Cruising on gas – the LNG revolution

The liquefied-natural-gas (LNG) carrier, with its distinctive hump-like tanks, is a common sight for today’s cruise passengers. The Caribbean, Mediterranean and Baltic seas are dissected by major gas transit routes connecting natural gas producers such as Trinidad, Qatar and Norway with the European and South American markets, and these shipping lanes will only get busier as the global energy picture changes.

When natural gas is cooled to temperatures of around -160°C, it turns into liquid – or LNG. The liquid takes up 1/600th the volume of gas, meaning that huge quantities can be handled and shipped with relative ease. It also produces 80% less NOx emissions than diesel and 75% less particulate emissions, and it is non-toxic and non-corrosive. For these reasons, LNG is likely to be the bedrock on which a more sustainable global economy is built – a vital bridge between the fossil fuel and renewable energy eras.

Clean voyage

Perhaps surprisingly, given its sometimes questionable reputation for conservatism, the past few years have seen the cruise industry make an enthusiastic leap into the world of LNG. AIDA kicked things off in August 2011 when it announced that it was to build the first cruise vessel that could be powered by LNG while in port: the dual-fuel AIDAprima. LNG would not be stored aboard the vessel; road tankers would transport the fuel to whatever port the ship was at.

In June 2015, the operator went a step further by announcing orders for two dual-fuel vessels that would be powered by LNG while at sea as well (with a spare bunker-fuel engine in case of emergency). Two such vessels were ordered for Costa within a month of the announcement. In April 2016, MSC announced the construction of two LNG-powered cruise ships costing €4 billion each, with the possibility of two more.

LNG carriers have been using their own supplies of liquefied gas as a power source for many decades in a safe manner – as have growing numbers of oil and gas supply vessels, and car ferries. Yet the cruise industry has been hesitant to make the move. There are numerous reasons for this: chiefly, the fear that a tank breach would put thousands of passengers at risk of asphyxiation, or even lead to a rapid phase transition – a big explosion caused by the rapid transfer of heat from the seawater to the cryogenically frozen gas. No such accident had happened before, but that didn’t mean it never would, some argued. At the same time, the price of LNG was too high and the number of refuelling facilities too low for a conversion to make economic sense.

However, a lot has changed over the past few years. Major gas discoveries and investments in processing facilities have brought down the price of LNG, with big upcoming projects in Russia, Australia and the US likely to ensure a buyers’ market for years to come. At the same time, storage technology has matured and global standards for the use of LNG were agreed at the right time to give cruise operators the confidence to make big LNG investments. The announcement by the International Maritime Organization (IMO) of the first globally binding regulations aimed at reducing shipping industry emissions, in 2013, was the final ingredient.

“The whole debate about tanks underneath passenger spaces had been raging for years, but now it had been resolved [through new standards], which gave us that regulatory certainty,” says Tom Strang, senior vice-president maritime affairs at Carnival Corporation. “We began to see the development of shore-based infrastructure; we had a shipyard we were confident in and a flag authority that was comfortable because the IMO had made the decision. All of that gave us a feeling that we’d reached a tipping point.”

Don’t get carried away

There is a palpable confidence around LNG and its potential to transform the cruise industry. At Seatrade, one CEO reportedly expressed the view that 80% of cruise vessels would be LNG powered by the year 2025, a prediction that, to many, seems a little bullish. While it’s quite feasible that 80% or more of new-builds will be using LNG by then, there are a couple of drags on growth that need to be addressed – a relative lack of bunkering facilities being one of them.

Though countries like South Korea have announced big investments in LNG-fuelling vessels, there aren’t many options in parts of the world that cruise ships tend to frequent. Many investors have been discouraged by the huge fluctuations seen in fuel prices over the past two years, although there have been welcome announcements of investment by hubs such as the Port of Barcelona. Carnival and MSC are working directly with suppliers to ensure the infrastructure is in place in time for launch.

Another challenge is the difficulty of retrofitting existing vessels to use LNG. Unlike a commercial vessel such as an oil tanker, where aesthetics are unimportant, you cannot simply place a 3,000m³ LNG tank on the deck of a cruise ship. At the same time, placing LNG tanks inside a vessel will almost certainly mean lost cabin space – a hit to revenue that many operators are unwilling to take – and would require the ship to be taken out of service for a prolonged period.

Limitations on LNG

An alternative course of action is to build an LNG-ready module with additional cabin space and insert it into the mid-body section of a ship, effectively elongating it. A comparable real-life example is Royal Caribbean’s Enchantment of the Seas, which was broken apart, fitted with a new block of cabins and welded back together in just 31 days. According to research by maritime consultant DNVGL, this course of action could potentially be carried out in a few weeks at 10–12% of the cost of a new-build LNG-powered project.

“If you just insert a new section without elongation, you have no gain in cabins; you are losing space because you have to insert the tanks,” says Gerd-Michael Wuersig, business director of LNG-fuelled ships at DNVGL. “Therefore, the most promising way is to have an elongation.”

As Wuersig acknowledges, however, this isn’t feasible in all cases. While technically possible on ships between 40,000 and 143,000t, anything larger than that is already at the limit of port capacity. Conversely, smaller luxury cruise ships often can’t be elongated as the destinations they visit don’t tend to have the facilities to handle larger vessels.

Paolo Moretti, head of the marine business line at RINA Services, believes that even for the vessels that fall within the weight bracket, elongation might be more trouble than it’s worth.

“To accommodate two or three tanks in this new part of the ship, it needs to be very big,” he says. “Typically jumboisation doesn’t exceed the main vertical zone, so something around 30–40m. If you make it too much longer, you have to calculate the longitudinal strength of the vessel, the stability and so on – there are a lot of issues to be calculated. The best option is to install an LNG tank. Or, in some cases, it’s better to go for scrubbers, because [elongation] is something that impacts the overall structure of the ship.”

Just a pipe dream?

This view is shared by Strang. Given how effective modern scrubber technology has become, particularly at reducing SOx emissions, retrofitting existing vessels to be LNG-powered, whether through elongation or the direct insertion of a tank, does not yet make economic sense.

“We’ve seen from the engine manufacturers the changes that are necessary to introduce gas-fuelled plants on board to make the engines dual fuel,” he says. “They are pretty significant investments and we don’t see a great return on investment in the studies we’ve done so far. For our particular sector, retrofitting is not the first choice. We have other means to ensure our compliance and environmental performance. We are continuing to explore options in certain ships with itineraries in specific areas, but so far we haven’t seen that as a particularly attractive option.”

Given the difficulties of retrofitting and the relative dearth of refuelling infrastructure, the 80% prediction seems highly unlikely today, although you have to admire the optimism of the CEO who made it. Over the longer term, however, the new, greener path ahead is clearly marked.