Ship & Bunker, FortisBC Begin First Published Posting of LNG Bunker Prices

Fortis BC has 7 million gallons of LNG storage capacity at its Delta-based facility with a further 10 million gallons of storage under construction.

As a result of the increasing interest in liquefied natural gas (LNG) as a marine fuel, Ship & Bunker today, in conjunction with Canada-based FortisBC, has begun posting Liquified Natural Gas (LNG) bunker prices for the port of Vancouver.

This price listing is the first such published posting of an LNG bunker price for the marine market and is located here: shipandbunker.com/LNGBunkerPrices

"The publicly posted price of LNG as a marine fuel highlights the competitive pricing of LNG that is available today from FortisBC's production facility, in a manner that is easily compared to traditional fuels such as IFO380 and MGO," says FortisBC in a statement.

FortisBC is providing two prices: LNG IFO380 equivalent (LNG-380e), and LNG MGO equivalent (LNG-MGOe), which are both calculated from FortisBC's same underlying LNG commodity price.

LNG-380e is the price for an amount of LNG that delivers the energy equivalent of one metric tonne of IFO380 bunker fuel.

LNG-MGOe is the price for an amount of LNG that delivers the energy equivalent of one metric tonne of MGO.

"This is yet another first from Ship & Bunker that will help bring transparency and clarity to the industry at a time of unprecedented change," says Martyn Lasek, Editor, Ship & Bunker.

"By expressing the LNG bunker price in terms of both an equivalent IFO380 and MGO price, rather than simply an abstract LNG price, bunker buyers will be able to make a like-for-like price comparison between LNG Bunkers and the traditional bunker choice most relevant to them."

The posted LNG prices reflect the FOB truck cost at FortisBC's LNG production location In Delta, BC on the Fraser River and are updated monthly.

As with conventional bunker fuel prices reported by Ship & Bunker in Vancouver, as well as many other ports, the costs associated with transportation and delivery to the vessel are not included.

FortisBC is the owner and operator of the only two LNG facilities on the west coast of North America – the Tilbury Island facility in Delta since 1971 and the Mt. Hayes facility near Ladysmith on Vancouver Island since 2011.

It currently has over 7 million gallons of LNG storage capacity at its Delta-based facility with a further 10 million gallons of storage under construction.

The company says that, "in addition to competitive pricing in comparison to diesel, FortisBC's LNG is produced using renewable hydroelectricity from BC's power grid, resulting in lower emissions. Natural gas as a transportation fuel results in reducing carbon dioxide (CO2) emissions, the principal greenhouse gas that contributes to global warming by 15 to 25 percent over diesel or gasoline."

Those who are interested in exploring LNG for their marine markets should contact Arvind Ramakrishnan, Manager LNG Sales at arvind.ramakrishnan@fortisbc.com and Mike Bains, Manager, Regulatory & Commercial Development at mike.bains@fortisbc.com.

Cost Calculation

The LNG-380e and LNG-MGOe price calculations take into account the raw commodity cost and Liquefaction Service per Gigajoule (GJ) as expressed in Canadian Dollars.

This is then converted into an IFO380 and MGO equivalent price on the basis of 40.6 GJ per metric tonne (pmt) for IFO380, and 42.5 GJ pmt for MGO.

This price is then converted from CAD into USD at the prevailing bank rate.

Finally, it must be realised that LNG is priced on a $/MMBtu Gross Calorific Value (GCV) basis.

In order to properly compare this to bunkers, which are expressed on a Net Calorific Value (NCV) basis, the final price is adjusted upwards by 9.1 percent.

An example of the LNG-380e price calculation is as follows:

1. Commodity: $C 3.025/GJ ($US 2.41/MMBTU)
2. Liquefaction Service: $C 4.51/GJ
3. Total: $C 7.535/GJ
4. Cost per IFO380 Equivalent: 40.6 x 7.535 = $C 305.92
5. Convert to USD: 305.92 / 1.317 = $232.29
6. Convert to NCV: $232.29 x 1.091 = $253.43 per metric tonne equivalent

The LNG-MGOe calculation is identical other than in step 5 using 42.5 GJ pmt rather than 40.6 GJ pmt.