Since January 2015, the International Maritime Organization (IMO) has reduced the regulatory limits for SOx emissions from 1.0% to 0.1% in so-called Emission Control Areas (ECAs), which include the North Sea, the Baltic Sea and the coasts of North America.
Article from CruisesNews magazine, issue 47 – December 2018
More recently, another IMO decision meant that emission limits for SOx outside of ECAs would be reduced from the current 3.5% to 0.5% from January 2020. Cruise ship owners have several alternatives to comply with these limitations: scrubbers, use of diesel or LNG, tier 3-4 diesel engines, etc.
Operating a cruise ship that uses LNG can reduce almost all SOx and particulate matter (PM) emissions compared to ships powered by conventional fuels. LNG use can also reduce CO2 emissions by up to 25% and NOx emissions by more than 80% compared to diesel.
However, the main challenge to the widespread adoption of LNG is developing the supply infrastructure to support the growing number of LNG-powered vessels expected to enter service. Until now, LNG-powered ships have relied heavily on truck-to-ship LNG tanker refueling, which is perceived as unsustainable in the near future.
Nevertheless, LNG penetration is projected to reach 15-18% of the market by 2030, with the cost of onshore facilities being the primary obstacle. A liquefied gas supply installation can cost three to four times more than a traditional fuel installation, although these differences will decrease over time.
The Future of LNG Supply in Europe:
One of the most significant challenges for the future of the cruise industry centers on LNG availability. After successfully supplying ships that only consumed this fuel in port (AidaPrima and AidaPerla), the viability of supplying this fuel will be tested in the coming months, as AidaNova will spend the winter in the Canary Islands as the first LNG-powered cruise ship, followed by the Costa Smeralda next October, departing from Savona. But the challenge is substantial, to the point that it will require a complete overhaul of ship bunkering infrastructure: deliveries from trucks or small barges will become a thing of the past, given that ships like the AidaNova require solutions on a much larger scale.
Different LNG supply systems (Click on the image to enlarge it)
This situation is a cause for concern for ports, shipowners, and supply companies, as well as for political authorities, who subsidize new infrastructure. In Spain, the European Commission selected the CORE LNGas hive project to develop an integrated, safe, and efficient logistics chain for the small-scale supply and bunkering of liquefied natural gas (LNG) as a fuel for the transport sector, especially maritime transport, on the Iberian Peninsula. The Hive2 project has been selected again by the European Commission under the CEF funds. This project includes, for example, adapting five Balearia ferries for use with liquefied natural gas, in a joint project between Balearia, which will handle the ship re-engining, and Enagás, which will provide the infrastructure and logistics solutions, with the support of Puertos del Estado (State Ports Authority). Among the initiatives to be carried out, the adaptation of the regasification plants in Huelva and Valencia to offer LNG bunkering services stands out. Spain's structural LNG storage capacity currently consists of six regasification plants, plus one in hibernation, representing 40% of Europe's total storage capacity. Adapting all of these plants to LNG bunkering, coupled with the country's strategic location for cruise routes (and maritime transport in general), between the Atlantic and Mediterranean maritime regions, could position Spain as a leader in this field. On May 25th, several initiatives were launched to this end, which could enable all Spanish regasification plants to supply gas for bunkering or on a small scale by 2020.
The bunkering market in Spain amounts to almost eight million tons of traditional fossil fuel, equivalent to more than 16 million m³ of LNG, which puts the country in a good position for the development of this activity.
The new generation of LNG cruise ships:
Currently, 24 cruise ships that will use LNG as fuel are on order. Fourteen will be built by the German shipyard Jos L. Meyer at its facilities in Germany and Finland; five will be built at Chantiers de l'Atlantique; and another five by Fincantieri.
By shipowner, Carnival Corp. will build eleven of them; five will be for MSC Cruises; four for the Royal Caribbean group; three for Disney; and one for Ponant.
Infrastructure in Europe:
The first references to LNG bunkering vessels date back to the 2013 delivery of the Viking Grace, the first large ferry powered by this fuel. In the spring of that year, the Seagas bunkering vessel was delivered, supplying the Viking Grace with more than 60 tons of LNG per bunkering while the ferry is docked in Stockholm, simultaneously with the ship's loading and unloading operations. By the end of 2017, the Seagas had bunkered the Viking Grace more than 1,400 times without incident.
Bunkering is the supply of fuel for maritime navigation, a fundamental business in the Spanish maritime industry.
