Journey to Sustainability: When Does the LNG “Bridge” Become the “Road”?

Carnival Jubilee (Carnival Corp.)

PUBLISHED MAR 11, 2024 8:13 PM BY SEAN M. HOLT

 

(Article originally published in Jan/Feb 2024 edition.)

 

In 2012, liquefied natural gas (LNG) as a marine fuel was a budding contender in the maritime industry, holding less than one percent market share.

At the same time, NASA's Aura satellite, equipped with an Ozone Monitoring Instrument, finished capturing images of elevated nitrogen dioxide (NO2) levels along shipping lanes, highlighting the environmental impact of traditional marine fuels.

These oxides of nitrogen (NOx) are known to produce fine particles and ozone, significantly harming cardiovascular and respiratory health—a concern underscored by the World Health Organization, which attributes approximately seven million premature deaths annually to air pollution.

The landscape has dramatically shifted forward since then: 469 LNG-fueled ships are now in operation with an additional 537 newbuilds on order. This surge places LNG at the forefront of the alternative fuel orderbook, as reported by DNV.

LNG's appeal lies in its ability to cut greenhouse gas emissions by 23 percent, sulfur emissions by 99 percent and nitrogen oxide emissions by nearly 99 percent. This is done by purifying and super-cooling natural gas to reduce its volume by 600 percent, enabling efficient transport and storage.

In the “basket of alternative fuels,” LNG stands out for its environmental benefits, established infrastructure and the industry's commitment to future-proofing maritime operations through significant investments.

SEA-LNG

Peter Keller, Chairman of the SEA-LNG coalition, and COO Steven Esau present a unified vision of the maritime industry's transition toward cleaner, sustainable fuel alternatives, particularly LNG.

Reflecting on the industry's evolution, Keller recounts the delivery of M/V Isla Bella to Tote in 2015, the first LNG-powered container ship, as a pivotal moment that heralded a new era: "Today, with over 1,000 LNG-fueled vessels either operational or on order, we're witnessing a remarkable surge in adoption. This growth, especially notable in the last two to three years, directly responds to increasingly stringent IMO regulations."

At the same time, he acknowledges the broader challenge of decarbonizing the global deepsea fleet, estimated at 60,000 vessels, and the critical issue of urban air quality.

Keller highlights LNG's environmental and operational advantages including significant reductions in sulfur oxides (SOx), nitrogen oxides (NOx) and particulate matter. He contrasts LNG's higher energy density with other proposed alternatives, which could affect cargo capacity and financial viability: "The logistical challenge of building infrastructure and supply chains for these fuels, especially in major ports like Singapore, Rotterdam and New York, cannot be overlooked. LNG's widespread availability and proven safety record make it a practical and immediate solution for reducing emissions."

Addressing concerns about methane slippage, Keller notes that advances in engine technology have significantly mitigated this issue. He emphasizes the importance of understanding the characteristics of available fuels and points out LNG's potential for reducing greenhouse gases by 23 percent using two-stroke technology with further gains possible as bio-LNG becomes more accessible.

Echoing his colleague’s sentiments, Esau questions the academic approach to decarbonization as lacking a practical understanding of the maritime industry: "Now that regulations must be complied with, shipowners are seeking viable pathways to decarbonization. LNG is proving to be the most viable and safest pathway for the maritime industry's decarbonization."

He underscores the necessity of actionable solutions over theoretical debates, highlighting LNG's role as a cornerstone in the industry's efforts to meet environmental regulations and achieve sustainability goals.

Keller concludes with a call to action: "Like Nike, Just Do It!" He calls for decisive steps toward adopting LNG and preparing for future advances. Hoping for a perfect fuel alternative is not a strategy. The industry must commit to viable, immediate solutions.

"Current LNG-fueled engines are adaptable, capable of 'dropping in' blends of LNG and hydrogen, which positions us well for a transition to bio, blue and synthetic LNG variants," he asserts.

Galveston LNG Bunker Port

Facing evolving regulatory challenges and a solid commitment to sustainability, the U.S. maritime industry is advancing with significant private capital to modernize Jones Act vessels and enhance port infrastructure.

An example is the collaboration between Pilot LNG and Seapath to develop the Galveston LNG Bunker Port (GLBP), slated to become the U.S. Gulf 's first dedicated LNG bunkering facility. The electric-driven facility will initially liquefy 300,000 gallons per day (gpd) from locally sourced natural gas, scaling to 600,000 gpd with two three-million-gallon storage tanks.

Anticipated to start operations by late 2026, the facility is a pivotal step towards aligning with stringent environmental regulations and shifting toward cleaner maritime fuel alternatives.

Benson Peretti, Executive Vice President of Seapath, emphasizes the strategic significance of GLBP: "Drivers such as IMO 2020 (limiting sulfur in fuel to 0.5 percent mass) and the U.S. being an Emission Control Area (more stringent at 0.1 percent) position GLBP to significantly reduce emissions in Galveston Bay." He highlights the facility's role in supporting operational needs for LNG-fueled vessels. This type of infrastructure enables the maritime and cruise industries to modernize their fleets by replacing older vessels and homeporting new, cleaner ships.

Reflecting on LNG's evolving role, Peretti asks, "LNG has been called a ‘bridge,’ but when does the 'bridge' become the 'road'?"

Considering LNG's more than a decade of use—nearly half the lifecycle of many ships—this question hints at the broader implications of shifting trade routes and the resonating effects of LNG infrastructure investments, which could yield unknown yet impactful dividends.

Captain Jonathan Cook, CEO of Pilot LNG, emphasizes the project's aim to address a crucial infrastructure gap – particularly in Galveston Bay and the greater Houston area, which comprise the U.S.'s largest port complex and fourth-largest cruise port. Establishing GLBP as a dedicated facility for supplying LNG bunker vessels and barges is a testament to the industry's foresight in enhancing these critical maritime hubs' operational capabilities and environmental performance.

