An Environmental Sea Change in LNG Shipping

8/10/2019 An Environmental Sea Change in LNG Shipping

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AN ENVIRONMENTAL SEA CHANGE IN LNG SHIPPING

Ms. Julie A. Nelson

Director, Chartering and Fleet Optimization

BG Group, Houston TX, USA

[email protected]

ABSTRACT

As environmental regulations become ever more stringent, LNG shipowners are increasingly

using enhanced operational techniques and new technology to reduce the impact of their ships on

the environment while, in some cases, reducing the vessels operating costs. The paper will

discuss the operational techniques and new technologies that LNG shipowners are considering

and/or implementing to meet these environmental regulations; discuss the current and proposed

future national/regional and international environmental regulations and guidelines that are

impacting LNG shipping; and give an overview of how LNG shipping has changed because of theincreased focus on the environment. A detailed discussion of ship design characteristics will

include hull form, propeller design and interaction with the hull, main propulsion system design,

underwater coating technologies, reliquefaction plants, and emissions control systems that impact

both fuel efficiency and emissions. Regulations involving restrictions and limitations of emissions

of green house gases (CO2), nitrous oxides (NOx), chlorofluorocarbons (CFC's), methane, and

sulphur dioxides and current and proposed special restrictive areas such as sulphur dioxide

emission control areas (ECA zones) will be presented. Discussion of how LNG shipowners are

reducing or eliminating ozone depleting substances, and better managing discharges of ballast

water to prevent, minimize and control overall impact on the environment will also be presented.


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INTRODUCTION

As environmental regulations become ever more stringent, LNG shipowners are increasingly

using enhanced operational techniques and new technology to reduce the impact of their ships on

the environment while, in some cases, reducing the vessels operating costs. The underlying

framework of environmental requirements is provided by the international community through theInternational Maritime Organization although other players such as the EU and US have also

acted independently. These complex international regulations are based on freedom of the seas

to move cargoes worldwide but also recognize the worlds need to protect the environment. In the

gas industry, both LPG and LNG owners have proactively introduced self regulation through

codes and recommendations. To comply with the myriad of regulations, both international and

self imposed, shipowners have implemented design improvements in the areas of hull form and

propeller design, main propulsion system design, underwater coating technologies, reliquefaction

plants, and emission control systems to improve both fuel efficiency, maintain cargoes and

reduce emissions. Shipowners also use operational techniques that reduce overall fuel costs

while improving emissions. Despite these improved designs and operational efficiencies, the

international community is still contemplating new policies to encourage even more emission

reductions through the use of new policy measures, including market based instruments or new

taxes. Developing a proper and appropriate framework is of critical importance to the industry for

the future.

INTERNATIONAL FRAMEWORK OF ENVIRONMENTAL SHIPPINGREGULATIONS

The primary body for developing an international regulatory framework for shipping is the

International Maritime Organization (IMO), a specialized agency of the United Nations. The IMOs

work encompasses safety, the environment, legal matters, international technical cooperation,maritime security and even efficiency of shipping. For environmental issues, the International

Convention for the Prevention of Pollution from Ships, 1973, as modified by the Protocol of 1978

relating thereto (MARPOL 73/78) is the controlling convention. This Convention covers a wide

range of accidental and operational pollution including oil, sewage and garbage pollution and air

emissions and it has been amended almost yearly since 1984. Six technical Annexes enhance

the Convention by providing regulations for particularly important environmental issues: Annex I -

Prevention of pollution by oil; Annex II - Control of pollution by noxious liquid substances; Annex

III - Prevention of pollution by harmful substances in packaged form; Annex IV - Prevention of

pollution by sewage from ships, Annex V- Prevention of pollution by garbage from ships; and,

Annex VI: Prevention of Air Pollution from Ships. While Annex VI regarding air emissions is

currently highly pertinent, as the world begins to focus on greenhouse gas emissions, Annex I

changed the face of the shipping industry when it required double hulls on all newly built tankers

with phase in dates for existing ships. As the majority of LNG ships have been built since the

implementation of MARPOL, this Convention and its important annexes creates the framework for

sound environmental practices on LNG ships.

Preventing pollution through good operational practices and improving technology, however,

is not the only concern for LNG ships regarding IMOs environmental regulations. The Hong Kong

IMO Convention on Safe and Environmentally Sound Ship Recycling guides an LNG shipowner to

identify potentially hazardous material onboard ships early in the ship design and construction

process. Taking eventual disposal of the vessel into account during the design and minimizing the

amount of potentially hazardous material onboard ships can help minimize hazardous waste

generation throughout the operating life of the ship. While this Convention was only adopted in


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May 2009, many LNG shipowners have already followed the general intent of this convention on

a voluntary basis with the assistance of their ship classification societies. During the development

of this convention, a working concept called "Green Passport" was implemented by the shipping

industry through the classification societies. The Green Passport notation for ships1accompanies

the ship throughout its working life and contains an inventory of all materials potentially hazardous

to human health or the environment used in the construction of a ship. The Green Passport isawarded by the classification society (or by a shipyard at the construction stage) to the Owner of

the vessel, allowing subsequent changes in materials or equipment to be recorded. Successive

owners of the ship maintain the accuracy of the Green Passport and incorporate into it all relevant

design and equipment changes, with the final owner delivering it, with the vessel, to the recycling

yard. The Green Passport concept was adopted into the final ship recycling Convention by the

requirement of an Inventory of Hazardous Materials (IHM)2and the Convention requires that the

recycling facilities be responsible for the proper management and disposal of the materials listed

in the IHM.