In February 2017, the Engie Zeebrugge was delivered and is based in the port of Zeebrugge, Belgium. From there, it can supply up to 5,000 m³ of LNG to ships operating in Northern Europe. Its first two customers will be two car carriers (PCTCs, or pure car and truck carriers) owned by United European Car Carriers, as well as ships from Aida Cruises. The owner of this mothership is a consortium formed in September 2016 by ENGIE, Mitsubishi Corporation, and NYK, called Gas4Sea, whose objective is the global supply of LNG to ships.
The ENGIE Zeebrugge will load LNG from the Fluxys LNG terminal in Zeebrugge, where a second jetty has been built for smaller bunkering vessels.
The first LNG supply operation in Zeebrugge took place in February 2014, using the tanker truck to ship method, which in that case was the tugboat Borgoy, the first in the world powered by this type of fuel.
Balearia will refurbish five ferries so that they can use LNG as fuel.
Another northern European port with cutting-edge technology for LNG bunkering is Rotterdam. The oil company Royal Dutch Shell has a bunkering vessel, the Cardissa, based there, which has been involved in two milestones in recent months. The first was the first ship-to-ship LNG bunkering between the Cardissa and the Russian tanker Gagarin Prospect, owned by Sovcomflot, which was also the first Aframax tanker powered by this fuel. This event took place last October in Rotterdam.
The Cardissa can bunker up to 6,500 m³ of LNG fuel. It was commissioned in 2015 based on bunkering agreements between several shipowners, including Sovcomflot and Carnival Corporation. This agreement led to the new AidaNova becoming the world's first cruise ship to use LNG on October 18, 2018. The Cardissa traveled to the Dutch port of Eemshaven, where the AidaNova was undergoing final outfitting. It will also supply fuel to the AidaNova in Santa Cruz de Tenerife.
The AidaNova has two liquefied gas tanks, each 35 meters long, 8 meters in diameter, and with a capacity of 1,500 m³. It also has a third, smaller tank, 28 meters long and 5 meters in diameter, with a capacity of 520 m³. With a full tank, the AidaNova has a two-week fuel autonomy.
In addition to the Cardissa, Shell will also use the 7,500 m³ LNG carrier Coral Methane, owned by the Dutch company Anthony Veder, after a refit to adapt it for ship-to-ship (STS) refueling along the European Atlantic coast and in the Mediterranean.
In 2017, the Coralius, the first LNG bunkering vessel built in Europe, was delivered by a Dutch shipyard. It has a capacity of 5,800 m³ of liquefied gas. It was chartered to Skangas, a Norwegian LNG distributor, to boost its bunkering business in the Skagerrak/Kattegat area and the Baltic Sea. In 2017, Skangas carried out 1,000 LNG bunkering operations using three methods: 60% truck-to-ship; 38% LNG terminal-to-ship; and only 2% ship-to-ship, both in port and at sea.
Another Baltic port, Klaipeda in Lithuania, will also have an LNG bunkering vessel in 2019, the Kairos, which, with a capacity of 7,500 m³ of LNG, will be the largest in the world upon delivery. The vessel is built by Babcock Schulte Energy (BSE) and will be chartered to a consortium led by the German company Nauticor, part of the Linde group, with 90%, and Klaipedos nafta (KN), which owns the remaining 10%.
In 2017, 74 LNG supply operations to merchant ships were carried out in Spanish ports.
Another megaferry using LNG in the Baltic is the MegaStar, delivered in 2017 to Tallink to serve the Helsinki-Tallinn route. The vessel cost $230 million, of which $4.8 million was co-financed by the European Union through the Connecting Europe Facility (CEF) program. In March 2018, Tallink signed a contract with AS Eesti Gaas to supply LNG to the MegaStar for the next five years. In 2017, 675 LNG trailers delivered 12,312 tons to the MegaStar in Vanasadam, using a truck-to-ship (TTS) system. Between two and four trailers were used depending on the vessel's needs, and each trailer can perform up to eleven deliveries.
As a result of this and other contracts, it was announced in October 2018 that the Gulf of Finland would be the operating area for another LNG bunkering vessel. Built at a Damen Group shipyard in China, the vessel will be operated by Eesti Gaas on a long-term charter from shipowner Infortar AS.
Upon delivery in September 2020, it will provide LNG bunkering services to cruise ships, ferries, and ro-ro vessels, all with very short turnaround times. The 100-meter-long vessel will have a capacity of 6,000 m³ of LNG in two Class C tanks at -163°C.
The new vessel will be able to bunker the MegaStar in a single operation while simultaneously loading and unloading passengers and cargo. This also eliminates the need for LNG trucks in the ports served by this bunkering vessel.
The main advantage of these vessels is ensuring a fast, secure, and highly competitively priced LNG supply for shipowners who choose this option. They will not only reduce the cost of the LNG supply chain but also guarantee a safe and reliable service for users in the Baltic Sea.
