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Outlook on LNG Bunkering Facilities in China Inland Waterways and Ports
1. DNV GL – Rev. 01.09.2014 – www.dnvgl.com Page 1
Outlook on LNG infrastructure and
bunkering facilities in China Inland
Waterways and Ports
DNV GL Report January 2016
2. DNV GL – Rev. 01.09.2014 – www.dnvgl.com Page 2
Acknowledgements
This report was prepared for DNV GL by intern mechanical engineer Dan-Hermann Thue. I
would like to thank James Wu for the informative discussion sessions, sharing his knowledge in
interviews and for helping in finding material for this report including Chinese sources. I also
want to thank Fabian Kock and Deng Ling at DNV GL Shanghai office for supervision,
encouragement and support during the period of producing the report.
As a precaution I will add that any findings, interpretations and conclusions expressed herein
are those of the author and do not necessarily reflect the views of DNV – GL.
3. DNV GL – Rev. 01.09.2014 – www.dnvgl.com Page 3
Table of contents
1 INTRODUCTION..................................................................................................................... 6
2 GOVERNMENT IMPOSED EMISSION REGULATIONS............................................................. 9
2.1 Chinese SOx Emission Control Areas 9
2.2 Inland water way requirements 11
2.3 Introduction of the coming legislation for IWW vessels 12
2.4 Government strategy for cleaner and leaner shipping 15
3 FUTURE REQUIREMENTS AND NOX .................................................................................... 17
3.1 The Norwegian NOX Fund model 18
3.2 NOx fund impact or model for Chinese legislation 20
4 LNG FUEL AS AN EMISSION REDUCTION MEASURE........................................................... 20
5 COSTS AND CONSIDERATIONS............................................................................................ 21
6 LNG VESSELS IN CHINA ....................................................................................................... 24
6.1 Conversion projects 25
6.2 New build projects 25
6.3 Summary LNG vessels China 27
7 CHINESE LNG BUNKER INFRASTRUCTURE DEVELOPMENT ................................................ 27
7.1 LNG import terminals 27
7.2 Possible bunkering pathways 29
7.3 Current Bunkering facilities in China 34
7.3.1 Haiqi Ganghua Gas Development............................................................................... 35
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7.3.2 SINOPEC ........................................................................................................................ 36
7.3.3 Fortune Oil / China Gas Holdings Bunker stations ..................................................... 36
7.3.4 Wuchang Shipbuilding Industry Group Co. Ltd. (WS)................................................. 37
7.3.5 ENN Holdings Co......................................................................................................... 37
7.3.6 Jiangsu Hongyun Green Energy Co............................................................................. 38
7.3.7 China Natural Gas, Inc. (CHNG) .................................................................................. 39
7.4 Summary LNG bunker stations in China 39
8 RELEVANT CHINESE COMPANIES INVOLVED WITH LNG BUNKERING................................ 40
8.1 National Oil Companies NOCs 40
8.2 Private companies 42
9 CONCLUSION....................................................................................................................... 43
9.1 Coastal and international trade 44
9.2 Inland Water Ways 45
10 REFERENCES........................................................................................................................ 46
APPENDIX A: LNG SHIP TANK TECHNOLOGY .................................................................................... 47
APPENDIX B: OFFICIAL LNG SHIP LIST AT END OF 2015.................................................................... 49
APPENDIX C: LIST OF GOVERNMENT SUPPORTED LNG PILOT PROJECTS......................................... 53
Table 1 - Stage 1 emission requirements for inland water way vessels....................................... 13
Table 2 - Stage II emission requirements IWW............................................................................. 14
Table 3 - Conversion projects examples and costs in China [10] ................................................. 24
Table 4 - Known LNG bunkering facilities China........................................................................... 35
5. DNV GL – Rev. 01.09.2014 – www.dnvgl.com Page 5
Table 5 – Storage pressure and boiling temperatures [18].......................................................... 49
List of Abbreviations
BOG Boil off gas
CNOOC China National Offshore Oil Corporation
ECA Emission Control areas
EGR Exhaust gas recirculation
HFO Heavy Fuel Oil
IWW Inland Water Ways
LNG Liquid Natural Gas
MDO Marine Diesel Oil
Mtpa Million tonnes per year
NG Natural Gas
PM Particulate matter
RFO Refined Fuel Oil
SCR Selective Catalytic Reduction
Glossary of terms
Barge Long, large flatbottom boat with propulsion capability. Ships can connect
and bunker fuel from it.
Bunkering Is the process of transferring fuel from a supplier to a Ship. In this report
the fuel considered is LNG.
Liquefaction is the process of making gas, in this case Natural Gas, into a liquid by
cooling it down (-162 C) by an industrial refrigeration process.
Compressing to about 1/600 times the volume compared to NG at room
temperature.
IWW inland waterways, covers rivers and lakes and is purely domestic term.
Vessels sailing in IWW are much smaller than ocean going and need not
abide by international requirements.
6. DNV GL – Rev. 01.09.2014 – www.dnvgl.com Page 6
Jetty Area for mooring ships in a harbour or port. It is similar to a pier. Often a
structure built out towards the sea/river.
Methane Slip Emission of unburnt natural gas from exhaust pipe of the ship. Occurs if
engine combustion is too fuel rich and regulation system of dual fuel
engine is not optimized well enough.
Pontoon Floating construction with no propulsion system. Serves as a dock ships
can connect to, in this case to bunker fuel from.
PM Particulate matter, in size range of less than 10 micro meters is PM10 and
Less than 2.5 micrometres are PM2.5. PM2.5 is more problematic for
public health and stays in the air for a much longer time. Source is from
carbon elements and Sulphur and impurities in fuel.
1 INTRODUCTION
Chi a is ho e to of the o ld’s top te o tai e po ts1
a d ha dles % of the o ld’s
containers every year. In order to reduce domestic severe air pollution, the Ministry of
Transportation of the Peoples Republic of China published a local emission control for seaborne
trade routes (2015-12-04). The goal is to reduce the emissions of Nitrogen and Sulphur Oxides,
CO2 and Particulate matter emissions from shipping in Chinese lanes and ports. This would be a
positive step for improving citizen health, ecological environment and crop yields. Chi a’s
Inland waterway systems are the most utilized in the world and has a long history. Around 240
000 ships run back and forth on rivers. The Yangtze River alone has around 100 000 vessels
operating on it for river transport. The usage of rivers is seen as an energy efficient and
economical way to transport goods and has been increasing rapidly in the past decade in China.
However, the emissions requirements for river vessels and maritime has been much less strict
than for road transport resulting in higher relative impact of SOx and PM. Many river vessels
are also becoming old or have issues with efficiency due to low technology.
1
http://www.worldshipping.org/about-the-industry/global-trade/top-50-world-container-ports
7. DNV GL – Rev. 01.09.2014 – www.dnvgl.com Page 7
A switch from fuel Oil to LNG could be a key factor for meeting the stricter requirements
for shipping in emission control areas (ECAs) and reduce environmental impact on inland
waterways. LNG contains no sulphur as it is removed before the liquefaction process and thus
the source of that particular pollutant is removed in a preventative measure. It also eliminates
particulate and reduces NOx emissions greatly.
However, more uncertainties for ship owners apply. Fuel safety measures, economics
and supply reliability of LNG is of utmost importance and must be addressed sincerely to make
it interesting and viable for ship owners to invest in conversion or new building of LNG
propulsion systems. Many ship owners of river vessels in china are as of date small scale and
very sensitive to regulations imposed on them from above.
This report make an overview of future and existing LNG players, infrastructure and plans for
new bunkering possibilities and locations in China.
8. DNV GL – Rev. 01.09.2014 – www.dnvgl.com Page 8
About DNV GL
Driven by our purpose of safeguarding life, property and the environment, DNV GL enables
organizations to advance the safety and sustainability of their business. We provide
classification and technical assurance along with software and independent expert advisory
services to the maritime, oil and gas, and energy industries. We also provide certification
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our 16,000 professionals are dedicated to helping our customers make the world safer, smarter
and greener.
9. DNV GL – Rev. 01.09.2014 – www.dnvgl.com Page 9
2 GOVERNMENT IMPOSED EMISSION REGULATIONS
2.1 Chinese SOx Emission Control Areas
Figure 1 - Three new Chinese Emission Control Areas and 11 key first implementation ports
confirmed Dec 2015 (Courtesy of Waterborne Transport Research Institute)
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The 3 new ECAs are limiting Sulphur content to maximum 0.5% in Fuels within the ECAs.
2017: 11 key ports are affected.
2018: Remaining ports in ECAs affected.
2019: Whole ECA affected.
2020: Evaluation of measures and possible 0.1% Sulphur requirement.
From January 1st
2016 individual ports within the ECAs may require vessels to use low sulphur
fuel oil when at berth. And until 2017 MARPOL requirements will apply [4].
