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Beyond LNG

| Maritime News | 17/02/2015

There’s more to ‘alternative’ fuels than LNG as the recent conversion of the Stena Germanica to methanol power shows.
“Methanol is an obvious choice for bunkering,” says Tony Devlin of Argus JJ&A. When it comes to delivery, methanol is already a basic commodity.

“First and foremost, you have methanol’s regular use – it is one of the most versatile base chemicals around as it forms the building blocks for many day to day substances, from plastics to refrigerants. So there’s already a big market in it and its growing: globally 60m tonnes worth every year, and it continues to grow at around 5% or 6% per annum.”
Moreover, methanol looks like being a rising star: a lot of ports, like Houston, Singapore and Rotterdam already have large-scale infrastructure in place with other projects on the US Gulf looking to take advantage of cheap shale gas which acts as a feedstock. “There are ports which already take in a few thousand tonnes to major hubs which can handle hundreds of thousands of tonnes,” says Mr Devlin.
But what has it got over LNG? Well, quite a bit. While Jason Chesko of Methanex says that both are ‘comparable’ when it comes to reducing local pollution as methanol is clean-burning and reduces SOx, NOx, and particulates significantly, it’s also biodegreadable.
There are other, equally salient points: it doesn’t fall prey to methane slip during combustion (an issue for the shipping industry’s green credentials), nor is there an issue with emergency venting of tanks: all things that can wipe out any environmental gains for LNG.
It’s also potentially very ‘green’ indeed: Mr Chesko goes on to explain that it isn’t just natural gas that can be used to create methanol, it can also be produced from coal, biomass or even CO2, “so there’s a renewable feedstock option” that could lower the carbon footprint.
Lower capex
But it’s the investment costs that could make the biggest difference. He says: “Both methanol and LNG are alternatives for converting natural gas resources to fuels and capture the price arbitrage that exists between oil and natural gas”, but LNG projects are “more capital intensive than methanol projects”. Further, LNG requires a certain amount of work just to keep it in its cryogenic state: smaller parcels of liquefied gas, such as generally required for LNG bunkering remain less commercially viable compared with the output from bigger facilities.
Methanol, on the other hand, has a low entry bar. “As you’d imagine for something so well traded, ships are already making big deliveries – and road tankers are well-used to making smaller ones. One of the attractions is that any chemical port should be able to put something in place relatively easily. You could say that the systems are there already, you only have to load into the fuel tank rather than the product tank,” says Mr Devlin.
“On the other hand a port could start at a low level of commitment and start by hiring a smaller ISO storage tank, this would be suitable for a ferry terminal for example. With methanol it’s easy to take it stepwise and slowly grow up; the fixed costs inherent in bringing a 3,000 tonne tanker into a port might work out to be more expensive than truck deliveries.”
Despite having a low flashpoint, around 9.5 degrees C, it’s not that difficult to handle: mild steel tanks are good enough to take care of the corrosion issues and the infrastructure and safety procedures are similar to ethanol and oil; the fumes means that tanks normally have a nitrogen blanket to inert the methanol, “so there’s not much chance of ignition”, says Mr Devlin. “The product is toxic if ingested, but that’s the same as virtually every other fuel.” Further, regulation is falling into line too; the drive toward alternatives has resulted in the IGF code on low flashpoint fuels being updated, something which covers both LNG and methanol.
Led by lines
But the big question is will the lines themselves go for methanol? There are a number of reasons to think they might: onboard conversion is much easier – and could be much cheaper – than LNG. Mr Chesko says that with a methanol conversion “the engine remains effectively the same with just an additional fuel system”. On top of this it maintains fuel flexibility, allowing the ship operator to switch between methanol and MGO or HFO.
For example although the total investment in this first Stena project was €22m this included bunkering facilities at Gothenburg: the onboard technology switch has been projected at around $300 per kilowatt, as compared to $1,000 per kilowatt for LNG. Although the ships need to think in terms of around twice the space for the product compared to diesel, it’s not a show stopper, and it’s easier than LNG (which has 60% of the energy density of diesel) but takes up more dedicated space.
However, to make it viable as a bunker fuel methanol needs certain pricing assumptions, and the experience of the last few years has shown rates can be very, very variable, explains Eric Ronco of Proviridis. While for a number of years it remained cheap enough to show promise as a fuel for developing economies, suddenly between 2013 and 2014 methanol prices hit record levels.
It was a ‘perfect storm’ of events: severe winters and political issues meant there was less gas to spare to act as a feedstock to turn into methanol, a number of plants, notably in Malaysia, Brunei and particularly in Iran, all had issues within several months of each other – and sanctions starved Iranian producers of key parts. Despite this, new developments in the US and elsewhere may help stabilise prices and recent rates have been more reasonable.
Looking at the bigger picture, there is the issue of efficiency: depending on plant design and quality of the source gas, approximately 30% drives the chemical processes. Further, some methanol plants use LNG as a feed, but this double processing is obviously inefficient says Mr Ronco, and also adds to the price.
But it doesn’t outweigh the practicalities: both Mr Chesko and Mr Devlin point out that low infrastructure costs and the ability to utilise existing fuelling systems makes for simplicity throughout the whole supply chain.
All this means that methanol could be ready to step into the limelight providing a regular fill up across a number of ports, which is just what the container trade needs.
Challenging the green claims
Despite methanol’s environmental credentials, producing it from natural gas has its own issues as there’s a lot of nitrous oxide created in the production process, along with carbon dioxide, carbon monoxide, sulphur dioxide, volatile organic compounds and fine particulates. “It’s very negative,” says Eric Ronco.
But these are the same pollutants that come from any natural gas combustion (including power plants) and so there are well developed protocols and control technologies.
However, there is, according to Dr Ronco, at least one very good reason why LNG remains the gas of choice: he explains that hydrogen is the way of the future but to support it there needs to be a halfway house, and LNG fulfils the criteria.
“We already know that fuel cells are the logical replacement for electrical batteries, and we are improving fuel cell technology all the time: they are very efficient as there’s no combustion and the promise is that eventually we won’t even need to be connected up to a huge grid,” says Dr Ronco. It would certainly be a bonus for ports which rely, at present, on the infrastructure behind them to meet their power supply needs.
However, the problem has been to produce and store hydrogen, and this is where LNG could be used an interim feedstock. “The step is really very small from gas to hydrogen. So you see if you build up a network of natural gas, this would help push fuel cell technology,” he says.
Dr Ronco concludes: “Although this is some way in the future and not for tomorrow, eventually the last step would be to get rid of natural gas and move completely to running off water,” which would be great news for ports.
Source: Port Strategy

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