LNG

Within 10 years the majority of shipping vessels will run on LNG...a cleaner, alternative fuel
source. The newest innovation in LNG carrier engine design, M-type, electronically controlled,
gas injection (ME-GI) engines, optimize the capability of slow speed engines by running directly
off BOG (removing the need to reliquefy the gas) or utilizing fuel oil, and ME-GI propulsion
results in less fuel consumption.
Environmental legislation is currently impacting the marine market segment. Ships were
traditionally powered by Heavy Fuel Oil (HFO), which produces high levels of harmful
pollutants. LNG is one of the only fuel source able to comply with the environmental legislation.

CONTENTS:

Page:

The following pages 2 thru 25, represent various publications/news articles regarding LNG
applications, markets, and developments.
LNGGasSupplySystemforMEGIgasinjec onsystemManifold(3pagebrochure)

24

FT 01/10/16:USwillbeagassuppliertotheworldbytomorrow

56

WSJ 12/02/15:OutofBoundsCO2elutestalks....

Gas Marine Fuel 12/03/15:TheMajorityofshippingvesselsaresettorunonLNGwithin10years

Marine Link 11/03/15:ABSdeemsCrowleyProductTankerLNGReady.....

WSJ 07/22/15:EconomicAnchor.July22,2015..

10

IGU World LNG Report2015edi onsec on5...... 1123

Marine Link 06/10/15: DSMElaunchesLNGcarrierforTurkey..
Motorship 11/27/13:MANhostsphaseofEULNGini a ve.November27,2013..

IssueDate:30Jan2016

24
2425

Page 1 of 25

IssueDate:30Jan2016

Page 2 of 25

IssueDate:30Jan2016

Page 3 of 25

IssueDate:30Jan2016

Page 4 of 25

US will be a gas supplier to the world by tomorrow January 10, 2016

http://http://www.ft.com/intl/cms/s/0/f1773832-b5ee-11e5-b147-e5e5bba42e51.html#axzz3yHh5aaug

The Energy Atlantic, a 290-metre tanker

steaming slowly through the Gulf of
Mexico, is about to make history. It is
scheduled to arrive on Tuesday
at Cheniere Energys Sabine
Pass liquefied natural gas plant on the
coast of Louisiana, to be loaded with the
first cargo of LNG to be exported from
the lower 48 contiguous states of the
US.
The shipment is a momentous event for
energy markets, marking the arrival of
the US as a gas supplier to the world.
The plunge in oil prices since the summer of 2014 has dragged down the value
of LNG, which is often sold on crudelinked contracts, and damped the excitement over US exports. The economics of
shipping gas from the US were compelling two years ago, but are now marginal. Deteriorating market conditions have
put the brake on any new investments in
US LNG.
Even so, US LNG exports are likely to
have a significant impact, holding down
energy costs for consumers in Europe,
Latin America and Asia. They will also
provide tough competition for anyone
hoping to build rival LNG plants, such as
the proposed projects in east Africa, the
west of Canada, or Russia. By the end of
the decade, the US is likely to be the
worlds third-largest exporter of LNG,
after Qatar and Australia.
Combined with the new supplies
from Chevrons huge Gorgon and Wheatstone projects in Australia, which are
scheduled to come on stream this year,
exports from the US are making it a
buyers market for LNG.
There is an awful lot of LNG sloshing
IssueDate:30Jan2016

around the world at the moment, with

even more to come, says Frank Harris
of Wood Mackenzie, a consultancy. And
that is putting downward pressure on
prices.
A decade ago, this prospect seemed
wildly unlikely. US gas production was
in decline and by the 2010s the country
was expected to be a large importer of
LNG, not an exporter.
The shale revolution, the result of
advances in production techniques that
made it possible to extract gas at
commercially viable rates from previously unyielding rocks, meant that US
production started rising again in
2006, and since 2011 it has been breaking new records every year.
Charif Souki, Chenieres visionary
founder who
was ejected from the
company at the end
of last year, was one
of the first to see the
potential for LNG
exports from the US.
In 2010, he submitted
the first application
to regulators to
convert the LNG import terminal that
Cheniere had built at Sabine Pass,
which was being barely used because
US domestic gas production was so
strong, into a liquefaction plant.

similar projects turned into a flood.

