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LR: Total cost of ownership a potential barrier for methanol propulsion on passenger ships

Report shows TCO for passenger ships retrofitted with methanol dual-fuel engines to be more than double the cost of blended fuel (Blend B30), HFO and HFO with carbon capture technology.

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Stena Germanica

A new report from Lloyd’s Register (LR), released recently, found that the total cost of ownership (TCO) for passenger ships retrofitted with methanol dual-fuel engines to be more than double the cost of blended fuel (Blend B30), heavy fuel oil (HFO) and HFO with Onboard Carbon Capture and Storage technologies (oCCS).

LR’s Fuel for thought: Methanol for Passenger Ships examined the TCO for operators over a 15-year period and based results on a calculation that 65% of voyage time would be spent in EU waters. 

Overall findings identified in the report, based on analysis by the LR Business Advisory team, show the bunkering price of methanol to be the main commercial barrier for its adoption, with the use of less environmentally friendly fossil based (grey) methanol a more commercially attractive proposition for passenger shipowners than a blend of 50% grey, 25% bio- and 25% e-methanol, even when EU emissions taxes are taken into account.

However, the study highlights that methanol is a technically viable fuel for ship operators looking to reduce the carbon emissions of passenger ship newbuilds, owing to the similar characteristics of methanol to existing fuels. 

Viable retrofit paths have also been taken to the sector, such as the pioneer LR project for the Stena Germanica back in 2015. This technical viability is reflected in the global orderbook with passenger ships ranging from small inland vessels to the largest cruise ships awaiting delivery.

The report also outlined that greater investment is needed in green and bio-methanol production along with improved bunkering infrastructure to increase fuel availability and reduce costs to a commercially viable level.

Natasha Pritchard, VP Strategic Key Accounts (Cruise), Lloyd’s Register, said: “Our latest Fuel for thought report brings some much-needed insights for passenger ship owners evaluating methanol as part of their energy transition pathway.”

“Whilst methanol as marine fuel holds considerable promise as a low carbon solution for passenger ship propulsion, the total cost of ownership (TCO) compared to other fuels may represent an obstacle to its widespread take-up in the segment.”

“It is therefore vital that renewable and low-carbon production of methanol is prioritised in order to drive down these costs.”

 

Photo credit: Stena Line
Published: 14 March 2024

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Alternative Fuels

MMMCZCS publishes report on preparing tanker vessels for conversion to green bunker fuels

Converting tankers to green fuels can be technically and economically feasible when carefully considered in the context of fleet transition planning and asset age profiles, says MMMCZCS.

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MMMCZCS publishes report on preparing tanker vessels for conversion to green bunker fuels

The Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping (MMMCZCS) recently released its latest publication that sheds light on the technical, economic and environmental impact of preparing tanker vessels for conversion to alternative bunker fuels.

The publication titled ‘Preparing Tanker Vessels for Conversion to Green Fuels’ aims to understand the technical requirements and cost of converting from fuel oil to methanol or ammonia and from liquefied natural gas (LNG) to ammonia.

The publication outlined the project results related to converting tanker vessels to methanol or ammonia fuels.

“To decarbonise the global shipping industry, the world fleet needs to transition to using alternative fuels,” it said.

“However, shipowners are met with a big scope of challenges as they build their decarbonization strategies and determine how to most effectively time their investments in alternative fuel and technologies.”

The report considered reference designs for two types of tanker vessels: LR2 and VLCC. 

These vessel types are two of the largest in the tanker segment, often travel long routes, and have a high fuel consumption ― therefore, they can provide a good illustration of the economic and environmental impacts of different choices relating to vessel conversion. 

For each vessel design, the center defined five levels of preparation for alternative fuels, ranging from no preparation (Level 0) to a dual-fuel newbuild ready to operate on methanol or ammonia (Level 4).

For the LR2 design, the center’s model indicated that the total add-on cost of newbuilding and conversion to operation on methanol or ammonia, depending on preparation level and range, is:

  • 14-27% of the cost of a standard fuel oil newbuild for fuel oil-methanol conversions
  • 25-42% of the cost of a standard fuel oil newbuild for fuel oil-ammonia conversions
  • 47-62% of the cost of a standard fuel oil newbuild (or 21-34% of the cost of an LNG newbuild) for LNG‑ammonia conversions

 The main takeaways from its publication are:

  • Converting tankers to green fuels is technically and economically feasible with careful fleet transition planning and consideration of asset age. The industry possesses the necessary technology and engineering expertise for these conversions.
  • The economic impact of conversions varies based on the chosen green fuel and vessel range.
  • Conversion to alternative fuels affects a vessel’s operating envelope due to differences in energy density and fuel tank size requirements.
  • To maintain the same operational range as fossil fuels, shipowners may need to add tanks on deck (impacting DWT) or sacrifice part of the cargo capacity for fuel tanks.
  • This project focuses on options that reduce the vessel’s operating range but preserve its cargo capacity. Such solutions are believed to have commercial applicability based on industry knowledge.
  • Conversions after ten years of operation on fossil fuels can still considerably reduce a vessel's lifetime greenhouse gas emissions, though financial viability of conversions at this stage of the vessel’s lifetime must be considered.

