Conversion of Ships to Gas Driven by Tidal Wave of Interest

FC Business Intelligence says: With the high price of low sulphur diesel and increasingly aggressive Emissions control areas (ECAs) in US waters, shipping firms and gas giants are looking to LNG as the next step in the evolution of marine fuel. With operational cost savings of up to 50% according to studies and a superior environmental profile, the conversion of ships to gas is being driven by a tidal wave of interest. This will be explored at the LNG for Marine Transportation Conference hosted by FC Business Intelligence.

But the capital costs associated with such a change are significant and prohibitive; cost estimates vary between ships but can easily exceed $70 million per ship. But there are long term concerns as well, with ship owners and operators concerned about the consistent supply of gas, the development of new infrastructure and the sell on value of their ships if they are exclusively fuelled by gas.

Nevertheless, there is a clear sea-change in the perspectives of key stakeholders. John Hatley of Wartsilla comments that this evolution is natural saying that, “Millennia ago the shift was oar to sail, two centuries ago it was sail to steam, a century ago steam to diesel, and now it’s a new era for gas.” And he is not alone; Gas suppliers including Shell and AGL resources are amongst the key movers in new high horse power markets. They have identified the marine sector as a promising market well placed to take advantage of the surplus in natural gas. Marvin Odum, president of Shell remarked that “LNG can provide great advantages for our commercial customers as a future energy solution in transportation” when talking about Shell’s future strategy to fuel the marine, rail and mining sectors.

There are also partnerships being built across the global supply chain to make this possible. High profile deals between the likes of Harvey Gulf and Wartsilla, Gazprom and Summa group and DNV and KOGAS are evidence of the appetite for change. These commercial companies are often supported in their endeavours by port operators as they look to develop bunkering projects.

However, with the market still in its’ early stages of development, a forum for producers, end users, infrastructure developers and port stakeholders is key for development. The LNG for Marine Transportation Conference is set to be that forum. With 200+ delegates expected, the core focus of the event is how to build an LNG fuel market for the Marine Sector in the USA. With speakers from AGL resources, American Bureau of Shipping, Totem Ocean trailer express and the Port of Houston confirmed there is a huge amount of expertise on show for those looking to grasp the future of fuel.

Oliver Saunders, the event director says of the event, “This is all about partnerships and bringing LNG to market in a way that benefits the customer commercially.” He went on to emphasize the benefits of having an inclusive approach at this conference; “It is clear to me that this isn’t about one industry making things happen…it’s about the ship operators, ship builders, gas producers, gas development companies, regulatory bodies and port authorities truly collaborating and finding out what they each need to make this a success.”

FC Business Intelligence, January 29, 2013

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