LNG as Ship Fuel Status Quo & Outlook Nautischer Verein … · LNG as Ship Fuel – Status Quo &...

LNG as Ship Fuel – Status Quo & Outlook

Nautischer Verein zu Bremerhaven

Bremerhaven – 17th of September, 2014

Introduction: Bomin Linde LNG

LNG vs. traditional marine fuels

Status quo & outlook: LNG as ship fuel

LNG-fuelled fleet

Safety & regulations

Pricing

2

Bomin Linde LNG – Nautischer Verein zu Bremerhaven

Agenda

08/10/2014 Source: Bomin Linde LNG

Comments

The Joint venture was founded in October 2012 in Hamburg and aims to become a leading supplier of LNG as a marine fuel in ECAs The Linde Group

Founded in 1879 in Munich

Leading supplier of industrial, health care and specialty gases

Leading supplier of cryogenic equipment and facilities

Marquard & Bahls

Founded in 1947 in Hamburg

Largest privately owned natural resource trader in Europe

Worldwide fuel storage and handling is done by Oiltanking

3

Bomin Linde LNG is a 50/50 JV between The Linde Group

and Marquard & Bahls to supply marine LNG

The Joint Venture


4

Bomin Linde LNG covers the entire value chain and

develops the infrastructure for marine LNG bunkering

Comments Small-Scale LNG Supply Chain

Bomin Linde LNG is covering the

entire LNG value chain

This is enabled through unique

competences as well as financial

commitment internally as well as

from the shareholder side

“Tailor made solutions” such as

small terminals, containerized

solutions and dedicated bunker

vessels at individual bunkering

locations can be realized

depending on volume demand

“Economies of scale” is key for

intermediate storage and

transportation

LNG SOURCE

TRUCK

RAILCAR LNG

STORAGE

LOADING

ARM

FUELING

VESSEL

TRANSPORT

VESSEL

CONTAINER

CUSTOMER

VESSEL

TRUCK


5

Bomin Linde LNG inherits the unique experience of LNG

storage and ship-to-ship bunkering in Sweden

Comments Nynäshamn terminal and ship-to-ship fueling

LNG supply: 20,000 m³

Nynäshamn terminal in

operation since 2011

World‘s first LNG fueling

vessel in operation:

“Seagas”

Bunkering of “Viking Grace”

six times per week in less

than 40 minutes

Above 350 ship-to-ship

fueling operations without a

single fault or accident

Bomin Linde LNG has full

access to both terminal and

the fueling vessel

08/10/2014 Source: AGA, Bomin Linde LNG

North

Sea Baltic

Sea

Black Sea

Mediterranean Sea

South of 62 N

East of 4 W

East of 5 W

Bomin Linde LNG Locations in Europe

1) Bomin Linde LNG has full access to both the LNG terminal as well as the SEAGAS fueling vessel

6

Europe: terminal and fueling vessel live in Sweden,

three more small-scale terminals under development

Stockholm (Owned by Linde)1

Operational

Hamburg (Bomin Linde LNG)

Live in 2015

Bremerhaven (Bomin Linde LNG)

Live in 2015

Rotterdam (Bomin Linde LNG)

Live in 2015

Key Facts Impressions

Fueling Vessel (Bomin Linde LNG)

World’s first LNG fueling vessel:

SEAGAS

Conceptual designs ready

Multiple solutions available


Impressions: layout of a Bomin Linde LNG fueling terminal

7 08/10/2014 Source: Bomin Linde LNG




LNG-fuelled fleet


Pricing

8


Agenda


0

1

2

3

4

5

2000 2005 2010 2015 2020 2025

9

By 2015 new emission limits for sulphuroxides to be

introduced, ship owners/operators need to act

Comments

Stricter emission limits in Emission

Control Areas (ECA)

North Sea Baltic Sea English channel US and Canadian coastlines

Reduction of SOx emissions:

ECAs: by 2015 from 1% to 0.1% Global (aim): by 2020 from 3.5% to

0.5%

Reduction of NOx emissions:

American ECA: by 2016 to Tier III European ECA: timeline under

discussion

Emission Limits: SOx and NOx

Sulfur (%)

Global

SOx ECA

Year

0

3

6

9

12

15

18

0 200 400 600 1000 1200 1400 1600 1800 2000 2200

NOx Limit, G/kWh(%)

Tier I

Tier II (Global)

Tier III (NOx Emission Control Areas)

Rated Engine Speed, rpm

08/10/2014 Source: International Maritime Organization, Dieselnet.com, Bomin Linde LNG

