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Charting a Course for Methanol Marine Fuel
Gregory Dolan, CEO
Methanol Institute
GreenPilot Launch
Goteborg, Sweden – 16 June 2016
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WHO WE ARE01
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History
• The Methanol Institute (MI) was first formed in 1989 to represent US
methanol producers in Washington.
• 26 years later, MI is truly a global trade association supporting the
expansion of the methanol industry in every corner of the world from
offices in:
S i n g a p o r e | Wa s h i n g t o n | B r u s s e l s | B e i j i n g
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MSF MAINTAINS A PRESENCE IN OVER 60
COUNTRIES• American Chemistry Council
• Fuels Institute
• Consumer Energy Alliance
• Asian Clean Fuels Association
• China Nitrogen Fertilizer Industry Association
• Chinese Association of Alcohol & Clean Ether
Fuels & Automobiles
• China Ministry of Industry and Information
Technology
• Peking University Center for New Global Energy
Strategy Studies
• Gulf Petrochemicals and Chemicals Association
• International DME Association
• European Chemical Industry Council (CEFIC)
• Formacare
• German Regenerative Methanol Network
• International Methanol Producers & Consumers
Association
MI STRATEGIC PARTNERS
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Transition to Energy Resource02
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Alternative Fuel Drivers
Scale: The feedstock base needs to be large enough to support global transportation market.
Sustainability: There needs to be a viable pathway to low- or no-carbon transport, while reducing smog.
Subsidy: Can’t rely on government support forever, so someone needs to make money.
Consumer: Demands seamless transition and ease of use.
Methanol: Checks all the drivers!
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Feedstock:
Abundant/Sustainable
Market:
Large/Diverse
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Methanol: Essential Chemical Building
BlockSource: Methanex
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Methanol: A Global Energy Resource
Out of the ~70 million metric tons
(23.3 billion gallons/88 billion liters) of
methanol sold globally in 2015,
energy and fuel uses represent one-
third of total demand.-Direct Methanol Fuel Blending
-Diesel Substitution
-MTBE
-Biodiesel
-DME
-MTG/MTO
-Fuel cells
From 2009-2014, direct methanol fuel
blending has increased at an annual
rate of nearly 23%.
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Source: IHS Chemical, November 2015
Oil displacement drives demand growth
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Denmark –
methanol fuel cells
for vehicles
Sweden – methanol
marine fuel
Israel – Power
generation & M15
Standards under
development
Australia – GEM fuel
Africa – cooking
stoves
China– M15 to
M100, Industrial
BoilersUK – EN228 low
blend
USA – methanol
motorsport fuel
Methanol Fuel Examples Around the
WorldIceland – M100
Trials
Egypt – M15 TrialsNew Zealand –
Introducing M3
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MARINE FUELS03
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•Bunker fuel – usually made from
diesel has been historically used in the
shipping industry.
•With over 90,000 commercial vessels
moving around the world’s oceans,
shipping consumes 370 million tons of
fuel (Heavy Fuel Oil and Middle
Distillates).
•Bunker fuel has been highly polluting;
high SOx, NOx, particulate emissions.
Marine Fuel in Transition
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•The International Maritime Organization has adopted regulations for SOx and NOx that are transforming the shipping industry.
•While SOx reductions may be met with low sulfur fuels, the combination of SOx and NOx reductions driving shipboard solutions.
SOx and NOx Regulations Driving Market
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China Designates Three SECAs
Source
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Diesel Bunker Fuel Methanol Marine Fuel
The Clear Alternative Marine Fuel
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Methanol Marine Fuels
•Launched in March 2015, Stena Germanica features Wärtsilä methanol-fueled marine engine in EU-sponsored effort.
•Methanex’s Waterfront Shipping 2016 delivery of seven new vessels with MAN dual-fuel methanol/diesel engines.
•MethaShip project led by Lloyd’s Register designing cruise ship andropax ferry over next three years.
•LeanShips converting Volvo Penta to dual-fuel operation in two smaller vessels.
•2016 GreenPilot Boat conversion by ScandiNAOS with support from MI, and Swedish Maritime Administration.
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• In Gothenburg, a bunker station was set up
on the pier with two methanol fuel transfer
pumps each with the capacity of 200 m3/h
that pump methanol from tanker truck to
ship Germanica bunker.
• This “modular” approach can serve several
vessels, and grow with demand.
• Cost is €5 million vs. an LNG terminal
costing €50 million.
Methanol Bunker Solution
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Methanol storage capacity estimates (thousand tons)
Global Port Terminal Availability
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• Methanol is plentiful, available globally and could be 100% renewable.
• Methanol is compliant with increasingly stringent emission reduction regulations.
• Current bunkering infrastructure needs only minor modifications to handle methanol.
• Infrastructure costs are relatively modest compared to potential alternative solutions.
Methanol as a Marine Fuel
Main Findings - 1
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• Methanol prices show regional variation.
• Conversion costs to drop dramatically as experience mounts.
• Current engines have performed well and upcoming technologies will improve on this performance.
• Shipping and chemical industries have a long history and ample experience in handling methanol safely.
