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Audun Grimstad, Principal Consultant, Maritime Advisory 31 May 2013 DRAFT LNG as ship fuel - market potential and necessary fuel infrastructure.

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Presentation on theme: "Audun Grimstad, Principal Consultant, Maritime Advisory 31 May 2013 DRAFT LNG as ship fuel - market potential and necessary fuel infrastructure."— Presentation transcript:

1 Audun Grimstad, Principal Consultant, Maritime Advisory 31 May 2013 DRAFT LNG as ship fuel - market potential and necessary fuel infrastructure

2 © Det Norske Veritas AS. All rights reserved. LNG as ship fuel 31 May 2013 DRAFT 2 It’s how you manage your most critical risks ELIMINATING RISK IS NOT AN OPTION

3 © Det Norske Veritas AS. All rights reserved. LNG as ship fuel 31 May 2013 DRAFT 3 DNV’s core competence identify assess manage risk

4 © Det Norske Veritas AS. All rights reserved. LNG as ship fuel 31 May 2013 DRAFT 4 Turn risks into rewards Manage risks Get relevant decision support Build trust and confidence towards stakeholders Achieve and maintain safe and sustainable performance BUSINESS RESPONSE

5 © Det Norske Veritas AS. All rights reserved. LNG as ship fuel 31 May 2013 DRAFT DNV – a global company with strong Indian presence 5 10,500 employees 300 offices 100 countries

6 © Det Norske Veritas AS. All rights reserved. LNG as ship fuel 31 May 2013 DRAFT 6 DNV: Advise to stakeholders throughout the entire LNG value chain Sub- surface Subsea Piping transportation (multiphase and gas) Offshore production facilities (incl. storage, processing & liquefaction) Transport vessel (LNG carriers) Onshore liquefaction Terminal/storageEnd-user (gas distribution/ power generation) LNG used as a maritime fuel Break-bulk and small scale distribution LNG used as a fuel for power plants

7 © Det Norske Veritas AS. All rights reserved. LNG as ship fuel 31 May 2013 DRAFT DNV focus on key risks in LNG projects 7 COMMERCIAL Contracts Financing Liabilities MARKET Commodity prices LNG price Market/Demand volatility Foreign Exchange PROJECT CAPEX/OPEX Schedule Approvals/Permits ORGANIZATIONAL Personnel competence Access to skilled workforce Work in inhospitable locations TECHNICAL Application of new technology Operability Process efficiency Safe and efficient operations

8 © Det Norske Veritas AS. All rights reserved. LNG as ship fuel 31 May 2013 DRAFT EU invests 2.1 bn € for 139 LNG bunker ports by 2025 8

9 © Det Norske Veritas AS. All rights reserved. LNG as ship fuel 31 May 2013 DRAFT Forecasting 9

10 © Det Norske Veritas AS. All rights reserved. LNG as ship fuel 31 May 2013 DRAFT World Energy Outlook scenarios 10

11 © Det Norske Veritas AS. All rights reserved. Relative fuel price differences have a significant influence on uptake on LNG fuelled vessels Regulatory requirements on EEDI and SOx in particular drives technology uptake Fuel prices, investment horizon and fuel burden are important drivers Sensitivity FINDINGS 11 Scenario D+ is Scenario D with increased fuel burden and investment horizon Uptake of smaller engine/de-rating Uptake of LNG fuelled vessels From “Shipping 2020”

12 © Det Norske Veritas AS. All rights reserved. More than 1 in 10 new buildings in the next 8 years will be delivered with gas fuelled engines LNG price, sulphur limits and EEDI are the main drivers From 2012-2019 the LNG price is the main contributing factor When approaching 2020, EEDI and sulphur limits will create additional motivation for LNG as fuel - In Scenario D, 35% of newbuildings will be delivered with LNG engines In scenario D, we foresee about 1,000 newbuildings from 2012-2020 and some 6- 700 retrofits Finding 1 FINDINGS 12 Share of LNG fuelled newbuildings Scenario D From “Shipping 2020”

13 © Det Norske Veritas AS. All rights reserved. LNG as ship fuel 31 May 2013 DRAFT Decision making criteria for a bunkering facility operator 1.Availability of LNG 2.Potential benefits of providing LNG bunker in a port (new business opportunities, cargo turnover, etc.) 3.The risks of providing LNG as bunker fuel in port (safety & operational risks, security risks, etc.) 4.The risks of not providing LNG as bunker fuel in the port (environmental non compliance, missed business opportunities, etc.) 5.Expected bunker volumes 6.Logistics solutions 7.Technical and operational roadblocks limiting the LNG bunkering operations 8.Financial support 13 GATE Terminals Potential locations for bunkering