Green Passports have also become an integral part of obtaining ISO 14000 accreditation

(including ISO 14001:2004 and ISO 14004:2004), as it is one means of evidencing measurable

and achievable enhancement of a companys environmental standards. The ISO 14000 family

enables a shipowner to demonstrate that it is operating its ships in an environmentally sustainable

manner through comprehensive environmental management systems (EMS). ISO 14001:2004

requires a shipowner to identify and control the environmental impact of its activities, implement

continuous improvement mechanisms and use a systematic approach to setting environmental

objectives and targets.

In addition to assisting shipowners during ship design, construction and operations, the major

ship classification societies have created environmental protection protocols for shipowners.

American Bureau of Shipping (ABS), for example, has developed a voluntary Guide for theEnvironmental Protection Notation for Vessels to promote environmentally focused design,

construction and operation of ships. To receive this notation, the ship must not only demonstrate

compliance with international environmental regulations and conventions and other ABS rules or

guides that encourage enhanced protection of the environment but also comply with more

stringent criteria for sea and air discharges. An environmental plus notation requires additional

certifications and approvals. Lloyds Register has a similar protocol. To verify exhaust emissions,

Germanischer Lloyd has developed an Exhaust Emission Certificate,3 which includes

measurement and relative certification procedures.

Sulphur And Nitrous Oxide Emissions. Despite the engagement of the IMO and

classification societies providing the foundation for improving the environmental footprint ofshipping, the European Union (EU) and the State of California have implemented more stringent

emissions regulations. California introduced requirements for low sulphur fuels in 2009 within 24

miles of the coastline.4 The European Union implemented low sulphur regulations at the start of

2010, bringing forward the timeline whereby LNG ships must be capable of using lower sulphur

1See Guide for the Class Notation Green Passport, May 2008, American Bureau of Shipping,

http://www.abs.org. See also Lloyds Register,http://www.lr.org/Industries/Marine/Services/Consultancy/Green+Passport.htm.2See http://www.imo.org, Resolution MEPC.179(59) adopted on 17 July 2009, Guidelines for the

Development of the Inventory of Hazardous Materials.

3http://www.gl-group.com/en/snb/ship_safety_environment.php4http://www.arb.ca.gov/regact/2008/fuelogv08/fuelogv08.htm


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fuel.5 While the requirement only applies when the ship is at berth, LNG shipowners are

currently striving to find the appropriate mechanism for compliance, as steam LNG ships were not

designed for the bunker fuels that would satisfy the EU directive.

The United States, jointly with Canada,6applied for (which was approved in principle by the

IMO on July 17, 2009), an Emission Control Area (ECA) designation, for reduction and control ofair emissions, including nitrogen oxides, sulphur oxides and particulate matter from shipping,

extending 200nm off the national coastlines (excepting parts of Alaska). This designation could

enter into force as early as January 2012, thereby requiring more stringent reduction of air

emissions from LNG ships than that required by the IMO global shipping regulations for

international waters (non-ECA zones). Ships entering the ECA zone will be required to switch

over to lower sulphur fuel, however, employing exhaust gas cleaning devices which remove

sulphur are also acceptable to meet the standard. Currently only the Baltic and North Seas have

ECA designations, but it is expected that the Mediterranean Sea and Tokyo Bay ECA zones will

follow in 2014 and 2015, respectively. Singapore, Hong Kong, Australia, the Black Sea, Mexico,

and the remainder of Alaska will likely also request ECA designations in the future.

Table 1. Ship and Engine Fuel requirements

Year Fuel Sulphur Limi ts NOx

USA, State of California, within

24nm of coastline

July 2009 Auxiliary diesel engines: marine

gas oil (MGO), 1.5%, marine

diesel oil (MDO), 0.5%

Main engines and auxiliaryboilers: MGO 1.5%, MDO 0.5%

2012 Auxiliary diesel engines: MGO

0.1%, MDO, 0.1%

Main engines and auxiliary

boilers: MGO 0.1%, MDO 0.1%

European Union (at berth

requirements, including main

and auxiliary boilers)

2010 1,000ppm (0.1%)

5EU Directive 2005/33/EC requires maximum sulphur content of fuel oil used by ships at berth

in EU ports to be 0.1%, which is not globally required by the IMO until 2015.6

France also joined the ECA proposal on behalf of its island territories of Saint-Pierre andMiquelon (which form an archipelago off the coast of Newfoundland). Seehttp://www.epa.gov/otaq/regs/nonroad/marine/ci/420f09015.htmfor a copy of the EPA proposal.


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Emission Control Areas (ECA) Through

July 2010

15,000ppm (1.5%)

2010 10,000ppm (1.0%)

2015 1,000ppm (0.1%)

2016 Tier 3 after-

treatment

MARPOL Annex VI global

requirements

2011 Tier 2

engine

controls

Through

January

2012

45,000ppm (4.5%)

2012 35,000ppm (3.5%)

2020 5,000ppm (0.5%), subject toreview in 2018

Industry groups such as the Society for International Gas Tanker and Terminal Operators

(SIGTTO) and Oil Companies International Marine Forum (OCIMF)7as well as other international

bodies, such as the World Bank8and national Export-Import (EXIM) banks prescribe guidelines

for the shipping industry for the environment, health and safety. In 2008, OCIMF published

guidelines for Energy Efficiency and Fuel Management to encourage voluntary reductions in CO2

emissions9, while SIGTTO has been actively participating in informing the EU of the potential

challenges of LNG ships to comply with the 2010 at berth fuel sulphur limit regulations as

currently written, due to their lack of clarity on using gas to meet the majority of fuel requirements.The World Bank prescribes environmental guidelines minimizing the use of volatile organic

compounds (VOCs), hazardous waste management, ballast water release, antifouling paint

restrictions, avoidance of ozone depleting substances and air emissions reductions (from

7Implementation of environmental monitoring program developed by industry groups,

www.ocimf.com8World Bank Group Environmental Health and Safety (EHS) guidelines for Shipping

