On August 9, 2017, I had the opportunity to visit and tour Port Canaveral, Fla. and discuss liquefied natural gas (LNG) as a marine fuel. Attendees at the discussion included Port Canaveral leadership, staff, port partners and tenants, representatives of the U.S. Coast Guard, Brevard County Sheriff's, Canaveral Fire Rescue and the Canaveral Pilots Association. Following this discussion, I spoke at the August 2017 luncheon of the Propeller Club, Port Canaveral.
Interesting Observation – The Space Coast
Cape Canaveral, known as the epicenter of the Space Cost is where Space X leases property from the port for its Falcon 9 operations. SpaceX uses a hangar and other facilities to process Falcon 9 first stages for future reuse after they land at Cape Canaveral Air Force Station's Landing Zone 1 or on its drone ship. The Falcon 9 blasts off from the Kennedy Space Center. For first stages that are recovered via drone ship, the berth at Port Canaveral is about 1/3 of a mile from SpaceX's property.
The Falcon 9 is known to burn approximately 29,600 gallons of kerosene in order to reach orbit. This equates to 10,060 tons of fuel. A cruise ship of the type that frequents Port Canaveral burns, on average, about 140-150 tons of fuel per day.
Could infrastructure be built in Port Canaveral to allow Space X rockets to operate on clean burning, domestically produced natural gas? Consider air emissions, LNG barge operations, re-liquefaction facilities, pipe/gathering lines and recent announcements by the cruise ship industry to utilize natural gas as a marine fuel on their new generation of ships.
Discussing Natural Gas as a Marine Fuel
Captain John Murray, the CEO of Port Canaveral, set the stage with his opening remarks, saying, “Natural gas, and its consideration for use as a primary fuel for ship propulsion, is quickly gaining momentum in the maritime industry to help meet global environmental standards scheduled to take effect January 1, 2020. The new regulations, established by the International Maritime Organization (IMO), set strict limits for global sulfur content of shipboard fuel oil.”
“We know that natural gas is one of the cleanest, most environmentally-friendly fuels available today,” said Capt. John Murray, continuing, “We wanted better understanding of LNG as a maritime fuel, as well as best practices globally to support vessels powered with natural gas.”
Ship owners and operators worldwide are making decisions based on IMO MARPOL’s sulfur cap regulations. There are a limited number of options including LNG as a fuel, scrubbers or low sulfur fuels. Natural gas as a marine fuel substantially exceeds the other options with respect to air quality measures. LNG emits zero sulfur oxides (SOx). Further, using LNG as a fuel emits near-zero particulate matter into the atmosphere. When compared to heavy marine fuel oil, LNG emits 90 percent less nitrogen oxides (NOx).
Recent International Regulatory Activity
The International Maritime Organization (IMO) met in London July 3-7. A couple of countries moved to delay or alternatively utilize a "transitional period" for the enforcement of the January 1, 2020 date for the global 0.5 percent sulfur content cap. The proposal was rejected by the IMO/ Marine Environmental Protection Committee (MEPC). Thus, any suggestion that there may be any delay to the January 1, 2020 implementation of the 0.5 percent sulfur limit was ruled out.
The Global MARPOL Explanation
In 1997, Annex VI to the International Convention for the Prevention of Pollution from Ships (MARPOL Convention) was adopted to address air pollution from ships. Annex VI regulations are designed to control airborne emissions from ships including sulfur oxides (SOx), nitrogen oxides (NOx), ozone depleting substances (ODS) and volatile organic compounds (VOC).
The global sulfur content level for shipboard fuel oil was set at 4.5 percent in 1997. In 2008, the sulfur content was reduced to 3.5 percent with an implementation date of January 1, 2012. The date of January 1, 2020 for the global .50 percent was set in regulations that were also adopted in 2008. However, the 2020 implementation date was not actually set-in-stone because at the time, it was unclear whether the world could produce (refine) enough marine gas oil to meet the demands of the global shipping industry.