14 © Det Norske Veritas AS. All rights reserved. LNG as ship fuel 31 May 2013 DRAFT The 3 main scenarios for LNG bunkering are intermediary tank to ship transfer (ITTS), truck to ship transfer (TTS) or ship to ship transfer (STS) 14 TTS ITTS STS Examples of LNG for fuel value chains

15 © Det Norske Veritas AS. All rights reserved. LNG as ship fuel 31 May 2013 DRAFT DNV is the leading Class Society on LNG fuelled ships 15  Class activities  Class related activities CLASS SERVICES 1  Strategic advice, market & feasibility study  Planning & design  Class related activities  Operational risk study ADVISORY SERVICES 2  Class activities  Class related activities CLASS SERVICES 1  Strategic advice, market & feasibility study  Planning & design  Class related activities  Operational risk study ADVISORY SERVICES 2

16 © Det Norske Veritas AS. All rights reserved. LNG as ship fuel 31 May 2013 DRAFT DNV Class Rules  Tank arrangements  Tank types and tank connections leakage protection  Tank arrangement –can be vacuum insulated tank with tank connection space  Portable tanks, tank containers  Bunkering arrangements & piping  Engine room arrangements  Gas safe configuration  Emergency Shut Down (ESD) protected configuration 16

17 © Det Norske Veritas AS. All rights reserved. LNG as ship fuel 31 May 2013 DRAFT Class activities Class services overview and selected reference 17  Contribution to the development of the International Code for Gas Fuelled Ships (IGF code)  Contribution to the ISO standard (ISO TC-67 WP10) on LNG bunkering  “LNG ready” - Preparing future newbuildings for easy retrofit  JIP with several parties on the use of fuel cells running on LNG onboard cruise ships Class related activities  35 out of 37 LNG fuelled vessels in operation globally have DNV class (as per 10.01.2013)  Design Reviews of ship concepts with gas fuel  Approval in Principle (AiP) and certification for tank systems  Approx. 90 gas only & DF engines and 2 gas turbines certificated to DNV Class  Approved engine types: - 2 types of medium speed spark ignited gas-only engines - 1 type of high speed spark ignited gas-only engine - 4 types of medium speed dual-fuel engines - MAN ME-GI slow speed dual-fuel engine - 1 type of gas turbine - Several engine types from several makers under evaluation/discussion Class activities

18 © Det Norske Veritas AS. All rights reserved. LNG as ship fuel 31 May 2013 DRAFT 37 LNG fuelled ships in operation worldwide 18 SHIPS IN OPERATION YearType of vesselOwnerClass 2000Car/passenger ferryFjord1DNV 2003PSVSimon MøksterDNV 2003PSVEidesvikDNV 2006Car/passenger ferryFjord1DNV 2007Car/passenger ferryFjord1DNV 2007Car/passenger ferryFjord1DNV 2007Car/passenger ferryFjord1DNV 2007Car/passenger ferryFjord1DNV 2008PSVEidesvik ShippingDNV 2009PSVEidesvik ShippingDNV 2009Car/passenger ferryTide SjøDNV 2009Car/passenger ferryTide SjøDNV 2009Car/passenger ferryTide SjøDNV 2009Patrol vesselRemøy ManagementDNV 2009Car/passenger ferryFjord1DNV 2010Patrol vesselRemøy ManagementDNV 2010Car/passenger ferryFjord1DNV 2010Patrol vesselRemøy ManagementDNV 2010Car/passenger ferryFjord1DNV 2010Car/passenger ferryFjord1DNV 2010Car/passenger ferryFosen Namsos SjøDNV 2011PSVDOFDNV 2011Chemical tankerTarbit ShippingGL 2011Car/passenger ferryFjord1DNV 2011PSVSolstad RederiDNV YearType of vesselOwnerClass 2012Car/passenger ferryFjord1DNV 2012PSVEidesvikDNV 2012PSVOlympic ShippingDNV 2012PSVIsland OffshoreDNV 2012General CargoNordnorsk ShippingDNV 2012PSVEidesvik ShippingDNV 2012PSVIsland OffshoreDNV 2012Car/passenger ferryTorghatten NordDNV 2012Car/passenger ferryTorghatten NordDNV 2012Car/passenger ferryTorghatten NordDNV 2013PSVREMDNV 2013RoPaxViking LineLR Updated 10.01.2013. Excluding LNG carriers and inland waterway vessels