(http://www.ifc.org/ifcext/sustainability.nsf/AttachmentsByTitle/gui_EHSGuidelines2007_Shipping/$FILE/Final+-+Shipping.pdf)

and General EHS documents(http://www.ifc.org/ifcext/sustainability.nsf/Content/EnvironmentalGuidelines)9http://www.ocimf.com/view_document.cfm?id=1147


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installation of shore based power units to suggesting the use of land-based emission units to treat

and collect vessel emissions while in port). The environmental guidelines are applied when one or

more World Bank members are involved in a project and provide performance levels and

measures considered achievable in the shipping industry. The Export-Import Bank of the United

States (EXIM US) has general non-shipping specific guidelines for the environment.10

Greenhouse Gas Emissions: After SOxand NOxemission reduction schemes, the next air

emissions issue facing the shipping industry reducing greenhouse gas (GHG) has already

begun. The 1997 Kyoto Protocol to the 1992 UN Framework Convention on Climate Change

delegated the limitation and reduction of greenhouse gases from shipping to the IMO.11

The

Marine Environment Protection Committee (MEPC), the IMOs senior technical body on marine

pollution related matters, conducted two GHG studies in 2000 (using figures from 1996) and

2009. These studies recognized that while shipping is generally an energy efficient mode of

transportation, a significant potential to reducing GHG through operational and technical means

has been identified12

and also discussed potential market based instruments that could

encourage cost-effective solutions. The second study estimated that ships engaged in

international trade in 2007 contributed about 2.7 per cent of the worlds anthropogenic CO2

emissions and that in the absence of global policies to control GHG emissions from international

shipping, by 2050 emissions may grow by a factor of 2 to 3 (compared to emissions in 2007) as a

result of the growth in shipping.13

The IMO, through the MEPC, is looking at the various policy initiatives that could be deployed

to encourage reduction in GHG and to control GHG emissions to develop its own GHG scheme,

as well as guidelines for operational and technical improvements. The policy initiatives include a

fuel tax, mandatory efficiency standards to improve energy efficiency, cargo-based scheduling

with assignment to national inventories and a hybrid system. The European Union is looking at

cap and trade policies and threatened the IMO that it will implement a plan if the IMO fails toimplement a GHG reduction plan in short order. The Director General Environment for the

European Commission stated that the EU has a preference for global measures but should the

IMO fail to act, the EU Commission will consult with industry in 2010 to reach agreement by

years end. The measures would be adopted by 2011 and entered into force by 2013. The

Director General stated that shipping should contribute to an emissions reduction target of 20%

below 1990 levels by 2020.14

A discussion of the various alternatives follows.

During their July 2009 meeting, the MEPC agreed to disseminate interim and voluntary

technical and operational measures to reduce international shipping GHG emissions and agreed

a work plan to discuss market-based instruments to provide incentives for the shipping industry at

later meetings. Agreed trial measures listed below will be discussed at the Committee's sixtiethsession (MEPC 60) in March 2010, for refinement and consideration for scope of application and

enactment. The measures include:

10http://www.exim.gov/products/policies/environment/envproc.cfm#intro

11http://unfccc.int/resource/docs/convkp/kpeng.pdf, see Article 2.2

12http://www.imo.org/includes/blastDataOnly.asp/data_id%3D26046/4-7.pdf

13http://www.imo.org/includes/blastDataOnly.asp/data_id%3D26484/4-7-Corr-1.pdf

14

Presentation by Mark Major, DG Environment for the European Commission, The political viewfrom Europe at SEAat Trading Seminar, International Maritime Organization, London, 2nd April2009


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1. interim guidelines on the method of calculation, and voluntary verification, of the

Energy Efficiency Design Index15

for new ships, which is intended to stimulate

innovation and technical development of all the elements influencing the energy

efficiency of a ship from its design phase; and

2. guidance on the development of a Ship Energy Efficiency Management Plan, for newand existing ships, which incorporates best practices for the fuel efficient operation of

ships; as well as guidelines for voluntary use of the Ship Energy Efficiency

Operational Indicator for new and existing ships, which enables operators to measure

the fuel efficiency of a ship.

Ballast Water And Invasive Species. The introduction of invasive species into national

waters is considered to be a major threat to the health and survival of all coast ecosystems16

and is one of the four greatest threats to the worlds oceans.17

The International Convention for

the Control and Management of Ships Ballast Water & Sediments was adopted in 2004 to prevent

and eventually eradicate the transfer of harmful aquatic species through ships ballast water. The

Convention requires shipowners to have approved Ballast Water Management Plans (BWMP)

which incorporate either ballast water exchange standards or treatment procedures. A Ballast

Water Record book is required to record when ballast water is taken onboard, treated or

exchanged and then discharged into the sea or a reception facility (or accidentally discharged).

All ships that carry ballast water must install a treatment system by 2016. In the United States, a

self-policing program was established in 1998 for ballast water management reports. The

shipping industrys rate of compliance was so poor that the voluntary program later became

mandatory. The program requires vessels to maintain a ballast water management plan and

submit Ballast Water Reporting forms through a National Ballast Information Clearing House.18

To assist shipping companies in developing BWMPs, the International Association of Independent

Tanker Owners (INTERTANKO) and the International Chamber of Shipping (ICS) have publishedmodel Ballast Water Management Plans.19

ENVIRONMENTAL IMPROVEMENTS BY DESIGN

Ship design improvements are important to improve efficiency and reduce emissions. Hull

forms, main propulsion system design, propeller design and interaction with the hull, underwater

coating technologies, reliquefaction plants, and emission control systems are some of the new

technologies that have been and are being incorporated into newbuild LNG ships. With the

worlds LNG fleet (and global shipping fleet) coming off an ambitious ship building cycle, it is likely

that any subsequent new technologies may take longer to integrate into the fleet or will need to be

retrofitted into the existing LNG ships.

