We recently wrote about LNG cruise ships and how one of the largest barriers to adopting LNG as a marine fuel in North America is the lack of bunkering infrastructure. We also noted that European LNG bunkering infrastructure is significantly more robust than in North America. One reason for this is that the European Union has developed several policies and initiatives around facilitating the commercial adoption and penetration of LNG as a marine fuel.
We highlight two specific initiatives. First, the Trans-European Transport Network (TEN-T), which is a set of projects that are aimed at building and upgrading transportation infrastructure across the European Union. While most projects are not focused on expanding the use of LNG, there is one specific project aimed at LNG for marine use.
Second, another initiative – the LNG Masterplan – led by a consortium is promoting the use of LNG for fuel in marine and inland vessels. The consortium is made of up 35 partners most of whom are being funded by the European Union. The members consist of ports, consultants, law firms, research firms, ship builders, fleet owners, service providers, and a university.
TEN-T policies has expanded LNG bunkering in the European Union. The TEN-T policies contain many different projects that range from railroad to waterway projects. Priority project 21, also known as Motorways of the Sea is a project that has strong ties to LNG and contains several smaller initiatives to increase the use of LNG for marine vessels in Europe. The aim of TEN-T priority project 21 (a full list of priority projects can be seen here) is to increase shipping for trade among European countries with the goal of reducing congestion on inland highways.
Part of the project is to establish standards for the process of planning and constructing LNG infrastructure at seven ports in the Baltic and North Seas including Aarhus, Copenhagen-Malmo, Helsinki, and Stockholm. According to the TEN-T website, this particular segment of project 21 concluded in 2014. An additional part of project 21 was focused on the installation LNG bunkering infrastructure in Belgium to better distribute LNG among the English Channel and North Sea regions. This particular segment was concluded in December of 2015. Figure 1 shows transportation lanes that are targeted as part of priority project 21.
Figure 1. Transportation lanes that are targeted as part of TEN-T priority project 21.
The LNG Masterplan consortium is advancing operational understanding of LNG in marine use. Specifically, it is focusing onLNG tankers, LNG propelled vessels, LNG terminals and bunkers, and LNG vehicles and machinery. The consortium currently has several pilot projects operating in the LNG propelled vessels segment. This includes the first inland waterway vessel refitted with a LNG drive system and a liquefied gas tanker both of which are operating on the Rhine in Germany.
The LNG Masterplan has seen some delays and its LNG tanker pilot project that is aimed at ship-to-ship LNG bunkering for inland barges is currently on-hold. Additionally, both the LNG terminal and bunkering pilot project and the LNG vehicles and machinery project had expected delivery dates of Q4 2015 but are currently not operating.
United States can learn from such policy initiatives to drive local LNG demand.
Demand for natural gas in the U.S. is stagnant while supply from shale plays seems unlimited. LNG exports have emerged as a major gas monetization option. The construction of LNG liquefaction facilities requires a significant amount of infrastructure investment. We have previously written about how Cheniere is sourcing gas for its liquefaction facility and other plants will need to do the same in order to ensure adequate feedstock supply. Policies that are modeled on the TEN-T projects and the LNG Masterplan if proposed in the U.S. may find bipartisan support in addition to expanding the use of natural gas and LNG.
The TEN-T project 21 has been mostly successful with its efforts to strengthen European LNG infrastructure. The addition of the LNG Masterplan consortium is also a signal that support is not only coming from the government but also from a wide variety of companies and firms outside of state control. These projects could serve as an important case study for new LNG infrastructure development in the U.S.
-Tyler Wilson and Uday Turaga
