Reduced Bunker Bills "Number 1 Reason" for LNG Switch

BC Ferries is still looking at retrofitting exiting vessels if it made sense to do so.

British Columbia, Canada, based B.C. Ferry Services Inc (BC Ferries) says the promise of lower fuel bills was the number one reason it decided to back Liquified Natural Gas (LNG) bunkers for three newbuilds announced last week.

"If you ignored capital costs, LNG is about half the price of the diesel we currently use, which is about $0.90 to $1.00 per litre," said Mark C Wilson, BC Ferries' Vice President Engineering, who spoke to Ship & Bunker following last week's announcement that all three of the new vessels will be dual-fuel capable.

Wilson noted that an important aspect of that pricing picture was that LNG's discount compared to diesel is expected to be maintained, irrespective of where prices head in the future.

"Our team has looked at what we believe will continue to occur, which is a price differential. Diesel prices will continue to rise, but studies indicate with reasonable certainty that the differential will be maintained no matter where they go," he said.

99 percent LNG

As such, Wilson expects the dual-fuel vessels will spend most of their life powered by LNG.

"If everything stays the way it is, we'll use 99 percent LNG, but [being dual-fuel] allows us flexibility and cuts down on corporate risk," he said.

"If there's ever a reason we can't or don't want to use LNG, we can just switch back to diesel."

BC Ferries already bunkers all its vessels by road tank wagon (RTW), and LNG bunkering will take place the same way, meaning that other than some new safety requirements, switching to LNG requires very little changes to their existing bunkering processes and there are no capital infrastructure costs other than the vessel itself.

Wilson said that the LNG supply side is not yet finalised, but BC Ferries has an advantage over operators in some other parts of the world as British Columbia is rich in natural gas resources and there are a number of LNG plants under construction, and even more under consideration, within the Canadian Province.

"It's still in the early stages but we've gone out with an expression of interest to see who could supply for us and there is sufficient interest. I see within the next year a pre-qualification stage, and a final request in the next 18 months as to who will supply," he said.

BC Ferries already uses ultra-low sulfur diesel to power its vessels, so the reduction in SOx emissions from switching to LNG is not as significant as for those switching from higher sulfur bunker fuels, but Wilson said they will still see an improvement in terms of a reduction in other Greenhouse Gases.

"Using LNG will also create a cleaner working environment for our engineering teams," he noted.

Looking ahead, Wilson said he didn't believe industry was "fully there" when it came to LNG conversions, but nevertheless BC Ferries is still looking at retrofitting exiting vessels if it made sense to do so.

And in terms of future newbuilds, he said they are not ruling out going with single fuel LNG vessels further down the road.

"I believe with these new dual fuel vessels we'll be fully successful in using LNG, and it might help us along in terms of that decision making process."