Friday, November 19, 2010

Top Story

Could LNG become dominant fuel source for ships?

Liquefied natural gas will become the dominant fuel source for all merchant ships within 40 years as environmental pressures force owners to use cleaner burning fuel, the world’s fourth-largest vessel classifier said.

Ships must cut emissions of sulfur oxides, a pollutant said to cause acid rain, to 0.5 percent by 2020 from 4.5 percent today under rules from the International Maritime Organization. In more environmentally sensitive areas, the upper limit drops to 0.1 percent by 2015 from 1 percent today.

“Environmental requirements aren’t going to get any less strict,” Lars Petter Blikom, segment director for LNG at Det Norske Veritas, a company that verifies ships are seaworthy, said in a Nov. 16 interview in London. “That’s just going to make gas even more compelling and there’s no other realistic option.”

LNG, natural gas chilled to 1/600th of its gaseous size, costs $397.28 a metric ton, according to Spectron. Bunker fuel oil with a sulfur content of 4.5 percent and a viscosity of 380 centistokes costs $475.26 a ton, according to data compiled by Bloomberg from 25 ports.

Nitrogen oxides trigger reactions that lead to the formation of ozone, a pollutant that irritates eyes and lungs.

By 2020, a majority of owners will ask for LNG fuel tanks every time they place an order for new vessels to be built, Blikom said.

Changing specifications so that ships burn LNG will add about 10 percent to construction costs, Blikom said.

As well as generating more revenue for yards including Hyundai Heavy Industries, the world’s largest, the switchover will bolster demand for LNG as a fuel.

Ships will burn 200 million to 250 million tons of heavy fuel oil this year, the Southampton, England-based International Bunker Association estimates.

LNG cuts carbon emissions from shipping by about 25 percent, sulfur oxides by almost 100 percent, and nitrogen oxides by 85 percent, Blikom said.

Including vessels already operating in the LNG industry, there are about 100 carriers that use the fuel for propulsion today.


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