Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Marine lng fuel, challanges and opportunities

874 views

Published on

Shipping optmising operations & meeting the 2020 IMO emissions cap

Published in: Business
  • Be the first to comment

  • Be the first to like this

Marine lng fuel, challanges and opportunities

  1. 1. © Wärtsilä MARINE LNG FUEL: CHALLENGES & OPPORTUNITIES 18.9.2019 [Presentation name / Author]1 John Hatley PE Gas Initiatives ( MBA, MSE ) Wartsila North America Cell +1 281 221 4209 john.hatley@wartsila.com John Hatley PE LinkedIn S2.6 SHIPPING OPTIMISING OPERATIONS & MEETING THE 2020 IMO EMISSIONS CAP 17-19 SEPTEMBER 2019 HOUSTON, TEXAS
  2. 2. © Wärtsilä Future Ahead, structural shifts? As a vessel owner, all I want to know what fuel strategy… … regulatory obsolescence … investment returns … environmental currency What do I choose to boost my bottom line? 2 © Wärtsilä A “Commodity Play” on fuel energy costs seeking competitive advantage for survival & market share.
  3. 3. © Wärtsilä Challenges 18.9.2019 [Presentation name / Author]3
  4. 4. © Wärtsilä Major Risk Sources, Threats, & Opportunities 18.9.2019 [Presentation name / Author]4 A vessel lifetime exceeds far longer accelerating change frequency… Key: look for structural changes, avoid defensive technologies, comprehend advancing technologies, and view strategic adoption as a competitive advantage. Environmental Economic Regulatory Political Technological ???
  5. 5. © Wärtsilä Competition Model Forces 18.9.2019 [Presentation name / Author]5 Government Legislation exercises market influence… emissions
  6. 6. © Wärtsilä Watershed 12 December 2015 18.9.2019[Presentation name / Author]6 Paris COP21 nearly 200 nations adopt global pact to fight climate change, promise cuts to greenhouse gas pollution with sanctions for countries failing to comply. Source: http://www.cbc.ca/news/world/cop21-climate-change-talks- saturday-announced-1.3362354
  7. 7. © Wärtsilä 13 April 2018 18.9.2019 [Presentation name / Author]7 Source: https://maritime-executive.com/article/imo-agrees-to-co2-emissions-target#gs.4pzG7ZQ Roadmap began 2016, declares shipping CO2 initial reductions… 50% by 2050… strengthening EEDI efficiency… 4th & 5th studies during 2019-2022.
  8. 8. © Wärtsilä 13 April 2018 18.9.2019 [Presentation name / Author]8 Source:http://www.imo.org/en/MediaCentre/PressBriefings/ Pages/06GHGinitialstrategy.aspx# IMO committed to GHG reductions… Levels of ambition… implement additional phases EEDI… 40% reduction by 2030… pursue efforts toward 70% by 2050 compared 2008 levels… reduce total GHG annual emissions by at least 50% by 2050 compared to 2008.
  9. 9. © Wärtsilä Environmental Timeline 18.9.2019 [Presentation name / Author]9 Regulations beget more regulations Baltic SECA No. America ECA North Sea ECA EEDI Adopted EEDI Phase 0 EEDI Phase 1 SEEMP Mandatory US Caribbean ECA EU Monitoring, Reporting, & Verification BWMC Ratified 0.5 % Global S0x BWMC Implemented BWMC Expanded No. Sea & Baltic N0x ECA EEDI Phase 2 EEDI Phase 3 Global N0x Tier I 3.5 % Global SOx 1.0 % S0x ECA Global N0x Tier II 0.1% ECA SOx N0x Tier III ECA
  10. 10. © Wärtsilä Regional Air Emissions, Environment, & Health 18.9.2019 [Presentation name / Author]10 CO2 Carbon Dioxide Greenhouse Gas NOx Nitrogen Oxide Ozone SOx Sulphur Oxide Respiratory PM Particulate Matter Carcinogen Low emissions = Anatomical… Human Health Global Warming
  11. 11. © Wärtsilä Regional Air Quality & Global Warming 18.9.2019 [Presentation name / Author]11 Anatomical… clean fuel promotes better health and longer life… Global… is regional aggregated REGIONAL AIR QUALITY GLOBAL AIR QUALITY
