Global Sulfur Cap on Maritime Fuel - in...

© 2016. NYK Group. All rights reserved. © 2016. NYK Group. All rights reserved.

Global Sulfur Cap on Maritime Fuel

Norway – Japan Maritime Seminar

Koji Shinozaki NYK Line

24th January 2017

© 2016. NYK Group. All rights reserved.

CHAPTER


Regulation for maritime emission – the option to choose

1

2


IMO Global Sulphur Cap

3

IMO Sulphur Oxides (SOx) Regulations

• MARPOL International Convention for the Prevention of Pollution from Ships

• Annex VI Prevention of Air Pollution from Ships (entered into force 19 May 2005)

2020 global sulphur cap implementation date decided

In a landmark decision for both the environment and human health, 1 January 2020 was confirmed as the implementation date for a significant reduction in the sulphur content of the fuel oil used by ships.

The decision to implement a global sulphur cap of 0.50% m/m (mass/mass) in 2020 represents a significant cut from the 3.5% m/m global limit currently in place and demonstrates a clear commitment by IMO to ensuring shipping meets its environmental obligations.

（Global）

2010 2015

（Global）

（Global）

4.5%

3.5%

0.5%

(ECA)

Sulp

hur

Conte

nt

2012 2020

0.1%

1.5%

1.0%

(ECA)

(ECA)

SOx Regulation


Emission Control Area (ECA)

4

SOx 0.1% 2015～ ECA (North Sea, Baltic Sea, US Cost)

SOx 0.5% 2019～ China (PRD, YRD, Bohai Rim)

SOx 0.5% 2020～ EU EEZ(Exclusive Economic Zone)

SOx 0.5% 2020～ Global

EU EEZ ＥＣＡ


• Use Existing fuel and Invest Scrubber

HFO + Scrubber

• Marine Gas Oil or Ultra low sulfur fuel oil

MGO / Sulfur Compliant Fuel

• New fuel to maritime industry

LNG

3 Options

5


World Demand – Marine Fuels

6

(million ton)

6

U.S./

Canada

24.2

* Source : IEA Energy Statistics

ARA

20.5

West/

North

Europe

26.6

MED

9.3 Japan

7.2

Russia

1.8

China/

Hong

Kong

36.3

Korea

8.4

Middle

East

21.6

Oceania

0.8

Central

America

5.3

Other

Asia

4.9

South

America

8.1

Singapore

42.7

World Total

240.1


Emission – LNG case

7

SOx 100%

80%(4 stroke)

CO2 25% PM 100%

Nox 15%(2 stroke)

67%(+EGR)


SOx Options Pros /Cons

8

Options Pros Cons

LSMGO / ULSFO No (or very limited) initial investment

High Fuel Price Future Availability

HFO + Scrubber (Open Loop)

Existing Avail Fuel Low fuel price

Intimal investment Dumping Sludge into Sea – possible new regulation

HFO + Scrubber (Closed Loop)

Existing Avail Fuel Low Fuel Price

Initial Investment OPEX cost increase for sludge treatment

LNG SOx / NOx compliant High initial Investment cost Very limited Availability

Quite unlikely to install Scrubber onto existing (relatively aged tonnage) due to limited payback period.

Most of the case, the industry should rely on the supply of LSMGO / Sulfur Complaint fuel.


CHAPTER


An Option – LNG as Marine Fuel

2

9


Price at same as LNG LHV

Price as is

Price Comparison - Rotterdam

NBP Natulal Gas

HFO

$362/MT

MGO

$569/MT $345/MT

At price on Dec 2016

$345/MT $300/MT $490/MT

Liquefaction Cost Logistics Cost


Price Comparison - Rotterdam

Equivalent at same LHV LNG Price without liquefaction / logistics cost

(MGO – ICE NBP Natural Gas Futures) Ave $449/MT

$/MT

0

200

400

600

800

1000

1200

1400MGO-N.Gas

N.Gas

HFO

MGO

© 2016. NYK Group. All rights reserved. 12

Price Comparison - Japan

LNG price based on statics MOF Japan HFO, LSDO prices are adjusted as same as LHV LNG