Rodger Rees, Port Director and CEO of Galveston Wharves, further elaborates on the initiative's wider benefits, stating, "Providing LNG fuel at the port positions the Port of Galveston to attract the latest, technologically advanced cruise and cargo ships." He notes the environmental and economic advantages of adopting LNG including improved air quality and job creation, contributing to the port's and community's sustainability efforts.

Cruise Industry Adoption

The dual-fuel Carnival Jubilee, the first new ship to homeport in Galveston, showcases the cruise industry's dedication to LNG. The vessel has secured fuel services with Stabilis Solutions and Seaside LNG, utilizing a specially equipped barge for LNG delivery.

The arrangement highlights the operational flexibility of the Jubilee which, aside from running on LNG, is able to use traditional marine diesel fuel as well, ensuring a seamless transition toward cleaner energy sources.

Further emphasizing the cruise sector's investment in LNG infrastructure, again in Galveston, Royal Caribbean inaugurated a $125 million terminal in 2022, strategically positioned within a drive-to market accessible to an estimated 50 million people. The terminal's significance was evident during the 7,600-passenger Icon of the Seas’ shakedown cruise when CEO Michael Bayley alluded to future plans for the port.

"It wasn't an accident that we built that beautiful $100-and-whatever-it-was million-dollar terminal in Galveston, Texas,” he exclaimed, “which, by the way, is our highest-rated terminal experience in the world. I'm not giving away our strategy here, but if you use your imagination, big things are coming," hinting at Galveston's growing role as a key hub for LNG-fueled cruise operations and perhaps a third ship in the Icon-class after Star of the Seas.

JAX LNG

Pivotal LNG, a subsidiary of Berkshire Hathaway Energy, a conglomerate known for its comprehensive involvement in natural gas processing, pipelines, storage and LNG production, recognizes LNG as the most viable marine fuel solution for the North American market in the immediate future. 

Pivotal LNG operates three key facilities—JAX LNG, a joint venture between Pivotal LNG and Seaside LNG in Jacksonville, Florida, Towanda LNG and Trussville LNG—collectively producing 470,000 gallons per day and boasting nine million gallons of storage capacity along the East Coast.

JAX LNG is the pioneering facility, completing over 650 marine bunkerings including the M/V Isla Bella. With the additional access to Jones Act LNG bunker barges owned by Seaside LNG, the Clean Canaveral and Clean Everglades, JAX LNG is a leader in the LNG fueling space.

Journey to Sustainability

In the maritime industry's journey to sustainability, LNG has evolved from a transitional “bridge” to potentially becoming the “road” to the future. Infrastructure developments in fueling operations like the Galveston LNG Bunker Port (GLBP) and JAX LNG underscore the sector's commitment to cleaner energy.

With significant investments from industry giants like Royal Caribbean, which signal a broader shift toward LNG, ports like Galveston are poised to play a crucial role in accommodating LNG-fueled vessels.

This collective move toward LNG reflects the industry's dedication to a sustainable future. It redefines trade routes and operational strategies, marking a significant step in the maritime sector's embrace of LNG as a foundational fuel choice. – MarEx

Frequent contributor Sean Holt writes from Singapore.

The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.

 

LNG-Fueled Fleet to Double as Current Orders Are Delivered Says SEA-LNG

SEA-LNG highlights the growth including CMA CGM's giant containership fleet (CMA CGM)

Published Oct 8, 2024 6:52 PM by The Maritime Executive

 

 

Industry coalition SEA-LNG is highlighting the strong growth in LNG-fueled vessels in the world fleet as well as the continuing investment in the new sector from leading shipping companies. The trade group which was launched eight years ago continues to promote LNG as a realistic alternative marine fuel pathway while also saying that engineering efforts are making strong progress on the environmental concerns associated with methane.

Citing data from DNV, SEA-LNG highlights that LNG-fueled vessels now account for more than two percent of the global shipping fleet and once the current orderbook is delivered it will double to four percent. Calculated based on deadweight tonnage (DWT) they report the LNG fleet is on track to represent six percent of the global fleet.

The number of LNG-fueled vessels has grown from 21 vessels in operation in 2010, many of them smaller ships operating regionally, to 590 in operation globally today. SEA-LNG notes that this includes the largest containerships which are twice the size of any operating in 2010. With a further 564 vessels on order, the total number of LNG-powered vessels in operation by the end of 2028 will be 1,154. 

One of the strongest growth segments is LNG carriers, where there are 772 in operation and a further 341 were on order as of the end of 2023. Strong global demand for LNG and the planned growth of exports from the United States and Qatar’s massive production expansion are driving the orders of new carriers. Included in this, are orders linked to Qatar for the world’s largest LNG carriers.

Currently, DNV calculates that a third of the global orderbook is for LNG dual-fuel vessels. SEA-LNG says this means that over 2,000 of the world’s 60,000 largest vessels are LNG-powered. Calculated by DWT, the LNG-powered fleet in operation and on order will reach 142.5 million DWT, representing six percent of the world’s total 2,224 million DWT.

Supporting the expansion in LNG dual-fuel vessels, LNG bunkers are currently available in 185 ports, with an additional 50 being added next year, reports SEA-LNG. The bunkering vessel fleet they note has increased from a single vessel in 2010 to 60 in operation today, with a further 13 on order. 

“It is gratifying that LNG is finally gaining favor amongst so many shipowners,” says Peter Keller, Chairman of SEA-LNG. “While we have always said that a basket of fuels will be required for shipping to meet the 2050 emissions reduction targets, the rationale for the LNG pathway remains unchanged. The LNG pathway using liquefied biomethane and eventually hydrogen-based e-methane currently provides the only viable option to making progress towards 2050, starting with immediate carbon reductions, now.”

