A Case Study: Technical Feasibility and Economic Potentials of Using LNG as Alternative Marine Fuel

Liquefied Natural Gas (LNG) as alternative marine fuel has been regionally applied to several shipping segments for a few years. In recent time, the interests from ship owners in further exploring the viability and future market potentials of applying the LNG fuelling technology to large vessels such as VLCC and ultra large containerships has rapidly grown, mainly driven by tightening environmental legislation and increasing oil price. The key objective of this dissertation consists of two aspects, namely the assessment technical feasibility and the investigation of economic advantages. An extensive literature review of LNG fuelling technology was conducted as aspects of dual fuel engine manufacturing, vessel modification and bunkering methods. It was subsequently concluded that using LNG- dominant-fuelled propulsion for large-size vessels involved in long-haul trips, a VLCC in this project, is technically possible but needs collaboration from port operators with regards to port bunkering facility development. As for the economic advantages, research was performed based on one specific case study of investing a VLCC newbuilding to operate along a presumed transoceanic route. With an estimated 20% investment premium based on the original price for a conventional VLCC, the payback time for investors is expected to be within ten years under most circumstances. The higher oil price is, the more cost-competitive it is to replace the current marine fuel with LNG. By improving infrastructure development worldwide, LNG delivery price as marine fuel could be largely reduced at some future stage, leading to a brighter future of this business area.Coastal and Marine Engineering and Management (CoMEM)Hydraulic EngineeringCivil Engineering and Geoscience