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LNG Bunkering Terminal Infrastructure: Opportunities and Challenges for LNG ships
Mr Faizul Ismail Vice President, LNG Business 21 March 2013
LNG MALAYSIA FORUM 2013, Kuala Lumpur, Malaysia © Copyright reserved MISC BERHAD
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Disclaimer
Certain statements made in this presentation and in other written or oral statements made by MISC Berhad are “forward-looking statements” that involve subjective judgement and analyses and are subject to significant uncertainties, risks and contingencies, many of which are outside of, or unknown to MISC Berhad. A forward-looking statement is a statement that is not a historical fact and, without limitation, includes any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain words like: “believe”, “anticipate”, “expect”, “estimate”, “project”, “will”, “shall” and other words or phrases with similar meaning. Actual future events may vary materially from the forward looking statement and the assumptions on which the forward looking statements are based. Given these risks and uncertainties, readers should not place undo reliance on forward-looking statements as a prediction of actual results.
These forward looking statements speak only as of the date of this presentation. MISC Berhad disclaims any obligation or undertaking to publicly update or revise any of the forward looking statements in this presentation, whether as a result of new information, or any change in events, conditions or circumstances on which any such statement is based.
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Contents
LNG Bunkering Value Chain
Challenges • Operational challenges • Ship design challenges
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Conclusion 5
Opportunities
• Forecast of LNG Bunker demand by 2020.
• Global LNG bunkering infrastructure by 2020
• Forecast of LNG-fuelled newbuildings.
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Introduction 1
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Introduction
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Regulations are in place to cap the sulphur content in marine fuels
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2000 2005 2010 2015 2020 2025
ECA GlobalSulphur content %
All shipping is subject to International Maritime Organisation regulations
Some voyages are subject to regulations agreed within regional “Emission Control Areas”
Global limit likely to be pushed out to 2025
Source: WoodMackenzie
Different alternatives that are viable for emissions regulations fulfillment:
• Burning lower sulphur fuels such as low sulphur marine diesel oil or marine gas oil (MGO).
• Fitting abatement technologies i.e. Heavy fuel oil (HFO) with an exhaust gas scrubbers.
• Converting to LNG or ordering new LNG-fuelled ships.
Emission Control Areas are in force in the Baltic, North Sea and around North America; future ECA are under consideration
Established Emissions Controlled Areas Emissions Controlled Areas under consideration Shipping critical points
New regulations apply to all vessels (existing and newbuilds)
Established ECA
ECA under consideration
Shipping Critical points
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Value Chain
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Supply of LNG as a bunker fuel – which options to choose?
LNG supply infrastructure LNG bunkering options LNG received as shipping fuel
Available options Potential future option
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Jetty-to-ship
Ship-to-ship
Ship-to-ship
Truck-to-ship
LNG Onshore terminal
Floating LNG terminal
Source: DNV
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Opportunities
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Source: Det Norske Veritas (DNV)
Global LNG bunker demand by 2020 forecasted to be in between 4 to 7 Mtpa
• ECA zones such as Europe and North America will dominate the LNG bunker demand until 2016 due to stricter emission control regulation.
• The price of LNG and other alternatives, particularly on dual fuel engines, will strongly influence growth of LNG bunkering demand.
• Strong government intervention and incentives are required for growth e.g. subsidies, tax reduction etc.
North America 0.9 – 1.4 Mtpa
South America 0.3 – 0.4 Mtpa
Northern Europe 1.4 – 2.2 Mtpa
Southern Europe 0.3 – 0.7 Mtpa
Middle East & India 0.3 – 0.7 Mtpa
Japan & Korea 0.3 – 0.5 Mtpa
South East Asia 0.4 – 0.7 Mtpa
Australia & New Zealand 0.1 – 0.2 Mtpa
China 0.3 – 0.8 Mtpa
0.07 – 0.09 Mtpa
LNG Bunkering Demand 2012
LNG Bunkering Demand 2020 Equivalent to 4 – 7 Mtpa of LNG
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Current and forecast of global LNG bunkering infrastructure by 2020
(2) (16) (19) Source: DNV, 2013
Major global bunkering ports: 1. Singapore 2. Rotterdam 3. Fujairah 4. Antwerp 5. Hong Kong
DNV is cooperating with KOGAS on feasibility study of LNG bunkering in Korea
DNV announced LNG Bunkering in Australia is feasible
Shell is anticipated to provide LNG barging and bunkering operation
SLNG has awarded ECP for berth project at Jurong Island terminal to facilitate LNG bunkering
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Newbuilding and number of LNG fuelled ships segment
• The technology is proven with 48 ships in operation with LNG fuel capabilities and 43 new ships contracted as at 27 Feb 2013.
• The Offshore vessels and ferries dominate the LNG fuelled fleet and order book today.
• Discussions are on-going among yards, designers, equipment manufacturers and classification societies to develop concepts and designs for most ship types.
Source: Llyods and RS Platou, 2013
Basecase: 4.2% of newbuilds i.e. 653 LNG-fuelled NBs
Highcase 67 Mt: 12.6% of newbuilds i.e. 1,963 LNG-fuelled NBs
YTD 48 LNG fuelled ships in operation and 43 confirmed LNG fuelled newbuilds
Challenges
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Whilst LNG bunkering infrastructure is developing, shipowners are facing several operational issues
Truck-to-ship transfer
•Supplying LNG in a small quantity (27 to 40 cbm only)
•Only suitable for small-scale LNG vessels and regional operating vessels
•LNG fuelled vessels for deepsea requires at least 500 cbm for operation
Jetty-to-ship transfer
•Lack of unified local and international regulations and standard bunkering procedures
•Permission from port state flag and port states have to be obtained for operation, causing complications if vessels calling at different ports
Ship-to-ship transfer via LNG bunkerbarge
•BOG handling and LNG bunkering interface (manifold) from LNG bunkerbarge to receiving vessels have to depend on receiving vessels specifications.
•Sensitive to adverse swell or weather conditions
•Missing link: LNG bunkerbarge (still at conceptual stage)
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Shipowners are facing ship design issues in adopting LNG as bunker fuel
Fuel tank types Type C: safe, reliable, allow
high loading rates and pressure, but consume 3 to 4 times larger volume
Type B: taking up space, require pressure maintenance and secondary barriers
Storage volume LNG need 1.6 times more
storage volume compared to HFO
taking up considerable amount of underdeck space, compromising cargo carrying capacity
Source: ABS
TGE Type C Tank
Prismatic Type B Tank LNG tank underneath accommodation unit
Tank location Can be located in enclosed
spaces or on deck Several risks involve: Risk of fire Risk of leaked flammable
product causing fire Risk of leaked cryogenic fluid
- loss of structural integrity
Source: TGE Source: DNV
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Conclusion
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Conclusion
• Technical and regulatory challenges need to be overcomed before LNG bunkering in ports become standard.
• Concerted effort of regional governments for complete regulatory framework and incentives (e.g. sulphur tax exemption, NOx fund support) are needed to promote investments in LNG infrastructure
• Availability of LNG with the growing global network of LNG liquefaction plants and regas terminals could significantly spur interest.
• Coordinated efforts by all actors in the LNG supply chain are needed for establishing a “critical minimum” level of LNG infrastructure to meet the demand in 2015 to 2020.
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LNG bunker suppliers are expecting off-takers to be ready and vice versa.
Shipowners are expecting shipyard to spur the development in terms of design, slot availability and vice versa.
Dilemma: which one comes first?
Thank You
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Economic Evaluation of Using LNG as bunker fuel on 14,000 Teu Container Ship Study done by: DSME
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The End
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