Critics however point to methane emissions which environmentalists report are far more harmful to the environment than carbon emissions because they take long to dissipate. SEA-LNG however argues that LNG has virtually zero SOx and particulate matter emissions, and provides up to a 95 percent reduction of NOx emissions, and up to a 23 percent reduction in GHG emissions. 

“With continued collaborative engineering efforts across the value chain, methane slip will be eliminated for all engine technologies within the decade,” asserts SEA-LNG. “Today, 2-stroke diesel cycle engines account for approximately 75 percent of the LNG-fueled vessel orderbook. These engines have effectively eliminated slip already. For low-pressure engine technologies where methane slip remains a challenge, manufacturers have already cut the levels of slip from low-pressure 4-stroke engines by more than 85 percent over the past 25 years.”

SEA-LNG points out that the current infrastructure will also support the transition to liquefied biomethane (bio-LNG) as it scales, and eventually, e-methane (renewable synthetic or e-LNG), providing ship owners and operators with the confidence that vessels ordered today are future-proofed for 2050 and beyond. They believe the development of these future fuels produced from the anaerobic digestion of waste materials, such as manure, provides a long-term pathway and a solution toward capturing additional methane that would otherwise be released into the atmosphere.

According to SEA-LNG, the recognition of the LNG pathway and the growth in the asset base is positioning LNG to play a significant, long-term role in maritime decarbonization. 

LNG Canada to begin start-up activities within next year

Robert Tuttle and Ruth Liao, Bloomberg News

LNG Canada will begin some start-up activity within the next year, with the first cargoes of liquefied natural gas scheduled to be shipped by the middle of the decade, the project’s chief executive officer said in a phone interview. 

The project to build a 14 million metric ton a year liquefaction plant in Kitimat, on the British Columbia Coast, is 85 per cent finished, said Jason Klein, chief executive officer of LNG Canada Development Inc., the global consortium led by Shell Plc that’s behind the project.  

Since the invasion of Ukraine, which disrupted Russian gas pipeline supply to Europe and accelerated the rush to buy North American LNG, Canada’s West Coast has been appealing to Asian buyers not wanting to compete with Europe. The shorter shipping distance to Asia and ample gas supply from massive basins such as the Montney and Duvernay in British Columbia and Alberta have been touted for decades to develop LNG exports.

The last of the major liquefaction modules for LNG Canada are scheduled to arrive by month end, Klein said. A total of 6,500 people are currently working at the site finishing up construction. 

A planned second phase for the project is still under evaluation by the partners, which include Shell, Petroliam Nasional Bhd, PetroChina Company Ltd., Mitsubishi Corp. and Korea Gas Corp. Plans for an all-electric second phase to slash emissions will have to wait until more power can be supplied by British Columbia Hydro and Power Authority. The company initially may use gas turbines to power phase two of the plant, but could switch to electric at a later date, Klein said. LNG Canada is in discussions with both the utility and government about increasing power delivery to the site. 

One of the largest private-sector construction projects in Canada’s history, LNG Canada is estimated to cost $40 billion (US$30 billion) including the cost of the liquefaction plant, pipeline and gas drilling. 

Europe And China Face Off Over U.S. LNG 

Supply Deals

By Tsvetana Paraskova - Jul 05, 2023

• Europe and China's pursuit of long-term supply deals with U.S. LNG developers and exporters offers certainty in long-term supply and flexibility for the buyers.
• 
  
• Despite cost inflation concerns, the U.S. is set to approve a record volume of LNG export capacity this year.
• 
  
• Long-term LNG contracting has seen a surge of deals, with China and other Asian buyers also securing supply from the U.S.

Concerned about energy security, Europe and China are in an intensifying competition to sign long-term supply deals with U.S. LNG developers and exporters.   

The race for LNG supply indexed to Henry Hub prices and with flexibility clauses to resell the cargoes if not needed gives buyers certainty about long-term supply and the possibility to send cargoes elsewhere if the market is not as tight as expected. 

For sellers, the U.S. LNG developers and exporters, more long-term purchase deals with Europe and Asia mean more chances for projects to contract future volumes from planned export facilities and underpin financing and final investment decisions for a greater number of U.S. LNG export terminals.  

“More volumes are good for the market, and with the new deals we will see more LNG export projects being developed,” Sindre Knutsson, partner of gas and LNG research at Rystad Energy, told the Financial Times.

Despite concerns about cost inflation, developers of LNG projects in the United States are set to approve a record-high volume of export capacity this year, driven by rising global LNG demand and increased long-term contracting from customers willing to boost energy security. 

Venture Global LNG has already approved one project this year—it announced in March the FID and successful closing of the $7.8 billion project financing for the second phase of the Plaquemines LNG facility. This, along with Sempra’s Port Arthur LNG Phase 1 project in Jefferson County, Texas, were the two projects approved so far in 2023. 

The third one, NextDecade’s Rio Grande LNG project, targets FID in early July, after signing framework agreements with Global Infrastructure Partners (GIP) and TotalEnergies, and selling 16.2 million tons per annum (MTPA) of LNG from Phase 1, or 92% of nameplate capacity, under long-term agreements, sufficient to support the binding debt commitments from these leading lenders and the near-term FID of the 17.61 MTPA Phase 1.

Supermajor TotalEnergies will hold a 16.7% interest in the first phase of the project, and has agreed to purchase 5.4 million MTPA of LNG from Phase 1 for 20 years and has options to purchase LNG from Train 4 and Train 5. 

In another major long-term offtake agreement between an energy major and a U.S. LNG exporter, Equinor signed last month a 15-year purchase agreement of around 1.75 million tons of LNG per year from Cheniere, which will double the volumes of LNG that Equinor will export out of Cheniere’s LNG terminals on the U.S. Gulf Coast.  