Liquefied natural gas, cooled down

to around -160° C

Distillate fuel with reduced sulphur

content (<0.1%)

Scrubber: permanently installed

desulphurization system

The Guardian, iStockphoto (Mayumi Terao), Wärtsilä, Bomin Linde LNG

10

There are three ways to comply with the upcoming

emission limits: MGO, LNG and HFO + Scrubber

Liquid Natural Gas (LNG) Marine Gas Oil (MGO) Heavy Fuel Oil (HFO) + Scrubber

Cheaper than MGO

LNG meets all current and

planned emission limits

Full compliance with NOx

emission limits

CO2 emission reduction

MGO today already 50%

more expensive than HFO

Price increase due to rising

demand by 2015 very likely

Compliance with NOx

emission limits needs SCR

Operating challenges (e.g.

increasing fuel consumption,

handling of hazardous waste)

Sustainability questionable

Compliance with NOx

emission limits needs SCR

Alternative Fuels in Compliance with ECA Regulations


0,4 2,0 13,0 SOx

11

LNG is a future-proof fuel enabling compliance with ever-

tighter emission limits for the next decades

LNG / HFO emission

comparison :

Close to 100% less

Sulfur and small

particles (PM)

80 – 85% less NOx

emission

20 – 25% less CO2

emissions

Reduction of noise

and vibration

Remarks Overview of Fuel Emissions Specified per Category [g/kwh]

Liquid Natural Gas

(LNG)

Gasoil

(0.1% Sulphur)

Marine Diesel Oil

(0.5% Sulphur)

Residual Oil

(3.5% Sulphur)

2 8-11 8-11 9-12 NOx

0.15-0.25 0.25-0.50 1.5 PM

430-480 580-630 580-630 580-630 CO2

08/10/2014 Source: MARINTEX, Bomin Linde LNG




LNG-fuelled fleet


Pricing

12


Agenda


08/10/2014 Source: DNV-GL, Bomin Linde LNG 13

Today ca. 50 vessels are using LNG as ship fuel – further

69 vessels on order

Comments

5044

Asia Norway Total

3

Europe USA

2 1

LNG-fuelled vessels today vs. order book [#]

LNG-fuelled vessels: today

26

20

19

69

USA Total Europe Asia

4

Norway

LNG-fuelled vessels: ordered

As of 01.09.2014 a total of 50 LNG-fuelled vessels are in operation – 69 vessels on order

Developments regarding the use of LNG as a ship fuel initially started in Norway mainly due to the NOx fund

Large-scale LNG carrier were not part of the count

Reputable companies such as UASC, Matson und Crowley have already ordered vessels

14

According to DNV the outlook for LNG-fuelled vessels is

positive – 400 vessels in Europe by 2020

LNG fuelled vessels worldwide & per region per shiptype [#]

DNV expects 1.000

vessels to be running

on LNG by 2020 of

which 400 will

operate in Europe

Expecially tanker and

Offshore segments

expected to grow

strongly after 2015

Slower developments

in the segments:

passenger ships,

RoRo‘s and container

vessels

Comments

08/10/2014 Source: DNV-GL, Bomin Linde LNG




LNG-fuelled fleet


Pricing

15


Agenda


08/10/2014 Source: SEA Consulting, Linde AG, Bomin Linde LNG 16

The transfer of LNG is subject to strict safety regulations

and occurs via high-tech equipment

Comments

Impressions: safety in LNG bunker operations

Regulations across the EU have to be consistent and harmonized

Break-away couplings prevent LNG leaks during bunker operations

LNG bunker vessels are equipped with emergency shutdown systems

In comparison to Heavy Fuel Oil (HFO) LNG is:

Non-toxic

Non-carcinogenic

Limited flamable

Bomin Linde LNG is a founding member of the

Maritime LNG Platform

Members of the Maritime LNG Platform

17

Maritime LNG Platform: Targets

Establish Liquefied Natural

Gas as fuel in the marine

industry

Support the construction of

LNG infrastructure to supply

freight- and cruise vessels

with LNG in German ports

Further high-calibre companies

expected to join

Levers

High-level political lobbying

Community building

Information exchange

Support for subsidy

applications

Comments

Partners:

Note: Maritime LNG Platform launched in February 2014

Ports:

08/10/2014 Source: OvB Consulting, Bomin Linde LNG

http://www.ds-schiffahrt.de/index.html

http://de.wikipedia.org/w/index.php?title=Datei:W%C3%A4rtsil%C3%A4-Logo.svg&filetimestamp=20090713185841&

