* EU wants all ports to have LNG fuel stations by 2020
* Shale gas, LNG could push gas ahead of oil as top fuel
By Henning Gloystein and Jonathan Saul
LONDON, March 5 North European ports are leading
a switch to natural gas as a cleaner way to power ships than
burning oil-based bunker fuel, while regulation and cost
benefits are likely to convince other sectors to follow in
Gas has been used so far mostly for power generation and
heating, while oil products have dominated the transport sector.
The outlook for cheaper gas in the wake of the shale gas
boom in North America as well as toughening environmental
regulation in Europe have driven up investment in gas as a
Ports in northern Europe, pushed by regulation to clean up a
major source of pollution, are now at the forefront with the
planned installation of liquefied natural gas (LNG) fuel
stations for ships, known as bunkering, before the end of the
"At present there are around 20 vessels in operation using
LNG as a marine fuel; almost all are in Scandinavia. Many more
are on order, and even more will be likely to be ordered," said
Andrew Clifton, general manager of the Society of International
Gas Tanker and Terminal Operators.
The shift in ship engines will follow.
"It will be at least two years before major deep-sea
shipping companies order LNG-powered engines once financing
becomes more available," said Arthur Barret, director of LNG
bunkering at French group Gaztransport & Technigaz.
"By then, hopefully, there will also be more infrastructure
to load LNG as a ship fuel," he added.
An European Union draft law has set a goal to cut greenhouse
gas emissions from the shipping sector by at least 40 percent by
2050 from 2005 levels. The European Commission is pushing for
regulation that will oblige all major ports in the EU to provide
LNG refuelling facilities by 2020.
"There seems to be a very strong economic argument in favour
of supporting LNG in shipping," a European Commission working
document published in January said.
Swedish infrastructure company Swedegas and Dutch oil and
gas storage company Vopak are jointly investing around
1 billion Swedish crowns ($155.3 million) in an LNG terminal at
the port of Gothenburg, Sweden's biggest. Swedegas said it was
also looking to fit other Swedish ports with LNG stations.
"We can start bunkering in Gothenburg in 2015, and activity
will be expanded by 2017," a spokeswoman for Swedegas said.
The Belgian port of Antwerp, one of Europe's biggest, is
chairing an international working group with other leading
ports, including Amsterdam, Bremerhaven, Brunsbuttel,
Gothenburg, Hamburg, Le Havre, Los Angeles, Long Beach,
Rotterdam, Stockholm and Zeebrugge, to develop guidelines on
safe procedures for LNG bunkering operations.
Rotterdam and Singapore, both major transport hubs, have
already announced plans to invest in facilities that would allow
ships to take LNG as a marine fuel, and Norway has already
developed a state-driven national LNG marine transport fuel
BIG CHANGE AHEAD
Ports in North America, also affected by new industry
standards to reduce pollution from ships within so-called
Emission Control Areas, are beginning to follow suit.
Anglo-Dutch energy major Royal Dutch Shell said on
Tuesday it would build two small-scale gas liquefaction units in
Louisiana and Ontario, with plans to become operational by 2016,
in order to unlock value in the use of LNG as a transport fuel.
"Populated coastal areas have emissions standards that
prohibit the use of heavy fuel oil, so 'cleaner' options should
become increasingly popular in coming years," Urs Dur, managing
director of Clarksons Capital Markets, said in a report.
Even so, the shift will take time and start in big
commercial markets because of the need for massive investment in
global infrastructure to transport and distribute gas, starting
with LNG import and export terminals at ports.
Shell has said gas will ultimately overtake oil as the
world's most used energy source, driven largely by growth in the
"In the 2030s, natural gas becomes the largest global
primary energy source, ending a 70-year reign for oil," the
company said in a report published in February.
Shell did not see an end to the primacy of oil in the road
transport market before 2040, however. In the auto market,
gas-powered vehicles also will face stiff competition from
electric cars, it added.
China and the United States are both making attempts to
replace more oil-powered vehicles with cleaner gas.
"The high energy density of the fuel increases the driving
range; this makes LNG an interesting option for the heavy-goods
transport sector," said Rolande LNG, a Dutch road gas
transportation company, adding that it was already relatively
well developed for use in trucks in the United States.
In China, the government has targeted the country's vast
transport sector as a preferred user of natural gas.