Another deal saw Germany’s state-controlled firm Securing Energy for Europe (Sefe) sign last month a 20-year agreement with Venture Global LNG to import 2.25 million tons of LNG per year from Venture Global’s third project, CP2 LNG, as Europe’s biggest economy is looking to secure gas supply after Russia stopped deliveries.   

Long-term LNG contracting has seen a flurry of deals in recent months, including from buyers in Europe, where energy security has taken center stage at the expense of concerns about emissions from natural gas imports. 

China is also looking at the U.S., apart from Qatar, to secure long-term LNG supply after last year’s energy crisis put an additional emphasis on Chinese energy security. 

Just last week, Cheniere Energy signed a long-term deal with China’s ENN to deliver LNG to the Chinese buyer for more than 20 years—the second deal between Cheniere and ENN. 

U.S. LNG exporters are signing deals with other Asian buyers such as Japan, securing further offtake commitments and making the U.S. export projects easier to push through the FID milestone. 

Developers of U.S. LNG export facilities could launch $100 billion worth of new plants over the next five years as high prices and the need for energy security create strong momentum for long-term LNG demand and contracts, energy consultancy Wood Mackenzie said in a report earlier this year. 

By Tsvetana Paraskova for Oilprice.com

The U.S. LNG Export Boom Faces Challenges

By Tsvetana Paraskova - Oct 31, 2024

The U.S. LNG export industry faces delays due to contractor bankruptcies, litigation over environmental permits, and a temporary permitting pause under the Biden administration.

Despite challenges, U.S. LNG exports hit a record in 2023, surpassing Qatar and Australia.

Corpus Christi LNG Stage 3 and Plaquemines LNG are set to start operations by the end of 2024.



The U.S. LNG export industry has recently hit several stumbling blocks. And who will be America’s president in the next four years may not even be the biggest.

Litigation at court from environmental groups, a contractor bankruptcy, and President Joe Biden’s permit pause have combined to increase uncertainty for U.S. LNG project developers and exporters this decade.

Top LNG Exporter

The expansion of the LNG export infrastructure over the past five years and the flexibility in cargo destination of U.S. LNG have made America the world’s biggest exporter of liquefied natural gas. Soaring sales in Europe, which has scrambled to replace Russian pipeline gas, and more LNG projects coming online this decade boosted U.S. exports by 12% in 2023 from a year earlier. At 11.9 billion cubic feet per day (Bcf/d) of LNG exports, the United States easily beat its closest rivals – Qatar and Australia – to become the biggest LNG exporter last year, EIA data showed.

Utilization of U.S. LNG export capacity averaged 104% of nominal capacity and 86% of peak capacity across the seven U.S. LNG terminals operating in 2023 as relatively strong demand for LNG in Europe amid high international natural gas prices supported increased U.S. LNG exports last year.

This year, U.S. LNG exports are set to average 12.1 billion Bcf/d, slightly up from 2023, and 13.8 Bcf/d in 2025, per the EIA’s latest Short-Term Energy Outlook for October.

Two new projects, Corpus Christi LNG Stage 3 and Plaquemines LNG, are in the commissioning phase to start LNG export operations, and each of these facilities will begin exporting LNG by the end of 2024, the EIA said.

Uncertainties Lie Ahead

Going forward, delays at some fully-permitted projects have recently emerged, and they have nothing to do with the U.S. administration’s policy.

ExxonMobil and QatarEnergy have seen their $10-billion Golden Pass LNG export plant in Texas slip in the timeline to late next year, after the project faced delays due to the bankruptcy of Zachry Holdings, the lead construction contractor. The U.S. Federal Energy Regulatory Commission (FERC) has just granted a three-year extension to ExxonMobil and QatarEnergy to build their export plant.

Earlier in August, Exxon said it is delaying the start-up of Golden Pass LNG to late 2025 from the first half of next year after work at the facility stalled following the bankruptcy of the lead contractor.

Then there is the Rio Grande LNG project of NextDecade, which also faces delays due to a court ruling over its FERC authorization.

In early August, a U.S. appeals court vacated the remand authorization of NextDecade’s Rio Grande LNG export project issued by the Federal Energy Regulatory Commission on the grounds that the FERC should have issued a supplemental Environmental Impact Statement during its remand process.

This case and other litigation add another layer of uncertainty for U.S. LNG developers.

Of course, the biggest one now is President Biden’s pause on permitting from January until the Department of Energy can update the underlying analyses for authorizations. Under environmentalist pressure, the Administration said early this year that during the temporary pause DOE will carry out a new updated review on the impact of such projects on health and communities.

The consensus at Wood Mackenzie’s annual conference on ‘Gas, LNG and the Future of Energy’ last week was that the pause in LNG export authorizations would ultimately be seen as something between “a blip” and “a speed bump” for the U.S. LNG sector, wrote Ed Crooks, Senior Vice President, Americas, at WoodMac.

The 47th President and U.S. LNG

Some of the uncertainties for U.S. LNG could be cleared as soon as January when the 47th U.S. president will take office. Donald Trump has promised to immediately restart LNG permitting, while the Harris campaign hasn’t indicated if a president Harris would continue Biden’s permit pause.

However, analysts have expressed concerns that the U.S LNG export boom could be undermined if a Trump administration slaps a promised 60% tariff on China’s imports, which could lead to a Chinese retaliation with China avoiding new LNG purchases from the U.S. or re-selling U.S. cargoes.

After the U.S. election, “It seems highly likely that the pause will be lifted. But new requirements could be imposed on projects that would make securing an authorisation a slower and more complex process,” WoodMac’s Crooks says.

