What is Natural Gas Flaring and What Can We Do About It?

By Michael Kern - Aug 30, 2024

• Natural gas flaring is a significant contributor to greenhouse gas emissions and environmental concerns.
• 
  
• Innovative ways to reduce natural gas flaring include the use of microturbines, GTL technology, pipelines, carbon capture technology, and bitcoin mining.
• 
  
• These solutions provide alternative uses for excess natural gas while promoting sustainable practices within the oil and gas industry.
• 
  

In the heart of oil and gas operations lies a practice as old as the industry itself: Natural gas flaring. This process, which involves the controlled burning of excess natural gas produced during oil extraction, has been a mainstay for decades. While it might appear as an unavoidable byproduct of oil production, natural gas flaring casts a long shadow of environmental consequences that demand our attention.

From contributing to climate change through the release of potent greenhouse gases to impacting local air and water quality, the repercussions of flaring are far-reaching. It's a practice that not only squanders a valuable energy resource but also poses risks to human health and ecological balance. As the world grapples with the urgent need to transition towards cleaner energy sources and mitigate climate change, the spotlight on natural gas flaring intensifies. It begs the question: is it truly a necessary evil, or can we find sustainable alternatives?

What is Natural Gas Flaring?

Natural gas flaring is the deliberate combustion of natural gas that is deemed uneconomical or impractical to capture and utilize. This excess gas, often found alongside crude oil deposits, poses a challenge due to its gaseous state, making it difficult to store and transport compared to liquid oil. In the absence of adequate infrastructure or viable markets for this gas, flaring becomes the default solution.

The process typically involves igniting the gas at the wellhead, creating a towering flame that illuminates the night sky. While seemingly simple, this act releases a cocktail of pollutants into the atmosphere, including carbon dioxide, methane, and other harmful substances.

As we delve deeper into this complex issue, we'll explore the environmental and economic impacts of flaring, the ongoing efforts to reduce its prevalence, and the innovative solutions that offer a glimmer of hope for a cleaner energy future.

How Does Natural Gas Flaring Happen?

Natural gas is often found alongside crude oil deposits. When drilling for oil, natural gas is also extracted from the ground. However, unlike crude oil, which can be stored and transported easily, natural gas is more difficult to transport and store due to its gaseous state. This is where natural gas flaring comes in.

During oil drilling operations, natural gas that cannot be captured or transported is burned off at the well site. This process involves igniting the natural gas as it exits the wellhead, resulting in a bright flame that can be seen from miles away.

Environmental Impact of Natural Gas Flaring

Natural gas flaring has a significant environmental impact. The most obvious is the release of greenhouse gases into the atmosphere. Methane, the primary component of natural gas, is a potent greenhouse gas, significantly contributing to climate change. According to the World Bank, global gas flaring resulted in the emission of approximately 400 million tons of CO2 equivalent in 2022, contributing to global warming and climate change.

Flaring also impacts air and water quality. It releases pollutants such as carbon dioxide, nitrogen oxides, and sulfur dioxide, which can harm human health and the environment. Additionally, flaring can contribute to light and noise pollution, affecting wildlife and ecosystems in the surrounding areas.

Economic and Social Impacts

Besides the environmental concerns, gas flaring represents a substantial waste of valuable energy resources. The World Bank estimates that the value of gas flared annually is around $40 billion. This wasted gas could be used to generate electricity, provide heat, or be utilized as feedstock for various industries.

In developing countries where flaring is prevalent, the economic and social impacts can be particularly severe. The loss of potential revenue from gas utilization can hinder economic development, while the environmental pollution from flaring can disproportionately affect vulnerable communities.

Reducing Natural Gas Flaring

There are several solutions being implemented around the world aimed at reducing or eliminating natural gas flaring. 

Build More Pipelines

One solution involves capturing and transporting excess natural gas instead of burning it off at the wellhead. This requires building new infrastructure, such as pipelines or liquefied natural gas (LNG) plants.

Use Microturbines To Produce Power

Another approach is the use of microturbines, which can generate electricity from excess natural gas that would otherwise be burned off. These small turbines are highly efficient and can provide power for various applications such as remote oil rigs or pipeline operations. This solution not only reduces greenhouse gas emissions but also provides a cost-effective way to produce electricity in areas where traditional grid connections may not be available.

