LNG Looks To Have A Bright Future As A Domestic Marine Fuel

Image Credit: Sanmar Shipping

Image Credit: Sanmar Shipping

The historic conundrum of developing Liquefied Natural Gas (LNG) as a marine fuel has a chicken versus egg element to it. Vessel operators interested in LNG are hesitant to make the commitment to build and/or convert ships to LNG without a guaranteed fuel supply. There is plenty of capital willing to build LNG liquefaction facilities, but virtually no one is willing to commit the capital without firm offtake agreements. Demand is stymied by lack of assured supply and optimal supply is not being generated due to concerns about market demand. Recent regulatory changes at the Environmental Protection Agency (EPA) and the International Maritime Organization (IMO) may help to incentivize an end to this stalemate, giving industry watchers reason to be optimistic about the future of LNG as a marine fuel. Stricter emissions regulations on marine vessels are set to take effect, making LNG a viable alternative to expensive compliance measures.

According to Sean Register, Director of Business Development for Chester Engineering, “The marine side is the frontrunner for implementation of LNG as transportation fuel”. Chester Engineering is a company that is introducing module & modular and scalable (MMS) liquefaction plants to bring LNG to directly where it is needed for use. The infrastructure requirements to support LNG as marine fuel is much less than for LNG class 8 Trucks. A standard 100,000 gallon a day LNG liquefaction facility will require as many as 3000 class 8 trucks to justify an investment. A similarly sized LNG facility can be justified with under a 100 ships. The trucking sector of the LNG market has also been retarded by the collapse of the price of oil. The reduced spread between LNG and diesel has made the economics that much more challenging for LNG trucking.

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