The Chinese ECAs will foremost require a reduction in sulphur oxides pollution SO2 and the
three new sulphur control areas are enforced from January 1st
2019. New port regulations at
eleven key ports within the ECAs are imposed as early as January 1st
2017. The remaining
requirements for ports located in the designated areas will go into force January 1st
2018 [5]. It
seems that Shanghai will be the only port to voluntarily apply for legislation to enter into effect
during 2016.
The Chinese ECA regulations so far calls for a maximum limit of fuel sulphur content of
0.5 % while at berth, except one hour after arrival and one hour before departure. This is an 80 %
reduction compared to maximum limit for sulphur fuel content in international shipping. The
Chinese government will evaluate the effectiveness of the ECA measures in the end of 2019 and
decide to either expand the ECAs, impose stricter sulphur content limits to 0.1 % or
implementing other measures. The point being that these regulations may only be the
beginning of an effort to regulate shipping emissions across Chinese coast and rivers.
Strict ECAs are already in effect in the North and Baltic seas, and along the US and Canadian
coasts, requiring a refined fuel oil with less than 0.1 % Sulphur content. However, it is very
probable that ECA areas may expand or that new areas will come into force in the following
years further impacting Chinese and i te atio al shippi g’s e issio s ha dli g. American
ECAs include NOx limits, which may also spread to other ECAs further strengthening the case
11. DNV GL – Rev. 01.09.2014 – www.dnvgl.com Page 11
for LNG fuel as a fuel for the future.
Figure 2 – Timeline of Current ECAs in northern Europe and USA and international waters future
requirements for maximum Sulphur content in marine fuel (Outside ECA may not drop to 0.5%
until 2025).
2.2 Inland water way requirements
China has some of the most trafficked inland waterways in the world. In fact Yangtze River is
the o ld’s ost t affi ked i e ith app o i atel essels. Befo e o spe ifi
legislation for air pollutant emissions has been enforced. The fuel used on the IWW is often
much more dirty than what is allowed for road transport. This means that even though IWW
transport is a cost effective and energy effective solution in many cases, it is lagging behind in
2016 - Voluntary
implementation
in key ports.
Shanghai
2017 -
Implementation
in 11 key ports
2018 - All ECA
ports affected
2019 Whole ECA
sea area also
affected
End of 2019:
Evaluate ECA
policy. status
quo? Expand
area? 0.1%
Sulphur?
Either 2020 or
2025 : Global
Sulfur Cap of
0.5% Sulphur
12. DNV GL – Rev. 01.09.2014 – www.dnvgl.com Page 12
the standards put on them for air emissions. A rough estimation of air pollutants from the IWW
ships made by the ministry of environmental protection found these values:
NOx 600,000 to 700,000 tons/year
PM 50,000 to 60,000 tons/year
SOx 100,000 tons/year
Cheaper and dirtier fuel is often used to stay more competitive. This is one reason why it is
important to improve the legislation on fuel quality and emission control for domestic vessels.
2.3 Introduction of the coming legislation for IWW vessels
For small engine ships, international standards for non-road mobile machinery applies
GB 20891-2014 (below 37kW). However this is too small for relevant river vessels. For new
build vessels stricter rules will be imposed. Type-approval and new quality requirements are
only to apply to new ships while fuel quality requirements will apply to both new and old.
The scope of this new legislation for IWW ships is then for Compression-ignition engines
and spark-ignition engines above 37 kW and for inland vessels, coasters, and other river-sea
ships with larger engines. The rules do not apply to gasoline engines or for rescue and
emergency ships.
FUEL OIL REQUIREMENTS
Currently, and since 01.07.2013, for all inland and river-sea ships only GB 252 General Diesel is
allowed use. The content of Sulphur is less than 350 ppm or 0.0350 % which is 100 times
The divide between legislation of the ocean and the Yangtze River is in
Nanjing, making this port extra important and potential bunker port of LNG as
ships wanting to go further must adhere to stricter requirements.
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stricter than current, ocean going vessel requirement of 3.5% Sulphur. These requirements are
planned to be made gradually stricter. From 01.07.2017 it is planned maximum 50 ppm sulphur
fuel cap and less than 10 ppm sulphur from 01.01.2018.
Larger river vessels such as coasters and channel ships are allowed different
requirement of less than 1000 ppm sulphur content (0.1% sulphur similar to European ECA). In
addition marine residual fuel is forbidden, HFO etc. This prohibition can be circumvented if one
uses exhaust gas cleaning technology such as Scrubbers, and the SOx removal efficiency is equal
to reduction from fuel requirement. Of course LNG will also be a possible solution to eliminate
PM and SOx emission from the fuel, as no SOx is present in LNG.
STAGE I EMISSION REQUIREMENTS
Table 1 - Stage 1 emission requirements for inland water way vessels
Category Cylinder Displacement
Power
CO
g/kWh
HC + NOX
g/kWh
PM
g/kWh
V 1:1
Vh,z < 0.9 l
5.0 7.5 0.4Pn > 37 kW
V 1:2 0.9 l < Vh,z < 1.2 l 5.0 7.2 0.3
V 1:3 1.2 l < Vh,z < 2.5 l 5.0 7.2 0.2
V 1:4 2.5 l < Vh,z < 5.0 l 5.0 7.2 0.2
V 2:1 5.0 l < Vh,z < 15.0 l 5.0 7.8 0.27
V 2:2
15.0 l < Vh,z < 20.0 l
5.0 8.7 0.5Pn < 3300 kW
V 3:2
15.0 l < Vh,z < 20.0 l
5.0 9.8 0.5Pn > 3300 kW
V 2:4 20.0 l < Vh,z < 25.0 l 5.0 9.8 0.5
V 2:5 25.0 l < Vh,z < 30.0 l 5.0 11.0 0.5
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Stage 1 emission requirements will take effect from January 1st
2017. This are the same rules
which were already put in effect in the EU zone in the 2000’ ds and corresponds to the stage 2
(Tier 2) of the US-EPA Final Rule for inland marine vessels. HC and NOx are grouped together
because the emissions of these two pollutants are oppositely related. At higher combustion
temperatures there is more NOX and less HC and vice versa.
STAGE II EMISSION REQUIREMENTS
Table 2 - Stage II emission requirements IWW
Category Cylinder Displacement
Power
CO
g/kWh
HC + NOX
g/kWh
PM
g/kWh
Category
1
Vh,z < 0.9 l
5.0 5.8 0.3Pn > 37 kW
0.9 l < Vh,z < 1.2 l 5.0 5.8 0.14
1.2 l < Vh,z < 5.0 l 5.0 5.8 0.12
Category
2
5 l < Vh,z < 15 l
P < 2000 5.0 6.2 0.14
2000<P<3700 5.0 7.8 0.14
P>3700 5.0 7.8 0.27
15 l < Vh,z < 20 l
P < 2000 5.0 7.0 0.34
2000<P<3300 5.0 8.7 0.5
P>3300 5.0 9.8 0.5
20 l < Vh,z < 25 l
P<2000 5.0 9.8 0.27
P>2000 5.0 9.8 0.5
25 l < Vh,z < 30 l
P<2000 5.0 11.0 0.27
P>2000 5.0 11.0 0.5
15. DNV GL – Rev. 01.09.2014 – www.dnvgl.com Page 15
Stage 2 planned enforcement date from January 1st
2020.
2.4 Government strategy for cleaner and leaner shipping
According to the previous National 12th
Five-year-plan for Environmental protection and energy
saving and emissions reduction two main strategies were put forth affecting shipping.
Phasing out old inefficient vessels more quickly
Improve regulatory framework for encouraging more efficient new builds of ships
Upgrading port infrastructure with more green technologies, electric shore power for
vessels at berth (Cold ironing), electric cranes and vapor recovery.
Besides the written 12 year plan document the government strategy of increasing the amount
of ships running on LNG is to increase gradually. It makes sense to start with inland waterways,
which are the most impactful regarding emissions. LNG ships and fuel stations have a good
safety record and as vessel and vehicle fuel it has been proven a viable by already extended use
elsewhere such as on the Baltic-North Sea ECA and Norwegian domestic vessels.
A report from The Chinese Ministry of Transportation from 2013 stated that they aim to
make standards and aid development of LNG infrastructure starting with inland
waterways starting with Yangtze River, Beijing-Hangzhou Grand Canal and Huaihe River.
And to improve supply reliability of LNG.
The report encourages local transport officials to apply for support in projects involving LNG [6].
Port tug boats, ferries, Roll on Roll off vessels and River bulk carriers seems to be the first step
to develop.