 

Flare-gas-to-liquids (GTL) technology: This innovative technology presents a groundbreaking solution to mitigate gas flaring and foster a greener energy landscape. By transforming waste gases generated from flaring into valuable liquid fuels like diesel, gasoline, or jet fuel, GTL provides a practical and sustainable use for excess natural gas. This process not only significantly reduces greenhouse gas emissions but also contributes to a circular economy by repurposing a previously wasted resource.

 

Carbon Capture and Storage Technologies

Some oil companies are using carbon capture technology to capture carbon dioxide emissions from natural gas flaring and store them underground. This approach not only reduces greenhouse gas emissions but also promotes carbon sequestration, which can help mitigate climate change impacts.

Bitcoin Mining

Bitcoin mining has been a controversial topic due to its high energy consumption and potential environmental impact. However, some bitcoin miners are using their operations to help reduce natural gas flaring. These miners are taking advantage of the excess natural gas that is often burned off at oil drilling sites by using it to power their mining rigs.

By using this excess natural gas, bitcoin miners are not only reducing greenhouse gas emissions from flaring but also providing an alternative use for a resource that would otherwise go to waste. This practice has gained traction in areas where natural gas flaring is common such as Texas and North Dakota, where bitcoin miners have partnered with oil companies to access excess natural gas.

Success Stories

While the challenges posed by natural gas flaring are undeniable, success stories from around the world demonstrate that progress is possible. These examples highlight the power of innovation, collaboration, and effective policymaking in driving flaring reduction and promoting a more sustainable energy future.

Let's explore two such stories that illuminate the path towards a world with minimal gas flaring.

The United States: A Model of Progress

The United States stands as a testament to the potential for significant flaring reduction through concerted efforts. A combination of technological advancements, regulatory measures, and market-driven initiatives has spurred remarkable progress in curbing flaring, particularly in regions like the Permian Basin.

Historically, the Permian Basin in Texas and New Mexico was notorious for its high levels of flaring due to a lack of adequate infrastructure to capture and transport associated gas. However, recent years have witnessed a dramatic shift. The expansion of pipeline networks, coupled with the adoption of innovative technologies such as microturbines and mobile gas processing units, has enabled the capture and utilization of a greater proportion of associated gas, significantly reducing flaring intensity.

Regulatory measures have also played a crucial role. State-level regulations, coupled with voluntary industry initiatives, have incentivized companies to minimize flaring and invest in gas capture and utilization projects. This multi-pronged approach has yielded impressive results, showcasing the potential for substantial flaring reduction even in challenging operational environments.

Nigeria: Leading the Way in Africa

Nigeria, once plagued by rampant gas flaring, has emerged as a leader in flaring reduction efforts on the African continent. The Nigerian government has demonstrated a strong commitment to tackling this issue through a combination of regulatory measures, policy reforms, and collaborative initiatives with industry stakeholders.

The Gas Flare (Prevention of Waste and Pollution) Regulations 2018, a landmark piece of legislation, imposes stricter penalties for non-compliance and encourages companies to invest in gas utilization projects. Additionally, the government has fostered partnerships with international organizations and oil companies to develop infrastructure and facilitate gas utilization projects.

These efforts have translated into tangible progress. Nigeria has witnessed a significant decline in flaring volumes, contributing to improved air quality, reduced greenhouse gas emissions, and enhanced economic opportunities. The Nigerian experience serves as an inspiration for other countries grappling with flaring challenges, highlighting the importance of strong political will, effective regulatory frameworks, and collaborative partnerships in achieving sustainable solutions.

Conclusion

Natural gas flaring remains an issue for both industry stakeholders and environmentalists alike, given its negative impacts on climate change through GHG emissions, among others. 

The good news, however, lies in global efforts towards reduction through innovations like micro-liquefaction technology while regulatory measures continue playing their role towards environmentally sustainable practices within this sector. 

Many countries and companies are taking action to reduce flaring and implement sustainable practices. As technology continues to advance, we can expect even more innovative solutions. It's important that everyone plays their part in protecting the environment and reducing greenhouse gas emissions. With continued effort and collaboration, we can create a cleaner, greener future for generations to come.

