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DNV GL © 2013 SAFER, SMARTER, GREENER DNV GL © 2013
Fuel Strategy Regulatory Compliance and minimize the fuel cost
1
DNV GL © 2013
The drivers for alternative fuels in shipping are interlinked
2
DRIVERS FOR ALTERNATIVE FUELS
Increased fuel prices HFO and MDO
More stringent environmental regulations
Sox & Nox
Availability of new energy sources &
technologies
Stakeholder pressure to reduce
environmental impact from shipping
DNV GL © 2013
A number of environmental regulations are on the horizon
3
DRIVERS FOR ALTERNATIVE FUELS
POSSIBLE REGULATIONS
EU CO2 MRV BC and VOC regulation
2018 2016 2015 2025 2020
ADOPTED REGULATIONS
NOx tier III for new builds
0.1% ECA sulphur limit
EEDI phase 1
EEDI phase 3 EEDI phase 2
0.5% global sulphur cap
Global CO2 MRV
0.5% global sulphur cap
DNV GL © 2013
Possible new ECA areas
4
DRIVERS FOR ALTERNATIVE FUELS
Turkish Straits in 2017?
Hong Kong / Guangdong?
From 2020 ; 0,5 % Sox in EU waters
DNV GL © 2013
Three options for SOX removal …
LNG as fuel
5
HFO + scrubbers for exhaust gas cleaning
HFO + change over to low-sulphur fuel in ECA
1
2
3
DNV GL © 2013
… but do not forget the NOx reduction
Selective catalytic reduction, SCR
6
Exhaust gas recirculation, EGR
Various water based technologies
1
2
3
DNV GL © 2013 SAFER, SMARTER, GREENER DNV GL © 2013
Choosing the best fuel technology
7
DNV GL © 2013
Key factors to consider
1. Development of price
of HFO/MDO/LNG…
2. Technology
development
3. ECA exposure
8
DNV GL © 2013
Gas prices are expected to remain competitive in the long-run
10
WHY LNG AS FUEL
Source: HFO 380 and MGO historical prices (Clarkson), natural gas historical (World Bank). Projections based on IEA World Energy Outlook 2013.
0
5
10
15
20
25
30
35
[U
SD
/M
Btu
]
Price development and projections for marine fuel and natural gas
MGO
HFO 380
NG: Japan import
NG: Europa import
NG: USA?
DNV GL © 2013
0 2 000 4 000 6 000 8 000 10 000 12 000 14 000 16 000 18 000 20 000
L20DF
L34DF
V34DF
L50DF
V50DF
C26:33 L
B35:40 L
B35:40 V
M34DF
M46DF
L51/60 DF
V51/60 DF
L28/32DF (2014)
L23/30DF
L35/44DF (2014)
V35/44DF (2014)
GS12/16R
Power [kW]
Gas engines [range in kW]
Ro
lls
Ro
yce
MA
N D
iese
l & T
urb
oW
ärts
ilä
Mitsubishi
Cat
er-
pill
ar
Available and announced 4-stroke gas engines
12
MARKET AND TECHNOLOGY
DNV GL © 2013
0 5 000 10 000 15 000 20 000 25 000 30 000 35 000 40 000
RT-flex50DF
X52DF (2016)
X62DF (2015)
X72DF (2016)
X82DF (2016)
X92DF (2017)
S80 ME GI
S70 ME GI
S65 ME GI
S60 ME GI
S50 ME GI
S40 ME GI
Power [kW]
Gas engines [range in kW]
MA
N D
iese
l & T
urb
oW
ärts
iläAvailable and announced 2-stroke gas engines
13
MARKET AND TECHNOLOGY
DNV GL © 2013
48 LNG fuelled ships in operation worldwide
Year Type of vessel Owner Class
2000 Car/passenger ferry Fjord1 DNV
2003 PSV Simon Møkster DNV
2003 PSV Eidesvik DNV
2006 Car/passenger ferry Fjord1 DNV
2007 Car/passenger ferry Fjord1 DNV
2007 Car/passenger ferry Fjord1 DNV
2007 Car/passenger ferry Fjord1 DNV
2007 Car/passenger ferry Fjord1 DNV
2008 PSV Eidesvik Shipping DNV