The IMO is working on development of a Mandatory Energy Efficiency Design Index (EEDI)

limit for new shipping to encourage development to improve energy efficiency by providing a

formula by which energy efficiency per unit of cargo can be objectively measured. The MEPC has

15*IMO Circ. 471 Interim Guidelines for Voluntary Ship CO2 Emission Indexing (Operational

Energy Efficiency Index)16

NOAA Economics, Invasive Species topic overview,http://www.economics.noaa.gov/?goal=ecosystems&file=events/invasive&view=overview17

http://globallast.imo.org/18See http://invasions.si.edu/nbic/19

www.intertanko.comand http://www.marisec.org/co2


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finalized a Circular on the Interim Guideline for Voluntary Verification of Energy Efficiency Design

Index20

to seek evidentiary outcomes through use of the baseline formula. Interim Guidelines on

the Method of Calculation of the EEDI for New Ships21

have also been developed so that the

Committee can test the applicability of the EEDI formula for all shipping types and then refine the

formula, if necessary. EEDI Guidelines can assist shipowners, shipbuilders and manufacturers

and other interested parties in understanding the voluntary EEDI verification.

Hull Forms. Shipyards are now looking at LNG vessel hull forms in more detail trying to

optimise designs to improve efficiency. This has been particularly important as vessel sizes have

increased from the traditional 130,000m3 to 138,000m

3 range up to 260,000m

3. Due to the

restrictions on draft, overall length and depth, that are applicable for many terminals, the

designers have adopted twin shaft designs for these larger sized vessels. This approach has

even been adopted by some designers for ship sizes in the 160,000m3 range. For these smaller

ship sizes, 160,000m3to 170,000m

3, the designers have to balance the advantages of having a

twin shaft arrangement with lower fuel consumption, versus the increased capital expenditure

(capex) and technology complexity of having twin shafts. To put this in perspective, a 170,000m3

twin skeg DFDE has a very similar fuel consumption to that of a single shaft 155,000m3DFDE. It

should be noted, however, that these changes to twin shaft arrangements have been possible as

a result of the alternative propulsion systems which are now available and are discussed below.

Propulsion Systems. Historically the LNG industry has been conservative, looking for a very

high degree of reliability required by the liner routes that were the norm. Until recently, reliable

alternatives to steam propulsion that dealt with the natural boil off were unavailable and the

inefficiency of steam was accommodated due to the fact that dealing with the natural boil-off and

having a very reliable propulsion system was key. However, new multiple fuel internal combustion

engines and energy saving technologies in ship propulsion are now available and have become a

key driver in newbuild LNG ships. Since the composition of exhaust gases emissions are directlyrelated to the impurities in the fuel that they use, efficiency is the determining factor when

choosing a more environmentally friendly propulsion system.

Dual and tri-fuel diesel electric ships (DFDEs/TFDEs) using medium speed diesel engines are

the new market standard over conventional steam turbines, despite the reliability and longevity of

steam plants. The primary disadvantage of steam propulsion is high fuel consumption because of

relatively low thermal efficiency of 28%-29%. As fuel prices increase, the steam plants benefits of

fuel flexibility, ease of maintenance and reliability are overshadowed by the cost of high fuel

consumption. Electric propulsion on the DFDEs has a higher initial capital cost but can achieve an

overall plant efficiency of 43-46%, thus creating the potential for both incremental fuel savings

and concurrent reduction in CO2 emissions. Environmentally, the DFDE/TFDE also hasadvantages over steam propulsion whenever the steam ship must supplement burning natural

gas as fuel with HFO.

Typically, a 145,000m3 steam propelled LNG ship burns about 160 mt fuel oil equivalent22

,

emitting about 498 tonnes of CO2into the atmosphere per day at 18-19 kts speed. In contrast, a

165,000m3 dual fuel diesel electric LNG ship at the same speed burns about 126 mt fuel oil

20MEPC.1/Circ.682 http://www.imo.org/includes/blastDataOnly.asp/data_id%3D26529/682.pdf

21MEPC.1/Circ.681 http://www.imo.org/includes/blastDataOnly.asp/data_id%3D26528/681.pdf22

Conversion factor (m3LNG to Fuel oil equivalent): 0.51


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equivalent, emitting about 392 tonnes of CO223

, resulting in emissions savings of about 30,000

tonnes of CO2each year.24

High efficiency steam turbines (also known as ultra steam turbines or steam reheat plants)

reduce fuel consumption by about 15% when compared to conventional steam turbine

technology. In this technology, the steam used in the turbine is re-heated to improve its efficiencyin the later stages, and driving steam condition is improved (as temperature and steam pressure

are increased). Thus when combined with the overall reliability and decreased maintenance of

steam propulsion, this type of ship may still be a good option for newbuild LNG vessels.

Slow speed diesel technology is more efficient than the DFDEs and high efficiency steam

turbines with an overall thermal efficiency approaching 48%. Utilizing newer cylinder lubrication

techniques, the slow speed engines are now capable of a wider range of speeds. In order to

maintain the cargo tank pressure in a safe condition, a reliquefaction plant (discussed later)

should be installed. This is a separate concept from maintaining tank pressure by utilizing the boil

off gas for main propulsion. In many ways this concept is viewed as a benefit as the vessels main

propulsion system is now separate from the vessels need for gas pressure management of the

cargo tanks. Adding the capability to slow speed diesel technology to burn natural gas25

is the last

step for implementation of slow speed technology on LNG carriers. This will allow the vessel

propulsion system to take advantage of segregated propulsion and gas management with the

ability to utilize gas for propulsion when it is commercially advantageous. As discussed

previously, the use of gas for engine fuel reduces harmful emissions. This type of vessel is likely

to be the next generation of LNG ship.

