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First Asian ship fuelled by methanol may set sail from Singapore next year

The Business Times by TAN HWEE HWEE

Singapore

THE first ship destined to operate in Asian waters using methanol, a fuel touted with greener potential than liquefied natural gas (LNG), is expected to set sail in Singapore late next year - that is, if a pilot project takes off as planned.

Not-for-profit lobby group Methanol Institute (MI), and Nanyang Technological University (NTU) are co-funding this first-of-its kind project in Asia. While still at a pilot stage, a successful run could bolster interest in methanol as fuel to power ships, providing another option for shipowners that are preparing themselves for tough new green shipping rules on marine fuel that come into force in 2020.

The targeted cost of this pilot trial is under US$200,000 and will cover the conversion of a ship to be fitted with an imported methanol-fuelled engine and subsequent sea trials.

MI chief executive Gregory Dolan hopes that maritime players here will be encouraged to make the methanol switch once they gain a better understanding of its use as a marine fuel.

Burning methanol - a fuel mostly derived from natural gas now - emits close to zero sulphur dioxide, a harmful greenhouse gas. This credential that methanol shares with LNG allows the two cleaner-burning alternatives to stake claim as marine fuels that comply with the new rules.

From 2020, the International Maritime Organization (IMO) rules will ban ships from using fuels with a sulphur content above 0.5 per cent versus 3.5 per cent now. This global sulphur cap has forced the international shipping sector to look at embracing greener alternatives to high-sulphur fuel oil, the de-facto source of energy that has been powering ships for decades.

Mr Dolan says methanol is competing directly with LNG to fill the need of hydrocarbon-based marine fuels in the low-sulphur future.

For now, LNG is pulling ahead with just two more years left to the 2020 deadline.

Just nine methanol-fuelled vessels are in operation to date. Methanex, the world's largest methanol producer, owns seven of these ships and it will add four more to its fleet starting next year. That's far off from the number of ships running on LNG which at last count stood at around 200 in 2016.

What has helped boost LNG-fuelled fleet is that ocean-going LNG carriers are equipped to use boil-off gas as marine fuel. LNG is chilled in tanks onboard carriers to negative 163 degree Celsius to stay liquefied and boil-off gas occurs when stored LNG comes into contact with external heat.

Unlike LNG, methanol is liquid at room temperature. This allows some existing storage facilities onboard ships to be converted to store methanol and therefore lowers the costs of converting ships to burn methanol.

Comparatively, the cost of converting ships to run on LNG can be prohibitive. Even if shipowners choose to build LNG-fuelled vessels from scratch, Mr Dolan notes that these would come at "substantial price premium compared to conventionally-fuelled ones".

He further argues that methanol, when produced from renewable sources, can be a "future-proof" marine fuel meeting a second green shipping regulation on the horizon.

In April, the IMO committed to halve carbon dioxide from ship emissions by 2050. International shipping cannot count on LNG use as a marine fuel alone to meet the IMO's ambitious CO2 emissions target.

In light of this, many in the industry consider the move by the IMO to recognise methanol as a marine fuel may help deliver the desired CO2 emissions target; in September, an IMO sub-committee completed the draft guidelines for the safety of ships using methanol, setting them on course for formal approval by the IMO's Maritime Safety Committee in 2020.

Following the positive regulatory development, MI and NTU's joint pilot project that is taking place in Singapore - which is home to the world's largest trading hub for marine fuel - may further bolster interest in methanol as marine fuel.

Simon Neo, Asia regional manager for the International Bunker Industry Association, says data collected from this pilot project could fill some of the gaps on methanol, including its level of fuel efficiency and viability as marine fuel.

Just 1 per cent of the world's methanol output is now extracted from renewable sources, going by an MI estimate. More investments would be required to scale up "renewable" methanol production to fulfil its promise as a "future-proof" marine fuel.