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LNG ‘bridge to renewable energy economy’

The best fuel option for power plants and ship propulsion during the next 25 to 40 years is liquefied natural gas, according to Jens Alers.

The wind of change for power production is becoming evident in Bermuda. In its Integrated Resource Plan Proposal, Belco evaluated natural gas as the top principal fuel option for the island's power generation in the future. If that choice becomes a reality it is possible a ship similar to one now joining the Bernhard Schulte Shipmanagement fleet could be used to transport LNG to the island.

Mr Alers is group director of Bernhard Schulte Shipmanagement (Bermuda), which has offices in Par-la-Ville Road. He spoke on the topic of LNG as a major fuel choice for the next 40 years following news that Bernhard Schulte is about to take delivery of its first gas fuel supply vessel, Kairos, which has been built in South Korea.

The ship can carry 7,500 cubic metres of liquefied natural gas and will deliver cargoes to power companies in the Baltic, and to other ships that use LNG for propulsion fuel.

Mr Alers has a twofold interest in the growth of LNG as a mainstream fuel. One is the potential for it to become a significant cargo for maritime transportation, the other is its role in providing a less environmentally damaging propulsion fuel for ships.

Discussing the latter point, he said the shipping world is facing stringent regulations aimed at cutting the level of pollutants and harmful emissions caused by the burning of propulsion fuel — which today is primarily heavy fuel oil.

In 2020, stricter global fuel sulphur content regulations take effect. The International Maritime Organisation regulations will make it no longer acceptable for ships to continue burning heavy fuel oil that contains sulphur content above 0.5 per cent m/m [mass by mass] without taking measures to reduce the resulting sulphur oxide emissions.

In Mr Alers's view, ship owners and operators have three choices. If they continue to use the traditional heavy fuel oils with sulphur content above the prescribed level they must install exhaust gas cleaning systems, also known as “scrubbers”, an investment that could cost many millions of dollars per ship, depending on the size of the vessel.

Alternatively, shipowners can have their vessels switch to burning low sulphur fuel oil, which is more expensive than the traditional heavy fuel oils, or they can opt to introduce new ships to their fleet that use fuels that have low or zero sulphur, such as LNG.

Retro-fitting a ship to run on LNG is prohibitively expensive, while fitting scrubbers is a more feasible option and is likely to be the choice of some shipowners.

Mr Alers believes using low sulphur content fuel oil will also be the choice of many, with the price of the fuel likely to come down as supply increases to meet demand.

However, the third option of introducing new LNG-powered ships into their fleets is being pursued by some of the world's largest shipping companies, such as Maersk Line and Hapag-Lloyd. French shipping company CMA CGM has ordered nine 22,000 container TEU ships that will be powered by LNG.

The shift to liquefied natural gas as propulsion fuel for ships makes sense to Mr Alers.

With gas there is no sulphur oxide and minimal nitrate oxide emissions, and a reduction in particulate matter — tiny particles that pollute the air as a byproduct of burning oil fuel.

Gas supply ships like Kairos cost between $30 million and $55 million to build depending on the equipment they have fitted. Bernhard Schulte Shipmanagement went ahead with its new ship only once it had ensured it had a secured charter for the vessel.

Mr Alers said: “In my view LNG is the best ship fuel and power plant fuel for the next 25 to 40 years. After that we will be in the hydrogen fuel and renewable energy economy.

“We call LNG a bridge fuel to the hydrogen and renewable energy economy.”

When asked for his opinion on the future of power generation in Bermuda, in light of Belco's Integrated Resource Plan Proposal that evaluated four scenarios for the future of Bermuda's electricity supply, Mr Alers said: “Belco needs to act. We do need a solution to what stands in the halls of Belco — those old engines.”

He believes that one way or another LNG power production will come to Bermuda, while also acknowledging that the infrastructure needed for a LNG power plant is not cheap.

A number of island communities have engaged in LNG-generated power production, such as Jamaica, Dominican Republic and Sardinia.

Mr Alers said he would not want to see Bermuda rely solely on natural gas, but instead have renewable energy, such as solar, as part of the overall energy generation solution.

If Bermuda heads down the LNG power generation route, he believes it could be gas supply ships like Kairos that will provide the maritime transportation for LNG from the US East Coast to the island.

Bernhard Schulte Shipmanagement looks after 600 ships and 20,000 employees. It manages tankers, container ships and VLCC, or Very Large Container Ships.

Preparing to sail: the Kairos is a new gas supply ship that is joining the Bernhard Schulte Shipmanagement fleet. A ship like this could be used to transport liquefied natural gas to Bermuda if the island decides to use natural gas as the primary fuel for electricity generation in the future (Photograph supplied)

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Published May 24, 2018 at 9:00 am (Updated May 24, 2018 at 1:32 am)

LNG ‘bridge to renewable energy economy’

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