BW Fleet Management Cimac Circle: LNG as fuel for deep sea shipping

Norshipping 26th May 2011

� General

� BW sees great future potential in alternative fuels

� LNG is the most realistic alternative to traditional fuel today – act as bridge until other solutions arrive to achieve

low carbon footprint society

� Large amount of gas

� Oil production is expected to begin to taper off after 2020

� LNG currently cheaply priced

� LNG gives instantly reduced environmental impact(CO2: - 20%, PM/Smoke: 0, SOx: 0, NOx: - 90 % (exhaust suitable for after treatment)

� Uncertainty: Time required to bring LNG to the market (heavy investments for infrastructure, FSRU a feasible intermediate solution)

LNG – future fuel for shipping

� Technology

� Realistic engine technologies are emerging

� Several options already available

� More to come

� Shipbuilding industry and suppliers have taken the initiative and provided feasible designs

� Several successful coastal vessels in operation

� Viable solutions for deep sea vessels are proposed

� Challenge: Choice of right technology for different applications(There are probably examples of mismatches)

� Bunker supply facilities

LNG – future fuel for shipping

� Operation

� Sludge handling largely reduced

� Cleaning and maintenance expected to come down

� Manning skill level to address

LNG – future fuel for shipping

� Requirements

� Safety and reliability

� Get it right the first time!

� Simple solutions

� Use technology to Keep It Simple for Seamen!

� Shipbuilders/suppliers: A total concept is required

� Partnership between providers and ship owners

� Will to participate

� Gain experience together and share across industry to promote standards

LNG – future fuel for shipping

� Economy� Incentive schemes may be required balanced by tax/levy regimes to get

the process moving – global schemes will be a plus

� Greater willingness to introduce new technologies if conditions are foreseeable and stable

� Uncertainty over longer term pricing of HFO and LNG

LNG – future fuel for shipping

� Development

� Norway in good position to take the lead

� High expertise amongst research institutes, industry and ship owners

� Broad and extensive experience from some 20 vessels in operation

� Høegh and BW in lead of study of LNG-fuelled ships (WG5)

� Initial study some years back: Too early for LNG at that stage

� Now: See a clear need for further exploration Decision made to initiate furthers studies.

(WG 5 is the working group for “Deep Sea Shipping “ set by NSA)

LNG – future fuel for shipping