With tightening emissions on the horizon and reduced fuel costs, LNG for marine applications has garnered lot of attention. However, there are relatively few ships fueled by LNG today and the vast majority operate only in northern Europe. Only one LNG-fueled ship is operating in North America today, Shell’s Harvey Energy. There are several reasons for the slow transition to LNG in marine applications including high switching costs and uncertain future fuel prices but one of the most important ones is the lack of LNG refueling or bunkering infrastructure.
There are two options that LNG vessel operators have to refuel their ships. First, and one used more commonly, is onshore LNG bunkering. Second, floating storage ships, also known as bunker supply ships, are used to refuel ships. Each option has its own advantages and disadvantages.
Onshore bunkering infrastructure is focused in northern Europe. Currently, most of the LNG ships as well as LNG bunkering facilities are located in northern Europe primarily due to the longstanding presence of Emission Control Areas (ECAs). We have previously written about ECAs and their impact on LNG use as a marine fuel. While most bunkering locations are located in northern Europe there is one LNG bunkering facility in southeast Asia and there are also plans to add LNG bunkering capabilities to several ports in North America. Currently, the only LNG bunkering location in North America serves the previously mentioned Harvey Energyand is located in Louisiana.
LNG bunkering vessels offer another way to refuel LNG-powered ships. An LNG bunkering vessel is a ship that stores LNG and is able to move it to a vessel in order to refuel it. This can be favorable if a large ship, such as a containership, needs refueling because a larger ship will have difficulty maneuvering closer to the shore. Shell has recently announced plans to build an LNG bunkering vessel that will be based at the port of Rotterdam. There are also several planned LNG bunkering vessels in North America. JAX LNG in Jacksonville, Florida is looking to construct an LNG bunker barge and plans to take delivery in the middle of 2016. Figure two shows the planned LNG bunkering ship from JAX LNG, courtesy of JAX LNG.
While there are two ways to bunker LNG, the overall infrastructure remains extremely limited. It will take well over a decade until LNG fueled ships are common on the seas. In our next blog we will analyze which ships are most likely to adopt LNG first and why.
-Tyler Wilson and Uday Turaga
