Alternative Fuels

SEA-LNG: Lifetime fuel costs of LNG pathway expected to be half of methanol and ammonia

Analysis shows lifetime cost of complying with regulatory regimes like FuelEU Maritime for LNG-fuelled vessels will be around half that of methanol and ammonia powered alternatives over coming decades.

Published

2 years ago

June 16, 2023

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Global multi-sector industry coalition SEA-LNG on Thursday (15 June) said its analysis showed the lifetime fuel costs of meeting key European decarbonisation targets for shipping through the LNG pathway are expected to be roughly half that of the methanol or ammonia pathways.

Building on recent work by the Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping (MMMCZCS) projecting fuel costs for alternative marine fuels out to 2050 (see Figure 1) and using long-term price benchmarks for ammonia, methanol and LNG as a marine fuel, SEA-LNG has calculated the cost of compliance with FuelEU Maritime regulations for a typical 14k TEU newbuild container vessel coming into operation in 2025.

FuelEU Maritime requires vessels to reduce the intensity of greenhouse gases produced by their energy consumption in coming years against a benchmark of the fleetwide average in 2020.

Grey versions of ammonia and methanol start at a significant disadvantage to LNG. The additional greenhouse gas emissions involved in producing ammonia and methanol from natural gas means that respectively these grey fuels emit 47% and 14% more GHG emissions than VLSFO on a well-to-wake basis. Fossil, or grey LNG, offers up to 23% immediate GHG emission reductions compared to VLSFO on a well-to-wake lifecycle basis.

What this means is that owners opting for LNG-fuelled vessels will be able to meet the reduction targets until 2039 without needing to blend their fuel with low-carbon bio-LNG or renewable synthetic e-LNG. By contrast, owners of methanol and ammonia fuelled vessels will need to include significant proportions of a green fuel immediately to meet the regulations, vastly inflating their fuel bills.

Assuming an average fuel burn for the typical 14k TEU newbuild container vessel of 146 tonnes of VLSFO equivalent per day (as per Figure 2 above), a methanol-powered vessel would require a 14% green fuel blend to comply with FuelEU Maritime in 2025 at a fuel cost of almost USD55m per year, assuming the use of biomethanol. An ammonia powered vessel, if such a thing existed, would require a 33% green fuel blend to comply and face a fuel bill of about USD80m per year if using e-ammonia. LNG by contrast would require no blending with a fuel bill of just over USD20m per year.

By 2040, LNG would require a 14% green fuel blend and annual fuel costs are expected to reach around USD25m, assuming the use of bio-LNG. Methanol’s green fuel blend requirement, will have increased to 40%, resulting in an annual fuel bill of just over USD 55m, assuming the use of biomethanol - the effects of the increased volume of biomethanol required offset by the falling costs of the green fuel. For ammonia the blend ratio will have increased to 53% with a blended fuel cost of approximately USD70m – the effects of the increased volume of e-ammonia required more than offset by the falling costs of the e-fuel. By 2050, SEA-LNG analysis shows that all three fuel options will have significant blends of green fuels in the form of bio- and e-fuels and we expect to see a convergence in overall fuel costs.

In summary, this simple analysis shows (as illustrated in Table 1, below) that the LNG pathway to compliance with FuelEU Maritime offers massively lower fuel costs than both the methanol and ammonia pathways, particularly in the first 15 years’ of the vessel’s life – a period critical for vessel financing decisions. The methanol pathway is approximately 2.5 times more expensive and the ammonia pathway 3.5 times more expensive.

Similar analysis can be undertaken for other sectors and while the absolute numbers will be different the cost ratios for the different pathways will be similar.

SEA-LNG COO Steve Esau, said: “Our analysis shows that lifetime fuel costs of achieving net-zero emissions through the LNG pathway are expected to be roughly half that of those for methanol and ammonia. This underlines the importance of understanding the implications of the journey to net zero as well as the destination. LNG offers GHG reductions today and a low cost, incremental solution for decarbonisation.”

SEA-LNG added it is currently developing a cost of compliance calculator that will enable ship owners, investors, charterers, and operators to explore the commercial implications of different fuel choices in complying with EU and IMO regulations.

Note: The full analysis can be read here.

Photo credit: Cameron Venti from Unsplash
Published: 16 June, 2023

LNG Bunkering

China: Ningbo Zhoushan Port completes first LNG bunkering operation for 2025

Bunkering vessel “Hai Yang Shi You 302” supplied more than 10,000 cubic metres of LNG bunker fuel to containership “MSC Adya” at the Ningbo-Zhoushan Port port on 5 January.

Published

3 days ago

January 10, 2025

Admin

China: Ningbo Zhoushan Port completes first LNG bunkering operation for 2025

Zhejiang Pilot Free Trade Zone Zhoushan Area on Wednesday (8 January) said Ningbo-Zhoushan Port successfully completed its first LNG bunkering operation for the year.

Bunkering vessel Hai Yang Shi You 302 supplied more than 10,000 cubic metres (m3) of LNG bunker fuel to containership MSC Adya at the port on 5 January.

Zhejiang Seaport International Trading, the bunker supplier for the operation, successfully obtained the Zhoushan Anchorage LNG bunkering licence in June 2024, extending refuelling services from dock to sea.

The company’s services cover Meishan, Chuanshan, Daxie and other port areas.