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These goals concerns retrofit and were very ambitious and show commitment. However, the
goal of 2000 converted LNG vessels by end of 2015 was not met. Time was needed for new ship
designs and the lowered fuel oil cost in 2014 and 2015 also made the incentives to switch to
LNG fuel less attractive in the short term. The development in the cheap oil price continues to
threaten LNG solutions and MDO with sulphur content < 0.5% will be the easiest measure to
stay within the current SOx requirements for now.
Figure 3 – Focus areas to increase LNG bunkering facilities, starting with rivers and expanding to
coastal shipping routes
The Ministry of Transport set goals in 2013 for more than 2% of its inland fleet running on LNG by
end of 2015, and more than 10% by 2020. These increases were equivalent to 2,000 vessels in
2015 and 10,000 by end of 2020 according to industry reports.
17. DNV GL – Rev. 01.09.2014 – www.dnvgl.com Page 17
Figure 3 shows some focus areas for initial implementation of LNG infrastructure for ships and
river vessels. Yangtze River and delta is now the most developed inland area. Grand Canal,
Bohai Sea and Pearl River delta is also focus areas. A list of government supported pilot and
demonstration projects can be found in appendix B.
3 FUTURE REQUIREMENTS AND NOX
The current Chinese ECAs focuses on SOx pollutants. For the sake of NOx, global emission
regulations from MARPOL are encouraged to be followed in the domestic water transport
routes. The 12th
five year plan intensified focus on emissions reduction in Chinese industry and
power sector for both SOx NOx and particulates. NOx emissions are sensitive to engine
effectiveness, and many of Chinas IWW vessels have outdated engine technology for optimal
NOx prevention, and high potential for energy efficiency gains. So far the government has
encouraged new construction of ships to follow the Marpol requirements also for domestic
vessels.
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3.1 The Norwegian NOX Fund model
Businesses included in the NOX fund are exempted from paying government NOx tax, and may
apply for support for projects reducing NOx emissions. About 760 enterprises have joined so far.
The Norwegian NOx fund is an industry collaborative where businesses that pollute NOx from
larger engines (above 750kW), boilers over 10 MW and all gas flaring can join. The tax rate
varies between industries.
Non- e e s pa . €/(kg NOx emitted) in state tax
The oil a d gas p odu e s pa s a ate of . €/(kg NOx emitted) to NOx fund
All other affected sectors pa s a ate of . €/ kg NO . Emitted) to NOx fund
This akes a ou d € illio a aila le ea h ea fo NO edu tio easu es fo the
affiliated businesses.
The NOx fund has been a means to support the implementation of LNG as ship fuel
infrastructure in Norway. Government support to such projects results in more commitment
19. DNV GL – Rev. 01.09.2014 – www.dnvgl.com Page 19
from industry and shipping. A shift to LNG fuel and battery powered propulsion is estimated to
be the largest contributor to NOx reduction in the period 2011 to 2017, accounting for 37 %.
Around half of the fund has been used for LNG ship support [7].
The fund supports up to 80% of the additional investments in LNG fuelled ships.
Since 2014, support is 200 NOK/kg reduced NOx, and support was also opened for LNG
distribution infrastructure.
The fund has since its inception in 2007 made a great contribution to the newbuilding and
retrofitting to LNG powered ships in Norway. In 2008 less than 10 Norwegian LNG ships,
including ferries, were in operation, while five years later the amount had grown to more than
40. [7]
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3.2 NOx fund impact or model for Chinese legislation
Chinese delegates have visited Norway and looked into the NOx fund concept. It is conceivable
that some similar mechanism may be used in china in the future to reduce emissions and
increase energy efficiency. Increasing energy efficiency is one of the most important goals for
the government and is parallel to reduction of NOx in many cases.
The annual Chinese Government budget for supporting new builds for LNG propelled ships was
800 RMB in 2015 [8].
4 LNG FUEL AS AN EMISSION REDUCTION MEASURE
To shift from heavy fuel oils to LNG for propulsion is a preventative measure against emissions,
the alternative in ECAs in China would be to clean the exhaust gas with scrubbers for SOx and
PM. EGR or SCR for NOx. The requirements for both SOX emissions and potential future NOX can
be met fully by switching to LNG. Figure 4 shows an example of potential reduction effects.
Emission type Pure LNG reduction potential
compared to MDO
How
SOX ~100 % No sulfur in LNG
Particulate matter ~100 % No black carbon source
from LNG
NOx 85-90 % Better combustion
performance
CO2 20 – 25 % Higher energy content in
fuel per Carbon atom
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Figure 4 - 4-Cycle engine emissions comparison between marine diesel oil (MDO) and LNG [9]
It should also be stated that methane, the largest component of natural gas, is itself a potent
greenhouse gas, and procedures to reduce methane slip to the atmosphere should also be
done. Methane emissions from LNG ships may come from unburnt fuel in exhaust or vented
trace amounts purged to the atmosphere during refuelling. Boil of gas (BOG) from LNG carriers
or land stations are re-li uefied o used fo p opulsio i toda ’s est p a ti es.
5 COSTS AND CONSIDERATIONS
The challenge for using LNG propulsion is the higher investment costs. A return on investment
depends on ships size, fuel consumption, maintenance cost and relative bunker price of LNG to
Refined oil. If the ship is affected by emission control requirements and often sails in ECAs, LNG
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may be a key solution. So far the switch to LNG is reliant on government support to be
economically viable in China.
Weaknesses and Threats Strengths and opportunities
Higher investment cost with LNG Government financial support
Lower cargo space Able to meet and surpass existing emission
requirements
Increase in volume of Fuel tank due to lower
volumetric energy content than diesel.
Eliminates need for scrubber investment in
ECAs and separate fuel tank for refined fuel
oil
Challenging to implement in small ships with
successful emission reductions.
Dual fuel ships may take advantage of
whatever fuel is cheaper LNG or MDO<0.5% S
Limiting ship routes flexibility due to
availability of LNG stations.
Protected against future increasing
requirements such as NOx or stricter SOx.
Inconvenience when refuelling, longer time,
simultaneous operations limitations.
Lower maintenance costs from cleaner fuel
and engine parts.
Recent and future low crude oil price. Currently oversupply of LNG and low east
Asian spot prices.
IMO will not implement global 0.5% Sulphur
cap until 2025
IMO implements global 0.5% Sulphur cap in
2020
Supply of LNG can grow in tandem with
general increased focus on using gas for
residential, industrial and power usage along
cities upriver.
23. DNV GL – Rev. 01.09.2014 – www.dnvgl.com Page 23
Figure 5 - Trend of weighted average import price of LNG, crude oil, and product oil in China
before the drop in the Crude oil price (CNII 2014) [10]
Engine and fuel system for LNG propulsion can be 10-20% of total vessel cost [11]. In the
current tight economic environment for the maritime industry and unfavourable prices of LNG
compared to oil it will be less likely to see a spike in implementation and conversion in the short
term in China.
The North East Asian LNG spot import prices have dropped more than 60 % from its peak of
19.70 $ per million British thermal unit in February 2014, as the Chinese LNG import spot price
is closely linked to that of the crude oil [12]. The LNG price lags behind crude with
approximately 12 months and is then based on average crude price [8]. Due to a significant
amount of new LNG production capacity coming online in 2015 the price is not expected to rise
to previous highs in the foreseeable future. However most of the LNG volume is traded on long
term contracts with long term prices fixed at the time the deal was sealed. This makes the price
for LNG at bunker stations fixed higher than the volatile and now very low oil price. Long term it
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seems most likely that natural gas and LNG will become cheaper compared with refined fuels. If
availability and demand would increase, economies of scale situation could make LNG more
competitive. China subsidizes Diesel for enterprises along for river shipping, so unless equal
economic incentives for LNG are provided, large scale implementation may prove slow.
Table 3 - Conversion projects examples and costs in China [10]
Vessel name Vessel type Gross Tonnage(ton) Conversion costs
USD
Changxun NO. 3 Bulk cargo ship 2590 193,000
Hongri NO. 166 Dry cargo ship 1808 85,000
Changneng NO. 12 Bulk cargo ship 3718 89,000
Jiangsu cargo NO. 3001 Bulk cargo ship 2000 66,000
Fuchou NO. 0608 Dry cargo ship 831 61,000
For a detailed cost benefit analysis and considerations of LNG for ship fuel for larger container
vessels see Germanischer Llo d epo t Cost a d Be efits of LNG as “hip Fuel fo Co tai e
Vessels f o
6 LNG VESSELS IN CHINA
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6.1 Conversion projects
The Chinese implementation of LNG as ship fuel was set in three stages
1. Adding NG to substitute Diesel in existing Diesel engines (up to 70 %)
2. Dual fuel engines implementation.
3. New builds with pure LNG propulsion systems.
Currently the progress has come to stage 3. The conversion projects have had technical
troubles with controlling the dual fuel engines. The low pressure dual fuel lacks proper
automatic control of air fuel mixture causing trouble with methane slip to atmosphere. Here
the problem has been lack of specific expertise for dual fuel gas conversion.
