Monday, December 30, 2019

Shipping: "Forced boil-off gas—The future of LNG as a fuel for LNG carriers"

It seems like a natural. As the folks at Wärtsilä tell us:
Boil-off gas (BOG)LNG tankers are designed to carry natural gas in liquid form at a temperature of – 163°C, close to the vaporization temperature. Despite tank insulation designed to limit the admission of external heat, even a small amount of it will cause slight evaporation of the cargo. This natural evaporation, known as boil-off is unavoidable and has to be removed from the tanks in order to maintain the cargo tank pressure.
So you're going to have LNG going through the phase change back to a gas, even on those arctic tankers Novatek is running in -20°C weather.
Regarding efficiency, from PetroSkills, November 1:

Can Boil-Off Gas Meet Engine Requirements for LNG Ships?

In 2017, approximately 31% of all the gas consumed worldwide was transported internationally. About 65% of this gas was transported via pipeline (21% of the total) and approximately 35% was transported as liquified natural gas (LNG) (10% of the total) [1].

Most of the gas transported internationally by pipeline was from Russia and Norway to Western Europe and from Canada to the US. The largest LNG importing region was in the Pacific Basin, mainly Japan and South Korea. Most of this LNG was supplied from the Middle East, Australia, Indonesia and Malaysia.

As shown in Figure 1, LNG is often the first choice for large volumes of natural gas transportation when the distances are large and when the supplier and buyer are separated by an ocean.
Figure 1. Natural gas transportation options
Figure 2 shows the overall transportation efficiency for natural gas [2]. Notice, LNG efficiency is roughly 90%. This is related to about 10 % fuel consumption for liquefaction and transportation. Notice the steep curve of the pipeline systems going from 100% efficiency at 0 distances to roughly 65% efficiency at 8000 km (4971 mile). This is essentially the fuel gas requirements for the compression along the length of the pipeline.
Figure 2. Nominal natural gas transportation efficiency [2]
The LNG is typically stored in insulated tanks to keep it in a liquid state for longer periods. As a result of heat transfer from surroundings to the storage tank, a portion of the LNG may evaporate which is known as boil-off gas (BOG). In addition to the heat transfer, reference [3] discusses other sources or mechanisms of BOG like:

►The sloshing of cargo: Liquid Motion

►The cooling of tanks

►LNG loading and unloading conditions

►Cargo tanks pressure decrease If the BOG is not removed from the storage tank, the tank pressure increases....
“In order to match BOG generation with engine consumption for a desired load, fuel sharing can be utilized. Dual-fuel engines are capable of running on both diesel and gas, which can be used to even-out variations in gas supply or quality. With normal gas operation, around 1—5% of the pilot fuel is needed to ignite the gas. With fuel sharing, the amount of gas can be varied between around 15% and 85%, with the rest being diesel [4].”

And finally, from McKinsey & Co., July 2019, the headline article:

Forced boil-off gas: The future of LNG as a fuel for LNG carriers
New limitations on sulphur emissions will require ship operators to consider alternative fuels. As a result, the use of forced boil-off liquefied natural gas is likely to increase.
On January 1, 2020, the International Maritime Organization (IMO) will introduce increased limitations on sulphur emissions by ships. Set forth by MARPOL (see sidebar, “The adoption of MARPOL”), 1 these global limitations will require operators to consider alternatives to the current widespread use of high-sulphur fuel oil (HSFO). Such alternatives include the installation of scrubber systems to remove sulphur from the gas stream or a switch to very-low sulphur fuel oil (VLSFO), marine gasoil (MGO), or liquefied natural gas (LNG).

Limited desulphurization-refining capacity, as well as other logistical considerations, constrain the supply of VLSFO and MGO. Therefore, vessel operators may experience fuel shortages and a sharp rise in prices on the back of an expected spike in demand. LNG’s widespread use as a marine transport fuel, however, is primarily constrained by limited LNG bunkering infrastructure. In fact, several countries, such as Belgium and Singapore, are currently investing in this area to increase the viability of LNG as an alternative fuel supply, though converting existing vessels to accommodate LNG is expensive. Therefore, nearly all growth in this area will come from newly built vessels or LNG-ready vessels.

In addition to the cost of conversion, shipowners and operators face three challenges. First, there are only a few months left before the new emissions limitations come to pass. Second, owners and operators will need to consider the potential LNG shortages and price increases, both likely results of the sudden increase in demand. And finally, they will be on the hook to provide commercial rationale to stakeholders for meeting these new regulations.

While the value proposition of LNG varies across segments of the shipping sector, it is (perhaps unsurprisingly) most attractive as a fuel for the approximately 550 LNG carriers currently operating worldwide. 2 We expect to see a rapid rise in adoption of LNG as a fuel in this segment, potentially increasing demand by nine million tons per annum (mtpa), or 3.0 percent of annual demand, over the next two years. Therefore, shipowners and operators in 2020 should consider switching to forced LNG boil-off gas (BOG).

A shift in the fuel mix of the global shipping industry
MARPOL bans the use of any bunker fuel in which sulphur content exceeds the 0.5 percent threshold—unless a vessel has the right equipment onboard, such as fuel scrubbers, to process high-sulphur fuels. These scrubbers spray alkaline water into a vessel’s gas exhaust to remove sulphur dioxide and other unwanted chemicals or pollutants. As 2020 draws near, some marine-solutions companies have seen a record number of orders for scrubbers. However, given the short time remaining before enforcement of the new limitations and the unsuitability of scrubbers for use on certain types of ships, it’s highly unlikely that they can be adopted by shipping fleets around the world.

In some cases, noncompliance is a distinct possibility, with doubts remaining over how effectively the regulation will be enforced and compliance monitored. To some extent, noncompliance will be addressed by the IMO’s recent announcement of a ban on vessels that lack scrubbers using ports to load HSFO. In addition, there will be increased pressure on authorities from leading shipping companies, which are expected to align with the new legislation, to ensure that enforcement is followed for the broader pool of shipowners, with the expectation being an even playing field.

The special role of LNG for LNG carriers
To comply with MARPOL, LNG carriers face most of the same options as the broader shipping industry. Even before the new regulations go into effect, forecasts show demand for LNG is likely to grow at 3.0 percent a year from 2019 to 2035, well above the growth of overall gas demand, which is projected at 1.0 percent a year. 3 Asia—especially China—and Europe will likely be the primary markets for increased LNG, while sector-specific growth will include electric power and industrials. Although demand in the transport sector is expected to remain relatively minimal, it will experience the fastest growth in the coming years. And within transport, the shipping industry is expected to play an outsized role.

Until now, the standard practice for LNG carriers has been to use BOG as fuel and to supplement with HSFO, which is currently more economical than LNG. After January 1, 2020, however, LNG carrier owners and operators will be required to meet the 0.5 percent threshold. The built-in ability of these ships to switch to LNG as an onboard fuel source means that the LNG option will likely be far more attractive. Installing scrubbers is not typically an option for LNG carriers because of space constraints on the ships themselves, high adaptation costs, limited yard space, and safety issues.
Most LNG carriers can force BOG and use it in place of HSFO (Exhibit 1). Therefore, they do not require conversion costs to stop using HSFO—though a reserve of MGO, other distillates, or VLSFO is expected to be kept for low-speed movements and emergencies. One exception is slow-speed-diesel-class (SSD) LNG vessels, which reliquefy BOG and use marine diesel as fuel. SSD ships are expected to stick with diesel, or other distillate fuels, because conversion to LNG would require dry docking and expensive adaptation.....