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Liquefied Natural Gas as a Marine Fuel: A Closer Look at TOTE’s LNG Containership Projects

Liquefied Natural Gas as a Marine Fuel: A Closer Look at TOTE’s LNG Containership Projects

Full Title: Liquefied Natural Gas as a Marine Fuel: A Closer Look at TOTE's LNG Containership Projects
Author(s): Anna Lee Deal
Publisher(s): National Energy Policy Institute
Publication Date: June 1, 2013
Full Text: Download Resource
Description (excerpt):

New rules by the International Maritime Organization and the U.S. EPA have created limitations on the sulfur emissions for the marine industry and changed the economics of LNG as a marine fuel. Compared to other emissions compliance options, LNG is an economically viable option for some vessels. Over time the lower operating costs (fuel and emissions compliance) can pay for the large capital investment in an LNG conversion project or new build LNG powered vessel. Tote Inc., an early adopter of LNG fuel in their marine operations has shared their insight into their decision to convert two large (Ro/Ro) containerships to LNG power for the Alaska trade and to invest in two new LNG powered containerships for the Puerto Rico trade. Key to TOTE’s success are 1) the ability to have a long term outlook on their investment 2) building a partnership to provide LNG fuel at the right price, and 3) in the case of the retrofit ‐ an EPA/Coast Guard exemption from 2012 sulfur limits during the time that they convert their vessels to LNG. Vessels that spend the majority of their voyage within Emission Compliance Areas (ECA’s) and those with high utilization and high fuel use will maximize the fuel savings of LNG compared to other more expensive, low sulfur fuel blends that would otherwise be required to comply with emissions standards. These vessel operators will look seriously at LNG as a marine fuel as the most stringent ECA sulfur emissions limits approach in 2015. These early adopters will likely need to build partnerships in order to develop LNG supply and bunkering infrastructure for their vessels. With its high fuel use per vessel, the marine industry has a unique opportunity to act as a critical core customer for the development of new LNG infrastructure projects and, in the process, establish LNG supplies for other transportation industries in the region.

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