//upload.wikimedia.org/wikipedia/commons/d/d9/Flag_of_Norway.svg

//upload.wikimedia.org/wikipedia/commons/a/ae/Flag_of_the_United_Kingdom.svg

http://www.sgmf.info/default.aspx




LNG-fuelled fleet


Pricing

18


Agenda


19

Spread between oil and gas has been growing for years –

U.S. LNG exports to support this trend

Price development of selected fuel types [Euro/MWh] Comments

Additional demand for MGO as of

2015 could lead to higher prices

Significant potential for decrease of

LNG prices:

1. Start of U.S. LNG export

2. Restart of nuclear plants in

Japan

3. Large LNG projects in Australia

going live

4. Russian-Chinese pipeline to

reduce future LNG demand in

China

0

10

20

30

40

50

60

70

12.2008 08.2009 04.2010 12.2010 08.2011 04.2012 12.2012 08.2013 04.2014

TTF GO 0.1% FO 3.5% MGO (0.1%) HFO (3.5%) Landed LNG

NWE

08/10/2014 Source: Reuters, Platts, Datagenic, Bloomberg, BominLinde LNG

20

Higher LNG prices in Asia due to shut-down of nuclear

plants – Lower prices in North America due to shale gas

U.S. pipe-gas and landed LNG prices in selected countries [USD/MMBtu]

Actual landed LNG prices for September 2014 Excluding the cost of liquefaction (natural gas)

Rio de Janeiro

USD 9.92

Spain

9.15 Euro

United Kingdom

USD 6.60

Belgium

USD 6.78

Lake Charles

USD 3.40

Cove Point

USD 2.44

Japan

USD 10.50

08/10/2014 Source: : Waterborne Energy Inc., IHS, Bomin Linde LNG

MGO LNG Small Scale

Logistics

Small scale mark-up Gasprice

LNG today competitive with Marine Gasoil – economies of

scale and location essential

Fuel costs

Fuel costs

Cost of

capital

Levers:

Subsidies &

learning effects B Economies of

scale

C Spread Oil-Gas

(-> Shale Gas)

Fuel: Cost perspective in shipping (MWh) Costs + optimisation from supplier perspective

Optimal mix of

A, B and C A


Differentiate yourself with LNG as a

financially superior and clean marine solution.

Bomin Linde LNG ©

Bomin Linde LNG GmbH & Co. KG Dornbusch 2 - 20095 Hamburg, Germany

Tel: +49.40.468959-0

Fax: +49.40.468959-103

Mail: [email protected]

Web: www.bominlinde.com

23

In the LNG market we generally differentiate between

small-, mid- and large-scale LNG infrastructure

Large-Scale

> 50.000 cbm

Mid-Scale

10.000 – 50.000 cbm

Small-Scale

< 10.000 cbm


08/10/2014 Source: Bomin Linde LNG 24

Storage and logistics of LNG more expensive and

complex than for traditional bunker fuels

Liquid Natural Gas Bullet Tanks

Cryogenic tanks with temperature

at -160° C

Highly pressurized at ca. 4 -7 bars

Vacuum-insulated piping – limited

flexibility

HFO/ MGO Tank

Heated storage with

temperatures from 60° - 80° C

Atmospheric pressure

Conventional pipes – highly

flexible

Key facts

EUR 17 bn in revenue (2013), ca. 9,280 employees

Businesses: oil trading, tank terminal storage, aviation fueling, gas supply,

biogas, biofuels, quality management

Offices in 30 countries on 5 continents

60+ years of experience in oil and energy business

Largest privately owned natural resource trader in Europe

EUR 16.7 bn in revenue (2013), ca. 63,500 employees

World-leading gases and engineering company: industrial and medical gases

sales, plant engineering, end-to-end supply chain solutions

German blue chip company (DAX listed)

452 offices on 5 continents

130+ years of experience in gases and engineering industry

Bomin Linde LNG is backed by solid and highly

committed shareholders

08/10/2014 Source: Marquard & Bahls, Linde, Bomin Linde LNG 25

Oiltanking and Linde Industrial Gases jointly have a

strong strategic presence with 326 locations worldwide

Comments

Oiltanking owns

and operates 73

tank terminals in

23 countries in

Europe, North

and South

America, as well

as in the Middle

East, India and

Asia

Linde Industrial

Gases operates

253 facilities in 84

countries on 6

continents

Locations: Oiltanking and Linde Industrial Gases

08/10/2014 Source: Marquard & Bahls, Linde, Bomin Linde LNG 26

Bomin Linde LNG is the exclusive supplier to the first

sea-going LNG-fueled vessel in Germany

Comments MS Ostfriesland: Germany‘s First LNG-Fueled Vessel

Bomin Linde LNG has

secured Germany’s first

marine LNG customer

Bomin Linde LNG

currently developing

LNG fueling solution

and procedures

MS Ostfriesland:

Connecting city of

Emden with the island

of Borkum in the

Wadden Sea

Operations starting in

Q4/ 2014

Truck-to-ship fueling

08/10/2014 Source: AG EMS, Bomin Linde LNG 27

28

Introduction of Emission Control Areas will impact waterborne trade of the world’s leading economies

ECA

ECA Under Evaluation


29

Bomin Linde LNG is backed by solid and highly committed

shareholders with know-how accumulated over decades

Key Facts The Joint Venture

The Linde Group

Revenue: 16.7 bi. Euro

FTE: 63,500

Over 400 locations on 5

continents

130+ years of experience in

gases, cryogenics and process

engineering

Marquard & Bahls

Revenue: 17 bi. Euro

FTE: 9,280

Over 100 locations on 5

continents

60+ years of experience in

fuel storage, handling

bunkering, and trading


Source: Oiltanking, Bomin Linde LNG

30

Hamburg small-scale terminal:

Ready to serve customers by late 2015

Comments Premises: Hamburg

Basic engineering finalized

Truck station and rail connection

available

Sufficient space at jetty to bunker

vessels via bunker barge; jetty

extension required


Source: Bomin, Bomin Linde LNG

31

Bremerhaven small-scale terminal:

Engineering works ongoing

Comments Premises: Bremerhaven

Project initiated, basic

engineering started

Rail and road

connection available

Bomin bunker station

in Bremerhaven

currently supplies gas

oil, heating oil and

helium

Excellent location for

RoRo traffic (car

carriers)


Source: Linde, Bomin Linde LNG

32

Basic engineering of

plattform with flexible

fueling hose already

initiated

Currently heavily

involved in permit and

spatial planning

processes

One of the key

strategic projects for

the Port of Rotterdam

Comments Premises: Rotterdam

Rotterdam small-scale terminal:

Focus on inland waterways


Impressions: 3D illustration of the Bomin Linde LNG

fueling terminal in the port of Rotterdam


34


storage and ship-to-ship bunkering in Sweden (1/2)

LNG supply: 20,000 m³

Nynäshamn terminal in

operation since 2011

Full containment

atmospheric tank with

concrete outer shell and

several LNG bullet tanks

Terminal located next to

the Nynas refinery

Used for both industrial

and marine applications


access to the terminal

Comments Case study: Nynäshamn Terminal


35

Impressions: LNG carrier unloading at the mid-scale LNG

terminal in Nynashamn, Sweden


36


storage and ship-to-ship bunkering in Sweden (2/2)

Comments Case study: Seagas LNG Fueling Vessel

World‘s first LNG fueling

vessel in operation:

“Seagas”

Ferry “Viking Grace” as lead

customer (55,000 dwt)

Bunkering of “Viking Grace”

six times per week in less

than 40 minutes

No methane slip due to use

of dry cryogenic couplings

Above 350 ship-to-ship

fueling operations without a

single fault or accident


access to the fueling vessel


37

Impressions:

SEAGAS fueling vessel traveling near Stockholm


08/10/2014 Source: Bomin Linde LNG 38

Depending on volume demand, bunkering location and

method BLLNG offers LNG prices in MGO & HFO range

Overview: price quotes1) for LNG supplied by Bomin Linde LNG

46

44

42

40

56

54

52

50

48

36

34

0

38

EUR/MWh [LCV]

MGO

HFO

1) Note: price quotes heavily dependent on bunkering location, bunkering method as well as volume demand – quotes depicted include supply via terminal, truck, ship and containers

66

64

62

60

58

As part of Linde Group, Bomin Linde LNG has access to

unique competencies in all areas along LNG value chain

Upstream Production/Sourcing Distribution Customers

World-scale LNG

Floating LNG

Biogas

Pipeline

Stranded gas

Truck

Marine

Industry

Utilities

Terminal

LNG plants

3rd party

Trucking

Shipping

Storage

Fuelling

08/10/2014 Source: Linde, Bomin Linde LNG 39

40

Liquefied Natural Gas has several advantages compared

to other fuel types or filtration systems like scrubbers

Summary: Advantages of LNG as Marine Fuel

Emissions: Reduces both sulphur and nitrogen-oxide emissions

Funding: Heavily supported on international and national level

Operations: Usage of LNG leads to lower maintenance cost for vessels

Price: LNG likely to be cheaper than Marine Gas Oil in the future


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