Propeller And Wake Design Improvements.For a 138,000m3LNG ship approximately 27

MW of power is needed at the propeller to maintain operating speed of 19.5 kts. Fixed pitch

propellers are the norm in LNG shipping; however, dual skeg hull designs having two propellers

are beginning to be incorporated on DFDE/TFDE ships, as described above. As the ships have

increased in size (yet are still limited by draft restrictions), the designers have spent more time

looking at ways to improve propeller design, aft end vibration and wake flow around the stern

area. This has included changes to propellers / blades, the fitting of additional wake improvement

devices on the rudder, propeller boss and stern tube casting, as well as additional vortex

generators / flow deflectors on the aft end of the ship, including around overboard discharges, to

give a better wake flow into the aft end. These improvements can lead to more energy efficient,

reliable and manoeuvrable ships, reducing fuel consumption by up to one-third. While propeller

selection and aft end design normally occurs at the design stage, new developments in wake flow

devices may make retrofitting a good possibility to decrease fuel consumption, thereby

decreasing overall ship emissions.

In the future we may see further development in this area with ideas such as podded drives and

overlapping propellers, just two of many examples being suggested by designers that could be

used to further reduce fuel consumption, thus reducing the environmental impact of the

propulsion system. As these designs and options are evaluated, shipowners must find the right

balance among considerations of increased technology complexity, additional capex cost, and the

23HFO CO2 Emissions Factor: 3.114 mt/mt

24Assuming 80% of year (292 days) underway.

25Excerpt of article, Innovative LNG Carrier Conceptby Janne Kosomaa, Product and ApplicationDevelopment, Wartsila, http://www.oceanenergynews.com/story.aspx?sid=11389


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effect on maintenance life cycle costs versus the potential improvements that the vessel may see

in performance.

Underwater Coating Technologies. A key link in the chain to driving ship efficiency is the

friction between the hull surface and water. Many marine coatings manufacturers are developing

or marketing lower friction energy-efficient coatings that could both reduce ship operational costsand a ships environmental footprint. Additionally, the International Convention on the Control of

Harmful Anti-Fouling Systems on Ships, 2001, entered into force in September 2008, requires

ships to either replace, or over-coat, any existing organotin-based anti fouling systems. A number

of LNG ships have incorporated biocide-free silicone paint as the preferred method to coat their

ship hulls, citing fuel savings of 2-9% over traditional coatings. Unfortunately, however, a

definitive industry answer to the benefits of these coatings is not available. While all agree that

the coatings are less toxic to the environment both in their application by reducing VOCs and

during their in service period by not leaching biocides or potentially toxic materials into the ocean

environment, due to their very expensive material and application cost, there is still some

reluctance within the LNG industry to claim true fuel savings or efficiencies from the use of these

products. Claims of longer drydocking cycles, smaller paint volumes and lower life-cycle costs are

benefits of the newer hull coating technologies, as well as corresponding speed increases. These

positives are offset by negative claims of poor anti-fouling performance at lower vessel speeds or

when idle and high incidents of coating damage from rubbing and abrasion.

Reliquefaction plants. As described above, a recent development in the LNG shipping

sector has been the move away from steam driven vessels to the use of more efficient internal

combustion engines as the main means of propulsion. Historically LNG ships had steam boilers

because it was much easier with this steam propulsion to accommodate the natural LNG

vaporization (boil off) produced by the LNG cargo. With diesel electric engines, there are now

more options to accommodate the boil-off: burn the gas in a Gas Combustion Unit (GCU) with nobenefit to the vessel or the cargo owner, burn the gas in the engine benefitting the vessel or

reliquefying the gas to LNG and re-injecting it into the cargo tanks, benefitting the cargo owner

(reliquefaction).

The slow speed diesel engines on the Qatari vessels cannot burn methane in their engines

and due to the large quantity of natural boil off (176 tons26

of LNG/day), a reliquefaction plant is

present to maintain tank pressure and preserve the tank levels. The cargo containment systems

and the propulsion systems are completely separated. Efficiency gains are made with the use of

the slow speed diesel engines and delivering the maximum quantity LNG possible. However,

optionality is lost by not being able to burn methane in the engines when gas prices are lower

than HFO prices. In addition, the use of HFO as the primary fuel in the slow speed diesel enginesresults in an increase in harmful emissions when compared to using gas for fuel.

With the introduction of dual-fuel/tri-fuel diesel electric engines it is possible to burn methane

in the engines, which would normally negate the need for reliquefaction of the boil-off. However,

with the higher fuel efficiency of the engines and the increased cargo capacity (resulting in

increased boil off), excess natural boil off occurs at speeds less than 19.5 knots. Burning the

excess gas in the GCU is uneconomical and results in increased CO2 emissions. With LNG

trading patterns moving away from point-to-point trades toward highly flexible worldwide trades,

scheduling inefficiencies can result in decreased speeds either on the ballast or laden legs

depending on the load or discharge ports. The ability to adjust the speed of the vessel, yet

26266,000m

3*98.5%*0.15%=393.015m

3*0.448=176


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accommodate the excess boil-off created at lower speeds, is a major driver for fitting re-

liquefaction units on the larger LNG carriers with DFDE propulsion.

Savings from the addition of a reliquefaction plant onboard a DFDE ship also results on the

ballast leg when the ship needs to arrive with the cargo tanks ready to load (i.e. cold). Normally

an amount of LNG is carried (called heel) taking into account the natural boil off rate of the shipand the length of the ballast voyage. Quantities of 5000m

3 retained (when HFO is more

economical than LNG) are not uncommon for longer voyages. The benefit of a re-liquefaction unit

is that only ~500m3of LNG needs to be retained as heel in order to keep the tanks cold, thus

increasing the amount of LNG available for delivery. Additional benefits are gained from the

reliquefaction plant when slower speeds are intentionally required and excess boil off is produced.