6.2 New build projects
Retrofits, Dual
Fuel and pilot
projects
The first Chinese LNG fuelled ships to sail in China were gas
injection to substitute up to 70% of the Diesel in the engines
with LNG.
I August Wuha Fe NO. as the fi st su h essel
to be approved by the National Vessel Inspection Bureau after
a25 day trial on Yangtze River.
Late , i the sp i g of , the Ri e Bulk a ie Cha g u of
2500-ton was test run after successful retrofit. It passed new
CCS tests.
26. DNV GL – Rev. 01.09.2014 – www.dnvgl.com Page 26
From October 1st
2013 until March 31st
2015, the government were subsidizing new builds of
LNG ships with up to 1.4 million RMB. Then the subsidy was lowered to 1 million RMB [13].
Lack of legislation has been a big problem for new developments, China Classification
Society (CCS) have in cooperation with the government lead trial projects even without planned
legislation in the 12th 5-year plan for LNG projects. For inland water vessels conversion to LNG
the lack of regulation and need to figure out the bureaucracy has been one of the reason for
slow growth in LNG vessels. Pilot projects for new builds have received government support.
CNOOC has also contracted Shanghai ship design firm Shanghai Bestway for engineering work
on 16 coastal ships with LNG propulsion. In addition one ordered small size 30 000 m3
LNG
carrier is now completed for CNOOC and more are on order. These small size LNG carriers can
be used to distribute LNG from LNG receiving terminals to upriver cities and storage facilities.
New Builds
In 2015 the first fully LNG powered tug boat finished
o st u tio Hai Ya g “hi You fo CNOOC
CNOOC runs 3 LNG Tug boats at end of 2015 and has one
more under construction
2014 Shanghai Bestway proceeds construction of 55 of
200 ordered LNG river vessels for Green Power Water
transport at Dajin Heavy industry shipyard The contracts
include one hundred 600dwt vessels, fifty 800dwt vessels
and fifty 1,000dwt vessels. Total value of the contracts is
about RMB650m. [2]
Sichuan based Honghua Group is also commissioned by
Green Power Water Transport to build 200 LNG powered
small ships expected completion Sept 2016 and the
contract is worth about RMB760m [3]
27. DNV GL – Rev. 01.09.2014 – www.dnvgl.com Page 27
In addition it can double as a LNG bunkering vessel itself with ship to ship LNG bunkering
capabilities.
6.3 Summary LNG vessels China
Government supports newbuilds with pure LNG propulsion by up to 1 million RMB
Spent 800 RMB on support of LNG newbuilds 2015.
So far, most constructed pure LNG vessels are port tugs constructed for CNOOC.
CNOOCs small size LNG carrier important for feasibility of transporting LNG on rivers and
can be used as ship to ship bunker vessel.
Conversion projects have met problems with methane slip and old engine technology.
Many newbuild projects of LNG propelled vessels are put on hold due to economic
uncertainties in a low cost oil environment.
7 CHINESE LNG BUNKER INFRASTRUCTURE DEVELOPMENT
7.1 LNG import terminals
As of the egi i g of 5, LNG e ters the Cou try through ajor
terminals and a small peaking facility, with 8 under construction and
several other fa ilities i various stages of pla i g [1]
28. DNV GL – Rev. 01.09.2014 – www.dnvgl.com Page 28
Figure 6- Chinese LNG
receiving terminals.
Operational (Blue), Under
Construction (Red), Main
planned Bunker and
Satellite LNG capacity
along Yangtze (yellow)[1]
CNOOC is the pioneer Chinese NOC to run LNG import and regasification terminals in China and
is currently involved or owner of 7 operational LNG receiving and regasification terminals.
Chinas first floating storage and regasification unit (FSRU) was put in operation in Tianjin at the
end of 2013. Their newest 4 mtpa receiving terminal in Shenzhen-Diefu was scheduled to be
completed during 2015, construction was slowed due to lowered profitability and competition
with inland sources. New terminals under construction in Yuedong/Jieyang and Fujian with
scheduled online dates in 2017 and 2016 respectively.
29. DNV GL – Rev. 01.09.2014 – www.dnvgl.com Page 29
CNPC is the second largest national player in LNG receiving terminals. They have 3
operational terminals with planned expansion of capacity, and one newbuild under
construction. Sinopec entered China’s LNG market by starting up their LNG import in Qingdao
in 2014 and is also represented in Guangxi province, and has a planned terminal in Tianjin.
Import terminals are a prerequisite for LNG bunkering stations along the coast. It could
be advantageous to build bunkering capacity of LNG close to the receiving terminals to shorten
transport needs. For import LNG to be available on inland waterways additional transport is
needed. Smaller LNG carriers would be needed to supply bunker stations upriver ant this
intermediary regional carriers are getting more attention in recent times. Domestic LNG can
also be transported with trucks to the river LNG storage facility from inland gas production sites.
Liquefying piped gas and storage in satellite or peak shaving facilities is also an option which
could be made to double as a source for LNG bunker fuel.
7.2 Possible bunkering pathways
Truck to ship (TTS)
Advantages Drawbacks
Flexible and
proven. Low
investment cost.
Reach smaller
places.
Very low volumes and
slow refilling time of
larger ships.
Higher risk/visibility to
public.
Ship to ship (STS)
Advantages Drawbacks
30. DNV GL – Rev. 01.09.2014 – www.dnvgl.com Page 30
Makes
simultaneous
operations
possible. High
transfer rate.
Flexible.
Possible to
refuel without
entering port.
Higher investment
and operational cost
than shore based.
Sea movement,
currents, wind and
waves
Needs shoreside
infrastructure to load
itself
Shore to Ship (PTS)
Advantages Drawbacks
High volume and
transfer rate.
Already
approved by
port
Lots of area need and
safety range.
Limit pipe length due
to LNG evaporation.
Portable Container tank transfer
Advantages Drawbacks
Standardized
size same as
container.
Truck train and
ship transport.
Many potential
uses of the
Lack in regulation.
Non optimal volume
utilization for ships.
Still in early phase.
Needs integrated
systems and
regulation approvals.
31. DNV GL – Rev. 01.09.2014 – www.dnvgl.com Page 31
tanks.
Fast change of
fuel tanks.
The cost of the LNG fuel will be higher than LNG import price due to need of building new
infrastructure for bunkering or truck loading and handling of smaller volumes. TTS bunkering is
well proven and has been extensively used in china already,
BUNKERING OF IMPORTED LNG
Bunkering close to import site from land station, pipes (PTS).
Trucks or barges bunkering from import site (TTS).
FSRU or land based terminals are available sources.
Imported LNG could be filled into smaller river LNG carriers that may be used for
bunkering other vessels (STS).
BUNKERING OF DOMESTIC LNG SOURCE
From existing satellite LNG liquefaction site from pipe feed gas (PTS).
Distributed with trucks to remote bunkering facility (TTS).
From central LNG liquefaction plant and transported with trucks directly to ship or local
station (TTS).
LAND BASED OR FLOATING BUNKER STATION FOR RIVERS
Building time for land bunkering stations in China are short and can be done in a couple of
months. However government approval may take years, therefore companies will apply for
approval and try to make the designs ready until approval.
32. DNV GL – Rev. 01.09.2014 – www.dnvgl.com Page 32
La d ased u ke i g jetty may cost around 15 million RMB, equivalent floating terminal
u ke i g a ge a e ti es o e e pe si e a d is o e o pli ated to app o e a d uild.
[8]. However due to regulations and restrictions of direct contact between river vessel and
some jettys, the floating barge or pontoon solution is very popular so far, usually with tank size
of LNG less than 300 m3
to avoid government required safety case study for larger LNG tanks.
33. DNV GL – Rev. 01.09.2014 – www.dnvgl.com Page 33
More information on the advantages of different bunkering alternatives can be found at
DNV.GL a d U“ Ma iti e Ad i ist atio epo t Li uefied Natu al Gas LNG Bu ke i g “tud
from 2014.
Figure 7 – Illustration of some possible bunkering pathways
courtesy of China Waterborne Transport Research institute.
34. DNV GL – Rev. 01.09.2014 – www.dnvgl.com Page 34
7.3 Current Bunkering facilities in China
The government is encouraging LNG investments by private companies and providing subsidies
to NOC investment. Currently private Chinese energy companies such as ENN energy holdings
limited, ChangBai Group and GuangHui Energy are investing in LNG infrastructure. ENN is
building natural gas supply chains in China and bunkering stations for LNG. ENN was the first
Chinese private company to operate an LNG terminal. Close to Ningbo, on Zhoushan Island ENN
is currently building a land based LNG import terminal with bunkering facilities planned to
import 3 mtpa in by 2018. Changbai is planning to construct a LNG facility west of Shanghai in
Jiangyin. Guanghui plans to invest 2 billion yuan in a LNG distribution station in Nantong Port,
upriver from the Yangtze delta [14].
