During the 2017 GREEN4SEA Conference, Steve Esau, General Manager for the multi-sector industry coalition SEA\LNG, focused on “The case of LNG as a marine fuel”. Mr. Esau explained that the coalition was created with the aim to accelerate the widespread adoption of LNG as a marine fuel. The coalition looks to highlight the viability and demand for LNG across the maritime value chain, thereby creating the necessary confidence between each link. SEA\LNG focuses on addressing the commercial barriers to LNG, particularly in the deep-sea shipping segment.
It brings together key players in the value chain, including shipping companies, classification societies, ports, major LNG suppliers, LNG bunkering companies, infrastructure providers, and OEMs (original equipment manufacturers), helping to break down the commercial obstacles to transform the localised use of LNG as a marine fuel into a global reality.
Regulation is tightening and is driving the adoption of LNG as a marine fuel, and also for alternative marine fuelling solutions and the abatement systems. Last October, The IMO’s Marine Environment Protection Committee (MEPC) announced the introduction of a 0.5% global sulphur cap, which will come into effect in 2020. Emission Control Areas (ECAs) have been enforced in Northwest Europe and in the US since 2005; first covering SOx, and more recently including NOx. In addition, we are seeing the development of additional ECAs in other parts of the world. For example, China is in the process of introducing ECAs around three major port areas in Eastern China, France plans to sponsor a Mediterranean ECA, and ECAs have been planned for Mexico, the Caribbean, and Australia.
Although SEA\LNG is a young organisation, since the IMO’s sulphur cap decision was announced, we have seen a massive upturn in interest in LNG as a potential marine fuel solution. There are some clear short term regulatory signals, however, thinking about the long term, if we anticipate what the regulatory trajectory might be, guided by the current emissions limits for diesel of vehicles in the roads of Europe, these limits are about 500 times more stringent than those proposed under the IMO regulations for 2020. Regulation is heightening but there is a long way to go.
LNG as a marine fuel is not just a concept, but a reality that is here today. There are approximately 100 LNG fuelled vessels in operation worldwide. In addition, there are 101 confirmed new builds and a further 72 LNG-ready ships in operation or on order. Every week there are new announcements about investments in LNG fuelling solutions. The order book clearly demonstrates the growing number of deep-sea vessels, especially in the cruise sector, the container sector, and the bulk sector.
LNG is widely available. Today, there are circa 20 countries exporting and 35 countries importing LNG. Meanwhile, market penetration is.increasing due to the development of new technologies, such as floating storage and regasification units (FSRUs).
Interestingly, many LNG import terminals are within or near existing ports, so the bulk infrastructure is well located. LNG bunkering is currently available in circa 57 different locations with a further 72 LNG bunkering locations in various stages of planning. By the end of 2017, there will be six LNG bunker vessels in operation, enabling STS (ship-to-ship) bunkering in Northwest Europe and the US, with plans for others in Asia.
For LNG suppliers the global bunker fuel market represents an attractive prize – it is approximately equal, on an energy equivalent basis, to the current global LNG market. And at the moment there is a surplus capacity within the LNG market.
Why LNG?
LNG is a marine fuel that offers great local emissions performance. It has the ability to significantly reduce SOx and NOx emissions, depending on the technologies used. It also deals with particulate matter (PM) emissions which are not currently regulated but where there is likely to be increasing regulatory focus. LNG represents a major step forward for CO2 emissions – using best practices and technology, LNG can deliver about 10- 20% GHG savings compared with traditional bunkering fuels. Furthermore, LNG as a marine fuel is cost effective, and widely available. Global LNG bunkering infrastructure is growing, and we are seeing significant steps in the major ports serving deep-sea shipping trades such as Singapore, Yokohama, Panama and Eastern China. Simply put, LNG offers a future-fit solution for local emissions.
What is SEA\LNG?
SEA\LNG is a not for profit collaborative industry foundation serving the needs of its member organisations. SEA\LNG’s members include: ABS, Bureau Veritas, Carnival Corporation & plc, Clean Marine Energy, DNV GL, Eagle LNG Partners, ENGIE, ENN Group, Gas Natural Fenosa, GE, GTT, JAX LNG, Keppel Gas Technology, Lloyd’s Register, Mitsubishi Corporation, NYK Line, Petronet LNG, Port of Rotterdam, Qatargas, Shell, Total, TOTE Inc., Toyota Tsusho and Wärtsilä.
SEA\LNG is guided by a board, which is led by Chairman Peter Keller. Each member organisation commits mutually agreed human resources, data analysis, and knowledge sharing in support of SEA\LNG initiatives and activities and financially contributes via a membership fee.
The SEA\LNG coalition was established by Xyntéo, an advisory body which works with global companies to identify and implement collaborative initiatives that enable businesses to grow in a new way, fit for the resource, climate and demographic realities of the 21st century.
SEA\LNG brings together the knowledge and experience of its members from across the marine value chain and also from credible external parties . SEA/LNG looks to demonstrate ‘proof points’ for LNG as a marine fuel by showing real, practical examples of successful projects combined with externally validated data and facts. Finally, SEA\LNG focuses on effective communication with the stakeholders who are key to driving the transformation, including the shipping industry, ports, and local authorities, governments, and regulators aiming to greater educational impact.
The above text is an edited article of Steve Esau’s presentation during the 2017 GREEN4SEA Conference & Awards
You may view his presentation video by clicking here
The views presented hereabove are only those of the author and not necessarily those of GREEN4SEA and are for information sharing and discussion purposes only.
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Steve Esau, General Manager, SEA\LNG
Steve is General Manager at SEA\LNG. Before taking up his position at SEA\LNG Steve was Head of Energy at Xyntéo. He began his career as a Geophysicist in BP, subsequently working in a variety of business development, strategy and analysis roles in the company’s gas, power & renewables and energy trading businesses. Steve has also worked in the City of London, for a commodity futures market, leading the development of financial instruments for the energy sector and for management consultants Pöyry Energy and Caminus Energy, where he specialised in providing advice on Carbon Capture and Storage (CCS); gas and power market policy; and commodity trading and risk management.