The industry is calling for the pause to be lifted.

“You gotta stop this crazy LNG pause from going forward,” Ryan Lance, chief executive at ConocoPhillips, said at the Gastech conference in Houston last month.

“We absolutely need permitting reform, and we need more infrastructure,” Lance added.

A Trump administration is widely expected to facilitate permitting and ease the regulatory burden on America’s oil and gas industry.


“But the primary determinants of US hydrocarbon production are the revenues and capital allocation strategies of the Majors and E&P companies, which are unlikely to be affected much by what happens in Washington,” according to WoodMac’s Crooks.

Even with President Trump, or likely precisely because of a Republican in the White House, the environmental campaign against LNG at U.S. courts will gain momentum, and U.S. LNG developers may have to contend with fresh delays stemming from legal challenges.

By Tsvetana Paraskova for Oilprice.com

 

Op-Ed: Bio-LNG En Route to Deliver Decarbonization

(Image courtesy SEA-LNG)

PUBLISHED JUN 7, 2023 5:06 PM BY PETER KELLER

 

The zero-emissions profile, availability, and cost of bio-LNG as a marine fuel have been widely discussed in the maritime industry. This includes in my last article, ‘The Emergence of Bio-LNG’ and The Maritime Executive’s coverage of the latest independent study commissioned by SEA-LNG – ‘The Role of Bio-LNG in the Decarbonization of Shipping’.

The expanding use of bio-LNG and the regulations surrounding its use continues to evolve as we travel down the LNG pathway to decarbonization. Work is now focused on the finer details such as the realization of regulations, feedstock traceability, and cementing the next steps on the journey. These practical discussions highlight the growing maturity of the bio-LNG value chain and its place in the LNG pathway that SEA-LNG has been highlighting for years.

Reaching the Regulatory Mile Marker

The journey to decarbonization is an incremental one, as recognized in the recent agreement in Brussels on FuelEU Maritime. This European legislation sets out probably the world’s most ambitious path to zero-emission shipping. 

FuelEU Maritime has outlined greenhouse gas (GHG) intensity targets for all energy used onboard ships larger than 5,000 gross tonnes for intra-EU voyages, and 50% of the energy used on ships stopping in the EU and sailing to or from ports outside the EU. The trajectory specified starts with a 2% reduction in intensity by 2025 over a 2020 baseline, 6% by 2030, 14.5% by 2035, 31% by 2040, 62% by 2045, and 80% by 2050. 

The use of LNG as a marine fuel enables vessels to be compliant with the well-to-wake GHG intensity targets proposed under the legislation until 2039, depending on engine technology. Following the LNG pathway, the use of a 20% drop-in blend of bio-LNG can extend compliance for a further 5 years. Thereafter, compliance can be achieved through increasing use of blends containing bio-LNG and its electro-fuel cousin, renewable synthetic (e-) LNG produced from renewable hydrogen as and when it becomes available together with other anticipated green fuels.

This compliance with FuelEU Maritime and strong performance within its framework highlights that the LNG pathway to decarbonization is not only a viable one but also a strong and practical route for shipowners and operators to continue to consider. The commercial weight behind LNG is proof that shipowners recognize this fact. Shipping stakeholders are investing in LNG because it provides a low risk, incremental pathway for decarbonization, starting now, not years or even a decade in the future. 

Putting the right Gas in the Tank

For bio-LNG to be a zero-emission fuel, it must be produced from sustainable biomass feedstocks, i.e., those that do not compete with food, fiber, or fodder production. This generally means it is derived from waste streams, residuals from agricultural or forestry residues, as well as dedicated non-food energy crops grown on marginal land unsuitable for food production. This is not a challenge to bio-LNG supply as these feedstocks are plentiful and widely distributed.

Currently, the main way to produce bio-LNG (liquified biomethane) is through a process called anaerobic digestion. Here one puts waste biomass, mainly agricultural slurries, into a digester where it produces biogas. This biogas is then cleaned to remove impurities resulting in streams of pure biomethane and other commercially valuable byproducts.

While the traceability of bio-LNG supply chains and resulting certification is an international challenge that will require continued global collaboration, the EU does already have standards in place. Namely the revised Renewable Energy Directive (EU) 2018/2001 (RED II). Certification schemes like the International Sustainability and Carbon Certification EU (ISCC EU) are compliant with this standard and are recognized by the European Commission. These certification schemes ensure that bio-LNG can be traced back to a sustainable source.

This means it is increasingly simple for ship owners and operators, bio-LNG suppliers, and regulators to ensure that they’re putting the right gas, from the right source, in the tank. The recent bunkering of MSC’s new cruise vessel, the MSC Euribia, with bio-LNG supplied by Gasum, sets a new global standard for vessels operating at net zero emissions through the use of bio-LNG. When bio-LNG from sustainable biomass feedstocks is used, the net-zero or net-negative emissions benefits are clear. Further, there is a significant contribution to the circular economy offered by bio-LNG as it turns waste into a viable product.

Comparing the Viable Routes

Just as your satellite navigation systems might compare multiple routes to a destination, the shipping industry must compare its routes to zero emissions. The sat nav’s computer evaluates each route based on a consistent set of metrics and calculations and we must do the same for the emissions, availability, cost, and safety implications of each alternative fuel. We must compare alternative fuel pathways on a like-to-like basis.

It is also important to recognize that there can be multiple viable routes to decarbonization. Just as today, different vessel types may favor certain fuels due to design and operational considerations, that will continue into the future. SEA-LNG has long stated that there are likely to be a basket of alternative fuels and technologies if shipping is to reach its decarbonization destination. Our coalition believes the LNG pathway currently offers the safest, most practical, and realistic, cost-competitive pathway to net zero for maritime. It also is the only pathway with significant infrastructure in place thereby freeing the industry from massive investments into untried technologies.

