single-Fuel LNG Conversion Tank Top 24

25 Dual-Fuel LNG Conversion Inboard Profile Wärtsilä engine version MaK version would move tanks fwd 1-2 web frames 25

26 Dual-Fuel LNG Conversion Operating Deck 26

27 Typical Great Lakes Shipyard Schedule 26 weeks 27

28 Capital Cost Estimate Summary 28

29 Remaining Life-Cycle Economic Analyses Assumes N =15 year of remaining useful life Assumes that all costs, savings and incomes inflate at the same rate Net Present Value of cash flow 15 J NPV(i,N) = CAPEX 0 + Σ Σ PW(i,n)*( cost/savings jn, income jn ) n =1 j =1 J includes: fuel used; steamship fuel saved; maintenance; steamship maintenance saved; extra fit-out and layup saved; lube oil used; lube oil saved; scrubber NaOH, flocculent and coagulant; 3 oilers eliminated; added cargo 29

30 Net Present Value of Conversion Options 30 Diesel conversions after 1/2016 will need SCR for NOx

31 Net Present Value Sensitivity to LNG Price 31

32 Conclusions The availability of LNG at an appropriate price will be critical to the economic viability of conversion to LNG fuel rather than conversion to diesel. The naval architecture challenges appear to be workable. EPA Heavy Fuel waiver to December 31, 2025 is a clear disincentive to the conversion to LNG Single fuel option is superior on fuel use, air emissions, remaining life-cycle NPV and dynamic response Initial applications would/should probably use dual-fuel for LNG availability and price risk avoidance 32

33 Acknowledgements GLMRI study funded through support from the U. S. Maritime Administration (Cooperative Agreement #DTMA1H11002). 33

34 Special Thanks to Noel Bassett, American Steamship Co. Claus Emmers, Chart Industries, Inc. Jan Kubica & Joris van Kriej, Chart Ferox, AS Mark Barker, Interlake Steamship Co. Mitch Koslow, Keystone Shipping Co. Odd Horgen, Jakob Nielsen & Sindre Haberg, Rolls-Royce Bergen Ken Westcar, Toromont Cat Power Systems John Hatley, Pete Jacobs, Quentin Stewart & Wärtsilä NA, Inc. all the many others acknowledged in the paper. 34

35 Thank you. Questions? 35

The Potential Conversion of the U.S. Great Lakes Steam Bulk Carriers to LNG Propulsion

The Potential Conversion of the U.S. Great Lakes Steam Bulk Carriers to LNG Propulsion Michael G. Parsons, Arthur F. Thurnau Professor Emeritus Department of Naval Architecture and Marine Engineering University