British thermal units, just a third of its

price of almost $19 per mBTU two years
ago, according to Argus, the information
service.

The US Department of Energy has

received applications to export LNG
for 54 projects. If they all went ahead,
At that price, with benchmark US gas at
they would have the capacity to liquefy
about $2.40 per mBTU, plus liquefaction
about 60 per cent of the entire gas
costs of $3 to $3.50 per mBTU, plus
production of the US.
transport at about $2 per mBTU, LNG from
So far, however, just five plants have Louisiana or Texas does not look commerstarted construction: Chenieres
cially attractive.
Sabine Pass and
Similar calculations apply in Europe. Benchits Corpus Christi
mark UK National Balancing Point gas has
project in Texas;
dropped by almost a half since 2013 to
Freeport LNG,
about $5.20 per mBTU, meaning that LNG
also in Texas;
exports from the US to Britain are unlikely
Cameron LNG in
to cover all of their costs.
Louisiana; and
Cove Point LNG, Since 2013, most of the new LNG projects
on the east coast launched worldwide have been in the US.
in Maryland.
However, the deteriorating economics

Those projects have been able to make

progress because they were fast
enough at signing up customers on
long-term contracts that guarantee
their revenues. Since the end of 2014
Many in the industry were skeptical
those customers, mostly utilities in
that the project could be made to work Europe and Asia, have been reluctant
but the plan took a decisive step forto make any further commitments.
ward in October 2011 when Britains BG
The price of LNG delivered in northGroup signed a 20-year contract to buy
east Asia, including Japan and South
most of the production from Sabine
Korea, the worlds two largest marPasss first train, as LNG production
kets, has fallen along with oil. It has
units are known. After that contract
dropped to about $6.65 per million
was signed, the trickle of proposals for

make it unlikely that any new plants will be

approved for a while.
The plants that have already started construction, though, are highly unlikely to be
stopped. This is because the companies
buying LNG from one of these plants have
typically made firm commitments for 20
years under which they have to pay the
charges they have promised, even if they
do not use the capacity.
The US LNG projects will add to global oversupply. Bernstein Research has estimated
that the worlds liquefaction capacity will in

Page 5 of 25

ContinuedUS will be a gas supplier to the world by tomorrow-January 10, 2016

h p://h p://www. .com/intl/cms/s/0/f1773832b5ee11e5b147e5e5bba42e51.html#axzz3yHh5aaug

the next three years rise by 90m tonnes

per annum, which is about 35 per cent of
present demand.
Nikos Tsafos of Enalytica, a research company, says US LNG should help hold gas
prices down for a few years at least.
When the global oversupply is finally absorbed by rising demand, the next wave of
plants in the US, including projects backed
by ExxonMobil and Kinder Morgan, will be
poised to benefit.
There are other promising potential new
sources of LNG in the world, including the
projects to develop large gas discoveries

IssueDate:30Jan2016

Page 6 of 25

Out-of-Bounds CO2 Elutes Talksby Robert Wall and Costas Paris December 2, 2015
h p://www.wsj.com/ar cles/outofboundsco2cloudsemissionstallying1449107855

For the shipping

industry, the IMO
has imposed an
efficiency
standard for
ships built since
2013.

World leaders are hammering out

ways to cut their countries carbon
emissions in Paris. But what about all
the carbon dioxidefrom planes and
shipsemitted outside any one countrys borders?

national commercial flights and shipping. Left unchecked amid efforts to

reduce emissions elsewhere, that
share could grow to as much as 40%
of global emissions by 2040, the report warned.

Airlines and the global maritime industry count among the worlds biggest
CO2-emitting industries. Unlike emissions from power plants or passenger
cars, CO2 from planes and ships plying international routes arent tabulated as part of any one countrys total
emissions. Those totals are the main
subject of haggling in Paris this week
and next, aimed at coming up with a
concrete plan to limit man-made
climate change.

