DNV GL: LNG Will Play Significant Role in the Future (INTERVIEW)

Driven by the desire to meet the 2020 environmental targets, the maritime industry branches have recognized the demand for thinking out of the box and pursuing alternative solutions to reduce their ecological footprint. During Offshore Energy 2013 exhibition and conference in Amsterdam, the Netherlands, LNG World News spoke with Det Norske Veritas (DNV GL) representatives about Liquefied Natural Gas as ship fuel. 

We spoke with: Bas Veerman, Principal Surveyor, Business Development Manager at DNV GL; Matthé Bakker, Head of Solutions, the Netherlands and Jeroen Van Der Veer, Head of Section Rotterdam Offshore Services.

1.       What LNG projects are you working on these days?

“We have a lot of projects up and running and they mostly have to do with companies that are looking to install LNG infrastructure in the Netherlands or abroad,” Matthé Bakker said.

“These relate to fuel stations, bunker stations and projects of larger scale such as the LBBR (LNG Break Bulk facility under development by Vopak and Gasunie) in the Port of Rotterdam.  It is a mid-scale terminal that will supply bunker operations in the Netherlands.

“In almost all of these projects we serve as the technical experts on safety consulting. We help our clients with the safety analyses for their projects. We do risk assessments, calculate explosion zones, fire distances and provide our clients with advice on which measure to take to ensure that they comply with the applicable laws. In the case of LNG bunkering, compliance can proof to be difficult since it is an activity that involves land-based assets, fueling water-based ships, which means that the land-based and water-based authorities have to work together. They have different rules and policies not necessarily aligned with each other. For instance, in the Port of Rotterdam, the Port Authority plays key role on the water. But as soon as you hit the land you are talking to the DCMR (Environmental Protection Agency Rijnmond, The Netherlands), and you likely fall under European legislation, which differs from the Port Bye laws of the Port Authority.

“Our work has to do with assisting those initiators to make sure their project gets to a permit award stage. Thus, we work with land-based as well as water-based authorities paving the way for our clients. We use concepts and experience from the industry and all the studies we conducted over dozens of years and put them into a new context.

“Since most authorities were not that familiar with LNG, our role has also been to  bring knowledge to the table making sure that the debate is being led on the facts not based on emotions,” Bakker pointed out.“On the land-based side, there are a lot of developments as well, for example on the trucking market.

“Shell has announced the start of installing seven LNG fueling stations, one in Rotterdam and the other locations are not disclosed yet. GDF Suez is looking to install ten to fifteen truck fueling stations; therefore a lot of these companies are eye-bowling what is happening on the market.”

“The EU has approved a lot of subsidies to investigate the potential of LNG as a fuel. The Port of Rotterdam has won a project to study LNG developments along the Rhine.

“In the Netherlands, the LNG PLATFORM has been set up to enable authorities and LNG companies, such as Shell, GDF Suez, Vopak and Gasunie, to collaborate. At the moment, they are setting up a project to ease the entire process of regulatory assessment, technical studies, custody transfer, developing methodologies, and standards.

2.       How would you assess the current situation in the LNG industry on a global level  and what are the prospects for the future?

“There are a lot of significant developments. Many LNG projects are being developed in Australia. Japan has become a very big importer of LNG after the tsunami in 2011, which has serious influence on the world market. In the US market shale gas is developing. All these things boil into a very dynamic pot. So for us, that’s creating a lot of opportunities,” responded Bakker.

Jeroen Van Der Veer reminded that DNV made a 2020 technology outlook, in order to sketch possible future developments for the industry based on the global megatrends.

Bakker added: “We believe very firmly, that the gas will play a significant role. In the 2020 shipping publication, DNV stated that we can expect 1000 vessels to run on LNG. And now on 1. January 2015, the ECA regulation will come into force, and more and more real opportunities will come to life.

“The Port of Antwerp has a tender out for a bunker vessel, in Gothenburg, an LNG terminal is being built, there is the LBBR terminal in the Netherlands, fueling stations etc. A lot of things are happening, and it’s really getting to a professional level. There was a lot of talk for a long time, but now we’re actually getting somewhere.

“Port of Rotterdam achieved its first legally approved bunker location this summer, for Shell’s Greenstream vessel. It might sound insignificant but it is a big step, because there was a lot of effort needed to get there. It is a big milestone step for the Port of Rotterdam. Many more port authorities are working on this and they will make this happen within the next year.“

Bakker mentioned some other projects DNV GL is participating in. “We are working at the moment for GLE, which is a Brussels based organization for the LNG industry, and they will produce a small scale LNG map later this year, it is expected to be published in November – December.“

3.       Can you tell us something about the ‘LNG ready’ concept, what are the benefits of it?

 “At the moment there’s uncertainty about what will the LNG price be, or what will be the low sulphur gasoil price, how much owners need to invest, how much it costs to make ship LNG fueled, where can they get LNG, where will it be available by the time a ship would be in operation,“ said Veerman.

“Another very complicated factor is that when the strategic fuel decision has to be made, you have to consider the costs and benefits of LNG fuel against your alternatives. We spoke about complexity of LNG fuel earlier, but the alternatives are as just as complex. It also requires information about fuel price, the investment costs and the operational expenses.

“We at DNV GL have recognized this complexity. If you are an owner and you need to order a ship now, you need to make a strategic decision about which fuel to use. That is why we have brought this service called ‘LNG ready’, because we consider that, for many cases, maybe the solution is not to go for the full investment in LNG fuel right now, but to prepare for a retrofit in a few years’ time.

“So what we can do, as part of our LNG ready service is, in Phase One, to assist with strategic fuel decision. Will it be a good decision to go for oil fuels or to prepare a ship to make it LNG Ready? And in some instances this strategic study will help decide whether it is best to go with LNG altogether, right from the beginning. And then, we go to Phase Two, where we look more technically at the chosen solution. Then we can help the owner make sure that the decision will be carried out properly, so that the ship will indeed be prepared for LNG. So to summarize we look into the safety concept, whether the ship will be LNG fueled, and we can review technical designs in connection with the layout of spaces. There are two more phases that include more detailed risk analysis and actual plan approval.”

Bakker continued: “DNV GL recently announced the recommended practice for LNG bunkering for ship operators, authorities and initiators. It is now being published for hearing so everybody in the industry can start commenting on it before it is finalized. The recommend practice is aimed at the authorities, LNG bunker suppliers and ship operators.

“We hope, that by setting a recommended practice there will be some unity across countries, because we, for example, do the work in the Netherlands as well as Germany, and it’s a completely different picture how you have to deal with the authorities, that’s one of the things we are trying to solve, that everybody uses the same standards, the same technologies, the same concepts in assessing this technology.”

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LNG World News Staff, November 20, 2013