Due to lack of regulation and complexity of approval of land based bunker stations for
LGN, the floating LNG pontoon solution has become popular. The tanks of LNG are in most
cases less than 300 m3
in volume due to special requirements for larger tanks. Larger tanks will
need special safety studies and will thus become a more expensive and complicated project.
Wuhan is seen as a potential future hub for LNG distribution as Wuhan port is in the
middle of China and on the Yangtze River.
35. DNV GL – Rev. 01.09.2014 – www.dnvgl.com Page 35
Table 4 - Known LNG bunkering facilities China
Known LNG bunkering facilities in China, including inland water ways
River Area Province Company Bunkering
type
LNG
Capacity
Status /
In service
Yangtze
River
Yidu City
Hubei
Xilan NG
Group
Land based
(PTS)
Storage
facility with
large volume
2014
Wuhan Fortune oil Land based
(PTS)
Storage
facility with
large volume
Under
construction
¬ 4.2016
Chongqing Chongqing Fortune Oil Land based
(PTS)
2000 m
3
10.2015
Shanghai Shanghai Gangqiang Gas Bunkering
pontoon (STS)
2 x 250 m
3
Construction
Nanjing Jiangsu Haiqi
Ganghua
Bunkering
pontoon (STS)
2013
Wuhu Anhui Sinopec Bunkering
Pontoon (STS)
500 m
3
2015
Grand
Canal
Jiangsu
Hongyun
Green Energy
Planned
Pearl River Xi River Guangxi ENN Gas
Holdings
Bunkering
barge (STS)
200 m
3
2015
Coastal Dafeng Port,
Yancheng,
Jiangsu Jiangsu
Hongyun
Green Energy
Land based
(PTS)
2 x 60 m
3
Construction
¬ 4.2016
Zhoushan Zhejiang ENN Gas
Holdings
Regasification,
Storage (PTS)
3 mtpa 2018
7.3.1 Haiqi Ganghua Gas Development
In September 2013, Haiqi Ganghua constructed
the first floating LNG bunker station along
Yangtze River in Nanjing.
36. DNV GL – Rev. 01.09.2014 – www.dnvgl.com Page 36
7.3.2 SINOPEC
Has an oil-LNG bunkering pontoon, which is located in Wuhu, Anhui Province. The construction
work was finished in March, 2015. The bunkering pontoon is 90 meters long and 16 meters
wide. It would be able to store 500 m3
LNG and 180 tons diesel oil. The refuelling station was
designed by Changjiang (Yangtze River in Chinese) Ship Design Institute and funded by China
Changjiang Bunker (Sinopec) Co., Ltd. It is quite possible for two 10,000-ton class vessels to
refuel oil or LNG simultaneously [8].
7.3.3 Fortune Oil / China Gas Holdings Bunker stations
China Gas and UK-based Fortune Oils assets in China have merged and have plans to construct
LNG bunker stations along the Yangtze River.
Chongqing port city harbour bunker station was put into use in October 2015. The construction
work had started already in June 2012. The terminal can store 2,000 m3
of LNG and can supply
3,000 ton vessels with a land based berth. Refuelling capacity is said to be 150,000 m3
a day.
And it can provide bunker service to up to 12 cargo vessels every day.
In Hubei province, close to Wuhan, construction of a LNG refuelling station was begun in May
2015. Specific location is Sanjiang Port New Area. The project is in two phases with a total
investment of 200 million yuan. Estimated finish date of first phase is April 2016. The station
will cover a 1.3 hectare area and a tank of 2,000 m3
could be built. In the second phase involves
construction of a regional gas supply centre. It is estimated that 111,100 tons of LNG will be
available every year in the bunkering station and a 600 million yuan annual sales income can be
made.
Future possible LNG satellite and bunker stations could be in Jingjiang and Nanjing.
37. DNV GL – Rev. 01.09.2014 – www.dnvgl.com Page 37
7.3.4 Wuchang Shipbuilding Industry Group Co. Ltd. (WS)
In December 2015 WS signed a deal with Ganqiang Gas Co., Ltd (Shanghai based) to provide a
ete lo g u ke i g po too Ga g ia g . It ill ha e a total capacity of 500 m3
of LNG
divided in to two 250 m3
tanks. It will also include another six large oil tanks.
WS and Huaqiang Gas Development Co., Ltd reached agreement in June 2014 on building 13
LNG bunkering pontoons to provide bunkering services for 2,000 LNG-Powered ships registered
in Anhui Province. Status of this deal is unknown.
7.3.5 ENN Holdings Co.
ENN is a Hong Kong based Energy Company big in end user gas applications. In the first half of
the ea , the G oup’s gas sales olu e fo LNG u ke i g usi ess a ou ted to 0.96
million m3
of natural gas compared to 743 million for land vehicles, so volumes for ship
bunkering are still far behind. They successfully completed bunkering for an ocean-going vessel
of Nor Lines, Norway, and an LNG-powered tugboat of CNOOC.
Figure 8 - Zhejiang Zhoushan LNG Import and Bunkering Terminal, currently under construction
by ENN at Zhoushan, China, will have a capacity of 3 mtpa by 2018.
38. DNV GL – Rev. 01.09.2014 – www.dnvgl.com Page 38
ENN has 3 bunkering stations for LNG and more than 240 for vehicle refueling [15].
The Co pa ’s bunkering barge in Xijiang Xijia g ENN , in Guangxi province has also
officially commenced operation April 2015. And can deliver 200 m3
of LNG and 500 tons of
diesel. It is the first LNG fuel barge to be classified by CCS as LNG refuelling ship. It was a great
step towards ensuring LNG availability in the Xijiang River basin. There are approximately 8,000
ships in the Guangxi Province sailing on the Xijiang River, the local government has announced
plans to construct 29 bunkering stations for LNG to promote a switch to cleaner fuel. ENN is in
charge of construction and bunkering operation of all these possible stations [16].
Figure 9 LNG a d diesel arge Xijia g ENN LNG capacity 200 m3
and 500 ton fuel oil in
operation on Xijiang River since April 2015
7.3.6 Jiangsu Hongyun Green Energy Co
In Yancheng, one small scale 10 million yuan LNG fuelling station started construction in
December 2015. It will have two 60 m3
LNG tanks and two oil tanks with 50 m3
capacity each.
Operation is expected to start in April 2016. In addition to this, Jiangsu Hongyun Green Energy
Co., Ltd is planning to build 13 LNG refuelling stations along the Beijing-Hangzhou Canal. These
terminals are including Shuanglougang terminal in Xuzhou, Dongfeng terminal and Yangzhuang
39. DNV GL – Rev. 01.09.2014 – www.dnvgl.com Page 39
terminal in Huai’an and Jintan terminal in Changzhou, etc. All of the above-mentioned terminals
are being built or have been built already. [8]
7.3.7 China Natural Gas, Inc. (CHNG)
From Ship&Bunker.com:
The first liquefied natural gas (LNG) upstream bunkering station on China's Yangtze River has
opened at Yidu city in Hubei province, Chinese shipping news site SinoShip Newsreports.
Xilan Natural Gas Group, a green energy company that converted a tugboat into the first LNG-
powered vessel to run on the river in 2010, is behind the facility. The station has a daily capacity
of 135,000 cubic meters and cost a total of RMB128 million ($20.5 million). Xilan Natural Gas
Group parent company China Natural Gas, Inc. (CHNG) has been working on inland LNG fuelling
stations along the Yangtze River since 2010, according to information from the
company published by NGV Global News [17].
The pla t is a fou i o e peak sha i g pla t hi h a sto e up to . illio 3
of natural
gas. It can also provide refuelling to land vehicles with LNG or CNG. CNG capacity is 30,000 m3
.
Bunkering capability is only part of operations of the plant.
7.4 Summary LNG bunker stations in China
LNG storage tank sizes are usually less than 300 m3
to avoid requirement for individual
locational safety studies which would raise costs.
The government is still subsidizing usage of marine diesel by tax incentives
o Removing these incentives could lead to stronger case for LNG, but may lead to
difficulties for small size ship owners and family businesses.
Much of the planned LNG bunker stations on IWW by CNPC and Fortune oil is on hold
due to lack of profitability in recent times.
40. DNV GL – Rev. 01.09.2014 – www.dnvgl.com Page 40
o Reduced investment is related to smaller budgets because of reduced profits
from selling of Oil products.
o Pilot projects by NOCs will be completed even at a net loss as development
projects.
o Regulations from previous pilots are then possible to follow for other companies,
this was seen with small scale LNG carriers orders rising after completion of
CNOOC 30,000 m3
demonstration project and approval of the first fuel barges
and pontoons.
