Vessels have carried liquefied natural gas (LNG) for many years, but in the future, LNG may be used as fuel for those vessels.

LNG has many uses. Notably, countries such as Japan and South Korea have used LNG for generating electricity. In Canada, plans exist to ship it across the Pacific Ocean from Kitimat in British Columbia. Eventually, the Rabaska LNG project may also be revived in Quebec. Norway is currently the most advanced country in using LNG as fuel for ferries, tugs, pilot boats and other vessels. The MT ARGONON (a 6,100 dwt dual-fuelled chemical carrier), is purportedly the world’s first LNG-fuelled tanker, and was delivered in Rotterdam in December 2011. In the U.S., two “dual– fuelled” offshore supply vessels are under construction for operation in the Gulf of Mexico. There may be similar developments elsewhere in the foreseeable future.

The two key factors that account for the growing interest in fuelling ships with LNG are environmental regulations and cost savings. The use of LNG results in as much as 90-to- 95 percent less sulphur oxide (SOx) emissions, as well as less nitrogen oxide (NOx) and carbon dioxide (CO2) emissions. These features make LNG attractive as a fuel that would assist owners in complying with existing and future regulations governing Emissions Control Areas (“ECAs”), such as the North American ECA, which the International Maritime Organization (the “IMO”) established under Annex VI (Regulations for the Prevention of Air Pollution from Ships) in March 2010. New rules for emissions standards within the North American ECA are due to come into force by the end of 2012.

While cost considerations are not fully known, it appears that LNG is more affordable than heavy fuel oil. The hope is that LNG bunkers would cost less than low-sulphur marine gas oil. Furthermore, using LNG may prove less expensive than installing exhaust gas cleaning systems (“scrubbers”) to reduce emissions.

Regulatory bodies and classification societies are moving quickly to develop guidelines on the use of LNG as a ship fuel. Some of the guidelines are the following:

  • The American Bureau of Shipping has developed the “ABS Guide for Propulsion and Auxiliary Stems for Gas Fueled Ships” (released May 2011).
  • Germanischer Lloyd published its “Guidelines for the Use of Gas as Fuel for Ships” in 2010.L
  • Lloyd’s Register is developing its “Rules for the Classification of Natural Gas Fuelled Ships” (expected release date: July 2012).

The IMO, through its Sub-Committee on Bulk and Liquid Gases, is busy developing an “International Code for Safety for Ships Using Gases or Other Low Flashpoint Fuels” (the “IGF Code”). The IMO’s intention is to make the IGF Code mandatory, by adopting it as an amendment to the Safety of Life at Sea Convention (“SOLAS”), which would come into force at the same time as the 2014 revision to SOLAS. This would permit ships using LNG to meet the strict ECA emission standards that will take effect in 2015.  

Despite these developments, at least three main regulatory challenges remain that confront the building and use of LNG-powered vessels:

  1. ship design – Where should LNG tanks be located on ships? Should they be placed under accommodations? This is an issue of special relevance to cruise ships, although it also is a source of concern for container vessels.
  2. bunkering – The viability of LNG as vessel fuel depends in part on supply. Possible solutions include delivery of LNG by truck to docks, the building and use of bunker barges, or pipelines.
  3. crew training – Training crews for the proper handling of LNG as fuel is essential. Such training would have to be regulated, possibly by amendments to the STCW Convention.

At present, Canada has no statute or regulation governing LNG-fuelled ships, although the subject appears to fall under federal jurisdiction. In fact, Canada’s Marine Machinery Regulations, now in force under the Canada Shipping Act, 2001, limit ship engines, with few exceptions, to (diesel) fuel having a flashpoint of 60 degrees C° (LNG can produce an inflammable gas cloud at -163 degrees C°). Nevertheless, Transport Canada is among several countries now actively involved at the IMO, together with the classification societies, in developing the long-awaited IGF Code.

In summary, LNG-propelled vessels may well prove to be a game-changer for the shipping industry, whatever challenges they and the relevant regulations pose to us today.