Liquefied Natural Gas (LNG) bunkering activity is booming in ports across North America and Europe.
In Spain, bunkering operations saw a 272% increase in 2020 compared to 2019; in December 2020, the Port of Hamilton saw the first ever LNG bunkering take place in the Great Lakes area; in February, bunker supplier Peninsula was the latest marine fuel provider to add LNG to its offering.
The outlook, overall, is a positive one. Peter Keller, Chairman at SEA-LNG, the multi-sector coalition advocating greater use of LNG, told PTI the growth in demand is a result of shipowners “starting to embrace” the need for environmental change to meet Greenhouse Gas (GHG) emissions targets for 2030 and beyond.
On 2 February, SEA-LNG announced its latest report on the “fundamental binary choice” facing ship owners, arguing that it is better to invest in LNG now, than wait for developing renewables and suffer the environmental consequences that it may bring.
“We know that ship owners generally are very conservative,” Peter said. “In the long term, I think all ship owners are starting to understand that these environmental considerations which came from IMO 2020, and now the targets for 2030, 2050 and beyond are real.
“We are going to have to deal with them and look for the best solutions.”
Responding to international climate goals, stakeholders are fervent on emerging renewable fuels to move away from current industry-standard fuels such as Marine Gas Oil (MGO) and Heavy Fuel Oil (HFO).
Use cases of hydrogen, ammonia, and biofuels continue to crop up daily – yet Keller claims the only means-tested alternative fuel available in a shipping firm’s ‘basket’ right now is LNG.
Renewable fuel testing on deep-sea shipping has been done to minimal levels so far, Keller argues.
The Chairman tied this issue in with factors such as price and availability of renewables, and the financing available long-term investment to bunker these fuels, as key drivers as to why some shipping companies are waiting to convert to green power.
“There will be other fuels in that basket, but how long is the future? We hear the most positive proponents talk in terms of a decade or more. In 10 years, we could do a tremendous amount of damage,” he lamented.
How ports factor in
Despite the prodigious growth of LNG bunkering facilities at ports in North America and Europe, in emerging economies such as Latin America and Africa, the number of bunkering facilities remains low. In October 2020, the Port of Coega in South Africa dipped its toe into LNG bunkering; yet compared to its European and North American counterparts, emerging economies are behind.
For a global shipping industry to hit its global GHG goals, surely even the smaller and intermediate ports in less-developed economies need to be onboard?
Keller argues a confluence of factors are at play here: including financing. “It’s pretty clear that that if you can provide financing that’s favourable with the environmental benefits, that’s going to be attractive,” Keller told PTI.
The most cost-effective method of doing so, Keller noted, is promoting Truck-to-Ship (TTS) bunkering of LNG. “I always tell ports: you don’t need to spend $25 or $30 million to spend that money to build a or bunker vessel for day one,” Keller explains.
Whilst Ship-to-Ship bunkering facilities may be a more feasible option for major deep-sea shipping firms, for the smaller and intermediate reports in lower-traffic economies, TTS LNG bunkering is cheap, easy, and no different from current bunkering methods with mineral fuels.
“It doesn’t cost a lot of money to get in. Once you’re in, then it’s like any other bunkering capability,” Keller said.
The Port of Hamilton Ontario is using TTS bunkering whilst demand develops in utilising LNG, Keller said.
“That’s how you start, minimal investment and minimal dollars going out. Then, when you develop some expertise, you develop a following, then you look at building a bunker bar or a bumper vessel, depending on the technical realities.”
Considering the lifecycle
SEA-LNG’s View from the Bridge report emphasises that for LNG infrastructure investment to reach the lesser-known economies, decisions on future fuels “must be made” on a full lifecycle basis.
From Keller’s perspective, whilst no fuel is perfect, greater use cases and examples from LNG investments in global centres like Singapore and Rotterdam will continue to pique major industry interest on making major infrastructure investments for the converting to green.
But for the emerging economies, the case is clear: to meet net-zero carbon targets convert to LNG with minimal investment now, rather than waiting for emerging fuel sources where the lifecycle analysis has not been considered yet.
“We’ve done life cycle analysis on LNG. We continue to do that. We know what the ups are. We know what the downs are,” Keller said.
“We know the mistakes, as we’ve been using the fuel for 50 years. We know it’s safe. We have not done that with some of these other alternatives that are being discussed to include some of the blends.”
The potential is there. In the bulk market, Latin America is home to some of the largest oil-producing nations such as Brazil, Venezuela, and Argentina – yet Latin America has just one LNG bunkering facility at the Port of Colon.
For the international shipping sector to truly band together in the name of reaching climate goals, renewable fuels need to be front-and-centre. As major stakeholders like the Panama Canal continue to realise the benefits of cleaner bunkering fuels, the case for financing LNG infrastructure at ports will be made stronger.