Bunkering activities and stations are attractive to combine with LNG satellite facilities
upriver to be used for power production. An approval to build a bunkering station can
be exploited to distribute to other end users as well, such as residential gas. In fact this
may be the main reason to invest.
8 RELEVANT CHINESE COMPANIES INVOLVED WITH LNG BUNKERING
8.1 National Oil Companies NOCs
China has three NOCs that have specialized in different fields and which are holding different
strategic domestic assets. China Petroleum & Chemical Corporation (Sinopec), China National
Petroleum Corporation or PetroChina (CNPC) and China Offshore oil Corporation (CNOOC).
CNOOC: Pioneer in the Chinese LNG import terminal technology and
offshore oil and gas resources. Leading in constructing floating terminals
and researching FLNG. CNOOC is the primary stakeholder of exploration
rights offshore.
41. DNV GL – Rev. 01.09.2014 – www.dnvgl.com Page 41
Sinopec: Major Petroleum energy and chemical company in China based in
Beijing. Refining and petrochemical giant. Sphere of influence strongest in
southern china. Most end user focused and runs most filling stations.
CNPC: Biggest integrated Oil and Gas Company in China. Holds the most
of the domestic land based gas resources and pipelines. Highest priority
for developing new resources on land.
Figure 10 - Figure showing traditional spheres of influence of the three major NOCs
42. DNV GL – Rev. 01.09.2014 – www.dnvgl.com Page 42
8.2 Private companies
ENN Energy holdings Limited, formerly known as XinAo
Gas Holdings: LNG Bunkering infrastructure
Holds investments in and operations of gas pipeline infrastructure and vehicle/ship gas fuelling
stations and sale of gas appliances and equipment. An interim report from the company in June
2015 said they have 294 CNG and 249 LNG refuelling stations in operation. Most of the vehicle
gas sales by far is sold to road vehicles. With the completion of Xijiang Bunkering barge in 2015
they now operate 3 bunker stations. They are also involved in projects for implementing LNG in
key ports.
Fortune Oil / China Gas Group (CGH): LNG Bunkering infrastructure
Chi a gas a ui ed B itai ased Fo tu e Oil PLC’s Chi ese assets fo $ illio . CGH is the
largest independent natural gas company in China in terms of city network, serving gas to over
150 cities. It engages principally in the investment, operation and management of city gas
pipeline infrastructure, the distribution of natural gas and LPG to residential, commercial and
industrial users, construction and operation of oil stations and gas stations, and development
and application of natural gas and LPG related technologies in China.
Honghua Group: LNG river vessel production
Shanghai Bestway: LNG ship design
43. DNV GL – Rev. 01.09.2014 – www.dnvgl.com Page 43
China Classification Society: Ship classification and approval of procedures
for bunkering and safety regulations with regards to new LNG technologies
in China.
9 CONCLUSION
The implementation of LNG in ships and river vessels and bunkering stations in China is still at
an early stage, but political will lies behind development and is expected to continue. This
support from the government will be crucial in order to eradicate the chicken and egg problem
of vessels needing LNG and bunkering stations providing LNG.
The unexpected and prolonged drop in Oil prices has lowered the cash flow of NOCs and
spending has had to be cut. As a result many pilot projects has been frozen or postponed.
The technical challenge can also not be overlooked, as old engines would need
conversion, which has not been unproblematic in demonstration projects, leading to methane
slip problems and some engine over charging. However this may be an initial phase disease that
can be overcome by competence building, and could lead to more job opportunities in the field.
The Governments long term goal of increasing gas usage to displace coal for cleaner
electricity and increased import and production of gas for the Chinese city residents does
propose that the long term possibility of LNG as ship fuel in China has great potential to grow in
tandem with this development. As the infrastructure of NG is China improves, more NG peak
shaving plants will be needed and LNG storage is necessary to control supply and demand.
Shanghai has seen an extreme growth in residential gas usage, and next in line are cities further
upriver. Wuhan is seen as an important potential LNG hub due to its central location and
connectedness in the Yangtze River system.
44. DNV GL – Rev. 01.09.2014 – www.dnvgl.com Page 44
As large LNG export terminals in Oceania will come online towards 2020 and Chinas LNG
regasification capacity will increase dramatically in the same time span, the landscape for
utilizing some of this LNG for ship fuel should be very good in the long term.
9.1 Coastal and international trade
The main driver of change in the bunker fuel business in China is the government regulations
and new emission requirements on limiting SOx emissions. In addition to stricter requirements,
government support for new cleaner solutions is tested. The new 13th
Chinese 5 year plan will
be published in March 2016 and will shine more light onto what solution for reducing shipping
emissions will receive the most support ahead.
In the short term, the easiest way for shipping companies to meet requirements of SOx
reduction is to change from HFO to Diesel with less than 0.5% sulphur content when in ports or
areas affected by the new ECA regulations. Due to the now historically low prices of crude oil,
fuel oils < 0.5% sulphur may be a convenient solution in the short term. It is also the solution
requiring the least change from ship owners. However, for abating NOx emissions or meeting
stricter SOx requirements it will not be enough. Engines running on HFO may also need to chill
down the refined oil in order to increase the viscosity to similar values of HFO for safe
operation.
Another supported emissions reduction measure for ships within China is to equip ports
with port-ship ele t i it alled old i o i g . Ho e e this easu e also e ui es port side
jetty and ship side investments. Battery powered ships are also a contender with LNG for
certain shorter fixed routes and may be a solution that gains traction with improving battery
technologies.
It seems clear that the government is serious about providing a framework for reducing
emissions. Both cold ironing and LNG systems will most probably be supported financially and
the effectiveness reviewed at a later stage. The international sulphur requirements on 0.5 %
sulphur on Ocean vessels may be implemented in 2020 or in 2025, if the case is 2020, it will
accelerate implementation of LNG fuelled ships and scrubbers, however if implementation is
45. DNV GL – Rev. 01.09.2014 – www.dnvgl.com Page 45
postponed to 2025 the option of switching to LNG will also most likely be delayed by many
potential newbuild projects.
9.2 Inland Water Ways
P o le to do ship o e sio s due to a lo te h e gi es al ead u i g i toda ’s fleet.
There is also a need for greater experience with dual fuel engine fuel regulation.
Difficult to predict rate of implementation of LNG bunker stations
o Depends on profitability of LNG vs refined oil products
o Government support critical for implementation
o Depends on competing green technologies, such as biofuels, battery electric
propulsion and port cold ironing.
o Clear regulations and framework for LNG solutions needs to be in place.
o Bureaucracy needs to be minimized and simplified.
New government policy on this may be available in March 2016 upon publication of the
13th
five-year plan.
o This time expected to include more points on LNG for inland use.
o New emissions reduction targets SOx, NOx also for inland.
In China the government plan for development direction is paramount for the direction IWW
LNG will take. The biggest players in the LNG bunkering market are domestic NOCs and they are
known to follow the directives from the state quite closely, making their projects more likely to
succeed even if at a loss.
Special factors and hurdles for LNG bunkering stations and use upriver is regarding
safety rules and regulations which are not quite accommodating to LNG technology yet. This
may include the prohibition of LNG ships to dock at many piers in Yangtze River, which had to
46. DNV GL – Rev. 01.09.2014 – www.dnvgl.com Page 46
be solved by adding a floating barge in between the ship and the main land dock to circumvent
regulations. This of course adds cost and complexity to bunker operations along the river bank.
10 REFERENCES
1. China, Overview, LNG. 2015: U.S. Energy Information Administration.
2. Shanghai Bestway proceeds with LNG-powered vessel orders. 2014; Available from:
http://splash247.com/shanghai-bestway-proceeds-with-lng-powered-vessel-orders/.
3. Honghua to Build 200 LNG Powered Vessels for China’s River Transportation. 2015
12.2015]; Available from: http://www.ngvglobal.com/blog/honghua-to-build-200-
lng-powered-vessels-for-chinas-river-transportation-0812.
4. China announce: New Emission Control Areas (ECAs). 2015; Available from:
http://ibia.net/china-announce-new-emission-control-areas-ecas/.
5. Finamore, B. China Acts to Control Shipping Air Pollution and Greenhouse Gas
Emissions. 2015; Available from:
http://switchboard.nrdc.org/blogs/bfinamore/china_acts_to_control_shipping.html.
6. 交通运输部关于推进水运行业应用液化天然气的指导意见. 2013 05.01.2016]; Available
from: http://www.gov.cn/gongbao/content/2013/content_2547150.htm.
7. Høibye, G., Norwegian NOx Fund as a driving force for LNG use. 2014, Næringslivets
NOx-fond.