Ave (LSDO – LNG) = Ave $227/MT

(200)

0

200

400

600

800

1,000

1,200

1,400

'20

03

/01

'20

03

/07

'20

04

/01

'20

04

/07

'20

05

/01

'20

05

/07

'20

06

/01

'20

06

/07

'20

07

/01

'20

07

/07

'20

08

/01

'20

08

/07

'20

09

/01

'20

09

/07

'20

10

/01

'20

10

/07

'20

11

/01

'20

11

/07

'20

12

/01

'20

12

/07

'20

13

/01

'20

13

/07

'20

14

/01

'20

14

/07

'20

15

/01

'20

15

/07

20

16

/01

20

16

/07

LSDO-LNGLNGHFOLSDO

$/MT


Prospection – LNG fuel market penetration

(2015): “LNG’s market penetration in 2025 could range from 5 to 27 percent.”

(2014):

“LNG will reach a maximum 11% share by 2030 in Status Quo.”

(2014):

“LNG uptake is expected to grow fast in the next 5 to 10 years”

(2011):

“Ongoing LNG infrastructure development will continue to enable LNG LNG in certain sectors, representing abt. 8% of global bunker demand by 2030.”

World Bunker Demand： 240 million MT

10% = 24 million MT by 2030


LNG Fuel – Merits & Demerits

MERIT DEMERIT

Fit for new regulation SOx Reduction 100％

NOx Reduction 10~50 % (lean burn) CO2 Reduction 20～25％

PM Reduction 90~100%

Initial Investment 20~30% increment on N/B Price

Price competitiveness with MGO/ULSFO Increment – Tank Space Less Cargo Space

Dual Fuel Redundancy Training to Crew

Supply Infrastructure – Still way to go


LNG-supply Method

Truck to Ship For Smaller tonnage

Shore to Ship Require Infrastructure

Ship to Ship Flexible Operation


LNG Fuel – Technical Solution

16 16

Dual Fuel Engine

Fuel Tank

【Membrane, SPB】 • Require BOG management • Require Sloshing counter measure (Membrane) • SPB – Heavy Tank weight

【Type C (Pressure Tank)】 • BOG - Manageable • Not suitable for large size tank • Eat rather huge space within ship’s hull

【X-DF (Otto Cycle)】 • Less Consumption than MEGI – Methane Slip • Clearance for NOx Tier III (Gas Mode)

【MEGI (Diesel Cycle)】 • Good Consumption • Require High Pressure FGSS


LNG-Fueled Vessels

(Source: DNV GL)

Ship Type Total Owners

欧州北米その他欧州北米その他

Car/passenger ferry 28 1 0 11 10 0 50 Fjord1, Viking Line, BC Ferries

PSV 16 2 0 4 4 0 26 Harvey Gulf, Siem Offshore

Container 0 2 0 19 4 0 25 TOTE, Crowley, Matson

Gas carrier 8 0 0 13 0 0 21 SABIC, Evergas, Navigator Gas

Oil/chemical tanker 2 0 0 14 2 0 18 Tarbit Shipping, Terntank

Tug 2 0 4 3 0 7 16 CNOOC, Buksér & Berging, NYK

Cruise Ship 1 0 0 7 2 0 10 Carnival, MSC

Ro-Ro 2 0 0 2 2 1 7 UECC, TOTE, Norlines, Sea-Cargo

General Cargo 4 0 0 1 0 0 5 Nordnorsk Shipping, Eidsvaag

Patrol 4 0 0 0 0 0 4 Remøy Management

Bulk ship 0 0 0 3 0 0 3 Erik Thun

Cable layer 0 0 0 1 0 0 1 Tideway

Icebreaker 0 0 0 1 0 0 1 Finnish Transport AgancyOther 1 0 1 6 0 0 8 RoPax, Dredger, Jack Up etc