By Michael Kern for Oilprice.com 

ExxonMobil's Guyana Oil: A Trillion-Dollar Opportunity?

By David Messler - Aug 30, 2024,

ExxonMobil's Guyana oil production is rapidly expanding, with the potential to reach 2 million barrels per day by the early 2030s.

• The company's Permian Basin assets are also poised for growth, with production expected to reach 2 million barrels of oil equivalent per day by 2027.

• ExxonMobil is involved in a high-stakes dispute with Chevron over the latter's proposed acquisition of Hess, which could have significant implications for ExxonMobil's Guyana operations.

There are two main drivers for ExxonMobil, (XOM), in the face of crude’s relatively tight pricing band-low $70’s to low $80’s, for the most the past year. The first is the Guyana, Stabroek production ramp, and the related kerfuffle with Chevron, (CVX) over the nature of their proposed acquisition of Hess, (NYSE: HES). The second is the ongoing digestion of Pioneer assets and acceleration of Permian output toward 1.2 mm BOEPD.

XOM is a huge company with a lot of irons in the fire-LNG, chemicals, carbon capture, refining, biofuels, and heck, they’re even dabbling in lithium. None of these really matter to the stock in the near term. XOM moves with higher or lower oil and gas prices and is likely to perform in lockstep with these commodities well into the future. Darren Woods, CEO let loose with a pithy comment in the Q-2 call that reveals the firm priorities of this company, regardless of what other “ponds” into which, they dip their oars-

“Later this month, we'll publish our global outlook, which projects global energy demand 15% higher in 2050 than it is today. We see oil demand holding steady at around 100 million barrels per day in 2050, while demand for renewables and natural gas grows considerably.”

Let’s give Mr. Woods his due. As the CEO of a company producing ~4.3 mm BOPD of crude oil, it is fair and reasonable for us to assign a solid probability of his being right. In this article we will cover a tight focus on what we believe to be the key needle-movers for the company.

Guyana

As was noted in the early August, Bloomberg piece by Kevin Crowley the 2015 Liza discovery well almost didn’t happen. Guyana’s waters were a minefield of 40+ dry holes accumulated over the years and XOM management wasn’t convinced that this prospect met their capital allocation criteria. Even more critical was the fact that XOM’s concession was about to expire, if they were going to do it, it had to be then. Read Crowley’s piece for more of the back story, but the success of Liza changed the company and the country. Quoting Crowley from the article-

“Today, Liza is the world’s biggest oil discovery in a generation. Exxon controls a block that holds 11 billion barrels of recoverable oil, worth nearly $1 trillion at current prices. The find has transformed Guyana from one of South America’s poorest countries into one that will pump more crude per person than Saudi Arabia or Kuwait by 2027. Guyana is on track to overtake Venezuela as South America’s second-largest oil producer, after Brazil.”

Now with more than 30 discovery wells, 6-sanctioned projects, current daily production of ~650K BOPD rising to 750K in 2025 with the commissioning of Yellowtail, 1mm+ BOPD in 2027 with the commissioning of Whiptail, and up to 1.5 mm BOPD with the startup of the 7th project- Hammerhead, the company is growing Guyana production at a rate of about 20% annually. The “Guyana Effect” shows up in total return comparisons with key competitors and the overall S&P 500 index, as noted in the Crowley article.

Guyana appears to have a long ramp for future development in Stabroek, as reporting indicates that another two fields, Fangtooth-now under delineation drilling, and the  Haimara discovery-new appraisal wells planned for later this year, could take reserves well beyond the 11 bn BOIP now booked.

If the company can continue the pace of announcing a new project for Guyana every eighteen months or so, it’s not hard to imagine daily production hitting the 2.0 mm BOPD level in the XOM graph below in the early 2030’s.

As a final point on Guyana, low cost of supply is everything in long-term oil production. With supply costs of less than $35 per barrel, Stabroek fits nicely in the low-cost category assuring profitable production at any likely Brent prices.

