INTERVIEW: Seaspan Energy Launches New West Coast LNG Bunker Supply Business

Drone photo of the Seaspan Lions vessel taken in Vancouver. Image Credit: Seaspan Energy

Seaspan Energy has launched the ship-to-ship supply of LNG bunkers in Vancouver, Canada, this week completing the first stem by its new bunker vessel, Seaspan Lions.

It marks the latest step in the company's plan to offer LNG bunkers at key locations across the West Coast of North America using product sourced from Vancouver, and follows the completion of Seaspan Energy's first LNG bunker stem in December.

That was completed at the Port of Long Beach by the Seaspan Garibaldi.

In all, Seaspan Energy plans to eventually have three LNG bunker vessels servicing key ports along the West Coast.

The three new-build vessels are all 112.8 meters in length, 18.6 meters in width, 5 meters in draft, with a design speed of 13 knots.

"Seaspan Energy is a new business that is part of the wider Seaspan group offering low-carbon solutions for ship owners looking to decarbonize their operations and transition to cleaner marine fuels," Harly Penner, Senior Vice President, Seaspan Energy, told Ship & Bunker in an interview earlier this week.

"That starts with the supply of LNG, and Seaspan Energy is proud to be the first company in Canada to provide ship-to-ship LNG bunkering solutions, and the first company to export LNG by ship to the US."

As the marine shipping industry looks to alternative fuels as part of efforts to reduce emissions and decarbonize, shipowners have made methanol and LNG the leading alternative fuels of choice.

While LNG is the most popular choice for alternatively-powered ships both in terms of tonnage already in operation and on order, Penner explained there were several reasons why an LNG bunker supply business made sense.

Headquartered in North Vancouver, Seaspan Energy sits in the Canadian province of British Columbia, a province with significant natural gas reserves and LNG capabilities already in place via local gas supplier Fortis BC.

Moreover, Seaspan already has extensive experience both using LNG as marine fuel, and as an LNG vessel operator.

"Developing an LNG bunkering business is a natural progression for Seaspan who has a fleet of hybrid ferries that operate primarily on LNG. Our LNG bunkering experience started in 2016, and since then we've successfully completed over 2,000 truck-to-ship operations within the Port of Vancouver," said Penner.

"We also already provide traditional fueling services via Seaspan affiliate business Marine Petrobulk who has been carrying out ship-to-ship bunkering operations from Vancouver for over 25 years, successfully completing over 15,000 bunker operations."

Building the Business

Beyond the basic mechanics of selling fuel and loading it onto a ship, as has been previously discussed at length in these pages, launching and building an LNG bunker business is a very different proposition to that of traditional bunker supply.

"The traditional startup mentality of LNG bunkering has been, give me a good long term supply deal first or I can't build infrastructure, I can't build a ship," said Penner.

"Seaspan Energy's approach is that we have acted first and committed to being here. We have built ships, we have built a loading terminal, we are here, and we're very happy to transact on a spot basis.

"Going forwards, as more LNG tonnage hits the water and the LNG price around the globe returns to its more normal spot pricing, we will see LNG bunker availability tighten, at which point the bunker buyers will start locking up supply. So longer term, our business will be a blend of spot and contract business."

Currently, the number of ships burning LNG is significantly less than those burning oil.

"Each year there's over 3,000 vessel calls to the Port of Vancouver. Each one of those is a potential customer for Marine Petrobulk where the fluidity of their customers is established. For Seaspan Energy we expect far fewer opportunities, and each one of those will be treated as a new business development activity," said Penner.

"The other thing that's quite different to traditional bunkering is that the technical aspect of your proposal is very different than when you have a barge with a good crane and a good crew. 

"Each customer's vessel has very different technical needs and we develop them individually, which includes the development of compatibility studies, risk assessment and joint procedures. 

"So it's still bunkering, but it is quite different."

Price

Emission savings are perhaps the headline reason shipowners are switching to LNG.

But while we see a tightening of regulations in Europe, particularly with the arrival of the new Trump administration in the US, signs are that North America will not be quick to follow suit.

"The way we see the market will go for LNG bunkering is that if there's no regulations pushing you to burn a greener fuel, then you're relying on price and desire," Penner explained.

"If you can buy something cheaper and be within the rules, then you are going to look pretty hard at that. Maybe the desire to burn LNG pushes you a little bit, but it's not going to push you far. So price is key."

LNG, then, will have to compete with VLSFO for the foreseeable future.

A key differentiator for LNG from Vancouver is it has the potential to do just that.

Ship & Bunker data indicates that in 2024 the average price of VLSFO in Vancouver was $659/mt, while an energy equivalent volume of LNG was $260 - a significant saving.

Those prices do not include delivery, and the reality is LNG logistics cost significantly more than traditional bunkering.

For comparison, Ship & Bunker data indicates that for Rotterdam its bunker equivalent pricing for LNG in 2024 was $568, although it should be noted that this is a delivered price.

Perhaps more importantly, Ship & Bunker data indicates that for Singapore, delivered VLSFO in 2024 averaged $611/mt, or $351/mt higher than LNG in Vancouver not taking into account the LNG logistics cost.

This is key, because for Seaspan Energy to establish a successful West Coast bunker supply business, it must persuade shipowners it is worthwhile to deploy their LNG-powered vessels on Asia–North America routes.

Unless pushed by regulation, achieving this hinges on ensuring that the West Coast LNG bunker price remains lower than Asia's VLSFO price, at least in the near term.

"What we will do now is continue to work for business by being successful and by leveraging the supply advantage that we have," Penner said.

Growing Footprint

With LNG bunker stems now completed in both Vancouver and Long Beach, Penner is already looking to next steps.

That includes not only expanding to other supply locations on the West Coast, but also adding to the types of ships Seaspan Energy is permitted to supply.

"We are currently authorized to bunker car carriers and tankers in the Port of Vancouver, and we are moving forward with our authorization for container ships and cruise ships," he said.

"In the Port of Long Beach we have an authorization for container ships and we'll continue to work to increase our authorizations there to cover more vessel types.

"We're also working with Port of Portland, and we'll then focus on other strategic locations

"One thing I would like to stress is the support we have had from the port authorities. Vancouver and Long Beach have been very supportive, and as we look to expand to the Port of Portland they have been very engaging.

"There is a good level of recognition that LNG as a marine fuel is happening. Shipowners have spoken with all the ships that have been ordered and all those good ships will come to the ports and will need fuel."

Readers interested in learning more about Seaspan Energy's offering can contact the company via email at: info@seaspan.com