Converting ships to alternative fuels feasible and cost-effective

Converting containership vessels to alternative fuels is technically and economically feasible, Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping said citing findings of a new report.

As the industry moves to decarbonize its fleet, numerous questions remain to be answered on the best pathways for shipowners given the uncertainty in relation to the future fuel landscape.

The report takes a deep dive into the technical, environmental, and techno-economic impacts of preparing container ships for conversion to green fuels in an attempt to de-risk investment decisions and provide shipowners with answers on what converting boxships to ammonia or methanol would entail.

The highlights build upon the results of the  ‘Green Fuels Optionality Project’, which used insights from a number of project partners to determine the technical requirement and costs of converting from fuel oil to methanol or ammonia or LNG to ammonia for containerships, bulkers and tankers.

The reference vessel used for this report is the container shipping sector is a 15, 000 TEU twin island containership.

Converting from fuel oil to methanol or ammonia

The project found that the accommodation was the most optimal location for the alternative fuel tanks on the boxship, as this position has the smallest impact on cargo space. However, tanks cannot be retrofitted in this position due to the existing ship structure, so vessels must be prepared for conversion at newbuild. When ships aren’t prepared, methanol or ammonia tanks must be installed in the cargo space during conversion.

Designs for methanol-fuel oil (top) and ammonia-fuel oil (bottom) dual fuel vessels after preparation at newbuild; Image credit: Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping

According to the project findings, methanol and ammonia dual fuel newbuilds should cost approximately 11 and 16% of a standard newbuild cost, respectively.

Methanol and ammonia have a lower calorific density than fuel oil, so they require larger tanks to provide the same range as fuel oil vessels. The study used full-range tank volumes of 16,000 m3 for methanol and 20,000 m3 for ammonia, compared with 8,000m3 for fuel oil.

As a result, converting to full-range dual fuel vessels using these designs reduces cargo space by 240-610 and 530-1100 TEU for methanol and ammonia, respectively, with conversion of unprepared ships sacrificing most space. As explained, these cargo losses can cause a significant reduction in the earning potential of the vessel, so they must be carefully considered before planning dual fuel or conversion-ready vessels.

The center said that it modeled the impacts of lost cargo space on the total lifetime costs of converted vessels using its techno-economic model, which included add-on newbuild costs, conversion costs, and cargo loss costs depending on the number of years the ship is operated on fuel oil only before conversion.

The center further pointed out that conversion costs and cargo losses can be reduced by converting to a reduced alternative fuel range. The proposed reduced range designs have a tank capacity of 10,000 m3 for methanol and 7.800 m3 for ammonia, resulting in a slot loss of around 400 TEU.

Although the range is significantly reduced, it is believed to be sufficient for traveling between Singapore and Southern Europe on ammonia. The reduced range conversion enables conversion CapEx to be cut to 9-12 % of a standard newbuild cost for methanol and 14-19% for ammonia.

Reduced range conversions also lower cargo loss and total costs. Therefore, converting to reduced range methanol-fuel oil vessels becomes cost-effective compared with building a full range dual fuel newbuild after just 4 years. Furthermore, converting to a reduced-range ammonia-fuel oil vessel is cost-effective from year zero, the report further notes.

Converting from LNG to ammonia is less complex than converting from fuel oil to ammonia, as many of the gas-related systems required for ammonia are already in place.

In cases where the existing LNG tanks cannot be prepared for ammonia, it will not be practically possible to replace the LNG tanks located under the accommodation, and as a result, conversion to ammonia would not be feasible. As a result, LNG vessels must be compatible with liquid ammonia storage from newbuild for a conversion to take place.

The center proposed designs for conversion to full range on ammonia (20,000 m3 LNG/ammonia tank) and reduced range (12,000 m3 LNG/ammonia). After conversion, these ships become ammonia-fuel oil dual fuel vessels and can no longer operate on LNG.

According to the report, the designs which prepare the vessels for later conversion, increase the cost of a newbuild by 7% and 2% for full range and reduced range, respectively, compared to a standard LNG-fuel oil newbuild. Conversion costs were 8% of an LNG newbuild, resulting in total additional costs for newbuild and conversion of 15 and 10% for full and reduced range. This is 33 and 28%, respectively, of a standard fuel oil newbuild cost.

Tags: Alternative Fuels, Ammonia, Decarbonisation, LNG, Maersk, Maersk Mc Kinney Moller, Methanol