LNG Supply at Florida Ports:
Across the Atlantic, LNG supply infrastructure is also being improved. Last August, Conrad Industries delivered the first LNG supply barge built in North America. Named Clean Jacksonville, it serves TOTE Maritime Puerto Rico's two container ships, the Isla Bella and the Perla Del Caribe, which operate on the route between Jacksonville and San Juan, Puerto Rico. Both were delivered in 2015 and 2016, respectively, and until now had been refueling from trucks.
This barge has a single tank with a capacity of 2,200 m³. Among its many innovations, the Clean Jacksonville features the first GTT membrane system installed on a non-self-propelled barge in the United States.
Cape Canaveral is the North American port that is most actively preparing to supply LNG to cruise ships.
Cape Canaveral, Florida, is also preparing for the arrival of up to five LNG-fueled cruise ships that could be based at that port: two from Carnival Cruise Lines and three from Disney Cruise Lines. Initially, in 2020, the first Carnival ship will be refueled while docked at Cape Canaveral by a special barge that will travel to and from Elba Island, Georgia. A permanent LNG storage tank at Cape Canaveral is in the plans of the cruise industry and LNG suppliers. But while that is being built, a 4,000 m³ capacity barge owned by Quality LNG Transport (Q-LNG), along with its integrated tugboat ATB, is being constructed by VT Halter Marine at its shipyard in Pascagoula, Mississippi. Shell will charter the vessel to supply LNG to the southeastern coast of the United States, primarily Florida and the Caribbean, including the two Carnival Cruise Lines ships with which it already has a contract. Delivery of this unit is scheduled for the first quarter of 2020.
In Asia, it was announced in June 2018 that Kawasaki Heavy Industries would build Japan's first LNG bunkering vessel for a joint venture between K-Line, Chubu Electric Power, Toyota Tsusho Corporation, and NYK Line, called Central LNG Shipping Japan Corp. The vessel will have a length of 81.7 meters and a capacity of 3,500 cubic meters of LNG. It will be delivered in 2020 and will allow ships carrying LNG to reach Japan.
How much do major cruise lines spend on fuel?
In 2017, Carnival Corp.'s fleet consumed 3,287,125 tons of fuel, at an average price of $443 per ton. The bill totaled $1.244 billion, significantly higher than the $915 million spent in 2016, though in line with the $1.249 billion spent in 2015. As a result of rising fuel prices, Carnival Corp.'s energy bill for 2018 is projected to increase by approximately $117 million over 2017, which would reduce the dividend per share by 0.16 cents.
Barcelona is the leader in Spain in bunkering for cruise ships.
Royal Caribbean's fleet consumed 1,332,000 metric tons of fuel in 2017, resulting in a $707 million fuel bill. The average price per metric ton was $531. Projected consumption is hedged 60% through swaps for 2017 and 44%, 35%, 25%, and 5% through swaps for 2018, 2019, 2020, and 2021, respectively. For the same five-year period, the average cost per metric ton of fuel in the hedging portfolio is approximately $503, $452, $342, $335, and $348, respectively. Royal Caribbean estimated in 2017 that a 10% change in fuel prices would result in a $23 million increase in fuel costs for the full year.
LNG cruise ship order book (Click on the image to enlarge it)
Royal Caribbean's Oasis-class cruise ships are the largest in the world, and they refuel in Barcelona during their Mediterranean seasons. For example, in July 2016, CEPSA supplied the Harmony of the Seas with 900 tons of fuel oil and 300 tons of diesel oil using the Spabunker 41 barge, built by Boluda Tankers. The operation lasted two and a half hours, with an average fuel delivery rate of 400 tons per hour and diesel delivery rate of 150 tons per hour. This fuel allowed the Harmony of the Seas to sail the Mediterranean for seven days. The Spabunker 41 is 72 meters long and has a delivery capacity of 4,026 tons.
NCL Holding spent $361 million on fuel in 2017, a significant increase over the $335 million spent in 2016. For NCL Holding, fuel purchases accounted for 11.8% of total operating expenses in both 2017 and 2016, reaching 13.5% in 2015. To mitigate the financial risk of fuel price fluctuations, NCL Holding, like RCCL, uses fuel derivatives agreements.
As of December 31, 2017, NCL Holding had hedged approximately 65%, 48%, and 26% of its projected fuel needs for 2018, 2019, and 2020, respectively. A 10% increase in the weighted average fuel price would increase anticipated spending for 2018 by $38 million.
