The US shipping industry is facing changes in the next 3-10 years as LNG is considered as a marine transportation fuel. Currently, pioneering companies are making investments in LNG and forming partnerships to build the LNG marine market. There are several challenges and market drivers influencing the adoption of LNG by the marine market in the US. Regulatory drivers to reduce emissions, the price differential advantage of LNG, and the potential for economic disruption from higher fuel costs are pushing interest in LNG as a marine fuel. However, the staggered adoption rate as LNG is not suitable for all vessel types and operations, challenges in training personnel and developing best practices, and uncertainty around the return on investment for retrofitting to LNG are hind

1. Liquefied Natural Gas for marine transportation
When will LNG be adopted by the marine market in the United States?
The US shipping industry is facing an inevitable period
of upheaval. The next 3-10 years will see great change, INTRODUCTION GROWTH MATURITY
although opinion is divided regarding the speed of change
driven by the possible use of LNG as a marine
transportation fuel.
In preparation for their upcoming market development LNG EXPORTS ENVIRONMENTAL
PTION
DISRU
report, FC Business Intelligence has released a snapshot MIC
ONO
of the CHALLENGES and market DRIVERS that the United EC N
URN O
States LNG marine market is facing. R RET STMENT?
VE ND INVE
RI G A TICE
YD IN C
Rate of adoption
OR IN RA
AT RA T P
UL T S
EG BE
LNG marine market: IAL
R
OF
ENT TY S
where are we now? PRICE DIF
FER ILI IVE
AB AT
AIL ERN
AV LT
A
E RED TE
STAGG N RA
Natural Gas has the potential to play a significant O
ADOPTI
role in a number of transportation markets in the
United States and globally. Currently, the marine Time
LNG market is being built by pioneering companies
making substantial investments and forming
strategic partnerships.
80%
Sulphur Oxides 90-95%
Carbon Dioxide up to 25%
Nitrogen Oxides 90%
Particulate Matter 100%
North American Emissions
Control Area
Entry in to force: 1 August 2012
Enforced by: Environmental Protection
Agency (EPA) and the US Coast Guard
Market (USCG)
drivers
1 2 3 4 5
Why is there so much interest Regulatory driver Environmental Price differential Economic disruption LNG exports
in LNG as a marine fuel? The catalyst for change Studies of converted 8 trillion cubic Fuel cost is 80% of The U.S. DOE’s
in the marine fuel diesel engines meters of natural total costs for ship desire to establish
market is environmental have shown a gas reserves in the operators, therefore the US as a
regulation, enacted by reduction of: United States has a cheaper, regulatory significant LNG
the International led to a 10 year low compliant fuel exporter will take
• Sulphur Oxides
Maritime Organization in gas prices. The source may have a number of years
by 90-95%
(IMO). These regulations, marine market is a major impact on to be realised. While
• Carbon Dioxide
which will become more expected to see a competitiveness. the export market
by up to 25%
stringent in 2020, 20% or better price fully develops, there
regulate the level of • Nitrogen Oxides advantage for will be increasing
Sulphur Oxides, Nitrogen by 90% LNG over Ultra Low availability for the
Oxides and Particulate • Particulate Matter Sulfur Diesel for the domestic LNG
matter emitted. by 100% foreseeable future. market.
Hierarchy of
challenges
1 2 3 4
What are the challenges to Staggered Training and best Return on Availability of
the LNG marine market adoption rate practice investment? alternatives
reaching a critical mass? First adoption will occur Demand for experienced Absence of a clear ROI LNG is not the only option
from ship owners who operations professionals for marine vessels to available to ship owners
have access to significant will increase, but there is prove categorically prove seeking to comply with
CAPEX. Adoption will limited supply and best economic model. The the EPA regulations.
occur in an ad hoc, practice for smaller, likely adoption rate will These alternatives are
vessel-by-vessel coastal vessels. The be heavily influenced by not without their own
approach whereby primary source of best the success of LNG challenges. Ship owners
retrofitting and new practice on LNG haulage on shore. could also:
builds will have to fit maintenance & refueling Similarly, given the 25+ a) Burn low sulfur fuels
with the existing is for tankers. The year life cycle of vessels such as Marine Diesel
operations plans. regulatory regime is still the ROI for retrofitting Oil (MDO); or
in a nascent stage, with will vary significantly. b) Fit abatement
further guidelines and technologies
regulations on both new (i.e. exhaust gas
builds and operations. scrubbers)
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