Instances when this occurs include canal transits or reduced speed due to adverse weather. The

exponential nature of the vessel fuel/speed curve has forced charterers and shipowners to

actively manage the speed of vessels and thus fuel consumption to reflect the economic

environment. Slow steaming is a tool used to reduce fuel costs and also to absorb excess

tonnage. Managing the boil off more effectively with the reliquefaction plant makes these

economic considerations a more achievable option.

The future of reliquefaction units is still uncertain as it is likely not an appropriate technology

for all LNG ships. Only when a vessel reaches a size where the natural boil off approaches the

fuel quantity required to maintain service speed is it preferable to have a reliquefaction unit as

reducing the boil off gas is a direct efficiency improvement. Additionally, the main benefit from a

reliquefaction plant is for the cargo owner, not the shipowner (who charters his vessel out with

fuel costs paid by the charterer). There is no incentive for a shipowner to invest in an expensive

reliquefaction plant if there is no concurrent return on the shipowners investment (through some

sort of efficiency sharing or performance incentives). Therefore, it is most likely that reliquefaction

units will only be fitted on the larger LNGCs which are ordered for long term charter or ownedand operated by the IOC or NOCs.

Other Design Criteria

Size. New build LNG vessel size has grown rapidly from a standard 125,000m3capacity

up to a maximum 266,000m3. The larger cargo capacity together with the higher

propulsion efficiency allows these vessels to be competitive on long distance voyages

despite their initial higher capital costs, as these ships usually have a lower unit

transportation cost per voyage. Larger capacity usually means more efficient

transportation which can lead to reduced CO2and other emissions on a per unit of cargo

delivered basis. The efficiency benefits of larger vessel size are offset by the reduction inport flexibility. Most LNG loading and receiving terminals in existence today are not

designed to accept the largest LNG vessels in operation.

Elimination Of Ozone Depleting Substances. Newbuild LNG ships now generally

exclude the use of ozone depleting substances such as Halons (fire extinguishing

equipment), chlorofluorocarbons (CFCs) and hydrochlorofluorocarbons (HCFCs) (used

in refrigerators, freezers, air conditioners and cargo containment/pipe insulation foam

blowing agents) and hydrobromofluorocarbons (HBFCs) (used in fire extinguishing

systems). Fire fighting specifications on new ships have been upgraded using

combinations of high expansion foam, water mist (Hi-fog) systems and other safer and

cleaner fire extinguishing agents to eliminate the need for environmentally damagingsubstances. Deliberate emissions of ozone depleting substances are prohibited by


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MARPOL Annex VI, Reg 12 as well as the installation and use of ozone depleting

substances on newbuild ships.

Volatile Organic Compounds (VOCs). Reduction of VOCs during the ship design

process, shipbuilding process and during the outfitting of a ships accommodation spaces

are important environmental measures that should not be overlooked. IMOs MEPC 59guidelines for the development of shipboard VOC management plans for crude oil

tankers, designed to minimize VOC emissions during loading of cargo, sea passage,

discharge of cargo and crude oil washing, go into effect 1 July 2010 and also apply to gas

ships for non-methane VOCs. Plans to prevent or minimize VOC emissions during ship

construction and post-delivery might easily be developed as an outgrowth of a ships

Inventory of Hazardous Materials but are not currently required for LNG ships.

Energy Efficiency In Design: Shipowners should also consider energy efficiency,

especially electrical loads during the initial design phase. As discussed below, there are

currently companies who audit existing ships to see where energy savings can be made.

In the future, we will see more audits of this type during the initial design of LNG ships.

Design improvements from this type of audit would likely include selection of particular

equipment or vendors based on energy efficiency ratings, the use of energy saving lights,

motion and time switches for lighting circuits, improvements to thermal insulation to

reduce heating, air conditioning etc.

Miscellaneous Areas

Wind. Windage impact on the accommodation and superstructure are now being

considered on the overall drag of the ship. We may still be a long way off from seeing the

ship looking like a modern racing car, but ideas are slowly coming to fruition on how to

reduce the drag, with at least one LNG owner having added some additional windage

deflectors to their current design to increase performance.

Reduction Of Heat Ingress Into The Containment System. Research into limiting heat

ingress into the containment system has generated new design ideas. As mentioned

above, vessels natural boil off may exceed fuel requirements, with excess either being

consumed in the GCU or reliquiefied and returned to the tanks. Designers are now

looking at ways of passively reducing this problem by limiting the amount of heat into the

containment system and reducing the boil off rate. This was not an issue when steam

was the main propulsion system and natural boil off alone was not near enough to

provide charter speed. Areas that are being looked at include:

o Deck paint and possible insulation to reduce the effects of sunlight on heating the

cargo tanks. Reflective / light coloured decks rather than more traditional dark

colours.

o Increasing insulation thickness surrounding the cargo tanks.

o Possible introduction of a different inert gas (traditionally nitrogen) for the

containment insulation spaces, using a gas that will have a reduced thermal

conductivity as compared to nitrogen and hence reduce boil off.

o Increased insulation thickness for the LNG transfer piping on deck and better

insulation on the return lines from the reliquefaction unit.


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Ballast Water Treatment: Ballast water exchange at sea currently provides the only

approved available measure to reduce the transfer of harmful invasive species; however, it

presents issues for ship stability and safety and it isnt 100% effective. Organisms can remain

adhered to the sides of the tank and it is difficult to remove all residual water and sediment.