Fueling Ships in Spain:
The two main Canary Island ports, La Luz in Las Palmas and Santa Cruz de Tenerife, became the leading bunkering ports in the Spanish port system at the end of 2017, surpassing major ports like Algeciras and Barcelona, with over three million tons supplied.
The Port of Las Palmas closed 2017 with a record fuel supply of 2,607,284 tons, maintaining virtually the same level as in 2016, with only a 0.41% increase. According to the Port Authority, 41% of the supply was gas oil, 57% fuel oil, and 2% diesel. With the data available this year, Las Palmas has overtaken Algeciras and become the leading Spanish port in fueling ships. By May, the Port of Las Palmas had supplied over one million tons (the only port exceeding that figure), accounting for approximately 30% of the total supply from Spanish ports. The Port of Algeciras ranked second, with 925,000 tons (27.5%), while the remaining Spanish ports supplied a total of 1,430,000 tons (the remaining 42.5%).
Molgas Energia is a Spanish company specializing in the supply of LNG to merchant ships.
Only the port of Santa Cruz will close 2017 with a 20% increase thanks to the rise in port traffic over the last two years. In 2015, fuel supplies totaled 445,148 tons, which rose to 502,948 tons in 2016, an increase of 12.98%. In 2017, the Port of Tenerife reached 550,812 tons, an increase of 47,894 tons compared to 2016, representing a growth of 9.52%.
Of the 7.8 million tons of fuel supplied in 2017, the Port of La Luz provided just over 2.34 million tons, a 1.1% increase over 2016. Meanwhile, the Port of Algeciras supplied over 2.54 million tons, but with a decrease of 18.3%.
CEPSA, the leading bunkering company in Spain.
In 2016, Cepsa carried out more than 2,000 fuel deliveries in Algeciras and almost 5,000 throughout Spain. By November of that year, it had supplied 4,250,000 tons of marine fuels in Spain and 1,575,000 tons in Algeciras, representing more than half of the total sales at these port facilities. Cepsa is the leading bunkering company in Spain, operates in more than 60 Spanish ports, and is one of the world's largest suppliers of marine fuels.
As proof of its capabilities, Cepsa carried out one of the largest marine fuel bunkering operations in its history in Algeciras on December 11, 2016. The vessel being bunkered was the Mary Maersk, a mega container ship from Maersk's Triple E series, measuring over 400 meters in length, which received 7,300 tons of fuel. The "Triple E" designation derives from its three design principles: economies of scale, energy efficiency, and environmental improvement. The operation required the intervention of two supply vessels, equipped, like all those in the Cepsa fleet, with mass flow meter technology. This innovative system guarantees the accuracy of bunker fuel delivery and reduces operating times by up to three hours, thanks to continuous and simultaneous monitoring throughout the entire bunkering process, thus improving overall efficiency by reducing refueling times by up to three hours.
Cepsa is the leader in supplying fuel to cruise ships in Barcelona.
Several Cepsa executives have stated on numerous occasions that they are prepared to supply LNG to ships upon request, although their primary business remains traditional fuels.
Cepsa, which offers all types of fuels in Barcelona, currently operates the bunker vessel SpaBunker 41, with a capacity of 2,600 tons of fuel oil and 850 tons of diesel; and the Spabunker 21, with a capacity of 3,800 tons of fuel oil and 600 tons of diesel. In total, during 2017, Cepsa carried out more than 1,100 bunkering operations in the port of Barcelona, supplying over 208,000 tons of products, primarily to cruise ships, ferries, container ships, and tankers.
First gas loading test on the Oizmendi vessel.
Efforts to develop an infrastructure capable of servicing the new LNG-powered mega-ships in the Mediterranean are much more modest than in Northern Europe. In Spain, the most significant development is the introduction by Cepsa of the multi-product barge Oizmendi, which was equipped last winter with two 300 m³ liquefied natural gas (LNG) tanks on deck, at a cost of €5.5 million. It carried out its first refueling in Bilbao on February 3rd, supplying 90 m³ to a cement carrier. The vessel is owned by Itsas Gas, a company formed by the Basque Energy Agency, Remolcadores Ibaizábal, and Naviera Murueta. The Oizmendi is currently based in Huelva, so its use for refueling cruise ships seems unlikely.
The Bunker Breeze, another self-propelled barge chartered from Cepsa and based in Barcelona, appears poised for significant use supplying fuel to cruise ships. It was delivered this year to Suardíaz Energy Shipping by the Zamakona shipyard in Vizcaya.
Carnival spent $1.244 billion on fuel in 2017, while Royal Caribbean paid a bill of $707 million and NCL $361 million.