  12. 12. © Wärtsilä Disruptions 18.9.2019 [Presentation name / Author]12
  13. 13. © Wärtsilä Marine Annual Fuel Consumption 18.9.2019 [Presentation name / Author]13 Source: Scorpio Tankers ( NYSE STNG) 12 February 2019http://www.scorpiotankers.com/~/me dia/Files/S/Scorpio- Tankers/STNG%20STIFEL%20Conferenc e%20Presentation%20_Final.pdf IMO, EIA, OPEX, IEA, CE Delft, EnSys/Navigistics… Estimates vary on daily marine fuel demand… 4.7 … 7.0 mm bpd Recent Consensus… Average 6.0 mm bpd CE Delft 2020 Million bpd 4 - 0 - 2 - 6 - 8 - Pre 2020 Studies 2020 Studies
  14. 14. © Wärtsilä IMO 2020 Sulfur Cap Disruptive Fuel Shift 18.9.2019 [Presentation name / Author]14 Source: http://www.scorpiotankers.com/~/media/Files/S/Scorpio-Tankers/STNG%20Company%20Presentation%20March_Final.pdf MGO & LSFO 1.9 mb/d MGO & LSFO 3.7 mb/d HSFO 3.7 mb/d HSFO 1.1 mb/d HSFO NonCompliants 0.8 mb/d MGO & LSFO 1.8 mb/d MGO & LSFO 1.9 mb/d Incremental Demand 2019 Shifting HFO Bunker Demand 2020 Incremental Boost Strains to MGO & LSFO MGO & LSFO 2017 2020 2017 2020 Bunkers shift from HSFO to MGO & LSFO… Demand increase 1.8 mm bpd strains inelastic supplies of MGO & LSFO… = price leap amidst availability reductions. 6 5 4 3 2 1 0 4 3 2 1 0
  15. 15. © Wärtsilä Fuel Forward Curve 7 March 2019 18.9.2019 [Presentation name / Author]15 Source: http://www.scorpiotankers.com/~/media/Files/ S/Scorpio- Tankers/STNG%20Company%20Presentation %20March_Final.pdf 285 $/mt 235 $/mt 2020 2021 2022 $/mt 300 - 250 - 200 - 150 - Fuel Spread Deepens 3.5% HSFO - 0.1% MDO Market anticipates jump approaching 2020 IMO Global Sulfur Cap Spread Rotterdam 3.5% HSFO vs. 0.1% Gasoil PRE 2020 2020 - 2022 Rotterdam Spread 3.5% HSFO vs. 0.1% MGO
  16. 16. © Wärtsilä Opportunities 18.9.2019 [Presentation name / Author]16
  17. 17. © Wärtsilä Perspectives on Tons, Volume, & Co2 18.9.2019 [Presentation name / Author]17 Utilize ABS/ IMO agreed calculation for CO2 based upon tons generated per ton of fuel mass consumed* Ship Burns 10,000 metric tons HFO per year = how many tons of LFO, MGO, Ethanol, Methanol, DME, LPG Butane, LPG Propane, Ethane, LNG, Hydrogen, Ammonia ? = how much volume m3 per each ? = how many tons CO2 generated per each ? * Only fuel properties and assume all other things equal: same efficiency, same ship, same route, …
  18. 18. © Wärtsilä Equivalent Annual Fuel Burn as 10,000 Tons HFO 18.9.2019 [Presentation name / Author]18 Tonnage Outliers Methanol 2.0 x HFO Ammonia 1.8 x HFO Ethanol 1.5 x HFO DME 1.4 x HFO
  19. 19. © Wärtsilä Equivalent Annual Volume 18.9.2019 [Presentation name / Author]19 Require Largest Volume Hydrogen 4.3 x HFO Ammonia 2.5 x HFO Methanol 2.5 x HFO DME 2.0 x HFO
  20. 20. © Wärtsilä Equivalent Annual CO2 18.9.2019 [Presentation name / Author]20 Least CO2 Ethane 21% < HFO LNG 26% < HFO Hydrogen 100% < HFO Ammonia 100% < HFO Renewables Decades Away!
  21. 21. © Wärtsilä Fuel Energy & Density vs. HFO 18.9.2019 [Presentation name / Author]21 Outliers Hydrogen Methanol Ammonia DME Less Space & Weight vs. HFO Greater Space & Lighter Weight vs. HFO Less Space & Greater Weight vs. HFO Greater Space & Weight vs. HFO
  22. 22. © Wärtsilä Landmark GHG Emissions Study 11 April 2019 18.9.2019 [Presentation name / Author]22 Definitive GHG Study; uses real engine data for realistic results. Takes into account methane slip and supply chain fugitive emissions conducted on Well to Wake WtW, Well to Tank WtT, Tank to Wake TtW. Source: https://info.thinkstep.com/lng-ghg-study?hs_preview=iCocCGSo-8445007461
