LNG infrastructure, availability, and accessibility: How Titan LNG is supporting demand?

In a recent interview with Offshore Energy, Dutch independent LNG supplier Titan LNG shared its views and predictions on the demand for LNG as a marine fuel in the upcoming months and years.

For those staying abreast of ongoing discussions around LNG and Bio-LNG, recent weeks have seen an influx of debate, combatting information and ‘agree to disagree’ sentiment. Yet whichever side you fall on, one thing’s clear: demand for the fuel is growing.

Liquified Natural Gas, or LNG, is a common fuel choice adopted by many in the maritime industry, including shipping giants such as Shell, CMA CGM, MSC, Hapag Lloyd, and NYK — to name a few. Adopters of the marine fuel typically cite its GHG emissions reductions capabilities and reduced harmful local emissions that will save lives as its primary benefits, in particular view of achieving the IMO’s upcoming targets in 2030, 2040 and 2050.

Now, shipping is witnessing a vast and steady increase of LNG bunkering infrastructure globally in efforts to meet increasing demand complementing the trillions of USD that are already invested in LNG large-scale infrastructure.

One such company is Titan LNG, an independent and physical supplier of (Bio)-LNG as a marine fuel. Titan LNG has been steadily growing its fleet since its inception in 2012 and is now one of the most prominent suppliers globally.

Offshore Energy sat down with Niels den Nijs, CEO of Titan LNG, and Michael Schaap, Commercial Director Marine to discuss the current climate for LNG as a marine fuel, how infrastructure is adapting, and the lifecycle of the fuel.

OE: Firstly, thank you for your time. It’s great to speak with you both. We wanted to start by asking how do you see the demand for LNG as a marine fuel developing in the coming months and years?

Den Nijs: With the trend over the past 24 months as our guide, we see demand really accelerating. LNG is already in widespread use across the global fleet. The orderbook for LNG-fueled vessels consists of a large variety of vessel types, including box ships, tankers, bulkers, Ro-Ro, and cruise vessels – evidence that LNG is suitable for many ship-owners to use. One clear rationale is that the adoption of LNG significantly contributes to the environmental credentials of your vessel, thereby increasing the chances of winning charters or tenders.

Not a week goes by without hearing of a new LNG-fueled vessel order or expanding LNG infrastructure in core ports around the globe and we fully anticipate this trend to increasingly gather momentum.

As an aside, it’s perhaps interesting for your readers that bio-LNG and synthetic LNG are not only the fuel of choice for decarbonizing the shipping industry. The rocket launch industry is undergoing the same transition and Elon Musk is currently building a methane-fueled rocket that will take the first humans to Mars in a couple of years!

OE: Not much is being said at the moment about Bio-LNG and synthetic-LNG — why do you think that is?

Schaap: Actually, bio-LNG and synthetic-LNG are starting to gain a lot of attention recently and are at the forefront of our focus.

Bio-LNG has already passed through the pilot phases and is scaling up in both supply and demand. It is fully compatible with the existing LNG infrastructure and engine technologies, meaning it can be transported, stored, and bunkered today. Bio-LNG is a biofuel made by processing organic waste flows that are available in abundance and fit into the circular economy that we are all striving for.

However, whilst it is available it comes at a premium price today like all greener fuels in the future. This premium is currently hard to recoup for owners and charterers as there is no price on emitting carbon for ships yet. Titan is very much in favor of carbon pricing to make this fuel use more economical now.

For the longer-term future, like bio-LNG, synthetic or hydrogen-based LNG, derived from renewable sources (such as wind and solar energy) can be ‘dropped-in’ at any ratio combination of both bio- and conventional LNG to fuel the merchant fleet. All of the processes required in the production of synthetic LNG are mature, however, synthetic LNG requires a further rollout of hydrogen infrastructure to become available in meaningful quantities just like all other carbon-neutral future fuels such as methanol or ammonia.

OE: So in your opinion, low-carbon LNG could become more widely utilised in the future?

Schaap: Indeed, and uptake is already increasing now. Customers are actively considering the usage of low-carbon LNG and are making more enquiries about its long-term availability and pricing. Because bio-LNG is made from waste products, the overall carbon footprint and lifecycle is significantly reduced. But emissions reductions aren’t the only benefit. Bio-LNG can be stored and supplied using existing LNG infrastructure, with no adjustments needed to existing engine technology. This safeguards the pathway to 2050 compliance as bio-LNG can be introduced, scaled up, and then eventually transitioned to syn-LNG when hydrogen becomes available.

Titan LNG is actively involved in projects, securing the long-term supply of low-carbon LNG by partnering with production facilities and guaranteeing long-term offtake to them in order to justify investment decisions in these facilities. Titan is also working on green hydrogen projects that can come online in the latter half of this decade.

OE: In a recent report, the World Bank claimed that any further investment in LNG fuelling or bunkering infrastructure would mean that the shipping industry would have to undergo two transitions in the span of 30 years. What are your thoughts on that?

Den Nijs: Through a positive lens, it is beneficial to see LNG as a marine fuel enter the wider conversation. Debate is healthy, and informed decision-making is the only way shipping can achieve IMO-2030 and 2050 targets — and more so, a fully net-zero carbon future. However, we think the report was misinterpreted by a large part of the public that did not take the trouble to read the full report. The study actually focused on which developing countries provide the opportunity to produce future low carbon bunker fuels at scale.

