New Americas era For
LNG Fuel Vessels
Green Tech Conference
Hyatt Regency
Vancouver, BC
29 - 31 May 2013
John Hatley PE
LNG Initiatives
Americas VP Ship Power
Wartsila North America
Cell 281 221 4209
Agenda
What ?
Why ?
Compelling Economic Savings
5 Drivers set Investment Clock
How ?
Integrated Gas Solutions
LNG Availability
Conclusions
Recent Market Signals
The Future Decade for Gas
The Opportunities
Target Markets
Agenda
What ?
Why ?
Compelling Economic Savings
5 Drivers set Investment Clock
How ?
Integrated Gas Solutions
LNG Availability
Conclusions
Recent Market Signals
The Future Decade for Gas
The Opportunities
Target Markets
Transportation Fuels
4 © Wärtsilä
Source: Wall Street Journal, Wednesday March 6, 2013 page B1
@ 0.2% …Natural gas has most growth potential
Annual Fuel Use : Gasoline Gallon Equivalents
5 © Wärtsilä
0 20 40 60 80 100 120 140 160
Thousands
Scale thousands gallons… where’s marine?
Sources: Clean Energy, Annual Report 2011, and AARR adapted by JFH
Marine Market Development Target
Scalability
a large number of small lot consumers ...
Prefer a small number of large lot consumers
Harbor Tug
7 © Wärtsilä
Annual 268,600
Gasoline Gallon Equivalent GGE
Ferryboat
8 © Wärtsilä
Annual 664,000
Gasoline Gallon Equivalent GGE
Offshore Supply
9 © Wärtsilä
Annual 1,072,000
Gasoline Gallon Equivalent GGE
Mississippi Towboat
10 © Wärtsilä LDC
Gas Forum LA CA
October 2010 John
Hatley Americas VP Ship
Power
Annual 2,058,000
Gasoline Gallon Equivalent GGE
Great Lakes Bulker
11 © Wärtsilä LDC
Gas Forum LA CA
October 2010 John
Hatley Americas VP Ship
Power
Annual 2,866,000
Gasoline Gallon Equivalent GGE
Coastal Cruise
12 © Wärtsilä LDC
Gas Forum LA CA
October 2010 John
Hatley Americas VP Ship
Power
Annual 6,801,000
Gasoline Gallon Equivalent GGE
Container Ship
13 © Wärtsilä LDC
Gas Forum LA CA
October 2010 John
Hatley Americas VP Ship
Power
Annual 28,090,000
Gasoline Gallon Equivalent GGE
Annual Fuel Use : Gasoline Gallon Equivalents
14 © Wärtsilä
Marine… scale millions… not thousands !
0 5 10 15 20 25 30
Millions
Sources: Industry sources, adapted by JFH
Annual Fuel Use : Gasoline Gallon Equivalents
15 © Wärtsilä
Marine… scale millions… not thousands !
0 5 10 15 20 25 30
Millions
Sources: Industry sources, adapted by JFH
Agenda
What ?
Why ?
Compelling Economic Savings
5 Drivers set Investment Clock
How ?
Integrated Gas Solutions
LNG Availability
Conclusions
Recent Market Signals
The Future Decade for Gas
The Opportunities
Target Markets
Logic… Economics !
03/06/2013
LNG Logic… Economics !
LNG provides compelling savings…
Business Cases demonstrate
Payback screen 2… 4+ years...
Strong cash flows… Higher ROA, ROE
Natural Gas Henry Price Forecasts
18 © Wärtsilä
EIA forecasts … prices recede… = gas bargain …
What’s Natural Gas ?
Methane has the highest hydrogen to carbon ratio = lowest CO2.
Butane
[C4H10]
10:4
(250%)
Propane
[C3H8]
8:3
(267%)
Ethane
[C2H6]
6:2
(300%)
Methane
[CH4]
4:1
(400%)
Natural gas a mixture of hydrocarbon gases associated with
petroleum deposits, principally methane.
MGO 1.86:1 (186%)
Gas Training Merchant / Mika Ojutkangas 19
How clean ?
CO2
NOx
SOx
Particulates DF Natural Gas
Engine
Diesel
Engine
0
20
40
60
80
100
Emission
values [%] -25%
-85%
-99%
-99%
LNG
provides
significant
emission
reductions
versus
traditional
diesel
engines
5 US Game Changers
Source:http://www.google.com/imgres?imgurl=http://www.canadiansailings.ca/canadiansailings/portals/0/April_13/emissions_area_map.jpg&imgrefurl=http://
EIA March 2010 Shale Gas Plays Lower 48 States
www.lngoneworld.com, www.bunkerworld.com, LR Fairplay
US centuries shale gas supply
Natural Gas bargain
Emissions Control
Area 2012
EPA Engine Emissions
EPA Fuel Standards
5 gas drivers …shale supply + bargain prices + 3
EPA mandates = set Investment Clock
Agenda
What ?
Why ?
Compelling Economic Savings
5 Drivers set Investment Clock
How ?
