Fuel bunkering: Going green means changes on the horizon

By: | at 11:21 AM | Channel(s): Liner Shipping  

The question of answering the challenge for lower emissions is changing the way bunker providers do business.

The bunkering industry provides the entirety of the maritime industry with the fuel oils they consume. As the demand for lower emissions creeps ever closer and more widespread acceptance of alternative fuels arise – like the sudden refocus and acceptance of liquefied natural gas (LNG) as a viable option; the bunkering industry undoubtedly has to adjust, maneuver and grow in order to continue to support the industry upon which it makes a living.

The lingering Tier III section of MARPOL Annex VI, which is an international convention to reduce global emissions of SOx, NOx and particulate matter by ocean-going ships, is scheduled for full acceptance by 2016. And while a number of countries have questioned whether or not the regulations can be met by vessel owners and operators by that time, the majority of IMO’s Marine Environment Protection Committee agree that it can, and should move forward as planned. This in addition to Emission Control Areas has bunkering companies like OW Bunker, expanding their presence to supply alternatives.

“With the impending 2015 ECA regulation, it is vital that customers have a clear strategy and plan for the procurement of quality distillates to ensure compliance. Our role is to actively work with customers to implement this, guaranteeing supply in the locations where they need them and in the most cost effective and risk averse way,” said Adrian Tolson, regional manager, OW Bunker North America in a press release.

OW Bunker, a physical distributor and reseller of marine fuel with a fleet of around 30 bunker vessels, has launched operations at the VOPAK storage terminal in Los Angeles/Long Beach and 18 months earlier, offshore in the Gulf of Mexico. The company also signed a deal with UNIPEC America to provide products at the BOSTCO fuel oil terminal in Houston. From Los Angeles, OW Bunker will work with Westoil Marine Services for barging services to supply regional customers with RMG380 (HSFO and LSFO), RMK500, RMK700 and MGO.

“In combination, Los Angeles and Long Beach remain the largest container ports in North America, with just under 15 million TEUs per year. Marine fuel distribution potential remains significant, and Los Angeles and Long Beach will likely take on a key supply role for distillate fuels,” said Tolson, regional manager, OW Bunker North America. “OW Bunker is establishing a presence to ensure customers are well prepared and have access to quality products ahead of the 2015, 0.1% emissions control area regulation.”

The company also entered an agreement with Genoil Inc., in which Genoil will build a Hydroconversion Upgrading System while OW Bunker will purchase one million tons a year of low sulfur IFO. This partnership was entered into as a way to produce inexpensive low sulfur bunker fuel, which is a market estimated at around five million barrels per day.

“As a leading global fuel distributor, we have a responsibility to our customers to look at all options and innovations for compliance beyond expensive distillates. While we are still in the early stages of this initiative, we are pleased to be partnering with Genoil,” said Steffen Kortegaard, technical director, OW Bunker.

Some vessel owners are looking past ULSD and onward to LNG as an alternative to not only meet the more stringent environmental requirements but shore up costs as well. But they are facing what Johan Sperling, vice president, Jensen Maritime calls the “chicken and the egg problem”. LNG isn’t readily available as a bunkering fuel at this time. Johan’s company, Jensen, which is a naval architecture and marine engineering company headquartered in Seattle, has been awarded a contract to design some of the industry’s first LNG bunker barges in the U.S. for customer LNG America, LLC to begin the buildout of America’s LNG bunkering infrastructure – along the U.S. Gulf Coast anyway. These new barges have an expected delivery date of late 2015 and have an initial planned capacity of up to 3,000 cubic meters of LNG.

“Through LNG America’s LNG bunkering initiative, we plan to serve and facilitate the growing marine demand for LNG,” said Keith Meyer, CEO of LNG America. “LNG America sees the demand for marine LNG to be robust as long as LNG can be made available to the maritime industry on a reliable, dependable and cost-competitive basis. Our mission is to deliver competitively priced LNG as fuel where needed, when needed and in the quantity needed.”

“The significance of this agreement is not only incredible news for the marine industry, which struggles with whether to develop LNG infrastructure or vessels first, but also for companies along the U.S. Gulf that hope to replace their traditional vessels with cleaner, more efficient LNG-powered ones,” said Sperling. “We are thrilled to be working with LNG America in the development of its marine infrastructure and also in providing a green fuel source to this important region. Jensen is on the leading edge when it comes to LNG vessel design and we look forward to serving LNG America and other customers with this valuable service.”

And, a bunkering solution better come to fruition quickly. There are expected to be thirty-one LNG fueled vessels in operation by North American companies by 2018. Harvey Gulf International Marine has contracted for a series of six dual-fuel offshore supply vessels which are being built to be primarily LNG-fueled and also has plans to build the first LNG marine fueling facility in the U.S. This new $25 million Phase 1, Slip B, LNG fueling facility, for which they broke ground on Valentine’s Day, will be located at the company’s vessel facility in Port Fourchon, La. The facility will consist of two sites each having 270,000 gallons of LNG storage capacity.

Likewise, Totem Ocean Trailer Express has announced plans for conversion of two of its containerships to LNG-power and has announced additional plans to build two new, LNG-fuels container ships. Matson has plans for two new 3,600 TEU containerships with duel fuel engines for delivery in 2018 and Crowley has announced plans for two combination container and Roll-On/Roll-Off (ConRo) ships to be delivered in 2017. Interlake Steamship Company announcing plans to convert its fleet; Staten Island ferries converting one of the smaller vessels in its fleet; Horizon Lines is in the early stages of converting two of its containerships; Washington State Ferries is exploring its options and the list undoubtedly continues.

American Journal of Transportation