The XOM, CVX, Hess kerfuffle

Chevron-CVX has lagged Exxon in reserves replacement over the last few years, as this OilNow article points out. Although down from 2018’s peak of ~24 bn bbls, XOM is comfortably ahead of Chevron with 16.9 bn bbls compared with 11.1 bn for CVX. Chevron’s motivation for its takeout offer for Hess, (HES) is pretty clear. With HES’ 30% stake in Stabroek, CVX saw an easy way to tack on several bn barrels on reserves with its $53 bn offer for HES. Shareholders for both companies approved the deal, but roadblocks began to crop up.

In late December of 2023, the FTC filed a request for more information on the deal but delayed any action pending the outcome of ExxonMobil’s objection to the merger. With the three-judge panel only recently confirmed recent reporting has a timeline well into 2025 for any resolution.

The core of the dispute lies in the interpretation of the Joint Operating Agreement-JOA, which contains a section on the Right of First Refusal-ROFR that governs the disposition of assets run by the consortium. XOM feels that the HES share should be offered to it under the ROFR language in the JOA. Chevron disagrees, and took pains in setting up the deal to provide for HES’ survival as an entity, effectively eliminating the “change of control” provisions of the JOA. Analysts feel the outcome will come down to the arbitration panel’s interpretation of the “intent” of the CVX/HES agreement as regards the asset. M&A expert, James English at law firm Clark Hill Law was quoted as saying-

"The crux here is whether a change of control even occurred. The three-person arbitration panel that will make the call must decide in part whether to focus on the language in the contract or to delve into Chevron's intent. “A plain language approach would be very favorable to Chevron, while if you go with the intent, Exxon may have a case," English said.”

There is no downside for XOM in this process, in my view. The valuation of the stake held by HES is a closely guarded secret, but we can make some assumptions and arrive at an estimate. 

A trillion dollar valuation has been put on the 11 billion worth of reserves already booked, implying a Brent price of $90-not out of line, but aspirational from current levels. That would put HES’ 30% share at ~$335 bn or so, 6X+ above the $53 bn takeout price. Depending on which estimate you use for the percentage ascribed to HES’ 30% as part of the CVX bid -60-80% according to experts cited in the Reuters article, it’s not hard to imagine a significant payday for XOM.

ExxonMobil is in the catbird’s seat in this scenario. They could make a counter offer for the HES stake, bid for a fraction of it, or take compensation from Chevron, if they prevail in arbitration. If it gets too pricey CVX would just walk away, accepting a $1.72 bn break-up fee from HES.

There’s no way to handicap the outcome of this dispute. As I noted there is no downside for XOM. A lot will come down to how the single word-intent, is interpreted.

The Permian

As the first full quarter of Pioneer assets operating under XOM’s umbrella approaches as Q-3 wraps we will get a peek at how efficiently this merger is being implemented. The company has put a big number on the bulletin board-$2 bn, in cost savings that will accrue from the merger annually. In a Bloomberg article, CEO Darren Woods noted that these savings will come from improved technology and extraction-fracking and cube development techniques, as well as the logistics advantages the merger provided in terms of lateral lengths and materials sourcing. XOM projects costs of supply at $35 per barrel from the Permian.

For full year 2024, XOM projects daily Permian production of 1.2 mm BOEPD across their 1.4 mm acre position in the basin. The company has a target of increasing Permian production to 2.0 mm BOEPD by 2027, implying a growth rate of 20% a year.

Your takeaway

XOM is trading at some fairly rich multiples at current prices. The EV/EBITDA is 7.65X, and the flowing barrel stat is $116K per barrel. Analysts rate the stock as Overweight with price targets ranging from $110-157.00 per share. The median is $130.00.

For those looking for well-covered shareholder returns, XOM is generating free cash of about $26.5 bn annually on a TTM basis. The company distributed $8.1 bn in dividends and repurchased $16.3 bn in stock for a modest free cash yield of ~5%. The company beat EPS estimates by ~5% in Q-2, and estimates have been raised for Q-3 to $2.14 per share. If they come in with a beat we could certainly see a move higher toward the midpoint of estimates. The inverse is also true.

XOM should be a part of every long-term energy investor’s portfolio for growth and income. Currently, it is trading near the top of its one-year range-$97-$123.00. Recent weakness in oil and gas prices would certainly argue for a judicious entry point that might come when Q-3 earnings are released in November.