Integrated Gas Solutions
LNG Availability
Conclusions
Recent Market Signals
The Future Decade for Gas
The Opportunities
Target Markets
C. Dual-Fuel Main engine
A. Storage tanks
B. Evaporators
C B
A
D. Dual-Fuel Aux engines
D
E. Bunkering station(s)
F. Integrated control system
E
F
Go For Gas - G. Tirelli,
Wärtsilä
23 © Wärtsilä
LNGPac
Wartsila single source…complete engineered
package solutions minimize installation and
operational risk for assured performance
LNGPac
Bunkering procedure
8
5
2
1. Collapse the gas pressure in the tank
Ba
r(g
)
Time
Glycol/water
mixture
To engines
2. Open the main filling line
3. Inert the piping with N2 (NOT shown)
4. Close the filling line valves
Bunkering
Station
24 © Wärtsilä LNGPac Customers Presentation
Tank pressure increase
8
5
2
1. Open pressure control valve
Ba
r(g
)
Time
Glycol/water
mixture
To engines
2. LNG flow by the hydrostatic pressure
into the vaporizer
3. LNG is vaporized and gas is returned to
the tank
PBU
25 © Wärtsilä LNGPac Customers Presentation
Normal operation 1. The “stop valve” and “master valve are
opened (double block valves with bleed
in between)
Glycol/water
mixture
G1
M2
M1
2. LNG is forced by the tank pressure
through the product evaporator and
instantly evaporated. Gas flows to the
GVU
Product
evaporator
Stop valve and master valve
26 © Wärtsilä LNGPac Customers Presentation
5 March 2013
03/06/2013
3 LNG plants each at 250K tons/yr
Geismar, Jumping Pond, & Sarnia…Online 2015
Source: http://www.bizjournals.com/houston/news/2013/03/05/shell-planning-lng-units-in-us-canada.html
Supply security and price stability = certainty
…certainty breeds investment
Geismar LNG Small Scale Facility
03 June 2013 28 © Wärtsilä
Geismar … Online 2015… LNG @ 250K tons/yr
Sarnia LNG Small Scale Facility
03 June 2013 29 © Wärtsilä
Sarnia…Online 2015… LNG @ 250K tons/yr
Jumping Pound LNG Small Scale Facility
03 June 2013 30 © Wärtsilä
Jumping Pound…Online 2015… LNG @ 250K tons/yr
Agenda
What ?
Why ?
Compelling Economic Savings
5 Drivers set Investment Clock
How ?
History Adoption
Integrated Gas Solutions
Conclusions
Recent Market Signals
The Future Decade for Gas
The Opportunities
Target Markets
CNOOC July 2012
6500 HP Tugs
2 @ 6L34DF LNG engines
Mechanical Drive
Twin Z Props
LNG Fuel ~ 50 m3
03 June 2013 32 © Wärtsilä
2 LNG tugs ordered June 2012... to work LNG Terminal
Guangdong Province... Delivery 1st tug August 2013
12 November 2012
25 Year Milestone with 2,000 gas Engines…
Millions Operating Hours…Tens Millions Horsepower
= proven gas technology & LNG system
3 December 2012
03/06/2013 34
Americas early adapter… CAPEX $180 Million + 2 options
First LNG fuel ferry for Americas
4 December 2012
03/06/2013 35
Americas early adopter … CAPEX $380 Million + 3 Options
6 December 2012
03/06/2013 36
Harvey Gulf were 4 LNG fueled supply boats … now 5…
CAPEX $290 Million + options
4 + 1
15 January 2013 Viking Grace …
3 June 2013 37 © Wärtsilä
Length: 214.0 m
Breadth: 31.8 m
Speed 22 knots
Passengers: 2800
Cabins: 880
In service: 2013
Shipyard: STX Finland Oy
Ship Owner: Viking Line
LNGpac Tanks
2 @ 200m3 each
Safe, Clean, LNG Cruise Ship … CAPEX $320 Million
16 May 2013
03 June 2013 38 © Wärtsilä
STQ orders 2 Dual Fuel LNG ferries at Davies... Joins earlier larger
DF ferry ordered at Fincantierri ... #2, #3 LNG ferry for No Am.
Keeping Count ?
THE NUMBERS
39 © Wärtsilä
1st Week December + prior during 2012…
Americas marine segment committed to LNG fuel …
the early adopters initiated a new gas ERA
Over $ 1 Billion CAPEX
24 May 2013
03 June 2013 40 © Wärtsilä
Confirmation... poised for early transition to LNG fuel...
availability supply meets owner demand
28 May 2013
03 June 2013 41 © Wärtsilä
17 May Houston... Wartsila introduced LNG early adopters as
interested guests for pre-launch....largest SIGTTO meeting ever !
42 12.3.2012 LNG_related_traini
ng_02en / Turku
Training Centre
Gas safety training
Engine training
LNGPac training
Engine training course as
with “normal” Ship power
project
New LNGPac course
New Gas safety
training course
Wartsila LNG Training Fort Lauderdale
LNG as Marine Fuel New LNG
training course
Target group:
Shipping company
management
Ship
management Ship crew Engine
crew
Deck crew
Gas Engine References
Land & Sea segments…hundreds installations…
CAPEX $30 Billion… it’s real & proven gas technology
Power
Plants
52 sites
155+
engines
Began
1997
Merchant
LNGC
•92 Vessels
•370+
engines
Conversion
s
Offshore
PSVs/FPSOs
•19
vessels
•93+
engines
•Began
1994
Cruise
and Ferry
LNG ferries
•1+1
vessels
•8 engines
•Began
2013
Navy
Coastal Patrol
•Coming…
Drivers = Decade Shift to Gas
03 June 2013
Mid decade market tipping point
Source: US EPA web sites, Hatley capture various sources
Geographic emissions bubble encapsulates US/Canada
Tight sulfur limits stress supply
After treatment burdens diesels
Paradigm shift to gas 1st on economics 2nd on emissions
Early adopters moving ahead… soon early followers !
Mandated Emissions & Fuel Restrictions
Agenda
What ?
Why ?
Compelling Economic Savings
5 Drivers set Investment Clock
How ?
Integrated Gas Solutions
LNG Availability
Conclusions
Recent Market Signals
The Future Decade for Gas
The Opportunities
Target Markets