Americas News
U.S. Still Reluctant to Adopt LNG Bunkers: Industry Sources
Liquefied natural gas (LNG) bunkering in the U.S. will take a while to be meaningfully adopted as shipowners and suppliers weigh the risks and costs of developing the supporting infrastructure, according to industry sources quoted by Platts.
"Most companies won't even look at that type of project unless the return on investment is at least 10 percent and depending on the capital leverage the return on investment may need to be closer to 18 percent - 20 percent," said one shipping expert, adding: "the return on investment is largely determined by the cost of capital leverage."
In contrast to many other regions of the world, including countries in Asia and Europe, the Americas are said to be taking more time to assess the feasibility of LNG as marine fuel.
"The concern from an owner/operator of tramp ships -- a ship with no fixed schedule -- would be for the availability of fuel where we need it. So unless we see massive investment in LNG installations around the world, I am afraid the availability of fuel will be a major concern," said Mikkel Borresen, vice president of Dampskibsselskabet Norden A/S (Norden).
There is noted to be only one onshore regasification LNG in the U.S. at present - Harvey Gulf International Marine, LLC's (Harvey Gulf's) facility in Port Fourchon, Louisiana - with market sources suggesting that the cost for the construction of such a facility is pegged at about $1 billion.
Meanwhile, in response to the International Maritime Organization's (IMO's) decision to implement a global 0.50 percent sulfur cap on marine fuel, U.S. refiners are said to be more focused on diesel than processing residuals.
With heavy investment required to embrace LNG as marine fuel, a source from Poten & Partners suggests that widespread adoption of LNG bunker fuel will be an "evolution" that is still decades away.
Earlier this month, Ship & Bunker reported that Eagle LNG Partners (Eagle LNG) has filed a formal application with the U.S. Federal Energy Regulatory Commission (FERC) for authorisation to build and operate its planned natural gas liquefaction and export facilities on the St. Johns River in Jacksonville, Florida.