By David Messler for Oilprice.com 

 

German Chancellor Visits Meyer Werft Signaling Support for Bailout

Scholz spoke with shipyard employees and media promising government support for the shipbuilder (Meyer Werft)

Published Aug 22, 2024 2:10 PM by The Maritime Executive

 

 

Financially troubled German shipyard Meyer Werft received assurances of a government-supported bailout during a town hall meeting for employees with German Chancellor Olaf Scholz and Lower Saxony’s Minister President Stephan Weil. While cautioning that the deal is not yet done, the government officials emphasized the importance of the jobs and their commitment to the company and its employees.

“The way has now been paved for the start of the restructuring and securing the future of the shipyard,” CEO Bernd Elkens and restructuring expert Ralf Schmitz told employees after meeting with the chancellor and local government officials. They said they would be following the roadmap from Deloitte’s recently presented restructuring report and would be clarifying details of the agreement with the commercial banks.

Government officials however emphasized that the final deal also requires the support of the budget committee of the Bundestag (the German federal parliament) as well as the Lower Saxony state parliament. The deal must also be structured in a form that will be approved by the European Union.

Meyer Werft’s problems are not a shortage of orders, but a financial shortfall and inability to finance future constructions. The company has 10 large cruise ship orders, including five new orders for Disney and its Japanese affiliate as well as two recent orders for Carnival Cruise Line, as well as work on a research vessel and four offshore converter platforms for the offshore wind energy industry. Media reports are saying the company booked approximately $12.3 billion in recent orders due for delivery till 2029.

The cruise lines reportedly pay 20 percent of the cost of the contract upfront and make the bulk of the payments when the ships are delivered several years later. The company took a loss on some of its recent projects due to increased labor and material costs after the pandemic and due to the war in Ukraine. Banks have been unwilling to finance the new construction without loan guarantees and are also calling for increased capital to help offset the recent financial losses.

 

Schulz told employees he understood the pressures created by the financial uncertainties while saying the government stands with the shipyard (Meyer Werft)

 

Meyer Werft in Papenburg is a major employer with Scholz emphasizing the critical importance of the maritime industry to Germany. He called the shipbuilder the “crown jewel,” for Germany in the industry. Around 3,300 people currently work at the Papenburg yard with Meyer employing as many as 7,000 with its other shipyards in Rostock (Meyer Neptun) and Finland (Meyer Turku). As many as 18,000 jobs are also associated with the yard from suppliers and contractors.

The terms remain to be set but Meyer is reportedly looking for as much as $2.5 billion in loan guarantees to finance the construction projects. In addition, the banks are reportedly demanding as much as approximately $450 million in new equity. German media is reporting the proposed terms call for the federal government and the Lower Saxony state to each provide approximately $1 billion in loan guarantees as well as making the capital infusion. In exchange, the government would receive a majority ownership stake possibly as high as 80 to 90 percent of the Meyer.

Members of the federal parliament are already saying the deal must be structured with a clear exit path for the government as well as a timeline. Some reports suggest the guarantees would only carry the company to 2027 but give the Meyer family the first option to reacquire the company. Commentators point out that a similar deal was created during the pandemic for Lufthansa and the government made a profit selling the shares. 

Meyer has previously said it faces a mid-September deadline to resolve its current financial crisis. In July, it reached terms with the unions to establish a works council and supervisory board, the standard structure for German companies. Meyer Werft had moved its corporate headquarters to Luxemburg but agreed to bring them back to Germany. In exchange, the unions agreed to a plan to reduce headcount by 300 employees first through voluntary efforts or in 2025 through layoffs.

Meyer remains one of the leading shipyards in the world for building large cruise ships and the pioneer in LNG-fueled cruise ships. For the mega-ships only Fincantieri and Chantiers de l’Atlantique have been traditional competitors but China is also working to enter the market after having built its first domestic cruise ship and currently enhancing processes as it builds its second cruise ship. 