TOTAL 68 5 5 85 24 8 195

Existing Ordered


Ship to Ship – Bunkering Vessel

Port Player Delivery Capacity Remark

Stockholm AGA (Linde Group)

2013 (converted)

180m3

Converted at the Norges Fiskerstrand Verft shipyard in Norway

Zeebrugge ENGIE/MC/ NYK

2017 5,100m3 Ordered to Hanjin Heavy Industries

Rotterdam Shell

2017 6,500m3 Ordered to STX Offshore & Shipbuilding

Baltic Sea Sirius Rederi / Anthony Veder

2017 5,800m3 Ordered to Royal Bodewes, Netherlands

Baltic Sea / North Sea

Bomin Linde LNG/Klaipedos Nafta

2018 7,500m3 Ordered to Hyundai Mipo

Gulf of Finland LNG-Gorskaya LLC

2018 or 2019

7,300m3 x 3 vessels

Ordered to United Shipbuilding Corporation, Russia


LNG Fuel Project in US

Port Player Operational

Method Customer

Jacksonville Pivotal LNG / WesPac

2016 Truck to Ship

TOTE Maritime (Service route / Jacksonville - San Juan) Two container vessels “Isla Bella” and “Perla Del Caribe”

Jacksonville Pivotal LNG / NorthStar Midstream

2017 Ship to Ship (2,200m3)

TOTE Maritime (Service route / Jacksonville - San Juan) Two container vessels “Isla Bella” and “Perla Del Caribe”

Port Fourchon Harvey Gulf

International Marine

2016 Shore to Ship Offshore Supply Vessel “Harvey Energy” chartered from Harvey Gulf International Marine to Royal Dutch Shell

Other Project of LNG Fueled Vessels • Vancouver: BC Ferries - New-built / retrofit of LNG fueled ferries • Jacksonville: Crowley Marine - New-built CONRO vessel (2,400TEU+400Vehicles) x 2


CHAPTER


NYK as a forerunner on LNG as Marine Fuel

3

20


LNG fueled Tugboat “Sakigake”

A Project subsidized Japanese Government (MLIT) and Class NK

Build ：31st Augest 2015

Yard ：Keihin Dock K.K. (an affiliate company of NYK

Engine ：Niigata Power Systems Dual Fuel engine

Operator ：Wing Maritime Service K.K.

Operating Area : Yokohama, Kawasaki

Thanks to :

• METI

• Agency for Natural Resources and Energy

• MLIT

• Japan Coast Guard

• Port of Yokohama

• Tokyo Gas

21


LNG fueled Car Carriers

22

Car Capacity 3,800RT

LOA 181.00m

Beam 30.00m

Designed draft 8.40m

Classification Lloyds

Main Engine MAN B&W (MCR 11,000kW)

Auxiliary Generators Wartsila

Bunker Station

LNG Tank


LNG bunkering business in Europe

23

LNG bunker business J/V LNG bunker business J/V

ENGIE ENGIE MC MC NYK NYK

Ship Owning J/V Ship Owning J/V

ENGIE ENGIE MC MC NYK NYK Fluxys Fluxys

LNG Bunkering Vessel

LNG Sourcing Agr.

Terminal Use Agr. Authorization

TCP

SBC

LNG Bunkering Agr.

http://www.uecc.com/Default.aspx


LNG Bunkering Vessel (LBV)

24

24

LNG Terminal

PCTC Berth

Zeebrugge Project

* Source : Google Map

Builder: Hanjin Heavy Industries & Construction

Delivery: 2017 Operational Area: Zeebrugge, North Sea Engine: Dual Fuel (LNG + MGO) LNG Tank Capacity: 5,100m3 (Type C) Ship Management: NYK LNG Shipmanagement (UK)


LBV Time Lapse

25


Branding “Gas4Sea”

World wide branding for LNG fuel business

Launched on 6th September 2016 at SMM conference in Hamburg, Germany

26


Feasibility Study – LNG Bunkering at Port of Yokohama

© 2016. NYK Group. All rights reserved. © 2016. NYK Group. All rights reserved.

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