The International Civil Aviation Organization, a United Nations body, puts the
current contribution from international aviation to global C02 emissions at
1.3%. Its shipping counterpart, the
International Maritime Organization,
said in a report last year that from
2007 to 2012 such emissions reached
an average 3.1% of the global output.

That omission is ratcheting up pressure on negotiators in Paris to figure

out how to handle that uncounted CO2,
and whether to force the industries
global watchdogs to come up with a
credible, separate plan to rein in air
and sea emissions.
One big challenge: Its hard to peg just
how much CO2 the two industries are
emitting in the first place.
A recent European Parliament report
estimated between 3% and 4% of
global, man-made CO2 emissions
came
from
inter-

IssueDate:30Jan2016

The issue hasnt been at the top of the

climate-change agenda among negotiators in the yearlong run up to the
Paris talks. But the threat of a more
forceful approach to reining in air and
sea emission has long shadowed those
industries. It is also flaring anew as an
irritant for environmental groups,
which say executives havent done
enough to come up with a plan on their
own.
Progress has been insufficient,
said Andrew Murphy, a representative
for Transport & Environment, an environmental advocacy group.

A preliminary paragraph in the draft

of the Paris accorda document
global leaders hope will spell out a
final, concrete plancould require
that countries work through the U.N.
agencies to slice up emissions from
such international trips by air and sea
and apportion them to individual countries.
The ICAO and IMO have taken leading
roles in trying to broker the details of
any agreement, and representatives
of both are in Paris now.
Countries with rapidly growing airlines, or those heavily dependent on
tourism, argue any moves to limit
flight emissions will favor more mature markets, such as those in the U.S.
and Europe. The airline industry,
meanwhile, has fought against what it
worries would be a patchwork of
national regulations and taxes that
would govern its emissions.
The European Union has, for instance,
threatened that the lack of a global
agreement on international flight
emissions could spur it to revive
efforts to include them in its carbon
cap-and-trade mechanism, something
carriers so far successfully have
fought.
We are supportive of
ICAO putting together a
framework that governs the entire planet,
said Mark Dunkerley,
chief executive of Hawaiian Airlines par-

Carbondioxideemissionfromshipsdontcounttowardna onaltotals.

Page 7 of 25

The Majority of Shipping Vessels are Set to Run on LNG within 10 years, with
Conventional Vessels having very Limited Trading Options | Gas as a Marine Fuel .
Source: E-mail from energy@semiconference.co.uk

Gas as a Marine Fuel | 3rd

December 2015, Central
London, UK
Register online to network
with latest attendees including ExxonMobil:
www.smionline.co.uk/2015gasmari
nefuel.asp
Alterna vely,con
tactMar nHughesontel
+44(0)2078276078or
emailmhughes@smi
online.co.uk

LNG is one of the

only fuel sources
able to comply
with these strict
limits

IssueDate:30Jan2016

Environmentallegisla onis
thekeyfactorcurrentlyim
pac ngthemarinesegment.
Whileshipsweretradi onally
poweredbyHeavyFuelOil
(HFO),whichproduceshigh
levelsofharmfulpollutants,
includingsulphurdioxide
(SOx),interna onallawnow
statesthatshippingfuelcan
containnomorethan3.5%
sulphur.Further,thelimitin
EmissionControlAreas(ECAs)
orSulphurEmissionControl
Areas(SECAs),whichcurrent
lyincludecoastalareassuch
astheBal cSea,NorthSea
andthewaterssurrounding
NorthAmericaandtheCarib
bean,is0.1%.

LNGisoneoftheonlyfuel
sourcesabletocomplywith
thesestrictlimitsand,with
themajorityofvesselsoper
a ngincoastalareas,the
needforLNGcompliantsolu
onsissettobecomeamust
foroperatorsintheverynear
future.Tenyearsfromnow,
themajorityofvesselswill
runonLNGandconven onal
vesselswillhaveverylimited
tradingop ons.Thissupports
theCapExargumentwhile
youmayhavetopaymore
foryourLNGcompliantsolu
onsintheshortterm,there
willbesignificantlymoreval
uetobegainedfromitdown
theline.