 

Venture Global Received First Vessel at New Plaquemines LNG Plant

First vessel arrived at Plaquemines to start the cooldown before production (Venture Global)

Published Aug 26, 2024 5:34 PM by The Maritime Executive

 

 

The new Plaquemines LNG export plant in Louisiana appears to have entered its final stage of ramp-up as the first LNG vessel arrived over the weekend expected to begin the cooldown phase of the first train as the plant prepares for production. Venture Global which is developing the facility which will become the second largest export terminal in the U.S. only posted a cryptic message with a photo of the vessel and the caption Plaquemines.

The first vessel, the Malta-registered Qogir (174,000 cbm) had departed Equinor’s Hammerfest LNG terminal in Norway and according to Kpler is carrying LNG under a Department of Energy re-export license. The vessel had been holding since last week in the Southwest Pass Anchorage before DOE on Friday granted the license. Reuters reports a second vessel is also proceeding toward the facility.

Venture Global in its applications to DOE said as many as three vessels could be required during the cooldown phase of the facility. The company had received DOE permission to deploy nitrogen into the facility which is used during the purging and testing of an LNG facility. Reuters reports the plant in June and July had begun to take in gas as a step before beginning LNG production.

Venture Global had previously said it expected to begin production at Plaquemines before the end of this year. The first train will have a capacity of 1.8 billion cubic feet per day and a second train with 1.2 billion capacity is expected to go online between 2025 and 2026. When fully operational, Plaquemines will have a capacity of 20 million metric tons per annum.

The facility becomes the next major facility for Venture Global which also began its Calcasieu Pass facility in January 2022. The company hailed the approval from the Federal Energy Regulatory Commission at the end of June approving its third facility CP2 LNG. It will be located on an approximately 546-acre site in Cameron Parish, Louisiana.

In the next phase of its expansion, Venture Global in March 2024 announced that it would be the first U.S. producer to buy and operate a fleet of LNG carriers. The company revealed that it has purchased nine vessels, including three of the largest carriers, with delivery of the vessels due to start later this year.

The expansion of the operations comes as the United States is currently the world’s largest exporter of LNG. The U.S. surpassed Qatar and Australia in volumes although Qatar is currently gearing up to complete its massive North Field which will again make it the largest exporter coming at a time when global demand for LNG continues to rise.

World's 1st Machine Room Safety Accreditation for Ammonia Gas Carrier

Realizing safe operation of ammonia-fueled ships through the highest safety measures

Published Aug 27, 2024 12:36 PM by The Maritime Executive


[By: NYK Line]

The world’s first accreditation* for “Machinery Room Safety for Ammonia” (MRS) will be granted by ClassNK for the ammonia-fueled medium gas carrier (AFMGC) currently being developed by a consortium that includes Nippon Yusen Kabushiki Kaisha (NYK) and Nihon Shipyard Co., Ltd. (NSY). MRS is Class notation demonstrating a ship is equipped with excellent ammonia safety measures for the machinery room. MRS also confirms the vessel meets the highest safety measures under the guidelines for ammonia-fueled ships.

Background

The consortium to which NYK and NSY belong is aiming for AFMGC delivery by the end of November 2026. The vessel development is under the Green Innovation Fund Project*** by Japan’s New Energy and Industrial Technology Development Organization (NEDO). One of the biggest challenges in the ship’s development is to overcome toxicity in the machinery room. It is essential to have measures to keep the crew safe, such as a design to avoid ammonia leakage from piping and tanks. To overcome toxicity, the consortium has conducted a risk assessment reviewed by ClassNK, risk assessments and safety measures from a user’s point of view led by NYK’s engineers, and a study of the ship’s specifications to realize the world’s highest level of safety.

Overview of MRS Notation

The minimum design requirements for using ammonia safely on board are regulated in the ammonia-fueled ship guidelines issued by ClassNK. To receive an MRS notation, it is necessary to satisfy the optional functional requirement to minimize personal exposure to leaking ammonia in the machinery room. This notation shall be granted only to ships that meet the functional requirement and secure the highest level of safety.

Future Developments

The consortium continues vessel development, the creation of operation manuals for actual operations, etc., aiming for delivery by November 2026. Moreover, we aim to further improve safety for ammonia-fueled ships through technical know-how and achievements, including MRS accreditation, with the collaboration of consortium members.

