LNG: studying the way of Norway

Europe is getting ready to toughening of the environmental standards in the Baltic Sea. Shipping companies switching to liquefied natural gas are provided with state support, infrastructure for LNG bunkering is being developed in ports. Norway is ahead of other countries in this sector. Representatives of the Russian Association of Marine and River Bunker Suppliers could see that themselves when visiting the country.

Like Russia, Norway is a gas producing company. However, this country is more prepared to introduction of new sulphur emission limits which come into effect from January 1, 2015. 

Shipping

As IAA PortNews was told at the self-regulating organization Russian Association of Marine and River Bunker Suppliers, the delegation of which has recently visited Norway to get acquainted with the neighbor’s experience, LNG as fuel is being used there for regular shipping already.

For example, ferries of Fjord1 (largest ship owner and operator of LNG-powered vessels) carry vehicles and people on a regular basis and constitute a part of the national traffic network.  The vessels are bunkered at Halhjem Ferry Terminal where LNG is delivered by motor transport. The Russian delegation watched the discharge of gas from a truck to the tank of the terminal. At-a-glance, LNG discharge and its pumping to a vessel is the same as in oil product bunkering. The only difference is the frosting of the hoses as the temperature of liquefied gas is very low.

The engine-room of an LNG-powered ferry is unusually clean with the absence of oil products.

Of course, regular operation of LNG-powered vessels is not possible without well developed production, logistics and supplies. In Norway, it is the specialization of Gasnor covering one third of these operations.  Gasnor commenced working with LNG in 2003 and it was the time when the company proposed wide use of gas for bunkering of vessels.

Shipbuilding and bunkering 

Shipbuilding concern Fisherstrand has developed the project of the first tanker for LNG bunkering. It was put into service in January 2013. From that time, the vessel called Seagas regularly provides bunker to M/V VIKING GRACE in Stokholm. Seagas (length: about 49.6 m and breadth: 11.25 m) can be bunkered with up to 167 cbm of LNG.

The bunkering operation takes some 45 minutes.  They use not a pump but a device to boost pressure. 

Besides, a concept is being developed for non-self-propelled barges. In some cases, several barges with 1-2 tugboats could be an efficient solution for fuel supply.

As of today, many ports of the world are not absolutely sure about the type of fuel which is to be used in the mid-term and long-term perspective. Nevertheless, bunkering companies should be ready for any scenario. Amid the uncertainty, the only solution is the use of double-purpose bunkering tankers. Basic designs have been developed already while the parameters can be adjusted depending on operation of certain companies. For example, when Saint-Petersburg lines start using LNG, they will possibly need batches of fuel exceeding 2,000 t.

Another concept proposed by Norwegian designers is that of LNG-ready vessels. It can be a vessel being built or designed for operation on heavy fuel oil or diesel fuel but planned to be converted to LNG-powered vessel. So, it is a vessel prepared for further conversion. This approach allows saving money and time during modernization. There are examples of this concept use. UASC has ordered 16 LNG-ready container carriers; they will be equipped with engines of two different types, gas tanks will be placed in 5 years during first drydocking.  

Safety

As the Russian delegation was told at the classification society DNV GL, the experience shows that LNG equipment is quite safe. No significant incidents, like fire or explosion have been registered yet. 

There were minor incidents but their frequency does not exceed the number of incidents at vessels powered by heavy fuel oil or diesel fuel. 

In EU, LNG powered vessels are not considered to be more dangerous than other ships.

Actually, the number of vessels driven by LNG is not very high so far. As of today, there are 48 gas powered vessels operating mainly in Scandinavia and North Europe. Those are ferries, vessels supplying oil platforms and servicing fish-breeding, tugboats, etc.  53 more vessels are under construction including seagoing cargo ships. 7% of vessels sold in 2011 are powered by gas. By 2020, this share will probably increase to 25%.  Total number of gas powered ships is forecasted to grow to 1,000. The number is supposed to double every year.

As Kirill Musteikism Director of DNV GL in Russia, commented for IAA PortNews, the Code for the use of LNG as fuel is to come into force in 2015. Temporary instructions on LNG bunkering developed by DNV GL should be used before that.

State regulation and support

Nevertheless, the key factor for introduction of those technologies is the state support which means not only governmental grants (though this aspect is extremely important) but also the creation of favorable environment. According to CEO of Fiskerstrand Holding AS Rolf Fiskerstrand, who used to chair Norwegian Ship Owners Association in 1990-ies, it took much time to convince the related Ministry of the necessity to support the use of LNG as marine fuel. This work resulted in the decision to convert the state ferry communication system to LNG. Large companies, like Statoil, have announced the modernization of their fleets which was a guarantee for all designers and manufactures of the related equipment.  Suport funds have been established (like the Norwegian NOx Fund) which help the business compensate the costs for construction of gas powered ships and development of other gas infrastructure elements. The tax system also encourages the use of LNG.

Hence the process develops faster and faster. The ferries were followed by fishing vessels registered in ports with LNG supplies, then by cargo vessels in certain areas of navigation where LNG bunkering is possible. Amid the growing number of orders the prices decline and new suppliers appear …

Moreover, there is a state organization in Norway which promotes export of goods and services, mostly vessels and shipboard equipment. Convenient, clear and absolutely transparent scheme enables the customers obtain credits with payment period of 8-12 years and interest of 2.47%. Of course, to obtain a credit, a customer should provide an accredited bank guaranty (with the premium of 1-4.47% of the credit amount). The repayment starts after completion of the contract with the fixed general interest. Such instruments also facilitate the production of LNG powered vessels and related equipment.

We believe Russia should carefully look into the experience of our neighbors in this sphere to develop domestic innovative shipbuilding and infrastructure for supplies of environmentally friendly fuel.

Vitaly Chernov, basing on the materials of Russian Association of Marine and River Bunker Suppliers  

Photo by Russian Association of Marine and River Bunker Suppliers

Norwegian experts will take part in VII All Russian Forum “Current State and Prospects for Development of Russian Bunker Services Market” which is to be held in Saint-Petersburg on June 19-10, 2014. For more information please call 380-43-88 or read >>>>