LNG for Shipping – Current status - GoLNG | Main page Class 2000 Car/passenger ferry Fjord1 DNV...

LNG for Shipping – Current status

Small Scale LNG 22nd Oct 2013 Claus Winter Graugaard Head of Customer Service & Business Development

© Det Norske Veritas AS. All rights reserved.

LNG for ships

LNG as ship fuel

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First LNG fuelled ship: GLUTRA in 2000

LNG fuelled cruise liner type ferry: Stavangerfjord in 2013


There are currently 81 confirmed LNG fuelled ship projects

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Updated 06.09.2013 Excluding LNG carriers and inland waterway vessels

© Det Norske Veritas AS. All rights reserved. 4

42 LNG fuelled ships in operation worldwide Ships in operation

Year Type of vessel Owner Class 2000 Car/passenger ferry Fjord1 DNV 2003 PSV Simon Møkster DNV 2003 PSV Eidesvik DNV 2006 Car/passenger ferry Fjord1 DNV 2007 Car/passenger ferry Fjord1 DNV 2007 Car/passenger ferry Fjord1 DNV 2007 Car/passenger ferry Fjord1 DNV 2007 Car/passenger ferry Fjord1 DNV 2008 PSV Eidesvik Shipping DNV 2009 PSV Eidesvik Shipping DNV 2009 Car/passenger ferry Tide Sjø DNV 2009 Car/passenger ferry Tide Sjø DNV 2009 Car/passenger ferry Tide Sjø DNV 2009 Patrol vessel Remøy Management DNV 2009 Car/passenger ferry Fjord1 DNV 2010 Patrol vessel Remøy Management DNV 2010 Car/passenger ferry Fjord1 DNV 2010 Patrol vessel Remøy Management DNV 2010 Car/passenger ferry Fjord1 DNV 2010 Car/passenger ferry Fjord1 DNV 2010 Car/passenger ferry Fosen Namsos Sjø DNV 2011 PSV DOF DNV 2011 Chemical tanker Tarbit Shipping GL 2011 Car/passenger ferry Fjord1 DNV 2011 PSV Solstad Rederi DNV

Year Type of vessel Owner Class 2012 Car/passenger ferry Fjord1 DNV 2012 PSV Eidesvik DNV 2012 PSV Olympic Shipping DNV 2012 PSV Island Offshore DNV 2012 General Cargo Nordnorsk Shipping DNV 2012 PSV Eidesvik Shipping DNV 2012 PSV Island Offshore DNV 2012 Car/passenger ferry Torghatten Nord DNV 2012 Car/passenger ferry Torghatten Nord DNV 2012 Car/passenger ferry Torghatten Nord DNV 2013 PSV REM DNV 2013 RoPax Viking Line LR 2013 Car/passenger ferry Torghatten Nord DNV 2013 Harbor vessel Incheon Port Authority KR 2013 General Cargo Eidsvaag DNV 2013 RoPax Fjordline DNV 2013 High speed RoPax Buquebus DNV



39 confirmed LNG fuelled newbuilds

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Confirmed orderbook Year Type of vessel Owner Class 2013 Ro-Ro Sea-Cargo DNV 2013 Ro-Ro Sea-Cargo DNV 2013 RoPax Fjordline DNV 2013 Car/passenger ferry Norled DNV 2013 Car/passenger ferry Norled DNV 2013 Ro-Ro Norlines DNV 2013 Ro-Ro Norlines DNV 2013 Tug Buksér & Berging DNV 2013 Patrol vessel Finish Border Guard GL 2013 Car/passenger ferry Society of Quebec ferries LR 2013 Tug CNOOC CCS 2013 Tug CNOOC CCS 2014 Car/passenger ferry Society of Quebec ferries LR 2014 Tug Buksér & Berging DNV 2014 PSV Harvey Gulf Int. Marine ABS 2014 PSV Harvey Gulf Int. Marine ABS 2014 PSV Harvey Gulf Int. Marine ABS 2014 PSV Harvey Gulf Int. Marine ABS 2014 Gas carrier SABIC BV 2014 Gas carrier SABIC BV 2014* Product tanker Bergen Tankers LR 2014 General Cargo Egil Ulvan Rederi DNV 2014 General Cargo Egil Ulvan Rederi DNV 2014 PSV Remøy Shipping DNV 2014* Car/passenger ferry Aktien-Gesellschaft EMS GL 2014 Car/passenger ferry Samsoe Municipality DNV

Year Type of vessel Owner Class 2015 PSV Siem Offshore DNV 2015 PSV Siem Offshore 2015 PSV Simon Møkster Shipping DNV 2015 PSV Harvey Gulf Int. Marine ABS 2015 PSV Harvey Gulf Int. Marine ABS 2015 LEG carrier Evergas BV 2015 LEG carrier Evergas BV 2015 LEG carrier Evergas BV 2015 Container Ship TOTE Shipholdings ABS 2016 Container Ship TOTE Shipholdings ABS 2016 Car/passenger ferry Boreal Transport 2016 Car/passenger ferry Boreal Transport

Updated 06.09.2013 Excluding LNG carriers and inland waterway vessels * Conversion project


All engine concepts are in use for ship propulsion

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"Why LNG as Fuel?"