The products and services herein described in this press release are not endorsed by The Maritime Executive.

Eidesvik, Equinor and Wärtsilä Pl Retrofit for First Ammonia-Powere OSV

Viking Energy is slated for conversion to ammonia in 2026 (Eidesvik Offshore)

Published Aug 26, 2024 4:05 PM by The Maritime Executive

 

 

In a pioneering project, Eidesvik Offshore as the vessel owner, Equinor as the charterer, and Wärtsilä will proceed with the conversion of an offshore supply vessel (OSV) to operate as an ammonia-fueled vessel. The companies believe it will become the first ammonia-powered OSV in the world when Viking Energy returns to service after the 2026 conversion.

Plans for the conversion were first announced in 2020 and were expected to proceed by late 2023. It is part of the Apollo Project funded by the EU’s Horizon Europe program designed to accelerate the transition toward a climate-neutral Europe by 2050. The companies report that in addition to the vessel conversion, the project will contribute to the preparation of regulations related to ammonia as a maritime fuel, as well as to establishing a value chain for ammonia bunkering.

The Eidesvik, Equinor and Wärtsilä Proceed with Retrofit for First Ammonia-Powered OSV was delivered in 2003 as the first LNG-fueled supply ship and has operated since its introduction for Equinor supporting its operations on the Norwegian continental shelf. The vessel is 6,000 dwt and approximately 95 meters (312 feet) in length. The vessel was fitted with a Wärtsilä battery system and in early 2026 they plan to begin the ammonia conversion. The conversion is projected to reduce emissions by at least 70 percent.

 In addition to the Wärtsilä 25 Ammonia engine, Wärtsilä will supply the complete ammonia solution, including its AmmoniaPac Fuel Gas Supply System, the Wärtsilä Ammonia Release Mitigation System (WARMS), and a selective catalytic reduction (SCR) system designed for ammonia. A service agreement, covering maintenance, is also included in the contract.

"The offshore fleet on the Norwegian continental shelf is aging and needs renewal,” said Ørjan Kvelvane, Equinor's senior vice president for joint operations support. “Investing in new technology is expensive, and there are many uncertainties. At the same time, scaling up the use of operational technology to enable the necessary transformation is urgent.”

Equinor will contribute to the funding for the conversion to ammonia operation as part of its goal to halve maritime emissions associated with its Norwegian operations by 2030. The company also extended its charter for Viking Energy to run from April 2025 to 2030, with options for further extensions.

The project is at the forefront of the efforts to introduce ammonia as an alternative fuel for maritime operations. The companies highlight that the Norwegian government has announced that it will establish requirements for low-emission solutions from 2025, and zero emissions from new supply vessels from 2029.

The Apollo project aims to demonstrate the first full-scale ammonia engine operating in an in-service environment on board Viking Energy. Fortescue recently completed the first ammonia conversion on an offshore supply vessel and has been undergoing certification and demonstration testing in Singapore where the first bunkering was also completed. Last week, NYK announced the completion of the first retrofit of a tugboat previously operating on LNG to full-time ammonia operations. It will begin operating demonstrations in Tokyo Bay. Other vessels have been ordered to be ammonia-ready as the technology is perfected and introduced.

 

Port Strikes: German Union Rejects Deal, India Settles, US Seeks Mediation

Union plan a strike in Hamburg over the proposed sale to MSC as port unrest continues around the world (Hamburg file photo)

Published Aug 27, 2024 4:03 PM by The Maritime Executive

 

 

Labor unrest continues at ports around the world during the newest rounds of contract talks and the first in many cases after the pandemic, surge in port volumes, and global inflation. Strikes or looming actions are impacting ports ranging from Germany where the union held day-long stoppages at the major ports, to Fremantle, Australia where pilot boat operators and traffic control personnel walked off the job for 48 hours and threatened more actions, and a nationwide strike was due to start tomorrow in India.

Indian officials are reporting it went down to the wire in a marathon meeting after more than three years of negotiations. The Shipping Ministry set up a Bipartite Wage Negotiations Committee in March 2021 but the country’s 12 major ports were on the verge of an “indefinite action” by around 18,000 employees affiliated with multiple unions.

