LNG-Powered Shipping May Jump 10-Fold, Biggest Engine Maker Says


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16 Nov 2010

tankers_fleet_logo.jpgThe number of ships powered by liquefied natural gas may jump 10-fold within five years as anti-pollution rules force owners to switch to the cleaner- burning fuel, the industry’s biggest engine maker said. “LNG is the future for shipping,” Jaakko Eskola, head of ship power at Helsinki-based Waertsilae Oyj, said by phone on Nov. 12 from Shanghai. Between 800 and 1,000 vessels

may use the fuel by 2015, up from about 100 today, he said.

Vessels must cut sulfur-oxide emissions in some regions to 0.1 percent
starting in January 2015, down from 1 percent today, as stipulated by
the International Maritime Organization, the United Nations’ shipping
division. LNG produces almost none of the pollutant and also has the
advantage of lowering carbon emissions by 25 percent, Eskola said.

The shipping industry burns between 200 million and 250 million metric
tons a year of heavy fuel oil, according to an estimate by the
Southampton, England-based International Bunker Industry Association.
Heavy fuel oil is the sludge left over after crude oil is refined into
more valuable products such as gasoline and jet fuel.

While LNG contains more energy than heavy fuel oil by weight, it also
is less dense, meaning vessels would need about 40 percent more storage
space than for conventional fuel, according to Eskola. Demand for
natural gas was 2.63 billion tons of oil equivalent last year,
according to BP Plc estimates.

Chilled Gas

A ton of LNG in the U.K. costs about $400, compared with $495.12 for
fuel oil with a viscosity of 380 centistokes, according to data
compiled by Bloomberg. LNG is natural gas that’s chilled into a liquid
form 1/600 of its gaseous size.

Owners are already acting to cut emissions. Mitsui O.S.K. Lines Ltd.,
operator of the world’s largest merchant fleet, and A.P. Moeller-Maersk
A/S have reduced speeds to use less fuel. China Cosco Holdings Co., the
nation’s largest container-ship operator, may reintroduce nuclear power
for moving cargo.

A Cosco official said in April the company was considering
nuclear-powered ships as one option to cut emissions. Maersk and Mitsui
saved up to $40,000 a day by halving speeds earlier, Thomas Preben
Hansen, chief executive officer of Rickmers Maritime, which counts the
two owners as clients, said at the time.

The 1,000-vessel estimate is based on a switchover of about 10 percent
of the 10,000 carriers that operate in so-called Emission Control
Areas, where the most stringent pollution reduction targets are being
introduced more quickly than elsewhere in the world, Eskola said.

Since 1834

Waertsilae, which has roots going back to 1834, makes about one in
every three marine engines. Its engines power Royal Caribbean Cruises
Ltd.’s Allure of the Seas, the world’s biggest cruise ship. The stock
was last at 51.50 euros in Helsinki trading, up 83 percent this year
and giving Waertsilae a market value of 5.08 billion euros ($6.9

Fitting ships to burn LNG costs about as much as installing so-called
abatement equipment that removes sulfur- and nitrogen- oxide emissions
as heavy fuel oil is burned, according to Eskola. Waertsilae also sells
such gear, he said.

About 100 vessels run on LNG now, including offshore service ships,
passenger ferries and tankers that haul the fuel, according to Eskola.
The Finnish company is developing the world’s first oil-products tanker
that will consume the liquid gas, he said.

Waertsilae also is working with Seoul-based Samsung Heavy Industries
Co., the world’s second-largest shipyard by sales, to design one of the
biggest classes of merchant ship so it can run on LNG, said Eskola,
declining to specify the vessel’s type. He also serves as president of
the European Marine Equipment Council, representing 13 trade
associations whose members build, convert and maintain ships and
maritime structures.

Source: Alaric Nightingale, Bloomberg

Sources:  www.Shipid.com

Maersk Line is one of the leading liner shipping companies in the world, serving customers all over the globe.

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