2009 PSV Eidesvik Shipping DNV
2009 Car/passenger ferry Tide Sjø DNV
2009 Car/passenger ferry Tide Sjø DNV
2009 Car/passenger ferry Tide Sjø DNV
2009 Patrol vessel Remøy Management DNV
2009 Car/passenger ferry Fjord1 DNV
2010 Patrol vessel Remøy Management DNV
2010 Car/passenger ferry Fjord1 DNV
2010 Patrol vessel Remøy Management DNV
2010 Car/passenger ferry Fjord1 DNV
2010 Car/passenger ferry Fjord1 DNV
2010 Car/passenger ferry Fosen Namsos Sjø DNV
2011 PSV DOF DNV
2011* Chemical tanker Tarbit Shipping GL
2011 Car/passenger ferry Fjord1 DNV
2011 PSV Solstad Rederi DNV
Year Type of vessel Owner Class
2012* Car/passenger ferry Fjord1 DNV
2012 PSV Eidesvik DNV
2012 PSV Olympic Shipping DNV
2012 PSV Island Offshore DNV
2012 General Cargo Nordnorsk Shipping DNV
2012 PSV Eidesvik Shipping DNV
2012 PSV Island Offshore DNV
2012 Car/passenger ferry Torghatten Nord DNV
2012 Car/passenger ferry Torghatten Nord DNV
2012 Car/passenger ferry Torghatten Nord DNV
2013 PSV REM DNV
2013 RoPax Viking Line LR
2013 Car/passenger ferry Torghatten Nord DNV
2013 Harbor vessel Incheon Port Authority KR
2013 General Cargo Eidsvaag DNV
2013 RoPax Fjordline DNV
2013 High speed RoPax Buquebus DNV
2013 Tug CNOOC CCS
2013 Tug CNOOC CCS
2013 Car/passenger ferry Norled DNV 2014 Car/passenger ferry Norled DNV 2014 Tug Buksér & Berging DNV 2014 RoPax Fjordline DNV
Ships in operation
* Conversion project
MARKET AND TECHNOLOGY
14
Updated 31.03.2014 Excluding LNG carriers and inland waterway vessels
DNV GL © 2013
60 confirmed LNG fuelled newbuilds
Year Type of vessel Owner Class
2014 Ro-Ro Norlines DNV
2014 Ro-Ro Norlines DNV
2014 Patrol vessel Finish Border Guard GL
2014 Car/passenger ferry Society of Quebec LR
2014 Car/passenger ferry Society of Quebec LR
2014 Car/passenger ferry Society of Quebec LR
2014 Tug Buksér & Berging DNV
2014 PSV Harvey Gulf Int. ABS
2014 PSV Harvey Gulf Int. ABS
2014 PSV Harvey Gulf Int. ABS
2014 PSV Harvey Gulf Int. ABS
2014 Gas carrier SABIC BV
2014 Gas carrier SABIC BV
2014* Product tanker Bergen Tankers LR
2014 General Cargo Egil Ulvan Rederi DNV
2014 General Cargo Egil Ulvan Rederi DNV
2014 PSV Remøy Shipping DNV
2014 Car/passenger ferry AG Ems GL
2014* Car/passenger ferry AG Ems GL
2014 Car/passenger ferry Samsoe Municipality DNV
2014 Ro-Ro Sea-Cargo DNV
2014 Ro-Ro Sea-Cargo DNV
2014 Tug CNOOC CCS
2015 Tug CNOOC CCS
2015 PSV Siem Offshore DNV
2015 PSV Siem Offshore DNV
2015 PSV Simon Møkster DNV
Year Type of vessel Owner Class
2015 PSV Harvey Gulf Int. ABS
2015 PSV Harvey Gulf Int. ABS
2015 Tug NYK NK
2015 LEG carrier Evergas BV
2015 LEG carrier Evergas BV
2015 LEG carrier Evergas BV
2015 Bulk ship Erik Thun LR
2015 Container Ship Brodosplit DNV GL
2015 Container Ship Brodosplit DNV GL
2015 PSV Siem Offshore DNV GL
2015 PSV Siem Offshore DNV GL
2015 Container Ship TOTE Shipholdings ABS
2016 Container Ship TOTE Shipholdings ABS
2016 Icebreaker Finnish Transport A. LR
2016 PSV Siem Offshore DNV GL
2016 PSV Siem Offshore DNV GL
2016 Chemical tanker Terntank BV
2016 Chemical tanker Terntank BV
2016* Ro-Ro TOTE Shipholdings ABS