Note: The full report by MMMCZCS can be viewed here.

 

Photo credit: Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping
Published: 23 July 2024

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Newbuilding

Steel cutting begins on Fratelli Cosulich methanol dual-fuel bunker tanker

Ceremony was held at Taizhou Maple Leaf Shipbuilding for the 7,990 dwt IMO Type II chemical vessel that will operate in Singapore; vessel will be able to carry both green methanol and biofuels.

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Steel cutting begins on Fratelli Cosulich methanol dual-fuel bunker tanker

Genoa-based international shipping and logistics company Fratelli Cosulich Group on Friday (19 July) said a steel cutting ceremony was held at Taizhou Maple Leaf Shipbuilding for its methanol dual-fuelled bunker tanker.

The 7,990 dwt IMO Type II chemical vessel has a capacity of over 8,000 m3 and will be able to carry both green methanol and biofuels. It will be equipped with three MAN GenSets designed for running on methanol.

The four-stroke engines will be part of a diesel-electric propulsion system, while an onboard battery storage system will optimize fuel consumption and reduce GHG emissions.

The vessel is scheduled for delivery during the last quarter of 2025 and will be located at the Port of Singapore under a contract with global commodities trader Trafigura.

“With the steel cutting of this state of the art bunkering vessel, we mark an additional important step in our Group’s journey to decarbonization”, said Guido Cardullo, Head of Marine Energy.

Manifold Times previously reported Fratelli Cosulich placing an order for its first methanol dual-fuelled chemical bunker tanker on 15 December which will operate in Singapore.

It will be deployed to deliver marine fuels for TFG Marine, Trafigura’s international marine fuel supply and procurement joint venture with shipowning companies Frontline Ltd and Golden Ocean Group Ltd.

Fratelli Cosulich Bunkers Singapore will oversee the technical management and operations of the vessel for TFG Marine. 

Related: Fratelli Cosulich orders its first methanol dual-fuelled bunker tanker to serve Singapore
Related: Fratelli Cosulich orders two methanol-ready chemical bunker tankers
Related: China: Headway to provide methanol fuel supply systems to Fujian Guohang and Fratelli Cosulich

 

Photo credit: Fratelli Cosulich
Published: 22 July 2024

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Alternative Fuels

Lhyfe and Elyse Energy plan to produce e-methanol bunker fuel from green hydrogen

Partners signed agreement for technical, economic, financial and regulatory feasibility study of a project to produce e-methanol from green hydrogen at this site within the port of Nantes Saint-Nazaire.

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Lhyfe and Elyse Energy plan to produce e-methanol bunker fuel from green hydrogen

Green and renewable hydrogen producer and supplier Lhyfe on Wednesday (17 July) announced a partnership with Elyse Energy, a pioneer in the production of low-carbon molecules. 

The partners aimed to develop the production of e-methanol from green hydrogen, at the Loire Estuary’s industrial and logistics port ecosystem.

In November 2023, Lhyfe was selected as the winner of a call for expression of interest (CEI) launched in late 2022 by the Nantes Saint-Nazaire port authority (Grand Port Maritime de Nantes Saint-Nazaire), to set up an industrial green hydrogen production and distribution operation at the Montoir-de-Bretagne site, with a view to decarbonising maritime transport.

With this objective in mind, Lhyfe and Elyse Energy, a producer of low-carbon molecules, announced that they have signed an exclusive agreement for the technical, economic, financial and regulatory feasibility study of a project to produce e-methanol from green hydrogen at this site within the port of Nantes Saint-Nazaire. This is the first collaboration of this kind for either of these two French industrial SMEs.

“E-methanol is a clean fuel that can be used to decarbonise maritime transport, which represents a key industrial and technological challenge for achieving the dual objectives of carbon neutrality and moving away from fossil fuels,” Lhyfe said. 

Implementation of the project will be subject to the conclusions of this study, the granting of operating licences and building permits, and financial investment decisions.

A presentation of the project by the partners is scheduled for September 2024.

 

Photo credit: Lhyfe
Published: 22 July 2024

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