• Methanol is biodegradable.
Methanol as a Marine Fuel
Main Findings - 2
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Methanol
(MeOH)
versus
other
marine
fuels
Conversion and Infrastructure Costs
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MI/DCG Methanol Safe Handling and Safe Berthing Bulletin
Released in 2015, the Methanol
Safe Berthing bulletin and checklist
highlight a number of recommended
and new mandatory practices we
expect the industry to adopt.
• Many of these recommendations are
already being or have been adopted
by most of the industry.
• Others are new and are slowly being
considered and adopted.
• Others will be mandatory over time
like the new IMO inerting regulation
for new tankers built in the coming
years.
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Research Agenda04
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E4TECH COMMISSIONED TO EXAMINE POTENTIAL FORINCREASING EU UPTAKE OF METHANOL AS A TRANSPORT
FUEL
• The Methanol Institute and its members are keen and have tried for a number of years to increase the use of methanol as a transport fuel in Europe and the rest of the world.
• There is significant resistance from the automotive and oil industry against the increase of methanol fuel especially as a substitute for gasoline.
• Therefore the aim of this study is to evaluate the most appropriate applications for methanol-derived fuels in Europe and contribute to a strategic globally harmonised plan to increase the demand for these fuels.
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FIVE PROMISING MARKET ‘FAMILIES’ IDENTIFIEDAND ANALYSED
# Parent market Other family
members
Considerations
1 Passenger
vehicle SI - M3
2&3-wheelers Large market with legislation allowing small
quantities of methanol currently, sustainability focus
2 HGVs CI –
(Dual Fuel)
Buses, railways,
inland navigation
EU short on diesel, EU VI, fleet operators focussed
on TCO, DF technology similar to LNG, Scania has
developed ED95 engine
3 Bus & coach CI
– DME
HGVs, railways,
inland navigation
EU short on diesel, AQ is overriding concern, works
well with hybridisation, fleet operators with dedicated
fuelling, wide range of duty cycles
4 Short sea
shipping CI-
DualFuel
Inland navigation,
ocean going ships
SECA, TCO is key, Sulphur Emission Control Area
(SECA) regulations, slow fleet turn-over, high
enough fuel consumption to achieve payback from
retro fit?
5 Passenger Veh.
SI & GEM -
FFV
2&3wheelers,
small machinery
Potentially a large market, sustainability, pollutant
emissions and TCO are key, dedicated fuelling
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Market 4: Shipping
• Introduce vehicle/vessel technologies
• Introduce fuel technologies & pathways
• Techno-economic analysis― Key assumptions & baseline ― Economics― Emissions (GHG & pollutants)
• Barriers & opportunities
• Key market players
• High level plan to commercialisation
Stena Germanica methanol fuelled ferry
Source: Stena Line
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Shipping: Dual-Fuel MeOH as a competitor to incumbent
HFO/LFO engines and Dual-Fuel LNG
Technology introduction
• The incumbent bunker fuel is HFO, however
regulations do not allow its use within SECA areas
(or require exhaust scrubbing). Options within SECA:
LFO (marine gas oil), scrubber technology or
switching to LNG (DF) / MeOH DF
• Dual-Fuel MeOH is a potentially viable proposition for
use within the SECA
o HFO used in the open sea, reducing costs
o LFO can act as a pilot fuel to MeOH in
assumed proportions 90-10% MeOH-LFO
• The direct competitors are use of LFO in SECA
areas, or a switch to Dual-Fuel LNG
• An analysis was conducted for 3 types of ships
o Ferry
o 8,500TEU container ship
o 18,000TEU container ship
NOx emissions limits
Fuel sulphur limit introduction
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SHIPPING: MODEL ASSUMPTIONS
NOTE: THE MAN LNG BUSINESS CASE STUDY WAS USED AS TEMPLATE *LFO = MGO
Sources: European Commission, METHANEX, Platts
Key assumptions
Incumbent
(HFO/LFO*)
Ferry 8,500TEU
Ship
18,000TE
U Ship
Consumption
kWh/km
352.7 1,004.7 1,372.9
Time in SECA 100% 70% 70%
Mileage km/day
days/year
977
300
977
300
977
300
Alternatives: HFO & scrubber, MeOH DF, LNG DF
Retro-fit costs: MeOH Dual Fuel €200/kW, LNG Dual
Fuel €270-400/kW, Scrubber €200/kW
LNG maintenance costs 10% higher than incumbent
and 15% payload decrease due to the LNG cryogenic
tank
No payload loss due to MeOH store – more flexibility
than in the case of LNG
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SHIPPING (RETRO FITTING): ECONOMIC ASSESSMENT SHOWS
DUAL-FUEL MEOH SIGNIFICANTLY LOWER CAPEX &OPEX THAN LNG
R E S U LT S• The analysis has shown that retro-fitting the existing fleet with scrubbers is currently
the most cost-effective option, since it permits the continued use of HFO
• Dual-Fuel Methanol has a similar CAPEX to scrubbers, however the OPEX is higher due to higher fuel costs than HFO
• LNG seems to be the least cost-effective due to higher fuel costs, as well as loss of payload attributed to large space requirements for a cryogenic LNG tank
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SHIPPING (NEW BUILD WITH SCR): DUAL-FUEL MEOH STILL
SIGNIFICANTLY LOWER CAPEX & OPEX THAN LNG.