2016* Ro-Ro TOTE Shipholdings ABS
2016 Car carrier UECC LR
2016 Car carrier UECC LR
2016 Car/passenger ferry Boreal Transport DNV GL
2016 Car/passenger ferry Boreal Transport DNV GL
* Conversion project
Confirmed orderbook
MARKET AND TECHNOLOGY
15
Updated 14.04.2014 Excluding LNG carriers and inland waterway vessels
DNV GL © 2013
Global development- confirmed orderbook
Norway
Europe
North America
South America
Asia
60 confirmed LNG fuelled newbuilds - DNV GL also first choice for future projects (2/2)
Year Type of vessel Owner Class
2016 Container Ship Universal Marine DNV GL
2016 Container Ship Universal Marine DNV GL
2017 Container Ship Universal Marine DNV GL
2017 Container Ship Universal Marine DNV GL
2017 RoPax Brittany Ferries BV
2017 Container Ship Crowley Maritime DNV GL
2017 Container Ship Crowley Maritime DNV GL
2018 Container Ship Matson Navigation DNV GL
2018 Container Ship Matson Navigation DNV GL
* Conversion project
Confirmed orderbook
MARKET AND TECHNOLOGY
16
Updated 14.04.2014 Excluding LNG carriers and inland waterway vessels
DNV GL © 2013
Current development is in line with DNV GL projections
17
0
100
200
300
400
500
600
700
800
900
1000
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Nu
mb
er o
f sh
ips d
elivered
Year of delivery
Development of LNG fuelled fleet
Total confirmed projects DNV Shipping 2020
0
50
100
150
200
250
300
2012 2013 2014 2015 2016
Updated 31.03.2014 Excluding LNG carriers and inland waterway vessels
MARKET AND TECHNOLOGY
DNV GL © 2013
A global LNG infrastructure is under development
19
Existing Planned (Feasibility study, risk study, proposed locations, pending approval)
Proposed (currently being discussed)
* See detailed map
Europe*
Busan Dubai
Singapore
Incheon
Nanjing
Wuhan
Buenos Aires
New York
Fourchon
Tadoussac
Tacoma
Duluth
Gaolan Hambantota
Turkish strait & Marmara Sea
Jacksonville Shanghai
Zhoushan
Santander
Algeciras Cartagena
Valencia Barcelona Ferrol
Seattle Vancouver
Sarnia
Mississippi river
MARKET AND TECHNOLOGY
DNV GL © 2013
There are two options for making a ship ready for LNG
20
We can help you select the best solution according to operational, environmental and financial requirements
Ship ready for operation today
Ship ready for future retrofit
LNG READY SERVICE
LNG fuelled ship LNG ready ship
DNV GL © 2013
There are four steps to become LNG ready
21
LNG READY SERVICE
2. CONCEPT REVIEW
Review of engine and tank type selection
Concept Design Review
Rules and regulations
Fit for purpose and best practice
Concept HAZID
1. FUEL DECISION SUPPORT
Operational profile
Concept design (tank size & location)
Financial assessment (CAPEX, OPEX,
pay-back time and sensitivity analysis)
Fuel availability
3. APPROVAL IN PRINCIPLE
For novel designs
For LNG Ready designs
4. RISK ASSESSMENT
Assessment of safety level of LNG fuel
system (mandatory by IMO)
Basis for investment
decision and outline
specification
Basis for
yard/designer
negotiations
Basis for contract
Basis for acceptance
by administration
Decision Points. Proceed with the LNG option or not.