Indeed, in 2008, natural gas or LNG as a marine fuel was not really envisioned as a commercial solution for oceangoing vessels—the shale phenomenon was in its infancy. More to the point, the U.S. was in the midst of completing several LNG import facilities as the U.S. was positioning itself as a major importer of natural gas.
To this end, the IMO adopted a look-back provision to review the availability of low sulfur fuel oil. A review that would have to be completed by 2018. As drafted, the IMO would look at the availability of low sulfur fuel and either allow the implementation of .50 percent m/m in 2020 or delay the implementation until 2025. That review was completed in October 2016, and the 2020 implementation date was preserved. As discussed above, it was again taken-up this past July and nothing has changed—the 2020 date is firm.
Emission Control Areas and MARPOL
In 2008 MARPOL designated Emission Control Areas (ECAs). ECAs established under MARPOL Annex VI for SOx are: The Baltic Sea area; the North Sea area; the North American area (covering designated coastal areas off the U.S. and Canada); and the U.S. Caribbean Sea area (around Puerto Rico and the U.S. Virgin Islands).
Under the rules (as amended), ships trading in the ECAs (specifically, North American Emission Control Area) would be required to use fuel oil with a sulfur content of 1.00 percent with an effective date of August 1, 2012.
Further, the sulfur content in the ECAs would again be lowered to 0.10 percent on January 1, 2015. Thus, since January 1, 2015 the sulfur content limit for fuel oil used by ships in ECAS established by IMO has been 0.10 percent m/m.
Natural Gas as a Transportation Fuel
The U.S. has led the way for commercial use of LNG as a marine fuel. The concept of LNG as a marine fuel is not new. LNG tankers were designed to use their boil-off gas as the fuel to create the steam to roll the turbines. In fact, LNG has been used as a fuel on LNG takers since 1959 – on the world’s first LNG tanker, the Methane Pioneer.
Aside from LNG tankers, the U.S. has taken a leadership role in building modern oceangoing ships that are LNG fueled and/or LNG ready. To date, U.S. shipyards have delivered or have on order 22 LNG ready vessels. Worldwide, there are 230 LNG-powered vessels in operation or on order.
As of now most of the LNG bunkering is taking place in Florida through trucking in LNG from Georgia. That will change when Crowley and TOTE bring on their liquefaction facilities and bunkering barges in Florida and the Pacific Northwest (Washington) in the coming months.
New Developments LNG-fueled Ships & Bunkering
The oceangoing cruise ship industry is getting involved. Last month Disney announced it would add a third LNG powered ship to its shipbuilding portfolio. Disney leases and operates the Disney Cruise Line Terminal in Port Canaveral, Fla.. It will be quite interesting following the discussion on where and how will the new Disney cruise ships source their LNG fuel.
Previously announced, Carnival Group, MSC Cruises and Royal Caribbean Cruise Lines have placed orders for LNG fueled ships. Carnival Group, has seven LNG-powered vessels on order. Royal Caribbean Cruises placed orders for two LNG and fuel cell powered vessels to be built on a prototype platform. On June 5, 2017, MSC Cruises announced its order of four 200,000-ton LNG-fueled cruise ships. The cruise ship orders are expected to be delivered 2022-2026.
Importantly, bunkering and sourcing of LNG for the ships is being addressed. Tote and Crowley are moving quickly to provide bunkering operations for their domestic fleet on new LNG powered ships. Shell Global announced in September 2016, it had signed a supply agreement with Carnival to supply LNG to fuel two of the world’s largest passenger cruise ships.
William P. Doyle is a Commissioner with the U.S. Federal Maritime Commission. The FMC, among other things, regulates liner companies, ocean transportation intermediaries and marine terminal operators. The thoughts and comments he expresses here are his own and should not be construed to represent the position of the Commission or his fellow Commissioners.