  23. 23. © Wärtsilä 11 April 2019 18.9.2019 [Presentation name / Author]23 Well to Wake… up to 21% Co2 reduction vs. HFO @ 2.5% Tank to Wake… up to 28% aligns with IMO method
  24. 24. © Wärtsilä Adoptions 18.9.2019 [Presentation name / Author]24
  25. 25. © Wärtsilä Marine Substitution Sail to Steam Percent 25 © Wärtsilä Year ? Sources: Challenging the S Curve: Patterns of Technological Substitution, Brice Dattee, Copenhagen, Denmark 18 June 2007 adapted by JFH Steam 1830 @ 10%... Why delay ?
  26. 26. © Wärtsilä Clipper Ship Era 1840’s Large Sails Remarkable Speed ( 18 mph ) Good Cargo Capacity Smaller Crew ( reduced cost ) 26 © Wärtsilä Sail defensive performance … brief 3 decade surge
  27. 27. © Wärtsilä Marine Substitution Sail to Steam Percent 27 © Wärtsilä Year 3 Decades 85 Year Adoption Rate Sources: Challenging the S Curve: Patterns of Technological Substitution, Brice Dattee, Copenhagen, Denmark 18 June 2007 adapted by JFH Steam 1830 @ 10% … 1915 @ 90% dominant
  28. 28. © Wärtsilä US Railroad Substitution Steam to Diesel Percent 28 © Wärtsilä Year 13 Year Adoption Rate Sources: Cowles Foundation for Research in Economics, Yale, Intrafirm Rates of Diffusion of an Innovation, Mansfield, 24 May 1962: adapted by JFH Diesel 1944 @ 10%.... 1957 @ 90% dominant
  29. 29. © Wärtsilä Take aways… 18.9.2019 [Presentation name / Author]29
  30. 30. © Wärtsilä IMO 2020 0.5%... Step change… chaos CO2 reduction… Structural change… beginning Regional Air Quality… clean gas… better health = longer life Defensive Technologies… traditional fuels mitigation Risk: stranded assets… fuel and ships… seize opportunity Gas is future proof 18.9.2019 [Presentation name / Author]30
  31. 31. © Wärtsilä Future Ahead, structural shifts? As a vessel owner, all I want to know what fuel strategy… … regulatory obsolescence … investment returns … environmental currency What do I choose to boost my bottom line? 31 © Wärtsilä A “Commodity Play” on fuel energy costs seeking competitive advantage for survival & market share.
  32. 32. © Wärtsilä GHG is a Stock not a Flow Problem 18.9.2019 [Presentation name / Author]32 “While LNG may not be the sustainable homogeneous fuel of choice for a zero carbon future, we are not prepared to wait for 100% compliant solution if we know that, together with our partners, we can make significant progress now,” Rashpal Bhatti, BHP VP Maritime & Supply Chain Mgmt Source: https://www.lngworldnews.com/bhp-issues-tender- for-lng-fueled-bulk-carrier-freight/ 15 July 2019
  33. 33. THANK YOU John Hatley PE VP Americas Marine Solutions & Director Market Shaping Gas Initiatives ( MBA, MSE
  34. 34. © Wärtsilä APPENDIX 18.9.2019 [Presentation name / Author]34
  35. 35. © Wärtsilä IMO MEPC 1/Circ. 866 30 January 2017 18.9.2019 [Presentation name / Author]35 IMO agreed calculation for CO2 based upon tons generated per ton of fuel mass consumed aboard vessel, not volume
  36. 36. © Wärtsilä IMO guideline page 3 18.9.2019 [Presentation name / Author]36 The energy content Lower Heating Value “LHV” per mass varies by fuel type… C02 generated per ton of fuel mass… not volume
  37. 37. © Wärtsilä IMO guideline Annex page 32 18.9.2019 [Presentation name / Author]37 Volume relates to Mass by “Density”
  38. 38. © Wärtsilä ABS Fuels Presentation Data Reference 18.9.2019 [Presentation name / Author]38 Source: ABS Presentation SGMF Port Canaveral 2 May 2019
  39. 39. © Wärtsilä Calculation Spreadsheet 18.9.2019 [Presentation name / Author]39 ABS & IMO data; …. calculation of equivalencies; tons, volume, C02

×