SCRUBBERS REMAINS MOST ECONOMIC.
R E S U LT S• The analysis has shown that fitting scrubber and SCR technology fitting to new build
ships is sill the most cost-effective option, since it permits the continued use of HFO
• Dual-Fuel Methanol has a similar CAPEX to scrubbers, however the OPEX is higher due to higher fuel costs than HFO
• LNG still seems to be the least cost-effective primarily due to higher fuel costs
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SHIPPING: MEOH GHG EMISSIONS SIGNIFICANTLY LOWER
THAN HFO & LFO & SIMILAR TO DUAL-FUEL LNG(when methane slip considered)
3
3
RESULTS• GHG emissions of the incumbent technology are lowest, followed by MeOH and LNG
respectively• The key difference is expected to be found in pollutant emissions – see next slide
* Includes CH4 slip as well as N2O emissions
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SHIPPING : POLLUTANT EMISSIONS – SIGNIFICANT IMPROVEMENT
OVER THE INCUMBENT THROUGH THE USE OF METHANOL,
THOUGH LNG BETTER STILL
R E S U LT S• Pollutant emissions display a large improvement over the incumbent LFO (MGO) across all
categories• LNG has shown to be a more effective solution to tackle pollutant emissions than methanol
Source: Chalmers
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SHIPPING: DUAL-FUEL MEOH COMPARES FAVOURABLY WITH
LNG, BUT AN INTEGRATED INFRASTRUCTURE IS REQUIRED
3
5
B A R R I E R S
• There are no legal, political or stakeholder barriers anticipated
• Conventional engines with after treatment remain the more cost-effective option for the time being
• Demonstrating the business case for individual ships, routes and duty cycles might persuade some operators to consider methanol
• A methanol marine fuelling infrastructure delivering cost effective shipping quality methanol is required across EU harbours
O P P O R T U N I T I E S
Any future Particulate Matter emission limits (not foreseen yet) in shipping would enforce cleaner fuels such as natural gas or methanol. Dual fuel methanol would then form a cost effective alternative to LNG
Dual-Fuel MeOH is cheaper than LNG, mainly due to no loss in payload and lower maintenance cost
Sustainable MeOH can significantly reduce the WTW GHG emissions
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SHIPPING: KEY MARKET PLAYERS
• EU (DG MOVE, DG CLIMA)― MeOH would need to be incorporated into the strategic plans and Alternative Fuel
Infrastructure Directive as an additional option to LNG
• MEMBER STATES― Member States could be encouraged to incorporate MeOH into their National Policy
Frameworks (NPFs), starting with key maritime SECA bordering nations – deadline Q3 2019
― This is synergistic with HGVs and potentially inland navigation
• FUEL PRODUCERS, DISTRIBUTORS, FUEL BUNKERING ETC― Build on StenaLine experience to develop a wide scale roll out plan with detailed
price forecasts / agreements
• OEMS / CONVERSION SPECIALISTS― Build on the Wartsila, MAN and StenaLine experience to demonstrate the
technology and business case
• SHIPPING COMPANIES / OWNERS ― Engage with more shipping companies to develop competitive fleet specific
solutions based on Stenaline experience
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M A R I N E M A R K E T A C C E S S R E L I E S U P O N I N F O R M AT I O N , I N F R A S T R U C T U R E A N D F U E L D U T Y C H A N G E S , TA K I N G
~ 3 Y E A R S A N D ~ £ ? M I L L I O Nx Work package activities
1 Ongoing maintainance
£ Significant uncertainty exists
• Summary:
• Organise workshops to understand concerns fully & appoint programme manager
• Use Stena & Methanex fleet data to create a shipping calculator demonstrating methanol feasibility relative to competing
options
• Determine methanol cost structure and develop methanol bunkering capability
• Lobbying efforts on fuel duty, inclusion in AFI & NPFs.
• Continuous PR & media campaign
• Duration: ~3+ years
• Total cost: ~£??million*
• Funding: Some funding /subsidies available locally. CEF infrastructure funds are most promising
• Sources: E4tech, Peter Windebank, Propel, Innovate UK (H2020), Wartsilla, Stenaline ScandiNaos, etc
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CONTACTS05
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MSF MAINTAINS A PRESENCE IN OVER 60
COUNTRIES
MANY OF THESE COUNTRIES MI HAS
TARGETED FOR METHANOL POISONING
OUTREACH PROGRAMS, MSF HAS EXISTING
OPERATIONS, TO INCLUDE:
• F
• F
• F
• F
• F
• F
• F
• F
• F
• F
CONTACTS
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COO
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Director of Government
Affairs
• L AR RY N AV I N
Senior Manager External
Affairs
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Chief EU Representative
• K AI Z H AO
Chief China Representative
• AP R I L C H AN
Executive Manager
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Executive Assistant
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