Redesigning ballast water tanks with sloping bottoms and flushing or washing systems may help

make this method become more effective. Alternative methods under development to eliminateaquatic species transfer include: mechanical treatment methods (such as filtration and

separation), physical treatment (sterilization by ozone, UV light, electric currents or heat),

chemical treatment (adding biocides to kill organisms) or combinations of the above.

Ballast water filtration can occur before ballast water enters the ship. This allows native

species to remain in their native habitats; however, this method requires specialized equipment,

may not remove all microorganisms and some designs also require very large filters, or frequent

back flushing, due to clogging by sediment as well as species. UV light has been demonstrated to

be effective on microorganisms, but is less effective on organisms suspended in water. Thus

hybrid solutions combining more than one method of treatment are the most effective. There are

currently eight type approved ballast water treatment systems27 that have received final IMO

approval that make use of active substances as of September 2009. (Active substances means

that the systems use chemicals or create a chemical-like substance during the process of

treatment.). Two ballast water management systems that do not use active substances have

been certified by their respective Administrations.28

Meeting Lower Sulphur Fuel Directives. In the wake of recent EU regulation reducing fuel

sulphur limits while ships are at berth, the LNG industry identified several solutions for LNGC

vessel compliance. These solutions were 100% gas burning while in port, boiler modifications to

burn low sulphur marine gas oil (LSMGO), utilization of scrubber technology and utilization of an

equivalency approach (which may or may not be acceptable by relevant authorities). Each ofthese approaches, though, has benefits and drawbacks. Fortunately, the EU commission has

recognized that operational issues remain for the retrofit of shipboard technologies to meet the

new sulphur standard. If a ship is not in compliance, an EU member state can look to evidence of

an approved retrofit plan with a designated completion date when assessing penalties for non-

compliance.29

Steam propulsion LNG vessels are not designed to use gas as the primary vessel

fuel. When gas is used as a primary fuel at berth the vessel produces zero or very

low sulphur emissions. But this approach may not allow the vessels to operate in a

safe manner while manoeuvring or transiting in restricted waters in areas that will

demand lower sulphur requirements (such as ECA zones) without a majormodification to the fuel gas supply system. Burning gas as a primary fuel is also not

viable when the ship needs to be gas free to enter a shipyard for maintenance within

the ECA zone, when low tank pressure exists so that gas cannot be removed from

the tanks or when the vessel has no remaining LNG onboard (heeled out).

27http://www.imo.org/includes/blastDataOnly.asp/data_id%3D26596/tableupdatedinSeptember20

09.pdf28

NEI Treatment System VOS-2500-101 by the Office of the Maritime Administration, Marshall

Islands and the Hyde Guardian System by Lloyds Register as delegated by the Administration ofthe United Kingdom.29

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:348:0073:0074:EN:PDF


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Boiler modifications to burn LSMGO. There are limited suppliers that can provide this

type of boiler modification, and the solution requires the purchase of expensive high

grade distillate. If an LNG vessel has separate tanks to store the high grade distillate,

the capacity of the storage tanks may not be sufficient to transit the larger ECA

zones. Additionally, the use of high grade distillates in varying loads have inherent

safety concerns, as gassing issues have previously caused boiler explosions. Thismodification will not address future NOxor CO2issues.

Scrubber technology is a viable potential option but has not yet been demonstrated

within the LNG shipping industry. There are scrubbing solutions on the market30

that

continue to allow the vessel to burn HGO and have been successfully applied to

diesel propulsion vessels to address SOx emissions requirements. However, these

available scrubbers at present will not address any future CO2 and NOx emission

regulations. The LNG shipping industry is still looking for a willing shipowner to be the

first user of this technology. The IMO and the EU are encouraging the use of

scrubber technology and have allowed for permitted trials; however, the EU requires

continuous emission monitoring during the trial period. The LNG ship may also apply

to the port state for an 18-month grace period from compliance with the EU Directive

to tune the systems and prove compliance. This technology could also address future

NOxand CO2requirements depending on the scrubber solution.

Equivalency solution. Burning a mixture of HFO and BOG could produce sulphur

emissions equal to 0.1% sulphur distillate fuel emissions. This approach, however,

may not be compliant with the EU Directive for reduced sulphur fuel limits at berth.

This method will likely be used by some LNG shipowners for compliance as this

approach would only require minimum modifications. A correct mixture of HFO and

gas would produce sulphur emissions equal to or lower than that which would beemitted when burning a 0.1% sulphur distillate fuel over the same period.

ENVIRONMENTAL IMPROVEMENTS BY OPERATION

Voyage Optimization. By carefully planning ship voyages, shipowners can optimize routes and

achieve efficiencies with improved emissions profiles. While the IMO has provided guidelines for

voyage planning, the ship operator can use the following techniques to create cost efficient

voyages with significant emissions reductions.

Speed, weather and schedule optimization When there is time in a voyage schedule,

the vessel can adjust vessel speed for the route, weather and currents. Schedulemodification may also allow speeds to be at the most efficient and adjusted thereby

minimizing the time that the vessel has to sail at full speed;

Optimized ship handling including trim adjustments, proper ballasting and use of

automated heading and steering controls can allow the ship to be more fuel efficient;

30See Advanced Cleanup Technologies, Inc., www.advancedcleanup.com/, Hamworthy

Kristallon www.krystallon.com, Aalborg Industries, www.aalborg-industries,com, Marine ExhaustSolutions EcoSilencer, www.ecosilencer.ca, and Ecospec, www.ecospec.com. This list is not allinclusive but represent some of the available scrubber technologies available.