CLASS APPROVAL (after vessel is ‘LNG Ready’)
DNV GL © 2013
LNG ready phase 1 Fuel decision support – case study
22
DNV GL © 2013
LNG as fuel on a new build MR tanker
Case description
Building an MR tanker with full dual fuel
capabilities
The vessel will use LNG for the whole roundtrip
All engines will run on LNG
Vessel specifics
Deadweight: 51,500 DWT
Length O.A: 183 m
Breadth MLD: 32 m
CASE DESCRIPTION
23
DNV GL © 2013
The vessel will trade cross-Atlantic
24
OPEREATIONAL PROFILE
Issues to consider
Vessels built after 1 January 2016 need to comply with NOx Tier III regulations when operating in NOx ECA. Compliance
options include LNG, SCR and EGR.
Rotterdam
Houston
New York
Operational profile
Total distance
(round-trip) 10,300 nm
Distance in ECA
(round-trip) 3,800 nm
Total sailing time 32 days
Sailing time in ECA 12 days
(38%)
Speed 13.5 knots
Complete round-trip
voyage time 49 days
Total time in ECA 30 days
(60%)
DNV GL © 2013
Issues to consider
Several engines types are available 4 stroke two stroke
high and low pressure
Ensuring Tier III compliance and engine compatibility with
other abatement technologies when running on diesel oil
(SCR, EGR etc).
Installation of dual fuel engines, two stroke Main Engine
25
Assumptions and comments
Dual fuel capabilities on all engines
Full HFO capabilities for back-up
Source: MAN
Dual fuel engines
1 x MAN 6S50ME-B9.2-GI Engine size:8,890 kW Engine speed: 99 RPM SGC: 135.8 g/kWh SPOC: 8.5 g/kWh 3 x MAN L23/30 DF Engine size: 850 kW Engine speed: 900 RPM
TECHNICAL CONSIDERATIONS
Source: MAN
DNV GL © 2013
A tank size of 1500 m3 is needed for 100% LNG operation (2 bunkering operations)
26
Assumptions and comments
Dual fuel capabilities for all engines
Bunkering frequency: Twice per roundtrip
85% tank utilization
Issues to consider
Cruising range, bunker price difference, additional capex
TECHNICAL CONSIDERATIONS
0 200 400 600 800 1 000 1 200 1 400 1 600
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Main Engine
Auxiliary Engine 1
Auxiliary Engine 2
Total Consumption
REQUIRED TANK SIZE
LNG volume [m3]
LNG tank capacity needed for operation [m3]
DNV GL © 2013
There are several possible tank locations on deck
27 27
Assumptions and comments
A LNG type C pressurized tank has been considered
Impacts on design/operation:
Rearrangement of some piping and equipment
Move cargo pumps to the side
Double gangway around the tank
Mechanical protection against hose handling crane
Issues to consider
Special attention must be paid to the interim guidelines,
class requirements and the draft IGF code for tank
location
Aim to keep tank size within standard supplier limits
TECHNICAL CONSIDERATIONS
Different tank locations
DNV GL © 2013
CAPEX estimate for LNG fuel alternative
28
Assumptions and comments
The LNG system price includes the tank, the tank
connection spaces, the bunkering station and the
automation and interfacing system
The yard cost assumes a "normal" addition for risk and
overhead/profit from the yard
Issues to consider
Cost-benefit evaluation of DF capability on auxiliary
engines and boilers
Low pressure versus high pressure gas engines and
related supply systems
5,8
0,5
4,4
0,9
0 1 2 3 4 5 6 7
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Engines andGVUs
LNG system
Yard cost
Total cost
[MUSD]
Total additional cost of the LNG system [MUSD]
FINANCIAL ANALYSIS
DNV GL © 2013
CAPEX estimate for hybrid scrubber system
29
Assumptions and comments
Hybrid scrubber for cleaning the exhaust of both the main
engine and the auxiliaries
Yard cost is a case-to-case specific parameter which
varies
Issues to consider
Choosing the correct scrubber solution among closed
loop, open loop and hybrid scrubber should be
investigated in detail.