8. Wu, J., Interview, D.H. Thue, Editor.
9. Unseki, T., Environmentally superior LNG-Fueled Vessels. 2013, Mitsubishi Heavy
Industries Technical Review.
10. Wan, C., et al., Emerging LNG-fueled Ships in the Chinese Shipping Industry: a
hybrid analysis on its prospects. 2014.
11. Fung, F., et al., prevention and Control of Shipping and Port Air Emissions in China.
2014, National Resources Defense Counsil
12. Paton, J. Asian LNG Prices Expected to Sink as Low as $4 in `Ugly' Market. 2015
06.01.2016]; Available from: http://www.bloomberg.com/news/articles/2015-09-
21/asian-lng-prices-expected-to-sink-as-low-as-4-in-ugly-market.
13. China may miss LNG-fuelled ship goals. 2015; Available from:
http://www.hellenicshippingnews.com/china-may-miss-lng-fuelled-ship-goals-
sources/.
14. CHINA’S LNG PROJECTS MOVE FORWARD. 2015 [cited 2016 05.01]; Available from:
http://www.breakbulk.com/chinas-lng-projects-move-forward/.
15. News, L.W. ENN boosts gas sales, LNG bunkering. Available from:
http://www.lngworldnews.com/enn-boosts-gas-sales-lng-bunkering/.
16. ENN. The First Standard Bunkering Barge in China is about to Start Operation. 2015;
Available from:
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http://www.enn.cn/wps/wcm/connect/enn_library_ennportal_en/ennroot/news_relea
ses/c5b1d333-8766-4b14-9eef-70e704883445?pageid=news.
17. team, S.a.B.n. First LNG Bunkering Station Opens on Yangtze River. Available from:
http://shipandbunker.com/news/apac/993574-first-lng-bunkering-station-opens-on-
yangtze-river.
18. Draffin, N., An Introduction to LNG Bunkering. 2013, Adderbury, GBR: Petrospot.
APPENDIX A: LNG SHIP TANK TECHNOLOGY
Because of LNGs cold cryogenic temperatures modern technology and special handling for
storage and security must be used. The tanks need first and foremost to be insulated and to
handle cryogenic temperatures without expansion damage or cracking. LNG evaporates at –
˚C a d so e oil off gas ill o u du i g sto age hi h ust e ha dled o e tl .
Membrane tanks:
Not self-supported, meaning that the tank relies on
the ships mechanical strength to contain the fluid.
The tank has two complete membranes, one inner
and one outer, to contain the liquefied gas. In
between these membranes are additional
insulation measures and structure support to give
the membrane mechanical support from the ships inner hull. Example of this tank type is made
from a company called GTT. The membrane tanks consist of 2 layers of membrane and
insulation (primary and secondary barriers, No.96 with invar steel and Mark III with stainless
steel). The secondary barrier is part of the two layers of membrane- in case the primary
insulation /membrane fails. The insulation is a sandwich of triplex glass wool and metal foil
wrapped in layers around the tank.
Independent tanks:
48. DNV GL – Rev. 01.09.2014 – www.dnvgl.com Page 48
Independent tanks sit inside the inner hull hold space. Their materials and construction
means they can take the weight of cargo (and internal pressure) because of their own
mechanical strength. Catego ized i to T pe A, B a d C ta ks
Type A tanks:
Traditional fully insulated self-supporting tank design with a secondary containment layer.
Type B tanks:
Advanced fully insulated self-supporting tank with partial
containment. A typical example of this tank type is the Moss
Sphere tanks, which gives many of the LNG tanker ships their
characteristic and easily recognisable appearance.
Type C tanks:
Self-supporting tank designed to operate under higher pressures, typically with a pressure of 2 -
10 bar. For vacuum insulated tanks, the tank sizes up to approx. 1000 m3
capacity are available.
For normal type C tank, with normal insulation the volume can be much larger. No need for
secondary barrier for the tank. So far they are the most common option as fuel tank for LNG
ships. The option of higher tank pressure makes it easier to handle the boil off gas, and is more
convenient for gas engine feed gas. A 200 m3
-type C tank can hold the boil-off for about 25 days
before reaching the maximum allowed tank pressure.
Containerised Type C tank
Standardized type C tank made to occupy the same space of a cargo container. Vacuum
insulated. It is claimed that they can sit full with no venting for up to 80 days.
Bi-lobe Type C tanks
A large bunker tank solution with two intersecting
spheres/cylinders. Typical 5 bar operating pressure.
Internally, the bi-lobe tank is a single tank. The advantage
of the tank is its relatively big size and the possibility for
maintaining a flat deck surface above.
49. DNV GL – Rev. 01.09.2014 – www.dnvgl.com Page 49
Table 5 – Storage pressure and boiling temperatures [18]
Storage Pressure Boiling temperature Application
1 bar - ˚C Cargo transport and land storage
3 bar - ˚C Distribution bunker station in Type C
tanks
10 bar - ˚C Smaller scale storage in fuel tanks
for ships.
Boil off gasses
The LNG stored in any tank will eventually all boil off given enough time. No insulation is one
hundred percent perfect and some heat leak into the tank will be unavoidable. This means that
the quality of the insulation and how the boil of gas is dealt with is important considerations for
any LNG operation.
Type A and B tanks need to either re-liquefy and return the boil of or use the boil off for engine
propulsion. The type C tank has the possibility to let the tank pressure rise within safe levels. If
the pressure in the tank is increasing the evaporating temperature of the LNG also increases.
This means that the temperature of the liquid LNG in the tank could also increase. If that is the
case and pressure is lowered significantly again, it will make the evaporation temp decrease
and one should expect more boil off which was delayed by the previous pressure build up.
APPENDIX B: OFFICIAL LNG SHIP LIST AT END OF 2015
In operation For graphs
ID # Year Type of vessel Ship type Owner
1 2000 Car/passenger ferry Car/passenger ferry Fjord1
2 2003 PSV PSV Simon Møkster
3 2003 PSV PSV Eidesvik Shipping
5 2006 Car/passenger ferry Car/passenger ferry Fjord1
54. General Office of Ministry of Transport: Announcement of the First LNG Pilot Demonstration Projects in Water Transport Industry
In order to thoroughly substantiate the requirements for launching the LNG pilot demonstration work of ‚Guiding
Opinions of Ministry of Transport on the Promotion of LNG Application in the Water Transport Industry‛ (Jiao Shui Fa
[2013] No. 625), further implement the application of LNG fuel in the water transport industry, procure the energy-saving
and remission-reducing promotion in the water transport industry, and expedite the ‚green‛ water transport construction
based on the "Program of Implementing the Pilot Demonstration for LNG Application in the Water Transport Industry‛, the
screened list of the first pilot demonstration projects for LNG application in the water transport industry is hereby
announced.
I. List of Pilot Projects (totaling 7 projects)
Serial
No.
Project Name Organizer Content of Pilot Program
Date of Implem
entation
1
Integrated Pilot Project of China N
ational Foreign Trade Transportatio
n for Marine LNG Application To Maj
or Ship Models for The Trunk Line O
f Yangtze River
China National Foreign Trade Transportation
(Group) Corporation
1 New construction of 2 inland LNG f
uel powered ships; 2 Package pilot con
struction of LNG station and LNG loadin
g/unloading pier in Huanggang, Hubei;
3 Pilot construction of the shore LNG
refueling station for land/marine purp
ose in Yichang, Hubei; 4 Provision of
support for the launch of relevant spec
ifications of technical standards.
2014-2016
55. 2
CNOOC Pilot Project of LNG Applicat
ion for Costal Water Transport
China National Offshore Oil Corporation
1 Construction of five 5000HP(1800 de
adweight tonnage LNG fuel powered PSV;
2 Construction of four LNG fuel powe
red harbor towboats for use at the coas
tal LNG loading/unloading pier; 3 Cons
truction of One LNG powered ship of 30,
000 cubic meters as a transportation sh
ip and refueling ship.
2014-2016
3
Zhejiang Zhoushan International Mar
ine LNG Refueling Station Pilot Pro
ject
ENN Energy Holdings Ltd.
1 Construction of coastal and offshor
e marine LNG refueling station, which f
orms the refueling technology with inde
pendent intellectual property; 2 Provi
sion of support for the launch of relev
ant specifications of technical standar
ds.
2014-2016
4
Pilot Project of Inland Mobile LNG
Refueling Ship
Xuzhou ENN Clean Energy Co., Ltd.
China Yangtze Fuel Oil Corporation
Dalian Yuchai Energy Co., Ltd.
1 Respective R & D for constructing o
ne inland mobile LNG refueling ship acc
ording to the related pilot standards a
nd requirements; 2 Provision of supp
ort for the launch of relevant specific
ations of technical standards.