We agree with assumptions that – in the long-term future – hydrogen will probably be the end game past 2050. However, we believe the report underemphasized the role of bio-LNG and biofuels in the medium term, based on outdated estimates of how much bio-LNG can be produced.

We hope that further research from the World Bank and other stakeholders will not only focus on the end game but also the practical steps that move us in the right direction, starting now. And with ten years’ experience of introducing a new bunker fuel to the market, we strongly caution against betting on one horse i.e. ammonia. There are many practical hurdles for ammonia to overcome before it can be safely used at scale and we cannot be sure that, in 10 years from now, ammonia will be where LNG is now. In addition to the current lack of infrastructure, ammonia is extremely toxic, and hydrogen is highly explosive, permeating through just about anything. This presents significant concerns not only for the cost of adoption, but the health and wellbeing of vessel crew, and the public living near ports.

Circumnavigating these challenging issues will be high cost and high risk. There has been no comprehensive Well-to-Wake analysis performed on either of these alternative fuels, as there has on LNG.  Without these studies, how can we effectively compare the long-term environmental attributes of these or other alternatives? We are only at the beginning of the research that is needed to make an informed decision for the long-term future and the costs we now come to in our business cases for hydrogen and green LNG derived from green wind power are more than a factor 10 more expensive.

While we argue that we should explore these alternative fuels, we must not rule out the LNG pathway and the clear evolution from LNG to bio-LNG to synthetic LNG to get us to zero emissions in the long run. In conclusion, doing nothing now and waiting for a magic solution will be looked back on with regret by shipowners in the future. We are also ship owners and if I try to put myself in the shoes of our customers facing the difficult choice of how to choose their future fuels, I am convinced that bio-LNG has a place in any portfolio of ships.

OE: Let’s change gears. Titan LNG recently christened and launched its second LNG bunkering barge. Earlier in the year, you also chartered Green Zeebrugge from NYK. The fleet is expanding steadily — any further plans for fleet expansion?

Schaap: Yes. Titan LNG has also recently announced the tendering of its new bunkering barge, Krios. While our fleet is agile, it does predominantly supply in the ARA region. Krios will increase the accessibility of LNG as a marine fuel in the Port of Zeebrugge and English Channel ports. We were particularly purposeful in the design of the ship and wanted it to match our environmentally conscious mission. Krios will have a hybrid bio-LNG / battery propulsion system ensuring that it is future-proofed, without sacrificing operational efficiency.

We’re also partnering to supply outside of Europe. For example, in November 2020, Titan LNG successfully arranged the first LNG bunkering in the port of Pasir Gudang, in collaboration with Petronas. Indeed, we expect more fuel to be delivered under the same structure. Being a supplier, ourselves means we are well-placed to assist our customers and help suppliers further afield in getting the best deal, helping both sides to optimize the LNG supply process and add technical know-how for fast and efficient compatibility checks.

By 2025, we expect to have the largest network of LNG bunkering vessels in Europe and we will continue to work with our partners, both in Europe and around the world, to ensure that shipowners are able to start the journey towards a zero-carbon future today.

OE: Mid-2020, you secured funds for a Bio-LNG project. The project would entail three additional bunker barges. What is the situation with that project?

Schaap: The Bio2Bunker project is progressing well. Titan LNG was granted €11 million in funding from the EU’s Connecting Europe Facility (CEF); the EU’s grant scheme supporting transport infrastructure, connectivity and the switch to greener fuels for transport.

The Titan Hyperion is the mothership for the Amsterdam-Rotterdam-Antwerp region and will resupply our FlexFuelers. Hyperion is an 8,000 cubic metres sea-going LNG bunker vessel, around 135 meters in length and 19 meters in width, expected to become operational by late 2023. It will mirror the conventional bunkering supply chain and is the result of extensive interactions with customers that identified the need for more economic LNG bunkering solutions than the seagoing (bunker) ships in use today. Owners and charterers can rest assured that this low CAPEX and OPEX barge brings enduring competitiveness to LNG bunkering versus IFO 0,5% and MGO.

OE: We wanted to avoid the questions of the COVID-19 effects on your business, but the situation prevails. How did you stay on top of it?

Den Nijs: Like most other businesses, we prioritized the health and wellbeing of our crew, our staff and our customers. It is a very new, unknown situation to be in and when it came to regulations and what we could do best, we put our faith in the experts to help inform those decisions.

Fortunately, the world of LNG is fairly digital already and we have electronic processes that support social distancing. That said, we are looking forward to increasing human interaction as restrictions ease – we believe it is essential to enable constant dialogue and feedback from our customers and partners, which we thrive on at Titan LNG.

Schaap: I think if there is one clear takeaway from the past twelve-plus months, it is that shipping’s need to decarbonize operations and help clean up air pollution is urgent, it is immediate, and waiting games are no longer an option. We have seen a very real, tangible impact to pollution levels and our global carbon footprint simply by reducing emissions from sea traffic, air traffic, road traffic. LNG — and of course bio- and synthetic LNG — hold this capability for ongoing, increasing emissions reductions. We are truly excited to see the continuing expansion of its use in the shipping industry and will remain at the innovative front of new fuels in the future.