Methane slip from gas engines have improved significantly, and further technical development is anticipated

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Methane slip varies significantly, but marine gas engines delivered from 2013 have lower emissions of GHG equivalents than similar diesel engines

2-stroke DF

CH4 emission [g/kWh]

Measured / expected - High

Measured / expected - Low

4-stroke DF / pure gas

Diesel engines

Measured - Average


DNV Shipping 2020 study 4-7 million tons of LNG p.a is required by 2020 corresponds to 0.2-0.3% of global LNG production 2010

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Supply 20

20

2013

42 ships in operation & 39 ships on order

4-7 Million tons p.a of LNG as

fuel for shipping

Limited volume of LNG as fuel for

shipping

Demand

1000 LNG fuelled ships


0

200

400

600

800

1000

1200

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020Tank Bulk Container RoRo Offshore General cargo Passenger ships Other

Approx. 1000 vessels will be fuelled by LNG and sailing within regions, primarily in the ECA zones

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Forecast of the LNG fuelled ships per region

YTD 42 ships in operation and 39 ships in order book

Combined with stricter emissions control regulations, Europe and North America will experience a growth in LNG fuelled offshore ships

Asia will play an important role, after 2020, driven by stricter regulations nations such as Singapore and Hong Kong

Under low economic growth and little environmental pressure scenario D, the number of new buildings has been estimated to be around 1000 by 2020

Offshore vessels and ferries dominate the LNG fuelled fleet and order book today, but there are on-going projects to develop concepts and designs for most ship types

Forecast of LNG fuelled ships per ship segment

- 50 100 150 200 250 300 350 400 450

Europe

North America

South East Asia

Midde East & India

Japan & Korea

South America

China

Australia & New Zealand

Tank Bulk Container RoRo Offshore General cargo Passenger ships Other


LNG for ships

A look to the past may light the future


LNG for ships

Global sulphur cap of 0.5% in 2020 will drive LNG fuel market globally

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Existing ECAs Upcoming ECAs?

2010: Sulphur < 1.0% 2015: Sulphur < 0.1%

ECA sulphur requirements

2011: NOx Tier II, -20% 2016: NOx Tier III, -80%*

*New builds, only m ECA

NOx requirements

2020 / 2025*: Sulphur < 0.50% * Date TBD pending 2018 review – but 2020 will apply in EU waters

Global requirements


LNG for ships

EU sulphur Directive - revision highlights Revised Directive agreed by

EU; - Alignment with MARPOL

Annex VI - Agreement on 0.5% in EU

waters in 2020 - PAX vessel requirements at

1,5% in all non-ECA EU waters until 2020 (200 NM)

- State aid for technology investments (scrubbers, LNG, infrastructure)

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LNG for ships

Global LNG bunker demand by 2020

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South America

North America

Europe & the Baltic Sea

Middle East & India

SEA

Japan & Korea

Australia & NZ

LNG Bunkering demand 2020 Equivalent to 4 -7 million tons of LNG

LNG Bunkering demand 2012

0.9 – 1.4 million

China

0.3 – 0.4 million

1.4 – 2.2 million 0.3 – 0.8 million

0.3 – 0.7 million

0.4 – 0.7 million

0.1 – 0.2 million

0.3 – 0.5 million 0.07 – 0.09 million

4-7 million tons of LNG p.a is required for 1000 ships in 2020. This corresponds to 0.2-0.3% of global LNG production of 2010


LNG for ships

Shell’s plans for LNG bunkering facilities in recent years

Shell self commitment: 25 % of Shell controlled vessels to run on LNG in 2025 (25% of approx. 1500 vessels 375 ships)

Some interested Suppliers 1. Shell/Gasnor 2. Bomin-Linde 3. GDF-SUEZ 4. Fortis BC 5. BP 6. SLNG 7. Woodside 8. KOGAS 9. CNOOC 10.ENN 11.…..