2014-2016
56. 5
Pilot Project of China Yangtze for
Constructing Barge-type ‚Combinati
on of Oil and Gas‛ LNG Refueling S
tation for the Trunk Line of Yangtz
e River
China Yangtze Fuel Oil Corporation
1 Construction of two Barge-type ‚Co
mbination of Oil and Gas‛ LNG Refuelin
g Stations; 2 Provision of support for
the launch of relevant specifications o
f technical standards.
2014-2016
6
Integrated Pilot Project of LNG App
lication to Water Transport in Dan
Jiang Kou Reservoir Zone - Water He
ad Site of Kunlun Energy South-to-N
orth Water Diversion
Kunlun Energy 长航 (Wuhan) Natural Gas Co.,
Ltd.
1 New construction of three LNG fuel
powered ordinary ships; 2 New constru
ction of two LNG fuel powered stake bo
ats; 3 Construction of one coastal L
NG refueling station.
2014-2016
7
Shore LNG Refueling Station and LNG
Transshipment Pilot Project of ENN
Energy at the Midstream and Downst
ream of Yangtze River
ENN Energy Holdings Limited
1 Pilot construction of one shore LNG
refueling station for the trunk line
of Yangtze River; 2 Exploration of in
land shore LNG refueling station coupl
ed with LNG transshipment function; 3
Research for proposing the standards o
f marine LNG refueling service for the
trunk line of Yangtze River.
2014-2016
57. II. List of Demonstration Projects (totaling 6 projects)
Serial
No.
Project Name Organizer Content of Pilot Program Date of Implem
entation
1
Shanghai International Port Demonstratio
n Project of LNG Application
Shanghai International Port (Group) Co., Ltd.
1 Construction of one vehicle LNG ref
ueling station; 2 Pilot launch of LNG
application to the mobile crane; 3 LNG
application to 200 container trucks 5
0 trucks during the preliminary launch）
2014-2016
2
Demonstration Project for LNG Appli
cation of Lian Yun Gang Port
Lian Yun Gang Port Co., Ltd.
1 Construction of three vehicle LNG r
efueling stations; 2 Purchase of 100 L
NG fuel powered vehicles, as well as ma
chinery and equipment; 3 Launch of res
earch and retrofit for LNG application
to harbor engineering crafts.
2014-2016
3
Demonstration Project for LNG Appli
cation for the trunk line (Guangxi
Section) of Xijiang
Guangxi Xijiang Investment Group Co., Ltd.
1 New construction of 100 LNG fuel po
wered ordinary cargo vessels; 2 Packag
e construction of one marine LNG refuel
ing station; 3 Construction of the int
egrated management information system f
2014-2016
58. or the marine LNG application for the t
runk line of Xijiang; 4 Formation of s
tandards for the marine LNG refueling s
ervice for the trunk line of Xijiang;
5 Lay the foundation for forming the
guidelines of safety regulation for mar
ine LNG application in respect of the t
runk line of Xijiang in Guangxi; 6 Exp
lore the measure of letting the LNG fue
l powered ships pass the ship lock on p
riority on the trunk line of Xijiang an
d submit the verification report.
4
Demonstration Project of LNG Applic
ation to the Water Transport in Chu
anjiang and the Three Gorges Reserv
oir Zone
Kunlun Energy Chongqing Chuan Gang Gas Co.,
Ltd.
1 New construction of LNG fuel powere
d ships: five law enforcement ships, fi
ve engineering ships, forty-five bulk c
argo ships, five container ships, and t
wo roll-on/roll-off ships, in cooperati
on with Chongqing Shipping (Group) Co.,
Ltd. and Minsheng Shipping Co., Ltd.;
2 New construction of one mobile LNG
refueling ship according to the relevan
t pilot requirements; 3 New constructi
2014-2016
59. on of one shore LNG refueling station;
4 Construct the integrated management
information system for the LNG applica
tion to the water transport in the Thre
e Gorges Reservoir Zone; 5 Research an
d exploration of the proposal for LNG f
uel powered ships to pass the ship lock
at the Three Gorges.
5
Demonstration Project of LNG Applic
ation to the Water Transport at the
Jiangsu Section of the Trunk Line
of Yangtze River
Jiangsu Overseas Towngas China Company Limi
ted
Jiangsu Runxiang Gaoqiao Port Co.
1 Construct one barge-type LNG refue
ling station at the coast of Yangtze Ri
ver – construct one mobile refueling s
hip according to the relevant pilot sta
ndards; 2 New construction of 100 LNG
fuel powered ordinary cargo ships in co
operation with Nanjing Chunyuan Shippin
g Limited,Jiangsu Dajin Heavy Industry
Limited and Zhenjiang Municipal Ship In
spection Bureau; 3 Construct one shore
LNG refueling station, coupled with si
multaneous function of land warehouse s
torage for transshipment.
2014-2016
60. 6
CNOOC Demonstration Project of LNG
Application to the Inland Water Tra
nsport Industry
CNOOC Gas & Power Group
1 New construction of 100 LNG fuel po
wered ordinary cargo ships in cooperati
on with Zhejiang Ji’an County Yuanya Tr
ansportation Limited and 广州市柏福莱海
运公司; 2 Package construction of two
shore LNG refueling stations.
2014-2016
61. III. List of Demonstration Zone Projects (totaling three projects)
Serial
No.
Project Name Organizer Major Participant
Content of Demonstration Zone
Date of Implem
entation
1
Integrated Demo
nstration Zone
of LNG Applicat
ion in Shenzhen
Port
Transport Commission
of Shenzhen Municipal
ity)
(1) China Merchants International Sheko
u Container Terminal Ltd.
(2) China Merchants International Chiwa
n Container Terminal Co., Ltd.
(3)Yantian International Container Term
inals Ltd.
(4)Shenzhen Dachan Bay Modern Port Deve
lopment Co., Ltd.
(5) CNOOC YG Energy Co., Ltd.
1 Package construction of one marine
LNG refueling station in line with the
proactive launch for the port with th
e new construction of LNG fuel powered
towboats; 2 Pilot construction of on
e international marine LNG refueling s
tation; 3 Package construction of six
vehicle LNG refueling stations in the
port zone, with 500 vehicles using LN
G in the port and proactive promotion
for LNG application to machinery and e
quipment; 4 Pilot construction of one
LNG power station in the port zone
(Western Shenzhen) to replace the powe
r supply at the shore to ships anchore
d in the port; 5 Construct the integr
2014-2016
62. ated management information system for
the LNG application in the port zone,
and establish the platform to monitor
energy saving and remission reductio
n; 6 Provision of support for the lau
nch of relevant specifications of tech
nical standards 7 Through the demonst
ration, 50% of vehicles in the entire
port use LNG power; 8 Systematic conclus
ion of the construction experience in the demo
nstration zone to provide the reference for oth
er ports.
2
Integrated Demo
nstration Zone
of LNG Applicat
ion to the Wate
r Transport at
the Jiangsu Sec
tion of Jing Ha
ng Canal
Jiangsu Provincial Co
mmunications Departme
nt
1 Local Maritime Bureau of Jiangsu Pr
ovince
2 Jiangsu Hongyun Green Energy Co., L
td.
3 Jiangsu Blue Marine Power Co., Ltd.
1 New construction of 300 LNG fuel po
wered ships; 2 Construct two shore LNG
refueling station; 3 Construct the in
tegrated management information system
of the marine LNG application for Jing
Hang Canal; 4 Form the marine LNG refu
eling service for Jing Hang Canal in Ji
angsu Province; 5 Form the guidelines
of safety regulation for marine LNG app
lication in respect of Jing Hang Canal
2014-2016
63. in Jiangsu Province; 6 Explore the mea
sure of letting the LNG fuel powered sh
ips pass the ship lock on priority on J
ing Hang Canal in Jiangsu Province and
submit the verification report.
3
Integrated Demo
nstration Zone
of LNG Applicat
ion to the Wate
r Transport of
Wanjiang and Ch
aohu in Anhui
Port Management Burea
u of Anhui Province
1 ENN Energy Holdings Limited
2 Anhui Jiarun Power Co., Ltd. 3 Hu
aqiang Natural Gas Development Co., Lt
d.
4 Ma An Shan Hongyun Green Energy C
o., Ltd.
1 New construction of 300 LNG fuel po
wered ordinary cargo ships; 2 Package
construction of one LNG refueling stati
on in Chaohu; 3 New construction of the i
ntegrated marine LNG services center (incorpora
ting LNG refueling, repair and maintenance, as
well as personnel training in respect of fuel po
wered ships) in Chizhou; 4 Establish th
e integrated management information sys
tem for marine LNG application in Anhu
i; 5 Form the standards of marine LNG
refueling service for the trunk line of
Yangtze River; 6 Form the guidelines
of safety regulation for marine LNG app
lication in Anhui Province
2014-2016
