SOURCE: Zeus Development Corporation

Zeus Development Corporation

February 01, 2012 14:09 ET

Coast Guard to Approve LNG-Fueled Ships Case-by-Case, Zeus Conference Learns

HOUSTON, TX--(Marketwire - Feb 1, 2012) - The U.S. Coast Guard (USCG) must judge all designs for U.S.-flagged LNG-fueled ships. Vessel owners are increasingly considering LNG as a replacement fuel to marine diesel and heavy fuel oil, also called bunker fuel.

Emissions regulations that take effect in 2015-2016 will make diesel and fuel oil operation more costly. The abundance of shale gas production in North American has made LNG cheaper and cleaner. Several fleets are working on LNG-fueled vessel designs.

To judge the proposed designs, the USCG intends to use International Maritime Organization (IMO) guidelines, which are drawing from lessons learned in Norway. Carbon emissions have long been a concern there, spurring many several to adopt LNG as fuel. Commander Randal Ogrydziak told a packed room at Zeus's First Annual World LNG Fuels Conference on Jan. 26 that operators considering LNG should start consultations early to avoid delays.

Fuel tank placement is a special concern. LNG is not as dense as petroleum, requiring between double and triple the space for the fuel tank. To alleviate the loss of space, some Norwegian designers locate the tanks under accommodation spaces, building protective coffers to hold the tanks. Others have placed tanks on deck where they can vent into the atmosphere should a spill occur.

"Tank placement is a thorny issue because all locations carry tradeoffs," Tom Campbell, energy analyst at Zeus, said. "Most U.S. fleets will rely on the Coast Guard stance to finalize plans."

Ogrydziak told the conference that the Coast Guard is "open to all comments" and will review everything on a "case-by-case" basis. He noted that IMO guidelines do not prohibit placement of LNG tanks under accommodation. However, the USCG feels the decision requires careful analysis. Thus far, no U.S. designs have located tanks under accommodation.

New Orleans-based oilfield service fleet, Harvey Gulf International, for example, has located the tanks for its four new LNG-fueled offshore service vessels (OSVs) under the work deck. On the other hand, a design being considered by Washington State Ferries, places the tanks on the sun deck above the main cabin.

To stay up-to-date on LNG-fueled ship developments, sign up for Zeus's weekly LNG-Fueled Marine Report, which is available free at www.zeusintel.com/ZLFMR.

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