OSG’s Alaskan fleet gears up for methanol-ready upgrade from MAN ES

U.S.-based tanker owner and operator Overseas Shipholding Group (OSG) has inked an engine upgrade program with German powerhouse MAN Energy Solutions for its Alaskan Class fleet.

The upgrade program covers four vessels from the series including Alaskan Explorer, Alaskan Frontier, Alaskan Legend, and Alaskan Navigator, all approaching 20 years of age.

The lifecycle engine upgrades aim to deliver substantial improvements in engine efficiency and operational capabilities, paving the way for compliance with the Carbon Intensity Indicator (CII).

The upgrades encompass a range of technical and commercial enhancements, such as replacing engine components with newer, more fuel-efficient models. This results in a significant reduction in fuel consumption and lower greenhouse gas emissions.

Moreover, the installation of advanced control systems and optimization technologies will empower crews to operate the vessels more efficiently, OSG said.

What is more, the upgraded vessels will possess the “Ready for Methanol” capability, allowing them to adopt methanol as a fuel source at a later stage.

The LCU program is scheduled to begin in early 2024 in conjunction with plans to reactivate the recently acquired Alaskan Frontier.

The remaining engine upgrades will coincide with scheduled vessel drydocking periods through 2026.

As reported by Offshore Energy, in October OSG signed a deal with BP Oil Shipping Company to purchase a methanol-ready tanker.

Alaskan Frontier is a sister vessel to three other Alaskan Class tankers operated by OSG’s wholly-owned subsidiary Alaskan Tanker Company. OSG plans to reactivate the 1.3-million-barrel capacity tanker which has been in cold layup in Malaysia since 2019.

OSG said earlier that the upgrade of four engines onboard for the Alaskan Frontier is expected to result in 15-20% fuel savings as compared to the vessel’s current consumption.

“The decision to contract with MAN Energy Solutions for engine Life Cycle Upgrades on all four Alaska class tankers represents a major investment in the future of our company,” said Sam Norton, President and CEO of OSG.

“When combined with previously announced commitments to reactivate the Alaskan Frontier, the aggregate investment we will be making into our Alaskan fleet over the next three years will be close to $100 million.”

Norton expects the investment will result in multiple benefits. These include improvements in fuel oil consumption resulting in substantial cost savings. Furthermore, the upgrades will cut over 20,000 metric tons of greenhouse gas emissions per year, OSG said. The estimates are based on historical trading patterns for each of these vessels.

OSG wants to achieve a 15% reduction in annual CO₂ emissions by 2030. This investment alone should account for roughly one-third of that target, Norton said.

“In addition, the anticipated improved emissions attained from the engine upgrades should allow all our Alaskan class vessels to operate in their historical trading patterns while maintaining compliance with current Carbon Intensity Index (CII) regulations through at least 2035,” he added.

“The Life Cycle Upgrade is our ‘Roadmap’ solution for the engine type 48/60 installed on the Alaskan Class,” said Marcel Lodder, Strategic Sales Manager at MAN PrimeServ.

“With the conversion, the roughly twenty-year-old engines of the Alaskan Fleet will not only profit from being ready for future fuels but are also reset to almost completely new condition in combination with today’s serial new build standards.”

“These vessels were originally built with a 40-year design life. With Alaskan crude oil production expected to increase by as much as 250,000 barrels per day by the end of this decade, ensuring the extended operating life of these vessels in compliance with environmental regulations has been a top priority for us and our customers,” said Chris Merten, Chief Operating Officer of OSG’s wholly owned subsidiary Alaskan Tanker Company.

“The upgrade of these vessels’ main engines should allow that goal to be achieved over the next decade, adding years of CII compliance for these vessels to generate additional cashflows through 2035. Looking out over the longer term, the methanol fuel option that these upgrades provide allows possibilities for even longer-term operation should green methanol fuel availability emerge in the decade ahead.”

Finally, OSG has amended existing charter parties for the Alaskan Navigator and Alaskan Legend. The amendments provide for five additional one-year extension options for each vessel at agreed rates through 2035.