LNG for ships

Some thoughts about LNG as fuel pricing Gas price in Europe (Feb 2013): 11 to 12 $/mmBTU; in US: 3-4 $/mmBTU;

US: Liquefaction 5 $/mmBTU (LNG 10 $/mmBTU)

HFO price 720 $/t 18 $/mmBTU (equal LNG at to 840 $/t; (49 MJ/kg))

MGO price 1000 $/t approx. 25 $/mmBTU (LNG at 1167 $/t; (49 MJ/kg))

Assumed distribution costs: 3 to 6 $/mmBTU - LNG Europe on board of ship: 14 to - 18 $/mmBTU (11+3=14; 12+6=18) - LNG US on board of ship:

- Baseline Henry Hub: 10 to 15 $/mmBTU (3+5+3; 4+5+6) - Baseline LNG price US: 13 to 16 $/mmBTU (10+3; 10+6) - Baseline LNG price Europe: 14 to 18 $/mmBTU (11+3; 12+6)

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42 MJ/kg=11,6 kWh/kg; 1mmBTU=293 kWh; 0,040 mmBTU/kg


LNG for ships

LNG as a fuel for ships and the world of rules and regulations

2000 2001 first DNV Class rules for gas fuelled ships

2004 NMD proposal to develop the IMO IGF Code

2010 IMO MSC.285(86) in force

2013 DNV Rules Part 6 Ch 13: Gas Fuelled Ship Installations (Ver. Jan 2013)

2013 IMO IGF-Code: International Code of safety for ships using Gases or other low-flashpoint Fuels (draft Feb 2013)

2013 DNV SfC 3.325 Competence Related to the On Board use of LNG as fuel (Ver. April 2013)

2013 ISO Guidelines for systems and installations for supply of LNG as fuel to ships (OGP Draft 118683) (draft published in June 2013)

DNV Recommended Practice on LNG bunkering - Oct 2013

2013


LNG for ships

ECA Trade - Hamburg – St. Petersburg – Hamburg - round-trip via Kiel Canal

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Stage Operation Distance

1 Idling in port -

2 Manoeuvring 36 nm

3 Bunkering -

4 Canal passage 55 nm

5 Cruising 758 nm

6 Manoeuvring 20 nm

7 Idling in port -

8 Manoeuvring 20 nm

9 Cruising 758 nm

10 Canal passage 55 nm

11 Manoeuvring 36 nm

12 Idling in port -

TOTAL 1738 nm


LNG for ships

1. STRATEGY – FUEL DECISION Financial attractiveness and technical feasibility of available ECA compliance measures

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The case ship

1. Switching to low sulphur fuel

2. Retrofitting a scrubber system

3. Converting to Dual Fuel engines and install LNG tank

Evaluated measures

Container feeder

Abt. 1.000 TEU

Main engine abt. 8MW kW (medium speed)


LNG for ships

Total cost of DF conversion for the case vessel is estimated to 5,7 MUSD

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5.7

2.5

1.8

1.4

0 1 2 3 4 5 6

Conversion of DFengines + GVU

LNG tank + gasequipment

Yard work

Total cost

Costs [Million USD]

Delta costs for DF system components

Cost estimate for DF configuration with 300 m3 LNG tank


LNG for ships

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-15

-10

-5

0

5

10

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0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Acc

umul

ated

cos

ts [

MU

SD]

Years

Cumulative Total Cost [USD] compared to HFO-baselineECA 2015 SOx compliance only

Scrubbers Retrofit MGO-baseline LNG = HFO + 10% LNG = HFO LNG = HFO - 10%

Cumulated costs DF retrofit of 1000 TEU container vessel operating 100% in ECA

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ENGINE AND OPERATION

Emission compliance ECA SOX

Time in ECA 100%

Installed power ca. 8,000 kW

Baseline HFO

FINANCIAL

Discount rate 0%

Investment decision Retrofit

Tax regime None

FUEL PRICE

HFO 650 USD/tonne

MGO 1,050 USD/tonne

LNG HFO / HFO±10%


LNG for ships

The path to becoming ‘LNG Ready’ - DNV Service for owners, designers, yards -

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1. STRATEGY – FUEL DECISION • High level technical feasibility

• Fuel consumption estimates

• Financial feasibility

• Cost, pay-back time and sensitivity analysis

• Fuel availability

2. CONCEPT CAPTURE • Detailed technical feasibility study

• Performance benchmarking

(Machinery and tank evaluation and optimization)

• Concept Design Review

(Statement - class acceptance)

• HAZID

CLASS APPROVAL (after vessel is ‘LNG Ready’)

3. INITIAL DESIGN • Approval in Principle

4. RISK ASSESSMENT • Gas fuel safety risk assessment (mandatory by

IMO)

Decision Points. Proceed with the LNG option or not.


LNG for ships

Published Thursday, August 29, 2013 UASC, Hyundai Heavy ink $2bn deal

- Hyundai to build new greenest and largest container vessels for UASC

United Arab Shipping Company (UASC) has signed a new vessel building program for some of the greenest and largest container vessels in the world.

contract was signed with HHI for five 18,000 TEU vessels and five 14,000 TEU vessels. The order includes options for one additional 18,000 TEU vessel and six additional 14,000 TEU vessels.

These vessels will also be the first large container vessels that will be "LNG ready" at delivery."


LNG for ships

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LNG for ships

First domestic LNG fuelled ferry in EU

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LNG for ships

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Safeguarding life, property and the environment

www.dnv.com

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