The MAGALOG Project LNG-fueled shipping in the Baltic Sea

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1 The MAGALOG Project LNG-fueled shipping in the Baltic Sea The project is supported by: 1

2 MAGALOG WP4.3 The competitive strength of LNG as ship fuel 2

3 Objective and background of study Competitive strength of LNG to traditional marine fuels and other alternative is briefly outlined. Traditional marine fuels are available worldwide, but new requirements related to sulphur content and introduction of strigther environmental requirement will influence of the availability and the cost level of the traditional marine fuels. Today large quantities of LNG are available worldwide, and the LNG market is growing. Hence, the availability of LNG will increase. The environmental properties of LNG are superior to HFO, and LNG is considered the most promising alternative fuel in the maritime segment today. 3

4 Ship fuel today status In international shipping today heavy fuel oil is used as the main fuel quality for propulsion. Auxiliary engines and operation in harbours may require use of marine gas oil (MGO) or of marine diesel oil (MDO). 4

5 World-wide bunker fuel consumption Assessed in an updated greenhouse gas study report to IMO /1/. Annual fuel consumption data were obtained from an activity-based approach. Fuel consumption split by Coastwise / ocean-going type of operation and high level ship categories Mill tons/year Oceangoing Coastwise Other Total Bulk Container Gen Cargo Other Ropax Cruise Tank Vehicle / RoRo Grand Total

6 World wide bunker fuel consumption (2007) Status 2007: Fuel consumption by ship category Tank Bulk General Cargo Container RoRo/Vehicle Ropax Cruise Other Deep sea ships Regional ships Fuel consumption (million tons / yr) The total fuel consumption: 333 mill ton/year (3.3% of the world fossil fuel oil consumption) Deep sea: 220 mill ton/year Regional: 113 mill ton/year Divided by main ship categories and assumed typical type of operation (Coastwise shipping is mainly ships < dwt, RoPax, Cruise, Service and Fishing), 6

7 Availability of LNG There are two alternative concepts for supplying LNG that can be used as ships fuel: By producing LNG from natural gas within reasonable distance from bunkering locations, i.e. within Northern Europe (Small scale LNG); By purchasing LNG that is imported to Europe from distant sources (Large scale LNG). 7

8 Small scale LNG production plants at Kollsnes, near Bergen, Norway Photo from Gasnor 8

9 Small scale LNG in Norway and Europe Norway: Four LNG production plants at three locations in Western Norway Annual capacity of tonnes, and individually ranging from to tonne. A new plant is being constructed with an annual capacity of tonnes. The Norwegian small scale LNG plants have been constructed not only for the purpose of supplying ships, but for supplying onshore users such as industrial plants, as an alternative to building pipelines.. Supplies to ships currently occupy some 25% of the capacity of existing Norwegian small scale LNG plants. The new t/y plant being constructed at Risavika, near Stavanger, is believed to have significant yet uncommitted capacity that may possibly be applied to supplying ships. Several parties have expressed intents of constructing more LNG capacity in Norway if supported by market conditions. Gasnor (one of the MAGALOG partners) owns some 90% of present small scale LNG capacity in Norway, whereas a different group will own the new t/y plant. Minor capacities for producing LNG on a small scale exist in certain other European countries, including Scotland, Poland and Russia, but are not known to have been applied as ships fuel. 9

10 Large scale LNG In 2007, only 0.1% of the LNG handled in Europe originated from the small plants in Norway. The other 99.9% were imported to Europe from distant origins, with Algeria, Nigeria, Qatar, Egypt and Trinidad as the largest sources. Spain and France were the largest European importers of LNG, accounting for 45% and 24% of total imports (calculated from BP 2008). The LNG imported to Europe is moved on ships having a cargo capacity usually upwards of m3 (corresponding to 850 GWh of energy), and is received at correspondingly large terminals such as Zeebrugge in Belgium and Isle of Grain in England. The LNG is generally regasified at these terminals and fed into the main natural gas pipeline grid, thus supplementing gas arriving by pipeline from Russia, Algeria and European sources. Natural gas imported as LNG accounted for 12% of gas consumption in the EU in 2007 (BP 2008). Loading LNG from large terminals may emerge as an attractive supplement to small scale LNG for supplies as ships fuel, and may provide added scope and security of supply as well as cost benefits particularly as volumes grow. In MAGALOG s assessment this will be feasible, though requiring that certain challenges must be overcome. 10

11 LNG trade Evolution of world LNG trade 11

12 Liquid biofuel, (LBF) Liquid biofuel (LBF, biodiesel) is made from vegetable oil, which also can be used directly as unprocessed fuel. The annual vegetable oil production globally is about 100 million tonnes. (Fediol 2008). The majority of global biodiesel production is based in the European Union which produces 5,7 million tonnes in 2007 (70-80% of world production). Biodiesel has been produced in industrial scale in EUcountries since early 1990 s and the last 10 years a rapid growth in production capacities is observed. As an example the production growth from was 17%. 12