The shipping industry is making newbuild investment decisions right now that will impact emissions today and for the next 25-30 years, the typical lifetime of a deep-sea vessel. Shipowners and operators need factual and practical like-for-like analysis that can inform their decisions and actions. 

Acting now on shipping’s GHG emissions is a key point. Waiting is not an option. GHG emissions are cumulative and the longer low-emission, zero-emission, and net zero fuel decisions are delayed, the more carbon continues to accumulate in our atmosphere. Shipowners and operators can start down the LNG pathway to decarbonization now because the technologies are mature, and the fuel and infrastructure are in place. The LNG pathway to decarbonization looks like a four-lane highway, while some alternative routes look more like dirt tracks with the first paving is only in the initial planning phase. 
 

Peter Keller is the chairman of SEA-LNG, a multi-sector industry coalition established to demonstrate LNG's benefits as a viable marine fuel.

LNG’s future unclear as conference kicks off in Vancouver

Story by The Canadian Press • Yesterday 

The world’s largest liquefied natural gas (LNG) conference kicked off on Monday in Vancouver, and with it comes uncertainty over the long-term viability of gas export projects in development in Canada.

The conference, which runs until Thursday, takes place as multiple LNG projects are in the early stages of development on the West Coast, including the First Nations-led Cedar LNG in Kitimat, B.C., that will export gas to Asian markets. The Haisla Nation is invested in the project.

The next two to three years will be critical in deciding the fate of Cedar LNG, Robert Johnston, executive director at the Center on Global Energy Policy at Columbia University, said in an interview with Canada’s National Observer.

“That’s when you get financing,” he added.

On Tuesday, it was announced in a press release that Johnston will also be the lead advising researcher for the First Nations Climate Initiative, a B.C.-based forum composed of Lax Kw’alaams, Metlakatla, Nisga’a and Haisla First Nations created to fight against poverty and climate change.

Johnston, alongside other researchers and industry CEOs, will advise the First Nations Climate Initiative’s international advisory committee, which will research and advise on LNG exports to Asia, including a demand-side outlook for the continent, decarbonization and the global competitive market that includes petro-state producers like Russia and Qatar.

Ultimately, it will be the decisions of investors, their gamble on whether there is long-term viability for gas exports to Asia and that continent’s energy transition, Johnston added.

LNG Canada, another LNG export facility in Kitimat, is currently 85 per cent completed. The project is a joint venture between Shell PLC, Petronas Nasional Berhad, PetroChina Co. Ltd., Mitsubishi Corp. and the Korea Gas Corp.

It’s unclear if similar large Asian gas corporations will invest in Cedar LNG, too, but Johnston said gas import infrastructure already exists in gas- and coal-dependent countries like Japan, Taiwan, Korea and China. It also remains to be seen whether other coal-dependent countries in Asia like India, Indonesia and Vietnam will invest in LNG infrastructure or instead hopscotch to clean energy like renewables. Currently, the most important consideration for those countries is price, and coal’s cost has remained low due to the war in Ukraine, Johnston said.

Many countries in Asia have built coal plants within the past decade or two, raising questions over the next steps in an energy transition that is demanding a steep drop in greenhouse gas emissions in the near future.

Meanwhile, some Asian countries face challenges in cleaning up their energy mix due to limited space for large wind and solar farms, Johnston said.

Nuclear development is also expanding in places like China, but it remains controversial in Korea and Japan after the Fukushima disaster, Johnston explained.

In Japan, for example, dependency on natural gas spiked following the nuclear disaster in 2011, which idled many of its nuclear plants, Reuters reports.

However, as Asian countries aim for net-zero emissions by 2050 — or 2060, for China — it’s not a given that natural gas will remain viable in those markets. Other energy sources could replace gas as nations work to fulfil their climate obligations. That’s why Johnston says long-term projections are uncertain, with different scenarios showing different outcomes.

But as of right now, there are still long-term gas contracts being signed, Johnston said.

“Will those be white elephants up to 20, 30, 40 years from now?” Johnston asks. “Possibly, but these contracts are designed to share that risk between buyer and seller.”

Fossil fuels like natural gas and coal are both significant propellants of climate change, which has seen global temperatures reach record highs over the past week.

On Tuesday, climate activists from Frack Free BC staged a die-in outside the LNG conference over the oil and gas industry’s role in worsening climate disasters like extreme heat waves, droughts and other weather phenomena taking place more often and more severely than in previous decades.

Frack Free BC also points to the fracking needed to extract much of Canadian LNG for export, arguing the method for extracting oil and gas is as bad for the climate as coal. The group also notes methane, the primary component in natural gas, is 84 to 86 times more powerful than carbon dioxide over a 20-year period.

Countries like the United Kingdom, France and Australia have already banned fracking over earth tremors and environmental concerns, like the heavy energy output needed to extract products.

“Oil and gas companies have spent billions of dollars lobbying politicians and peddling lies about clean gas,” Alexandra Woodsworth, director of organizing at Dogwood, a B.C. environmental non-profit, said in a press release.

“The research is crystal clear: there’s no room for new LNG if the world [wants to meet] its climate commitments. Any politician who claims otherwise is just helping the industry greenwash its image.”

Matteo Cimellaro, Local Journalism Initiative Reporter, Canada's National Observer

Uncertain demand clouds future of Canada's planned LNG exports, experts say

Story by The Canadian Press • Yesterday 


VANCOUVER — Canadian liquefied natural gas projects looking to fill gaps in the global market left by the absence of Russian gas may run into more challenging conditions than expected, industry experts have told a global conference in Vancouver.

They said the consensus among economists is that the gas shortage in Europe caused by the war in Ukraine is unlikely to last beyond 10 years, while the rise of renewables will cut into demand from 2030 onward.