A Technology Qualification process is also recommended
to increase the likelihood of a successful installation.
Operational costs of scrubber systems may vary
significantly and needs to be accounted for.
3,3
0,5
2,8
0,0 0,5 1,0 1,5 2,0 2,5 3,0 3,5
0% 20% 40% 60% 80% 100%
Scrubberequipment
Yard cost
Total cost
[MUSD]
Total additional cost of the hybrid scrubber system [MUSD]
FINANCIAL ANALYSIS
DNV GL © 2013
LNG is expected to be available on the trade route
30
Issues to consider
The availability of
bunkering LNG in
an area/port does
not necessary
mean that
bunkering will be
possible for a
specific ship
(pending slot
contracts and
compatibility)
Confirmed
Potential
LNG AVAILABILITY
Rotterdam
New York
New Orleans
Houston
DNV GL © 2013
-3
-2
-1
0
1
2
3
4
5
6
7
8
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Co
st
[M
US
D]
Year
Cumulative discounted cost difference to HFO baseline [MUSD]
HFO baseline ScrubberFuel switch LNG @ 16 USD/MMBtuLNG @ 14 USD/MMBtu LNG @ 12 USD/MMBtu
HFO
Scrubber
Fuel switch
Cost analysis for LNG, Scrubber and Fuel Switch
Note; New global 0,5% Sox limit not included (2020/2025) MGO price 890 USD/tonne 22 USD/MMBtu HFO price 595 USD/tonne 15.5 USD/MMBtu
FINANCIAL ANALYSIS
31
DNV GL © 2013
Pros and Cons of different fuel options
32
OPTION PROS CONS
SCRUBBER • Use cheaper, high sulphur fuel
• Fuel available
• Takes up space
• Significant investment cost
• No significant reduction of NOx
• Requires additional energy during operation
• Discharge of water
• New technology - maintenance
LNG
• Currently cheaper fuel
• Reduces NOx and CO2 and Sox
• High system costs
• Requires larger fuel tanks
• Distribution network ?
• Methane slip
LOW SULPHUR
FUEL
• No or little modifications and investment needed.
• Well known and tested
• High fuel cost
• Fuel availability uncertain
• Increased Wear and tear on engines
• NOx treatment needed for Tier III
1
2
3
DNV GL © 2013
LNG Ready Studies
Interest has primarily been
spurred by known or likely LNG
availability in relevant ports
Most projects have proven the
potential for a good business case
for LNG and scrubbers
33
Updated 18.03.2014
0 2 4 6 8 10 12 14
Others
Gas carriers
Tankers
Containers
Bulk carriers
Different designs assessed
LNG READY SERVICE
DNV GL © 2013
LNG as fuel – business riks’s
34
MARKET AND TECHNOLOGY
DNV GL © 2013
LNG will become a major fuel – it’s only a matter of time!
35
MARKET AND TECHNOLOGY
LNG & Scrubbers are proven & available technology!
LNG & Scrubbers should be considered for all new builds !
Close cooperation with charterer and LNG bunker supplier needed in this early phase
DNV GL © 2013
SAFER, SMARTER, GREENER
www.dnvgl.com
Thank you for your attention
36
Håkon Skaret Business Director Tankers
+4795937377