BW LPG's BW Gemini is the first of 12 vessels to get retrofitted with dual-fuel propulsion engines in China. On November 4, 2020, the vessel received class certification and embarked on a historic Transpacific voyage with LPG as its primary fuel. In order to comply with the IMO 2020 sulphur emission guidelines, BW LPG opted for LPG dual-fuel engines over exhaust gas scrubbers and VLSFO.
While BW LPG has widely marketed the various benefits of the technology, its peer Dorian LPG has opted for scrubber retrofits. EPIC Gas, a smaller vessel operator, has stated that it does not intend to use this technology at least until 2030 as it does not make "economic sense" at this point in time. It is noteworthy that the cost of retrofitting is close to US$9 million per ship.
BW LPG recently became a pure-play VLGC owner/operator, with 34 owned vessels and 46 operated vessels; the owned fleet averages a little over nine years. The company has scheduled dual-fuel retrofitting for 12 vessels which is expected to be completed by end-2021.
Each retrofit costs the operator about US$9 million and takes about two months to complete which is probably why, its peer, Dorian has retrofitted its vessels with scrubbers. In a recent interview, the CEO of Epic Gas, Charles Maltby indicated that they may look at dual-fuel LPG engines only after 2030, citing economic reasons.
According to media sources, there are as many as eight more VLGCs from various owners that are expected to be retrofitted with dual-fuel LPG engines in 2022, but no retrofitting has been planned so far in the smaller vessel segment. However, of the 10 MGCs (24,000 cbm to 40,000 cbm) in the orderbook, six will be delivered with dual-fuel engines by 2021.
As LPG propulsion engine reduces fuel consumption by 10 per cent, sulphur dioxide emissions by 99 per cent, particulate matters emissions by 90 per cent, carbon dioxide emissions by 15 per cent and nitrogen oxide emissions by 10 per cent when compared with the conventional compliant fuel, it is a good alternative marine fuel for the 2030 IMO target for reducing emissions by 30 per cent from 2008 levels.
LPG as a marine fuel for VLGCs offers multiple efficiency gains. Aiming to capitalise on these gains, BW LPG expects output efficiency to improve by as much as 11 per cent for BW Gemini over the use of LSFO. Using LPG as a fuel will also result in easy storage and faster refuelling, thereby decreasing the turnaround time for these vessels at ports. LPG as a marine fuel is also future-proof and cost-efficient. In addition to savings from reduced fuel consumption, the vessel is also protected from price sensitivity with dual-fuel flexibility.
Using LPG as a marine fuel will not require high investments on infrastructure as is the case with LNG. Most LPG loading/discharging terminals are capable of bunkering LPG-fuelled vessels as the fuel is not cryogenic and therefore does not require complex technology. For offshore supply, there are over 500 small coaster vessels which can perform STS transfers making LPG an infrastructure-ready alternative marine fuel.
Although BW LPG is the first company to use dual-fuel propulsion, it is not the only one aiming to harness the benefits of this technology. A snapshot of the existing orderbook provides a key insight of the upcoming trend. New vessels, especially fully refrigerated, mid- to large-sized ships are the top in line for retrofitting. BW Gemini is a 2015-built 84,134 cbm vessel, while the second in line, BW Leo (owned by BW LPG) is also a 2015-built 84,195 cbm vessel.
The trend, therefore, is obvious as an investment of US$9 million along with two months of dry docking cannot be justified for older and smaller vessels.