Againstthisbackdrop,SMis
GasasaMarineFuelmaster
classwillexaminethegrow
ingdemandforLNGasama
rinefuelasaresultofanin
creasingemphasisonenvi
ronmentalperformanceand
howtobestprepareforitby
examininghowthisisbe
ingimplementedworld
wide,withfocusonrecent
developmentsinEuropeand
theUS.Thefulldaypro
grammewillalsoexplorethe
recenttechnicalandregula
torydevelopmentsandhow
youcanbestadapttothese
changes.

Page 8 of 25

ABS Deems Crowley

Product Tanker LNG-Ready- November 3, 2015
Source: (http://www.marinelink.com/news/lngready-crowley-product400340.aspx)
Posted by Eric Haun
Four-ship series built to ABS class is
first to take advantage of LNG-Ready
approval for potential conversion to
LNG fuel in the future
ABS has issued the first LNG-Ready
approval in accordance with its Guide
for LNG Fuel Ready Vessels to a
product tanker, granting LNG-Ready
Level 1 approval and approval in
principle for Crowley Maritime Corporations new Jones Act tanker Ohio, the first in a series of four
ships built by Aker Philadelphia
Shipyard
By achieving compliance with the
ABS Guide for LNG Fuel Ready
Vessels, Crowley has the option to
convert the product tankers to LNG
propulsion at a later date having
already been granted a conceptual
review.

IssueDate:30Jan2016

ABS has played a fundamental role

in supporting the ambitions of the
maritime industry as it moves to
embrace the opportunity of LNG as
fuel, said ABS Chairman, President
and CEO Christopher J. Wiernicki.
This milestone builds upon our work
to provide owners with the guidance
and support they need to move ahead
with shipbuilding projects that allow
them the flexibility to respond to
changes over the lifetime of their
vessels.
According to ABS, who published
the Guide for LNG Fuel Ready Vessels in 2014, its LNG-Ready endorsements allow shipowners and yards the
flexibility to limit initial investment
while planning for the future conversion to dual fuel or gas-powered
combustion engines.

for Crowley, said, As our business

continues to shape itself to better
meet the requirements of our customers, these vessels that stand ready and
able to operate on a cleaner, alternative fuel source are our way of anticipating future demands.
Crowley will christen Ohio today at
the Tampa Cruise Terminal. The
50,000 dwt, 330,000-barrel-capacity
ship has already made two voyages to
date carrying clean petroleum products to Florida.
The three remaining product tankers
are expected to be delivered through
2016.

Rob Grune, senior vice president and

general manager petroleum services

Page 9 of 25

Source: The Wall Street Journal | Wed. July 22, 2015 |

FleetSize

Rows of shipping containers at the freight terminal at Piraeus port in Greece last week. PHOTO: SIMON
DAWSON/BLOOMBERG NEWS

IssueDate:30Jan2016

Page 10 of 25

Issue Date: 30 Jan 16

Page 11 of 25

Issue

Is Issue Date: 30 Jan 16

Page 12 of 25

Issue Date: 30 Jan 16

Is

Page 13 of 25

Issue
Is Date: 30 Jan 16

Page 14 of 25

IssueDate:30Jan2016

Page 15 of 25

IssueDate:30Jan2016

Page 16 of 25

IssueDate:30Jan2016

Page 17 of 25

Issue Date: 30 Jan 16

Page 18 of 25

Is

IssueDate:30Jan2016

Page 19 of 25

IssueDate:30Jan2016

Page 20 of 25

IssueDate:30Jan2016

Page 21 of 25

Is

Issue Date: 30 Jan 16

Page 22 of 25

Issue
Is Date: 30 Jan 16

Page 23 of 25

DSME Launches LNG Carrier for TurkeyJune 10, 2015

Special points of interest:
The two-stroke engine

Source: http://www.marinelink.com/news/launches-carrier-teekay392752.aspx)

PostedbyEricHaun

technology provided by
MAN Diesel, the MEGI propulsion system, is driving a
step change in global LNG
vessel efficiency.