Six Indian unions were demanding pay and benefit improvements backdated to January 1, 2022, and the expiration of the prior contract. Reports in the Indian media indicate an MoU was reached with an 8.5 percent basic pay increase and a 30 percent consideration for holidays. Also, there is a monthly special allowance covering the period between 2022 and the end of 2026.

The same basic issues of pay, benefits, and work rules are cropping up in the negotiations in all parts of the world. Germany’s Ver.di union reports that voting on two options presented by the Central Association of German Seaport Companies (ZDS) was rejected as “completely inadequate” by its 11,500 members. At the fourth round of negotiations in July, ZDS put forward its final offers which included a 12-month option or a 16-month variant.

The union said voting concluded on August 23 and the offers were rejected. Officially they are calling for ZDS to return to the negotiating table and improve the offers. Ver.di had staged rolling strikes between Hamburg, Bremerhaven, Bremen, Wilhelmshaven, Brake, and Emden coinciding with the prior rounds of negotiations. No strikes have yet been scheduled for the contract, but Ver.di did announce plans for an August 31 action in Hamburg ahead of the scheduled vote to approve MSC’s deal to acquire half of Hamburg container terminal operator HHLA. 

The deal for the port is bad for Hamburg says the union and in addition the wage offer they said has fallen short of members’ expectations. They note members have for two years worked hard maintaining the supply chain in Germany. 

Vessel traffic personnel and the operators of pilot and other small boats in Fremantle, Australia however reported successful negotiations. They had paralyzed the port with their first walkout, and planned to stage a second 48-hour stoppage on August 25-26 but canceled it. Terms of the agreement were not announced but officials hailed the success of the negotiations and said there would be no further disruptions in Australia’s key western port.

Looming though is still the unsettled dispute for the U.S. East and Gulf Coast ports which has the greatest potential to disrupt global supply chains. A local issue over automation stalled the efforts to proceed with master contract negotiations. There is little more than a month till the September 30 deadline with the International Longshoremen’s Association saying it will not extend past the deadline. Last week, the ILA and the U.S. Maritime Alliance (USMX) each filed with the Federal Mediation & Conciliation Service (FMCS). The ILA has refused talks for the master contract as part of its stance against port automation. USMX says it is ready to resume talks.

National Longshore Strike May Hit All of India's Major Ports on Wednesday

Container terminals at Jawaharlal Nehru Port (file image)

Published Aug 26, 2024 8:29 PM by The Maritime Executive

 

After nearly three years of wage negotiations, India's longshore unions are on the verge of a strike, and they could stage a walkout as early as 0600 hours Wednesday morning if last-ditch talks fail to produce a compromise. 

On Tuesday, the Centre of Indian Trade Unions will meet with the state-run India Ports Association for a final round of discussions. If the talks do not work out, strikes could hit all 12 major Indian seaports, including Kandla, Jawaharlal Nehru, Kochi, Kolkata, Visakhapatnam, Tuticorin and Mumbai. 

The walkouts will cover about 20,000 longshoremen and harbor tug operators, the union consortium said. The participation of tug crews in the strike means that even privately-operated, non-union terminals in the 12 affected ports may not be able to dock and undock vessels.

A full-scale strike would shut down about 2.3 million tonnes of cargo movement every day, Water Transport Workers' Federation leader T. Narendra Rao told Hindu Business Line. Rao called the ports association's approach to talks "lethargic and cruel," and said that 32 months was too long to wait for a new contract. "We are not begging for anyone's generosity or for alms, but struggling to keep our rights and privileges upright," Rao said. 

Indian shipping interests have expressed dismay at the prospect of a major port shutdown, especially since the disruption in the Red Sea has already affected the shipping routes to and from the subcontinent. However, ships' agency GAC advised that the strike might not be quite as severe as forecast. The agency believes that tanker and LNG terminals will probably not be affected, and it says that only four ports - Tuticorin, Chennai, Ennore and Vizag - have actually been served with  strike notices so far. 

"[The strike] will lead to severe delays and congestion, extended turnaround time for vessels. Prolonged disruption will also result in higher operational costs like demurrage, detention, and re-routing expenses," GAC advised.