Methanol the future proof marine fuel

With the technological and regulatory challenges associated with burning methanol as a bunker fuel largely resolved, it’s time for the industry to move forward, as Maersk has done, and get ready to go green with methanol.

That was the view widely expressed at our “Rise of Methanol As A Future Proof Marine Fuel” seminar held in Mumbai and online on 29 April 2022. The event organisers were Sea Commerce America Inc. and Institute of Marine Engineers of India’s Mumbai Branch and sponsored by Methanex, Canada and Methanol Institute, Singapore. FutureFuels, India were media partner.

It was back in August 2021 that methanol secured its position as a future marine fuel when A.P. Moller – Maersk announced an order for twelve large ocean-going container ships to operate on carbon-neutral methanol. This landmark order has raised the profile of this promising fuel. However, each shipowner faces unique challenges, and it is not enough to just follow Maersk’s lead and expect success. In the seminar the panel of experts spoke in detail on installation options, fuel cost and availability, bunkering infrastructure, and e-fuel production potential.

Today, methanol made from natural gas, offers a lifecycle GHG reduction of 5-15% compared to diesel as well as immediate reductions in SOx, NOx, and particulate matter. Methanol offers a 2% lower fuel consumption per kWh than diesel fuel, and engine corrosion and fuel slip are not an issue due to the high combustion rate achieved by the engine designers.

In case of a spill, methanol is miscible in water, with near zero risk of damage to the environment and near zero potential harm to the wildlife.

IMO regulations on handling methanol are well developed within the IGF Code and the Methyl/Ethyl Interim guidelines. Still to come could be rules for methanol bunkering and standards for fuel quality.

Class oversight is well established. ABS, a pioneer in this, will class the Maersk vessels, and its safety evaluation will include design considerations such as the need for cofferdams between fuel tanks and fire risk areas, double-barriers and sealing systems, ventilation and gas detection, explosion mitigation, and redundancy.

The Maersk newbuilds will require larger bore engines than current dual-fuel methanol LGIM installations, and MAN expects a further increase in engine size to be available soon. This will open up the market for other large, ocean-going vessels, and MAN is already seeing a lot of interest in retrofits.

Berit Hinnemann from Maersk talked about the partnership Maersk has entered into the producers of Green Methanol to supply their fleet methanol powered fleet. Maersk will require 10000ts in the year 2023 and 500,000 tonnes by mid-2025. Berit also mentioned that Maersk sees “methanol in combination with biodiesel for the pilot vessel as the only certain and scalable pathway towards significant impact this decade.”

These 16000 TEU DF Maersk vessels are to be classed with ABS and will provide “20 percent improved energy efficiency per transported container”.

Mr. Vikrant Rai, took over the stage and presented the regulatory views on the subject. He also stressed upon the importance of port energy enhancements and ship energy enhancements.

Availability

Methanol is available in over 100 ports as per an independent study conducted by Methanol Institute.

Availability of green methanol, which has near zero carbon foot print on life cycle analysis basis, is still limited. Irrespective of the fact how methanol is produced, whether brown or grey or green or blue, because methanol molecule has same characteristics it is possible to mix green and grey or others to reduce the carbon footprint to comply with the relevant CO2 regulation.

Costs

A large dual-fuel 2-stroke engine running on methanol could cost a shipowner up to $4 million more on a newbuild and up to $9 million more for retrofit. These costs are partially mitigated because the engine can be Tier III compliant without the need for an exhaust gas recirculation system ($1 million) or a selective catalytic converter ($1 million). The need to continually run air compressors to support these after-treatment systems adds further to their cost.

Experience to date has shown that operating a dual-fuel methanol engine can add about 5% to OPEX due to training and maintenance. There are STCW training requirements for crews – basic IGF Code training for seafarers and advanced training for masters and engineers. Additionally, MAN’s proprietary training on its LGIM engine is recommended.