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Proper hull maintenance including application of new coating systems, regular

inspections and propeller cleanings. The smoother the hull and propeller, the more fuel

efficient the ship will be;

Regular propulsion system maintenance to ensure that the ship can perform efficiently;

Better fleet planning to reduce the number and length of ballast voyages;

Review of energy management systems onboard and efficiency practices introduced

onboard the LNG ship. There are several companies31

that perform energy audits on

commercial ships, identifying and assessing operating practices and maintenance plans

that will achieve savings in fuel and reduction in ship emissions;

Reducing trading and sailing areas Movement to a regional LNG trade could reduce

overall global ship emissions by reducing the length and possibly the number32

of ballast

voyages; and

Energy conservation awareness training programs onboard ships that encourage savings

reductions through implementation of shipboard efficiency practices.

Emissions Reduction Policy Alternatives

In order to incentivize additional emissions reductions over the long term, the IMO (through

the MEPC) and the international community at large have discussed various policy alternatives,

including market based instruments, mandatory efficiency standards (both design and operations)

and fuel tax levies (including the establishment of an international GHG fund). In July 2009,

MEPC 59 agreed a future work plan for discussion of these policy alternatives, with the caveat

that any relevant outcomes from the UN Climate Change conference held in Copenhagen inDecember 2009 would have to be included.

Market Based Instruments. With implementation of a maritime emissions trading scheme,

GHG itself cannot be traded, however, permits to pollute would be the operative currency. A

tonne of CO (or another designated emission) would be given a value, a carbon credit, which

can be traded. An LNG shipowner (or charterer) would have an allotment of credits (a cap)

based on the ship type, age and other factors. If a particular ship exceeded its cap, the shipowner

(or charterer) would have to buy more credits in order to keep operating. Operating below the cap

would leave excess credits that would be tradable on a market.

If an emissions trading scheme was developed, it would need to be global so that shipownerswill not shop for better flags of convenience based on the flag states stance on emissions

trading. The primary issues for creating a workable emissions trading scheme would be to

develop the average annual emissions output for each type of vessel, choose the benchmarking

date (by which all future emissions reductions would be calculated) and create the mechanism for

the sharing of credits between Owners, Charterers and possibly ship managers. Currently the EU

is considering the inclusion of ships and ports in emissions trading schemes. The United States

31Two companies that provide energy audit services are Alaris Companies

www.alariscompanies.com, and Lloyds Register,http://www.lr.org/Industries/Marine/Services/Consultancy/Ship+energy+services.htm32

While LNG ships typically carry cargo only one way, some charterers have optimized cargomovements by working with other charterers to deliver each others cargoes. This allows eachcharterer to reduce the length of the voyage and decrease costs.


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may act but the scale of any potential action is yet undetermined. Australia and New Zealand are

also contemplating emissions trading schemes for shipping. There is some concern that the IMO

will not react quickly enough and allow regional schemes to be implemented before agreement on

a global solution is reached.

Mandatory Efficiency Standards For New LNG Ships. As described above, the IMO,through the MEPC, has created an Energy Efficiency Design Index

33 for shipping. The effect,

however, is limited as it only applies to new shipping and it only incentivises design

improvements, not operational improvements. Before this index could be used to reduce the

impact of shipping on global climate change, further work needs to be done to develop how the

ships CO2performance should be measured and what baseline would need to be set so as to

encourage lower emissions. These issues are not unlike the issues that would need to be

resolved to create an emissions trading scheme. Requirements for efficiency could be created for

shipbuilders and designers to mandate improvements in fuel efficiency or other performance

standards.

For existing shipping, the IMO could develop mandates for Owners or Operators

(charterers) to improve operational environmental measures. However, it is likely that such

operational mandates will likely only occur through broad emissions targets thereby allowing

Owners flexibility in deciding how their ships would meet the targets. MEPC 59 recently agreed

(in July 2009) not to make the development of a ship energy management plan mandatory for

shipowners.

Fuel Tax. A tax on fuel oil consumed by ships could be used to incentivize reductions in

shipping emissions. Tax receipts could be used to fund environmentally friendly projects in

developing countries.34

The tax would make fuel more expensive, but it would also encourage

shipping companies to conserve its use, since fewer tonnes consumed means less tax paid. If too

high, the levy on fuel tax would potentially create a modal shift from shipping to other, more

polluting (per tonne/mile) forms of transport. Also there is no direct net reduction of CO 2, as

emissions are not actually reduced. Furthermore tax receipts could potentially be diverted from

the intended use toward environmental projects. An International GHG fund from bunker charges

or by direct contribution by ships is supported broadly by MEPC members.

A fuel tax may also have added benefits of reducing speed, as profit maximization could

determine the optimal speed for a given fuel price and CO2reductions are prevalent at reduced

speeds.35

The IMO could set route-specific speed limits or choose a market-based cap and let

price signals work to control vessel speeds. This potential solution, however, may not work for all

segments of shipping and may not be appropriate for LNG ships. For instance, reducing thespeed of global LNG shipping will eventually require an increased number of ships to transport

the same amount of cargo. As all ships are designed for an optimum service speed (most efficient

speed and above minimum safe speed), a mandatory speed reduction (speed limit) will mean that

33*IMO Circ. 471 Interim Guidelines for Voluntary Ship CO2 Emission Indexing (Operational

Energy Efficiency Index)34

This principle, enshrined in the Kyoto Protocol, is referred to as Common but DifferentiatedResponsibilities (CDR).35

Impacts of Speed Reductions on Vessel-Based Emissions for International Shipping by JamesJ. Corbett, Haifeng Wang University of Delaware and James J. Winebrake Rochester Institute

of Technology. Paper 09-3742, in Session 270 Climate Change and Maritime Transportation,Presented at 88th Annual Meeting of the Transportation Research Board, Shoreham, Blue Room,Washington DC, 12Jan09.


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Documents

An Environmental Sea Change in LNG Shipping