The vessel is 86 meters long and 17 meters wide, with a deadweight of 5,250 tons. It has ten cargo tanks. Currently, eight are designated for heavy fuel oil, with a capacity of 4,000 m³. Two more tanks will be for diesel with a capacity of 1,000 m³; and four on-deck tanks for LNG, with a capacity of 1,200 m³.
This vessel is part of the Core LNGas Hive project, supported by the European Commission, which aims to improve the LNG logistics chain to promote its use as a fuel in maritime transport.
In April 2017, the first LNG bunkering from a jetty took place in Cartagena. The Canadian vessel Damia Desgagnés received 370 m³ of LNG. This amount represented the largest operation of its kind in Spain at the time, and for Repsol, which in previous operations had supplied up to 320 m³ using tanker trucks. Months later, on March 15, 2018, this record was also broken in Cartagena. The Canadian product tanker Mia Desgagnes received 425 m³ (approximately 190 tons) of LNG on its delivery voyage, supplied from the Enagas terminal in Escombreras by ten trucks. The LNG was supplied by Repsol and Molgas Energía in an operation overseen by Enagas and the Port Authority. In this case, the truck-to-ship (TTS) method was used at a specially adapted jetty for LNG refueling.
In June 2018, Gas Natural Fenosa and Baleària carried out the first liquefied natural gas (LNG) refueling operation in Valencia for the ferry Abel Matutes. In January 2017, the Abel Matutes was also a pioneer in Barcelona.
Endesa will also supply LNG to the port of Santa Cruz de Tenerife. To this end, it shipped an LNG tank on a trailer from Barcelona, which will be available to provide this service to docked vessels that require it. The news of Carnival Corp. taking over the management of the Tenerife terminal will result in an increased LNG supply at the capital's port to meet the needs (at a minimum) of that cruise line's vessels.
Molgas Energía:
While Cepsa is the undisputed leader in the conventional ship bunkering sector, other players have emerged in the LNG sector. One of them is Molgas Energía, which carried out its 100th bunkering operation on August 18th. It is currently the leader in supplying liquefied natural gas as fuel to ships, both via truck-to-ship (TTS) and container-to-ship (CTS). Since LNG bunkering began in Spain in 2012, Molgas has handled 98% of the operations carried out on the Iberian Peninsula.
Among Molgas Energía's clients is Aida Cruises, with whom it signed a contract in 2017 to bunker the AidaPerla. The first LNG bunkering of that ship took place on October 20, 2017, in Barcelona. Molgas also refueled the AidaPerla in Palma de Mallorca, Civitavecchia, Livorno, and Marseille. On December 10 of that year, the vessel received 40 m³ of LNG in Algeciras in an operation that lasted four hours. The AidaPerla spends approximately 40% of its time in port. Thanks to one of its generators being dual-fuel, it can produce the required energy while docked using only LNG. Molgas purchased two 40-foot tank containers specially adapted for refueling the AidaPerla, each capable of carrying 15 tons of LNG, which are connected to the vessel for approximately twelve hours, providing a continuous supply of liquefied gas.
On May 4, 2017, Molgas Energía supplied 40 tons of LNG to the cement carrier Ireland in Santander in a truck-to-ship (TTS) operation that lasted approximately five hours. That same cement plant received 40 tons of LNG last December in Algeciras, supplied by Molgas.
Las Palmas closed 2017 with a historic record in the supply of fuel to merchant ships.
INTERVIEW WITH BUREAU VERITAS. AN EXPERT COMPANY'S OPINION ON LNG.
What will be the impact of the new SOx limits on maritime traffic in general and on cruise ships in particular?
These measures aim to reduce emissions, advance the sustainability of maritime transport, and contribute to the improvement of the seas and the environment. The limits apply to all ships, including cruise ships.
What safety measures must a ship operating on LNG have?
Ships must comply with the safety and emissions regulations of the International Maritime Organization (IMO). In this case, Classification Societies like Bureau Veritas play a fundamental role in independently ensuring that ships comply with safety and emissions regulations.
Does BV have any established procedures for how LNG should be consumed?
In this regard, it is very important that vessels comply with the regulations on refueling set by the Port Authorities, which are based on the legislation of each port's government.
Has BV classified any vessels with this technology?
Yes, in 2017 it classified three vessels that exclusively consume liquefied natural gas (LNG). Furthermore, vessels currently being converted from conventional fuels to dual-fuel systems are also being converted.
Bureau Veritas has also been involved in bunkering vessel projects for this and other traditional fuels. According to Martial Claudepierre, Managing Director of Sustainable Ships at Bureau Veritas Marine and Offshore in Asia, “three out of every four LNG bunkering vessels operating or under construction have been classified by Bureau Veritas.”