Peter Abdo, chief commercial officer for LNG for German energy giant Uniper, told the LNG 2023 conference his company is committed to entering into 10-year contracts with potential suppliers — but longer-term deals will be more challenging because of Europe's uncertain long-term demand for natural gas.

"I guess the caveat is, if any European player is entering into a long-term contract irrespective of the portfolio benefits, let's just make sure that we have enough flexibility in that deal to where we can take it to Asia or some other market, in case we're faced with a situation like stranded gas," Abdo said.

Octavio Simoes, president and CEO of U.S.-based natural gas firm Tellurian, agreed that the biggest opportunity opened by the European gas shortage is in Asia, a region with a much brighter long-term outlook in LNG demand.

However, Simoes said challenges remain on that front.

He told the conference that the current European gas shortage revealed a fundamental challenge for anyone wanting to sell LNG to Asia, as planned by projects in British Columbia — price may be the ultimate determining factor, not environmental standards touted by the West.

Simoes said European countries such as Germany jumped into the LNG market in the last two years to replace Russian gas, paying more for the commodity and essentially "taking it from the rest of the world" while driving up prices.

He said high prices pushed Pakistan to abandon plans to buy natural gas and instead quadruple commitments to coal, and similar trends are happening in Indonesia, Thailand, Vietnam and the Philippines.

"I look at it from the principle that we have roughly half the (global) population — 4 billion people — living on less than $7 a day," Simoes said. "So whatever we do to decarbonize, if it's not affordable, it's not going to happen."

Earlier in the conference, LNG Canada CEO Jason Klein had said Canada would be competitive on the global market, partially due to its high environmental and social standards.

Klein said the $40-billion LNG Canada export facility in Kitimat, B.C. — the only one of its kind to reach the construction stage on the Canadian West Coast — is about 85 per cent complete and is scheduled to begin exports by "mid-decade."

In a written statement, the $40-billion joint-venture LNG project's management said it does not comment on pricing and market conditions, but reiterated the facility will produce an affordable supply through "highly efficient equipment" and "access to an abundant supply of low-cost" Canadian natural gas.

The CEO of multinational energy giant Petronas, which is backing LNG Canada, said Tuesday that he agrees pricing will play a big role as Asian countries decide whether to import LNG, switch to renewables or stay with coal.

But Muhammad Taufik told the conference that each market has unique dynamics, and Canadian LNG's emphasis on environmental and social standards has a market in many Asian countries.

That demand will grow, he said, as governments around the world develop more concrete carbon-pricing policies, which would add more incentive for countries to buy lower-polluting fuels like LNG.

"They will want this high-quality LNG," he told the conference. "I can tell you already that my marketing and trading team are already delivering — or have already delivered — carbon-neutral LNG, and there have been customers who are specifically asking for carbon-abated cargoes."

One such market would be China, said PetroChina International's senior vice-president Keith Martin.

Martin said Chinese President Xi Jinping's announcement at the United Nations two years ago that China would achieve carbon neutrality before 2060 has set the world's second-largest economy strictly down the path of buying lower-emitting fuels such as LNG.

"When President Xi made that speech at the UN, that wasn't just a speech," Martin said. "That was an order."

Muhammad Taufik said that comparing LNG's costs and benefits as a whole, versus coal and renewables, may play to its advantage in Asia.

The key for LNG Canada and other Canadian projects, he said, is timing, making it imperative that production does not get delayed, thereby missing the window.

"A call-out to our Canadian friends: You do have probably one of the most unique opportunities to be part of the global solution," he said. "You are just naturally positioned to cater to these markets, and I think it would be a huge opportunity lost if we do not pivot to actually respond to those needs."

This report by The Canadian Press was first published July 11, 2023.

New emissions targets may sink LNG’s pitch as a shipping fuel

Story by The Canadian Press • Yesterday 

The fossil fuel and shipping industries just got a serious shot across the bow over relying on liquefied natural gas (LNG) as a transition fuel.

On Friday, the International Maritime Organization (IMO) finalized stricter global emissions standards for the maritime industry while closing a significant regulatory loophole driving up the use of LNG as a shipping fuel.

LNG has lower CO2 emissions than other fossil fuels used in shipping but it also emits significant amounts of methane, a short-lived but powerful greenhouse gas responsible for more than 25 per cent of current global warming.

Past emissions rules focused solely on reducing shipping’s CO2 emissions and failed to fully include methane, which makes up 70 to 90 per cent of natural gas.

The IMO’s new emissions strategy now considers the full life cycle of shipping fuels — also known as well-to-wake greenhouse gas (GHG) emissions.

The new accounting method means LNG can no longer sail under the radar when it comes to emissions, said Elissama Menezes, global campaign director for the Say No to LNG coalition.

“It’s a huge step and quite exciting to see,” Menezes told Canada’s National Observer.

“At the end of the day, it really brings some accountability to the shipping sector, which for too many years has not really been responsible for the whole footprint of its emissions.”

The oil and gas industry has aggressively pitched LNG as a bridge fuel until low- or zero-emission alternatives are fully developed in the shipping sector.

Compared to dirty heavy fuel oil (HFO) predominantly used in shipping, LNG does emit less carbon dioxide and harmful air pollutants like sulphur, while meeting previous emission standards and being economically attractive to the shipping industry.

Consequently, methane emissions from shipping surged by as much as 155 per cent from 2012 to 2018, according to the IMO.

“Methane emissions have been growing at a much faster pace than any other greenhouse gas and it’s becoming more of a problem over time,” said Bryan Comer, marine program lead for the International Council on Clean Transportation.

Half of all newly built cruise ships and a large share of recently built container ships are designed to be fuelled with LNG, he said.