TheMANDieselMEGI
propulsionsystem,is
equippedwithDynamic
Controls:

TeekaysfirstMtype,Elec
tronicallyControlled,Gas
Injec on(MEGI)powered
LNGvessel,CreoleSpirit,was
floatedoutattheDaewoo
Shipbuilding&MarineEngi
neering(DSME)shipyardin
SouthKoreaonMay29.The
vesselisonchartercontract
withCheniereandisexpected
toenterserviceearly2016,
makingitthemostecient
LNGshiponthewaterwith
thelowestunitfreightcost
intheworldfleet.

Thetwostrokeenginetech
GasSupplySystemforMEGI nologyprovidedbyMAN
gasinjec onsystem
Manifold.

Diesel,theMEGIpropulsion
system,isdrivingastep
changeinglobalLNGvessel
eciency.Whilethemost
ecientDualFuelDieselElec
tric(DFDE)propulsionsys
temshavedailyconsump
onsintheregionof125130
metrictonsincludingsea
margin,theMEGIvessels
haveaconsump onof100
metrictons.Thatbeingsaid,
itisnotjustthefuelcon
sump onthatmakesthetwo
strokestorysocompelling.
Thereduc oninthenum
berofcylindersrequiring
overhaul,thereduc onin
thesizeofthecomplex

electricalsystemsandthe
introduc onofapassivepar
alreliquefac onsystemadd
totheseLNGvesselsecien
cyandfurtherhelptoreduce
theunitfreightcost.
Overthenext8monthsDSME
willinstallthecargocontain
mentsystemcapableof
transpor ng174,000m3of
LNGandputtheshipandits
equipmentthroughthere
quiredtestsandtrials.

CreoleSpirit(Photo:Teekay)

Refertopages2,3,4of25.

MAN Hosts Final Phase of EU LNG Initiative November 27, 2013

http://www.motorship.com/news101/lng/man-hosts-final-phase-of-eu-lng-initiative

MAN Diesel & Turbo has marked the final phase of the EUfunded Helios project by hosting an industry conference at its
PrimeServ Academy in Copenhagen.

MANDiesel&TurboMEGIengine

IssueDate:30Jan2016

The Motorship attended the event, at which the results of the Helios project, aiming to develop a research platform for an LNGfuelled two-stroke marine Diesel engine. Helios is part of the EU
7th framework programme, and MAN as lead organisation was
partnered by Germanischer Lloyd, Kistler Instruments, Sandvik
Powdermet, TGE Marine Gas Engineering and four universities Uppsala, Erlangen, Jonkoping and Lund. (continued on 3 of 17)

Page 24 of 25

ContinuedMAN Hosts Final Phase of EU LNG Initiative November 27, 2013

http://www.motorship.com/news101/lng/man-hosts-final-phase-of-eu-lng-initiative

The project centred around

MAN's ME-GI research engine
and it was enlightening to see the
two different approaches to gasfuelled two-stroke developments
following our visit to Wartsila in
Trieste two weeks ago. MAN's
high pressure gas system is undoubtedly more complex than the
competing low-pressure technology, burns a higher percentage of
pilot fuel, and will need EGR or
SCR in order to meet IMO Tier
III emissions limits. However, it
appears to be engineered with an
even more highly fail-safe approach to problems with the gas
system and a simpler retrofit possibility. In addition, the company
says that it offers shipowners the
most flexible choice of fuel possi-

IssueDate:30Jan2016

ble, and although NOx emissions

are currently above Tier III limits,
methane slip is very low, so carbon emissions - and hence EEDI implications are highly positive,
the engine is tolerant to variations
in gas quality, and it can run on
gas at loads of 10% or lower.
MAN is confident that with further development the pilot fuel
percentage can reduce further, and
NOx emissions can be cut.
The Helios project has explored
wider aspects of LNG as fuel in
Europe, including availability,
pricing and infrastructure, as well
as lubrication and wear issues
resulting from using ultra-low
sulphur fuels.

not expected by MAN, as

well as Teekay LNG tankers and for two larger container ships for US company Matson. No doubt the
low price of LNG in North
America has influenced
these orders. MAN expects the market for dualfuel two-stroke engines to
grow rapidly as the lower
ECA sulphur limits come
into force.

The ME-GI engine has already

attracted orders, the first being for
TOTE container ships, which was

Page 25 of 25