A new report finds that LNG is a fuel with global growth potential, but also that so far the demand is limited in the small and medium-sized ports. While Westwood Global Energy Group expects a turnover of USD 236 billion in the global LNG market from 2018 to 2022, the report, prepared by COWI for the Port of Esbjerg, indicates that it would be inappropriate to invest in LNG at the Port at the current time.
The report was prepared by COWI, which consulted with the gas consulting firm Kosan Crisplant and others. The project is part of the ‘Green Cruise Port’, and COWI has studied how the LNG market will evolve in the years ahead throughout the entire Baltic region. In this context, they have created various business cases for the Port of Esbjerg.
Peter Harbo, business development manager at the Port of Esbjerg, explained:
The conclusion is clear. LNG is interesting, but it is still too early for the Port of Esbjerg. LNG is a more eco-friendly and natural fuel, and it makes good sense to use it in some sectors. But it requires huge investments and no one will make them in Esbjerg until demand is present.
Depending on the type of plant to be built at the port, the price could quickly reach EUR 10 million. It is not easy to cool down and liquefy the gas and keep it in its liquid form, which makes it 600 times more concentrated, an official statement by the Port reads.
- LNG is used by only a few ships in Esbjerg
At the moment, LNG is used only by some of the big cruise ships that enter Copenhagen, Amsterdam, Barcelona and other ports, but not the small ships that call at Esbjerg. At the same time, the cruise ships that actually call at Esbjerg are refueled in other ports.
The report also reviews the demand for LNG for other than cruise ships. According to the analysis, installation vessels for offshore wind farms, crew transfer vessels and offshore supply vessels that currently sail from Esbjerg will not be using LNG for the time being.
The technology is also in place to ensure that trucks and buses can run on LNG, but even here the report does not show great prospects: It is probably more likely that we will see more hybrid or hydrogen vehicles, says Peter Harbo.
In fact, in addition to COWI predicting limited demand for LNG in Esbjerg, a number of ports around Denmark already have LNG and facilities for production and LNG refueling. There are LNG installations in Oslo, Gothenburg, Rotterdam, Zeebrugge and Hamburg.
- Major international market
Recently, Shell estimated that by 2030, 20-30% of the total maritime fleet will sail on LNG.
According to Westwood, the LNG sector is about to emerge from a difficult period in which reluctant investors and an oversupply of LNG have led to a number of cancelled projects. Now, the mood has changed. Mark Adeosun, Lead Analyst of Westwood Global Energy Group’s research team, says:
Although the oversupply still gives cause for concern, we anticipate great demand, especially in Asia, and stable demand in Europe. This means that the oversupply will be reduced over the next 5-7 years. Many countries are looking at other forms of energy than the traditional ones. This has generated more projects in the pipeline. In 2050, CO2 consumption must be 50% lower, so there is pressure to deliver various solutions.
He adds:
If the right financial model is found, LNG in Esbjerg could be a good idea. It also depends on whether the Nord Stream 2 gas pipeline from Russia is delayed. If it is, then it might be interesting.
According to Westwood Global Energy Group, in the period up to 2022, 265 ships will be delivered worldwide that can transport LNG, and there will therefore be a record high number of transportation options by the time we reach 2022.
Two ways to deliver LNG
The LNG supply chain can be divided into two main groups. Either supply from a remote terminal, where the LNG is delivered to the port via trucks, containers or ships.Or a permanent station at the port, which is a large investment, and requires greater strategic planning. COWI has investigated 12 different permanent solutions in its report.
The only solution with potential that they identify is that it may be an idea to provide ships with LNG if the refuelling takes place from a terminal in another port with LNG facilities. The refueling has actually been performed at the Port of Esbjerg by driving tank vehicles up from Zeebrugge and refuelling directly from the vehicle to the ship.
The problem with this way of doing things is just that when the LNG is transported by truck in this way, some of the green mindset and gains also disappear, Peter Harbo commented.
The report also indicates that the development of batteries for ferries is progressing so rapidly that this would seem a realistic option in the future.
At the moment, it appears that smaller ships and passenger ferries are more interested in electrical power than LNG.