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Fugitive emissions, or methane slip, along the length of the value chain — including extraction, processing, storage, distribution and even gas released unburned from engines — is the “Achilles heel” of LNG, he added.

The amount of methane that slips on vessels varies according to the type of engine used. High methane slip engines consumed 40 per cent of LNG marine fuel in 2017, with one of the most common and worst offenders being low-pressure, dual-fuel engines.

The well-to-wake emissions accounting, combined with the IMO’s plan for mid-term measures such as more stringent greenhouse gas fuel emissions standards slated for 2027, will likely increase the uptake of alternative low- or zero-emission fuels and drive down demand for LNG, Comer said.

He noted the European Union is also set to regulate methane as soon as 2025 under new fuel standards aimed at decarbonizing the maritime sector.

The new regulatory measures will require industry investment to improve fuels and engine technology. And all forms of LNG will likely become increasingly impractical as a marine fuel due to the associated costs and uncertainty associated with scaling up bio and e-LNG (“renewable” LNG), which is estimated to be seven times more expensive than fossil LNG by 2030, Comer said.

Other alternatives involving wind, green methanol, hydrogen and ammonia could offer low life cycle emissions without the same methane slip problems, he added.

“It’s not that LNG won’t be allowed, it’s just that the market won’t be as strong as current projections suggest,” Comer said.

“When some of these infrastructure decisions are being made, there are probably better things to spend your money on.”

The IMO has provided Canada’s fossil fuel industry and the maritime sector with a wake-up call to adapt to a future that doesn’t involve natural gas, said Andrew Dumbrille, Canada campaigner with Say No to LNG.

Canada supported ambitious global GHG reduction targets and well-to-wake accounting at the IMO, but continues to buy into domestic LNG fracking projects and building large LNG fuelling depots at home ports, Dumbrille said.

Aside from methane slip issues, the LNG production chain involves other social, health and environmental risks, and its emissions fuel climate impacts like the savage wildfire season underway across the country, he said. It also threatens Canada’s ability to meet its own emissions targets.

Continued investment in LNG infrastructure by Canada and B.C., like the Tilbury LNG Marine Jetty in Delta on the Fraser River, risks stranding infrastructure or vessel assets while reducing financing for other zero-emission solutions, Dumbrille said.

The World Bank has dismissed LNG as a viable option for decarbonizing the shipping industry, finding it has a limited role as a shipping fuel before 2030, and that countries and businesses investing in LNG infrastructure to meet IMO climate targets are risking unnecessary spending and technological lock-in.

The growing fleet of LNG ships risks financial losses of $850 billion by 2030, recent research suggests.

“LNG development and shipping in Canada is fast approaching its best-before date,” Dumbrille said.

Rochelle Baker, Local Journalism Initiative Reporter, Canada's National Observer


Alberta and B.C. in talks to expand Canadian LNG reach globally, Danielle Smith says

Story by The Canadian Press • Yesterday 

VANCOUVER — Alberta Premier Danielle Smith said her province has begun talks with British Columbia as part of a push to greatly expand the reach of Canadian natural gas to more foreign markets.

Speaking on the final day of the international LNG 2023 conference in Vancouver, Smith said delegates told her that many countries in Asia cannot meet emission reduction goals without natural gas, and the goal should be for Canada to fill — and benefit from — that gap.

She expressed frustration about the lack of federal infrastructure that would allow Alberta producers to fulfil global market needs.

"With the right infrastructure in place, Western Canada would become a sought after supplier for both Asia and Europe," Smith told conference attendees.

"Shipping LNG from Canada's West Coast to Asia takes 11 days, compared to 20 days from the U.S. Gulf Coast."

"With the completion of proposed projects in Atlantic Canada, shipping Western Canada's gas to Europe would take seven to eight days, and that would be less than any other North American LNG project."

In an attempt to spur more LNG export projects on the West Coast, Smith said she and B.C. Premier David Eby began a discussion two weeks ago to explore leveraging Article 6 of the United Nations Paris Accord, which allows Canada to gain carbon credits for reducing emissions abroad.

Smith said she wants to see Alberta and B.C. "pioneer" a way to use Article 6 to create more interest in export infrastructure that would supply Asia with LNG, while Canadian jurisdictions gain the credits that are generated from displacing more polluting fuels such as coal in those markets.

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"I feel like this is an integral part of a global strategy for emissions reduction, and I think that Alberta has an obligation as the owner of the resource in our province to take a lead making sure we build that consensus," Smith said.

The massive LNG Canada project in Kitimat, B.C., a $40-billion-dollar project that is about 85 per cent complete, is the only such export facility under construction in Canada and is scheduled to begin delivery mid-decade.

Speaking earlier this week, Eby confirmed he was speaking with other premiers about the LNG opportunity and the awareness that there is a global demand for Canadian natural gas internationally.

However, Eby said he is "not at all confident" that B.C. is on track to provide the necessary electricity to move the natural gas industry locally away from fossil-fuel usage, something that companies such as Malaysian energy giant Petronas mentioned as a key part of the Canadian LNG brand.

"It takes eight to nine years to fulfil a request from industry for the kind of electricity that they're looking for," Eby said. "It takes about the same time to go through the call for power all the way through to generation and transmission."

"We have to speed that up."

Eby said a task force had been set up to do exactly that, to ensure B.C. does not miss LNG's economic opportunity.

Smith said Alberta is not stopping at talking to B.C., identifying the Yukon-Alaska corridor through Skagway, a Saskatchewan-Manitoba corridor to Churchill and possible links to James Bay in Ontario as ideas to explore.

"I'm looking at all of those options," she said. "I think out best option, since we already see so many LNG projects underway with partnership of Indigenous communities, is making sure we can tie in our gas into those project lines."

This report by The Canadian Press was first published July 13, 2023.

The Canadian Press