As China's first river-sea LNG transport and bunkering ship, Hai Yang Shi You is currently placed permanently at Ningbo Zhoushan Port, providing a variety of bunkering methods such as ship-to-ship and ship-to-shore.

Zhejiang Seaport International Trading will continue to expand the scope of bonded LNG bunkering operations and new alternative fuels such as green methanol, ammonia and biofuels in the Zhoushan Area.

Photo credit: Zhejiang Pilot Free Trade Zone Zhoushan Area
Published: 10 January, 2025

Nuclear

VARD and partners team up to explore nuclear propulsion for shipping

Project, which involves Knutsen Tankers and DNV, will evaluate fourth-generation nuclear reactor technologies for their viability in commercial shipping applications.

Published

3 days ago

January 10, 2025

Admin

VARD and partners team up in project to explore nuclear propulsion for shipping

Norway-based shipbuilder VARD on Friday (3 January) said it has partnered with the Norwegian University of Science and Technology in Ålesund, Norway and other key stakeholders in the NuProShip I project, which explores nuclear propulsion for the maritime sector.

NuProShip, short for "Nuclear Propulsion in Shipping," will evaluate fourth-generation nuclear reactor technologies for their viability in commercial shipping applications.

In this project, an extensive assessment of 99 companies developing advanced reactor technologies led to the selection of three promising reactor types:

Kairos Power (USA): Fluoride high-temperature molten salt reactor using Tri-structural Isotropic (TRISO) fuel particles, designed for robust and efficient operation.
Ultrasafe (USA): Helium-cooled gas reactor, also employing TRISO fuel particles, known for their resilience and safety in extreme conditions.
Blykalla (Sweden): Lead-cooled reactor concept utilizing uranium oxide as fuel, offering high efficiency with advanced cooling mechanisms.

VARD said TRISO fuel particles, noted for their durability and containment properties, play a crucial role in two of these reactor types.

“TRISO technology in fact, is renowned as one of the most resilient nuclear fuel types available today,” it added.

Alongside VARD, the NuProShip project is supported by other partners, including DNV, the Norwegian Maritime Administration, ship owner Knutsen Tankers, and the Spanish nuclear consultancy IDOM.

VARD’s primary contribution involves integrating these reactor systems into various vessel types, assessing the technical challenges to enable the future commercial use of nuclear-powered ships.

Photo credit: VARD
Published: 10 January, 2025

Bunker Fuel

Singapore: KPI OceanConnect, partners deliver first renewable diesel to cruise industry

Delivery of bunker fuel from Neste was made at Singapore Cruise Terminal, with the fuel sourced from Vopak Penjuru Terminal and transported to a cruise ship via barge “Maple”, operated by Global Energy.

Published

4 days ago

January 9, 2025

Admin

Singapore: KPI OceanConnect, partners deliver first renewable diesel to cruise industry

Global provider of marine energy solutions KPI OceanConnect on Wednesday (8 January) said it partnered with Neste and Global Energy on the first successful delivery of renewable diesel, also known as HVO100, for the cruise industry in Singapore.

The landmark delivery of Neste MY Renewable Diesel™ took place in November 2024 and marked a significant milestone for the Asia-Pacific marine sector.

Neste MY Renewable Diesel™ is made from 100% renewable raw materials and is a direct replacement for fossil diesel, helping the industry meet its sustainability goals.

The use of this renewable diesel can result in up to 90% greenhouse gas (GHG) emissions reduction over its lifecycle compared to fossil diesel.

The fuel is a drop-in solution and is suitable for all diesel-powered engines without the need for additional investment or modification to engines or fuel infrastructure.

The delivery of renewable diesel from Neste was made at the Singapore Cruise Terminal, with the fuel sourced from Vopak Penjuru Terminal and transported to the cruise ship via bunker barge Maple, operated by Global Energy.

KPI OceanConnect facilitated the successful delivery of the renewable diesel, working closely with the vessel's technical team to ensure engine compliance. KPI OceanConnect collaborated with Neste to source the fuel and with Global Energy for operational agreements in Singapore waters.

Ee Pin Lee, Head of Commercial APAC, Renewable Products at Neste, said: "This first supply of Neste MY Renewable Diesel to the marine sector in Asia-Pacific is a significant milestone and demonstrates the versatility of the product across a wide range of applications where it can replace fossil diesel. It is an effective solution for enabling the marine sector to be more sustainable."

Chow Munee, Group Business Manager, Global Energy, added: “Partnering with Neste and KPI OceanConnect to supply renewable diesel to the marine sector in Singapore is an important step in helping our clients reduce their environmental impact. By providing seamless and reliable delivery of HVO, we are supporting the industry’s transition without compromising operational efficiency. We’re proud to play a role in driving these crucial efforts within the maritime sector.”

Jesper Sørensen, Head of Alternative Fuels and Carbon Markets at KPI OceanConnect, said: “We are proud to be industry first movers in sourcing and delivering HVO for our clients, helping them reduce their carbon footprint and achieve their environmental goals. By working closely with Neste and Global Energy, we were able to offer high-quality biofuel to our client, laying the groundwork for further fuel uptake and decarbonisation progress. This successful delivery is a testament to how partnerships can help advance the industry’s green transition.”

Photo credit: KPI OceanConnect
Published: 9 January, 2025