19 © Det Norske Veritas AS. All rights reserved. LNG as ship fuel 31 May 2013 DRAFT 31 confirmed LNG fuelled newbuilds 19 YearType of vesselOwnerClass 2013Car/passenger ferryTorghatten NordDNV 2013Harbor vesselIncheon Port Authority 2013High speed RoPaxBuquebusDNV 2013Ro-RoSea-CargoDNV 2013Ro-RoSea-CargoDNV 2013RoPaxFjordlineDNV 2013RoPaxFjordlineDNV 2013General CargoEidsvaagDNV 2013Car/passenger ferryNorledDNV 2013Car/passenger ferryNorledDNV 2013Ro-RoNorlinesDNV 2013Ro-RoNorlinesDNV 2013TugBuksér & BergingDNV 2013PSVHarvey Gulf Int. MarineABS 2013PSVHarvey Gulf Int. MarineABS 2013Patrol vesselFinish Border GuardGL 2013Car/passenger ferrySociety of Quebec ferriesLR 2013TugCNOOCCCS 2013TugCNOOCCCS YearType of vesselOwnerClass 2014Car/passenger ferrySociety of Quebec ferriesLR 2014Car/passenger ferrySociety of Quebec ferriesLR 2014TugBuksér & BergingDNV 2014PSVHarvey Gulf Int. MarineABS 2014PSVHarvey Gulf Int. MarineABS 2014Gas carrierSABICBV 2014Gas carrierSABICBV 2014PSVRemøy ShippingDNV 2014PSVSiem OffshoreDNV 2015PSVHarvey Gulf Int. MarineABS 2015Container ShipTOTE ShipholdingsABS 2015Container ShipTOTE ShipholdingsABS CONFIRMED ORDERBOOK Updated 10.01.2013. Excluding LNG carriers and inland waterway vessels

20 © Det Norske Veritas AS. All rights reserved. LNG as ship fuel 31 May 2013 DRAFT DNV is the leading Class Society on LNG fuelled ships 20  Class activities  Class related activities CLASS SERVICES 1  Strategic advice, market & feasibility study  Planning & design  Class related activities  Operational risk study ADVISORY SERVICES 2  Class activities  Class related activities CLASS SERVICES 1  Strategic advice, market & feasibility study  Planning & design  Class related activities  Operational risk study ADVISORY SERVICES 2

21 © Det Norske Veritas AS. All rights reserved. LNG as ship fuel 31 May 2013 DRAFT DNV could unlock your potentials from strategy to operational issues 21  Strategy advice  Regulations advice  Business development  Enterprise risk management  Which bunkering operations fit your needs?  What type of intermediate solutions needed?  What are the hazards during bunkering operations?  What are the hazard & risks during ships design and development?  How to convince public that LNG is safe? DNV Services  Is bunkering facility available outside ECA zones?  How to identify the right locations for bunkering?  Will demand be big enough in the future? Market & Feasibility study  What does strategic investment fit us – newbuild or retrofit?  How much investment needed to retrofit?  Will funding be available?  What kind of incentives available  Market assessment  Logistics modelling  Value chain analysis  Project DD  Project risk management  LNG operations safety study  LNG bunkering safety study  HAZID  Environmental risk  Navigational risk Stakeholders challenges Strategic advicePlanning & DesignOperation & Risk study

22 © Det Norske Veritas AS. All rights reserved. LNG as ship fuel 31 May 2013 DRAFT Advisory services overview and selected reference  Feasibility assessment for LNG bunkering JIP in Singapore  Feasibility study for the supply of LNG as shipping fuel in Belgian ports  JIP LNG fuel bunkering in Australia – Infrastructure & regulations  Feasibility study for mobile LNG fuel tanks  Cost efficient ECA compliance for a shipping company  Shipping 2020 22 Strategic advice, market & feasibility study  BunGas JIP  LESAS JIP LNG bunkering in Rotterdam  JIP LNG bunkering Ship-to-Ship for RoPax  Frame agreement with the port of Brunsbüttel  Consultancy services for Gasnor Brunsbüttel LNG Terminal  Environmental Impact Assessment for Eckelmann’s power barge  Harbour toolkit for the Port of Rotterdam Operational risk study  Concept ships - ECO-ship 2020, concept design for an open hatch bulk carrier with Oshima - Ecore, concept design for a VLOC with FKAB, TGE Marine, Cargotec and MAN D&T - Green Dolphin, Concept design for a Handysize bulk carrier for SDARI  Kawasaki Heavy Industries Approval in Principle for LNG fuelled container vessel  Risk analysis & design safety verification of onshore LNG plant in Risavika, Norway Planning & Design

23 © Det Norske Veritas AS. All rights reserved. LNG as ship fuel 31 May 2013 DRAFT LNG is now key to DNV corporate strategy 23

24 © Det Norske Veritas AS. All rights reserved. LNG as ship fuel 31 May 2013 DRAFT Safeguarding life, property and the environment www.dnv.com 24 Please contact: audun.grimstad@dnv.com

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