Friday, September 7, 2012

Top Story

Industry eyeing LNG as ship fuel of the future

Motivated by high oil costs, environmental restrictions, and the abundance of natural gas, some shipping companies are moving toward fueling with liquefied natural gas.

"LNG is already being used as a fuel in certain segments, and it has potential to become an energy source used on a larger scale in shipping," said Bo Cerup-Simonsen, head of Maersk Maritime Technology, to the Wall Street Journal.

France's CMA-CGM Groupe, the world's third-largest container-shipping company, and Daewoo Shipbuilding and Marine Engineering of South Korea are in the early stages of creating an LNG-powered container ship.

"The first vessel could be built within five years when a solution has been completed to supply the vessels with LNG, either using a small vessel alongside, in a container terminal or even in an LNG tanker terminal," said Ludovic Gerard, vice president of CMA Ships, to the WSJ.

Wärtsilä, a major builder of ship engines, converted a 25,000-deadweight-ton oil product tanker to LNG. It's one of the largest ships ever to use LNG, although tiny compared to post-Panamax vessels and oil tankers. China's Cnooc Ltd., an oil company, has ordered two tugboat engines from Wärtsilä that can run on oil or natural gas. Other orders for small vessels have come in from the U.S., South America and Canada.

"Future environmental regulations, as well as anticipated climate change regulations, will be very costly to comply with, and [liquefied natural gas] may have benefits in meeting these regulations with less additional emission cleaning required," said Cerup-Simonsen.

Industry-wide use of LNG will not happen anytime soon. The large investment of putting an infrastructure in place, converting ships and setting up distribution channels does not seem feasible until the shipping industry bottom line rallies.

For more of the Wall Street Journal story:

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