Fuel Prices

Fuel price was a primary concern for our seminar participants, and it was noted that Argus Marine Fuels and S&P Global Platts now report methanol prices. Methanol is currently competitive with LNG and ammonia, and it is available at over 100 ports already, but what are the infrastructure costs for establishing bunkering facilities?

Infrastructure

Sea Commerce has examined this issue and estimates that to install a shore-based 20,000cbm methanol storage tank would cost approximately $2.5 million – the same size LNG tank facility would cost approximately $50 million. A significant price differential also exists for the establishment of truck or bunkering barge infrastructure, indicating that methanol could be made available more economically than LNG or other new fuels that require cryogenic or pressurised containment systems. Methanol has the simplest storage and handling of competing fuels, for example, LNG, hydrogen, ammonia, and LPG. Indeed, in its infrastructure report for marine fuels released in April 2021, the World Bank recommended that money should not be invested in LNG bunkering facilities due to the limited role of LNG as a marine fuel beyond 2030 due to its higher GHG/CO2 footprint on a lifecycle basis.

Lifecycle GHG performance

While the IMO’s 2050 targets are still currently being debated, it is widely agreed that a full lifecycle approach will be taken when evaluating the GHG performance of future fuels. This is expected to lead methanol production towards recycled carbon feedstocks and generation technologies that involve renewable energy. Taking a lifecycle approach that includes scope 3 emissions such as wind turbine construction, green methanol does have a carbon footprint, but it is about 20 times less than marine gas oil, LNG, or methanol produced from natural gas and about three times less than methanol produced from biomass.

Methanex is already producing methanol from recycled CO2 at its Medicine Hat facility in Lousiana, using renewable natural gas from biomass at its Geismar facility, and producing e-methanol at the CRI facility in Iceland.

Supply and demand need to develop in unison to ensure green methanol can be cost-competitive and meet future demand. This won’t happen overnight, but the transport, storage, bunkering, and combustion technology available today is future-proof – how the methanol is produced is irrelevant because the resulting molecule remains the same.

The event was designed to address the needs of shipowners and operators, and moderated by Richard Clayton, Chief Correspondent at Lloyds List. Speakers, including the host and organizer Capt. Saleem Alavi, delved into the technical, commercial, and regulatory details. Top industry experts spoke on the occasion including Berit Hinnemann, Head of De-Carbonization Business Development at Maersk; Ayca Yalcin, Director Market Development EMEA at Methanex; Chris Chatterton, Chief Operating Officer at the Methanol Institute; Fredrik Stubner, Chief Executive Officer, Green Marine Engineering; Kjeld Aabo, Director New Technology at MAN Energy Solutions; Rene Laursen, Manager of Global Gas Solutions at ABS; Vijay Arora, Managing Director Indian Register of Shipping; Vikrant Rai, Engineer & Ship Surveyor cum-Deputy DG(Tech), Mumbai.

Most of the near 400 event participants indicated that they had more confidence in methanol’s viability as a bunker fuel after hearing from the expert presenters.

At Sea Commerce, we are ready to support you, to share our insights, and fill in any gaps. We look forward to working with shipowners and stakeholders throughout the industry as we all work towards our common goal of a cleaner, greener world.

Closing the seminar Capt. Saleem Alavi took the opportunity to thank IMEI as co-organiser, Methanex, Methanol Institute for sponsoring the event, and FutureFuels as Media partner and the support of, Envirown, Lloyd’s List, IRS, ABS, MAN, WARTSILA, Green Marine Engineering, Engineering and Ship Surveyor from Govt. of India for their time to participate in the event. A special thanks to Captain Kapildev Bahl, active member of Company of Master Mariner of India and Mr Surendra Rai of Institute of Marine Engineers India for their help in organising this event.

Source: Sea Commerce

Tags: ABS, IMEI, Lloyd's List, MAN energy Solutions, Methanex, Methanol, Methanol Institute, Sea Commerce