Expected demand for LNG as ship fuel in Northern Europe Dr. Pierre C. Sames, Senior Vice President Strategic Research and Development
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Contents Introduction Procedure to estimate LNG demand Number of vessels operating in Baltic Sea Fleet projection LNG demand 2015 to 2020 Supply chain options Conclusions
Expected demand for LNG as ship fuel in Northern Europe - Gas-fuelled Ships 2010 conference, 20 Oct 2010, Hamburg | last modified: 2010-10-09, PCS | No. 2
Introduction Emission components (100% load)
The motivation to consider using gas as ship fuel has become stronger.
CO2
1000
NOx
SOx - 23 %
Three reasons are identified: • facilitating high air quality with much reduced SOx emissions • reducing CO2-emissions • attractive price
g/kWh
100 10
v
1
- 80 % - 92 %
0,1 6S70ME-C
6S70ME-GI
s o urc e : M A N
(with EGR)
Gas and ship fuel prices (monthly averages) NG futures NYMEX
US LNG im ports
LNG Zeebrugge
HFO Rotterdam
MGO Rotterdam
35
But how much gas will be asked for and where and when?
USD / mmBTU
30 25 20 15 10 5
06 O kt 06 Ja n 07 Ap r0 7 Ju l0 7 O kt 07 Ja n 08 Ap r0 8 Ju l0 8 O kt 08 Ja n 09 Ap r0 9 Ju l0 9 O kt 09 Ja n 10 Ap r1 0
06
Ju l
Ap r
Ja n
06
0
Sources: EIA, apxgroup.com, x-rates.com, bunkerw orld.com NG: Natural Gas, LNG: Liquefied NG, HFO: heavy fuel oil (IFO 380), MGO: marine gas oil, BTU: British thermal Unit = 1,06 kJ
Expected demand for LNG as ship fuel in Northern Europe - Gas-fuelled Ships 2010 conference, 20 Oct 2010, Hamburg | last modified: 2010-10-09, PCS | No. 3
The procedure to estimate LNG demand number of vessels operating in area
ship types age profile
relevant ship types fleet growth fleet prediction from 2011 to 2020
recycling phase-out newbuildings from 2011 to 2020
LNG adoption avg. LNG cons.
LNG demand from 2015 to 2020 Expected demand for LNG as ship fuel in Northern Europe - Gas-fuelled Ships 2010 conference, 20 Oct 2010, Hamburg | last modified: 2010-10-09, PCS | No. 4
Number of vessels operating in area Type of vessels operating in the Baltic Sea
Age of vessels operating in the Baltic Sea 25%
35% 30%
20% 15%
25% 20% 15%
0% unknown
before 1970
1970-1979 1980-1989 1990-1999 2000-2007
5% 0%
ax G en .C S Ro R o Ch em Co T. nt ai ne r sm al l O il T. Bu lk e Pr r od Re T. fri g. CS Cr ui se T V e ugs hi cl e C
5%
10%
Ro P
10%
A study by Jalkanenen et al. (2009) reported on average about 4250 vessels operating in 2007 with seasonal variations in the Baltic Sea. We assume that most of these vessels are only trading inside the area. Eventually, only 2945 vessels were considered as relevant and used for the fleet prediction, as small and unknown vessels were removed from the data set. Expected demand for LNG as ship fuel in Northern Europe - Gas-fuelled Ships 2010 conference, 20 Oct 2010, Hamburg | last modified: 2010-10-09, PCS | No. 5
Fleet projection Number of vessels operating in Baltic Sea 4.000 3.500 3.000 2.500 2.000 1.500 1.000 500 0
20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 20 19 20 20
The fleet model follows a pre-set growth. We focus on newbuildings as candidates for using LNG as ship fuel. Three scenarios were considered which differ in the phase-out and replacement levels. Accelerated phase-out assumes that ECAs will trigger more newbuildings.
Future age profiles of Baltic fleet
1400
1800
1200
1600 2015
1000
2016
800
2017
600
2018
400
2019 2020
200
number of ships
number of ships
Future age profiles of Baltic fleet
(accelerated phase-out of 20-30 year-old vessels)
1400
2015
1200
2016
1000
2017
800
2018
600
2019
400
2020
200
0
0 > 30 years
20 to 30 years
10 to 20 years
1 to 10 years
newbuilds
> 30 years
Expected demand for LNG as ship fuel in Northern Europe - Gas-fuelled Ships 2010 conference, 20 Oct 2010, Hamburg | last modified: 2010-10-09, PCS | No. 6
20 to 30 years
10 to 20 years
1 to 10 years
newbuilds
Technology uptake for gas as ship fuel Gas as fuel adoption rate in newbuildings 80%
Ropax, RoRo, Cruise
70% 60%
GCS & Bulker
50% 40%
Container, reefer, vehicle carriers
30%
Oil, prod, chem tanker
20% 10%
tugs 0% 2015
2016
2017
2018
2019
2020
Expected demand for LNG as ship fuel in Northern Europe - Gas-fuelled Ships 2010 conference, 20 Oct 2010, Hamburg | last modified: 2010-10-09, PCS | No. 7
Number of newbuildings predicted to use gas Predicted number of newbuildings opting for gas as ship fuel Standard replacem ent
100
accelerated phase-out (30-year+ vessels)
90
accelerated phase-out (20-to-30 year old vessels)
80 70 60 50 40 30 20 10 0 2015
2016
2017
2018
Expected demand for LNG as ship fuel in Northern Europe - Gas-fuelled Ships 2010 conference, 20 Oct 2010, Hamburg | last modified: 2010-10-09, PCS | No. 8
2019
2020
LNG demand 2015 to 2020 LNG demand from Baltic shipping Standard replacement
700.000
accelerated phase-out (30-year+ vessels) 600.000
accelerated phase-out (20-to-30 year old vessels)
m3 per year
500.000 400.000 300.000 200.000 100.000 0 2015
2016
2017
Expected demand for LNG as ship fuel in Northern Europe - Gas-fuelled Ships 2010 conference, 20 Oct 2010, Hamburg | last modified: 2010-10-09, PCS | No. 9
2018
2019
2020
The LNG supply chain – flexible, mobile and ship-based
local LNG production plant
LNG import & export terminal
small LNG tanker
local LNG storage
LNG bunker vessel LNG end user
Expected demand for LNG as ship fuel in Northern Europe - Gas-fuelled Ships 2010 conference, 20 Oct 2010, Hamburg | last modified: 2010-10-09, PCS | No. 10
Conclusions The motivation to consider using gas as ship fuel has become stronger. LNG as ship fuel demand in the Baltic Sea was estimated using available data and expert judgement. Three scenarios with different phaseout, replacement and newbuilding levels were considered. Demand is expected to be between 100.000 m3 (in 2015) and up to 600.000 m3 (in 2020). GL Strategic Research continue developing new technologies together with our clients. Expected demand for LNG as ship fuel in Northern Europe - Gas-fuelled Ships 2010 conference, 20 Oct 2010, Hamburg | last modified: 2010-10-09, PCS | No. 11
Thank you for your kind attention.
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