13 Average emission impacts of biodiesel for heavy-duty highway engines 13

14 Biofuels (LBF) on ship engines Conclusions from comparision of emissions on a Wärtsilä 32 engine running on heavy fuel and biofuel (palm oil): NOX emissions are slightly higher with LBF. This result correlates with a slightly lower fuel consumption measurement with LBF. The reason for this is possibly the rate of heat release, which is faster with LBF operation due to the presence of oxygen acting as a combustion catalyst. CO emissions are in the low range with both fuels. Although an increase was recorded when using LBF, in practice it has no influence since the measured values are in both cases very low. One reason for the increase may be some cold regions in the combustion chamber causing a disturbance of the combustion process. THC (total hydrocarbons) emissions are significantly lower with LBF operation. The reason for this is likely to be the different composition of hydrocarbons present in HFO and LBF. HFO contains more light fractions, which evaporate more easily, thus influencing the THC emissions. Palm oil is, for all intents and purposes, a sulphur-free product since the fuel analyses indicated that it contained less than 10 mg/kg of sulphur. The difference, therefore, to an average quality heavy fuel with a sulphur content of ~ 2.7 % m/m is tremendous, and this difference is clearly indicated in the SOX emission levels. Particulate matter (PM) emissions are mainly influenced by the presence of sulphur and ash constituents in the fuel. Since palm oil is almost sulphur-free and contains only small amounts of ash constituents, such as iron, phosphorus, calcium, potassium, aluminium, magnesium and sodium, it is clear that measured particulate emissions are also much lower than with HFO operation. 14

15 Available ship engines for biofuel operation Major engine manufacturers as MAN B&W, Wärtsilä, Caterpillar and Rolls Royce all claime that biofuels may be suitable for their ship engines, but so far they have limited experience. From a technical point of view, only minor modification of the engines components is required to run on biofuel compared to conventional fuel. Wärtsilä experience is that, it can be concluded that liquid biofuel (LBF) operation does not, to any large extent, have an effect on the condition of; the combustion chamber the exhaust system the power system including pistons, cylinder liners, bearings, etc. the turbocharger and charge air system. The reason for these excellent results is that the fuel is relatively clean and has low ash content. Changes to the external system have been radical. It is of the utmost importance to be able to control the fuel temperature all the way from the storage tank to the separator, the day tank, the booster unit, the engine, and back to the booster unit s mixing tank. Such changes will be required for all engines types, and this will add some extra cost to the engines and fuel system. 15

16 Availability of ethanol Global fuel ethanol production grew 27.8% to 26 million tonnes of oil equivalent (920 thousand barrels daily on a volumetric basis) in Supply growth accelerated for the third year in a row due to increases in the US and Brazil. 16

17 Ethanol as fuel Ethanol as fuel is today used as blends in gasoline in various ratios. No ship engines have so far been developed to run on ethanol as fuel. However, Scania has developed a heavy duty bus engine which operates on 95% ethanol + 5% ignition improver, indicating that in a future scenario ethanol may also be made available as s ship fuel assuming that competitive prices and production volumes can be achieved. 17

18 Penetration of new fuels into the maritime transport industry The latest IMO study /1/ consider the market penetration potential for seven alternative fuels: (1) marine distillates; (2) heavy fuel oil; (3) LNG; (4) LPG; (5) biodiesel; (6) synthetic diesel such as FTD; and (7) other renewable fuels. When considering potential market penetration it is assumed that: Oil is a significant primary energy source in 2020 and 2050 (16-28% of world primary energy in 2050) In 2050, fossil fuels contribute from 57-82% of all primary energy Previous estimates range fuel consumption for shipping in 2050 from million tonnes. Further, it is assumed that the sulphur regulations proposed in the revised MARPOL Annex VI are adopted and that a global 0.5% sulphur cap is applied in 2020, with the opening for alternative equivalent compliance routes. It is thus considered that permission to use oil-based fuels are continued, although the cost would be expected to be higher. Therefore, the move from oil-derived fuels would have to be motivated by economy. Since there are already binding emission targets for GHG reductions on land it is assumed that biofuels would fetch a better price there and would not be used by ships. The same situation would apply for the use of renewable energy from land. Natural gas is believed to be an important energy source in the future. LNG propulsion would appear attractive for Coastwise shipping (RORO and ROPAX vessels). LNG could also be particularly interesting on tank ships where fuel tank storage above deck is expected to be feasible, with limited negative impacts. 18