Methanol momentum: 25 ships in operation, 81 more on the way

There are currently 25 methanol-fuelled ships in operation and another 81 ships on order as of March 2023, according to DNV’s Alternative Fuels Insight.

This compares to a total of 82 methanol-powered ships that were in operation and on order at the end of 2022.

Of the newbuild ship orders placed in the first three months of 2023, 6% were with methanol, equaling the 6% ordered with LNG, excluding LNG carriers, DNV said. The figures support a strong momentum building behind methanol as a decarbonization choice for the maritime sector.

The current number is expected to be even higher as orders for methanol-powered newbuilds continued into April and May.

The acceleration in ordering comes on the back of the adoption of the IMO interim guidelines for ships using methyl or ethyl alcohol as fuel, together with the IMO‘s IGF Code for ships using low-flashpoint fuels, providing a comprehensive regulatory framework for the use of methanol as ship fuel.

The container-shipping sector has been at the forefront of the ordering of methanol-fuelled newbuilds this year as well, with industry’s heavyweights like HMM and CMA CGM spearheading the contracting.

In February 2023, South Korea’s HMM signed newbuilding contracts with compatriot Hyundai Samho Heavy Industries (HSHI) and HJ Shipbuilding and Construction (HJSC) for nine 9,000 TEU containerships powered by methanol dual-fuel engines.

At the beginning of April, French liner heavyweight CMA CGM followed with a deal to construct 16 large container ships worth more than $3.06 billion.

The order comprises of twelve 15,000 TEU methanol dual-fuel powered large container ships and four 23,000 TEU LNG dual-fuel powered container vessels, a CMA CGM Spokesperson confirmed to Offshore Energy.

Companies are also planning for methanol in their investments by ordering methanol and ammonia-ready ships. This has been the case with Ocean Network Express (ONE) which contracted ten 13,700 TEU methanol/ammonia-ready containerships in March.

ONE has also started discussions with the shipyard and equipment manufacturers to implement onboard carbon capture and storage on delivery. The containerships are slated for delivery in 2025 and 2026.

Dry bulk is also venturing into methanol-powered newbuilds. J. Lauritzen, a Danish investment company focused on maritime industries, has signed a letter of intent (LoI) with Japanese shipbuilder Tsuneishi Shipbuilding for the construction of methanol dual-fuel bulk carriers.

The LoI includes the construction of minimum two methanol dual-fuel 81,200 dwt Kamsarmax bulk carriers which will be capable of trading with zero-carbon emissions when powered by green methanol and bio diesel.

According to J. Lauritzen, the vessel will be among the very first zero-emission capable bulk carriers in the world.

In addition, Swiss freight trader Cargill has placed an order for two methanol-fuelled bulk carriers in Japan. The company has teamed up with Mitsu & Co, and ordered a Kamsarmax duo from Japanese shipbuilder Tsuinesihi Shipbuilding.

The RORO sector has also cast a vote of confidence in methanol, with most recent orders from CMES and SAIC Anji.

Activity is picking up in the retrofitting space as well.

Namely, Singapore-based shipping company Berge Bulk (BB) is exploring the feasibility of converting a bulk vessel to methanol fuel propulsion with ABS classification society.

The bulker is a 210,000t dwt bulk carrier, currently under construction at the Nihon Shipyard in Japan. Delivery is expected in mid-2024.

The six-month study is underway, and the two companies will collaborate on a broad range of subjects from the availability of methanol fuel and practicalities of bunkering to the review of technical and economic aspects of the conversion.

In addition, Maersk’s Svitzer is working with Houston-based Caterpillar Marine to adopt solutions that enable Svitzer to utilize methanol in their fleet. Under the partnership, the duo plans to work on the installation of dual-fuel methanol engines on new tugs as well as conversions of existing Cat^® powered tugs, which comprise the majority of Svitzer’s fleet.

At the moment only fossil-based methanol is currently available for bunkering. However, plants for producing e-methanol are currently under development and production volumes could reach up to 0.1 EJ/yr before the end of this decade, according to DNV figures.

Compared with other fuels like LNG, methanol is more convenient for storage and transportation as it is a liquid fuel at ambient temperature and pressure. It can be used in existing diesel engines with relatively minor adaptations, making the conversion process much less expensive than other alternative fuels.

Market analysis shows that methanol reduces emissions of sulfur oxides (SOx), and NOx by up to 60% in comparison to HFO, including reductions in particulate matter emissions of 95%. Nevertheless, e-methanol production plants are ramping up development paving the way for a zero-emission profile of the fuel. Specifically, e-methanol can be added as a drop-in fuel in the existing infrastructure.

There is currently no dedicated bunkering infrastructure for methanol. However, since methanol is a commonly traded product, there are 118 terminals for local storage in connection with ports, (DNV, 2023a). On a general basis, it is expected that all methanol terminals could be used as reload terminals for a methanol bunker vessel or barge, with no or limited modifications to the terminal.

Both ship-to-ship and truck-to-ship bunkering are feasible options for methanol. Nevertheless, the recent uproar in ordering methanol-powered newbuilds has pushed the market into building methanol bunkering vessels as well.

Responding to market demand, Singapore shipowner Consort Bunkers has signed a contract with China Merchants Industry Nanjing Jinling Shipyard for six 6,500-ton methanol fuel bunkering ships.

The vessels will be suitable for carrying methanol, fatty acid methyl ester, biofuels, and more, the shipyard said.

“With increased interest in methanol as fuel for other deep-sea ship applications as well, the commercially available product range is expected to increase, and we also foresee other makers entering this market. Retrofit options for a range of 2-stroke engines are also available, resulting in a current assessment of technology readiness level (TRL) 9 for 2-stroke dual-fuel engines,” DNV said.

“We also see an increased interest in methanol as fuel from shipowners operating in segments where 4-stroke engines are the preferred choice. This has triggered a technology development from manufacturers aiming to serve both the newbuilding market and potential retrofits. The current TRL is estimated to be 6, though we expect to see a rapid increase in technological maturity level for 4-stroke engines (DNV, 2022c). In the cruise segment there is interest in methanol as fuel and alternative energy converters. This drive can be expected to accelerate the development in fuel-cell technologies using methanol as an energy carrier, also benefiting other segments. The current TRL is estimated to be 5 with an expected maturation time longer than for internal combustion engines.”