By Alex Binkley

Andrew Kendrick, Vice-President of Operations for Vard Marine Inc., would like to convince the Great Lakes ports and terminals to consider building LNG facilities both as a source of marine fuel and for other industrial customers to further diversify their business base. There has been talk of establishing an LNG plant in Sarnia to tap into that community’s energy facilities, he noted in an interview. With the current turmoil in crude oil prices, the situation remains hypothetical, although Gaz Metro in Montreal is expanding its LNG production capacity to supply the new Quebec ferries being built at Marine Industries in Levis for operation between Matane and Tadoussac. “However, they will be supplied by tanker trucks for now, although a LNG tanker could become part of the mix if other LNG ships enter service.” The fact that LNG will be available in Montreal is stirring ideas and interest in the marine community, he added. Dual fuel vessels that can run on LNG have been ordered by Groupe Desgagnes.

Meanwhile U.S. shipowner Interlake Steamship Co. has reached an agreement in principle with Shell to supply LNG to its vessels once they are converted to the fuel for their main power source. “With a goal of converting the first vessel by the spring of 2015, Interlake is already working through engineering and design, seeking regulatory approval and securing financing,” said Interlake President Mark Barker. Switching the company’s fleet to LNG from heavy fuel oil “will require Interlake to make significant capital investments in its fleet.” He did not specify a cost. “Interlake anticipates that the conversion to LNG will result in significant reductions of carbon dioxide, sulfur oxide, nitrogen oxide and particulate matter.”

Vard Marine’s Kendrick says these kinds of developments have sparked a lot of interest in LNG in the marine sector but there is a waiting game going on between energy companies on one side and the ports, terminals and shipowners on the other. The energy companies want to see more commitment to LNG before they invest in increased production capacity while the other side hesitates because it isn’t sure the fuel will be available, he noted. “Switching a ship to LNG is a big initial investment but so is making conventional engines compliant with the new emissions rules. In many ways, LNG is competing with installing scrubbers.” Another complication is that most Great Lakes ships don’t have the storage capacity for LNG.

Sarnia could play a major role as an LNG fueling center for the Canadian and American fleets on the Great Lakes because of its location between Lake Erie and Lake Huron. “A lot of ships are already being bunkered there.” The addition of an LNG terminal could encourage more Great Lakes shipowners to consider it as a fuel for their vessels. It could lead to LNG distribution by tanker throughout the Lakes to other ports that build LNG depots. Hamilton and Thunder Bay have sufficient vessel traffic to justify the addition of terminals while other ports might develop industrial customers for LNG.

LNG will also become a more attractive option as new rules kick in to lower sulphur content in marine fuel, Kendrick added. Owners who stick with convention bunkers will likely have to add scrubbers to meet the new emissions rules while LNG is naturally free of those contaminants.