TotalEnergies affirms drive for LNG as bunker fuel, eyes biomethane

TotalEnergies remains upbeat on the uptake of LNG as a bunker fuel as stricter international rules loom in global shipping, viewing the fuel as a financially stable route to biomethane use.

This scenario would work well for the company, which is a significant gas producer. Its production averaged 2.87 million boe/day average in 2020 and around 55% of that was gas, the company said on its website.

TotalEnergies started planning planning to deliver cleaner marine fuel solutions several years ago through a range of investments in LNG infrastructure at key bunkering hubs and other initiatives, it said in a recent report, with the company taking delivery of is first chartered LNG bunker vessel--Gas Agility--in August 2020 following the signing of a time charter party agreement with Mitsui O.S.K. Lines, Ltd. in February 2018. It is also currently the world's largest supplier of LNG as a bunker fuel.

In 2021, Total Marine Fuels, a part of TotalEnergies, was awarded a LNG bunker supplier licence by the Maritime and Port Authority of Singapore, for a five-year term starting January 1, 2022 in the city-port.

FueLNG and Pavilion Energy Singapore already exist as licensees in Singapore, the world's largest bunkering port, which recorded sales of 50,000 mt of LNG bunkers in 2021 and saw its first ship-to-ship LNG bunkering operation completed in March.

Today, there are 26 LNG bunker vessels in operation globally and the fleet will grow to 43 units offering an aggregated capacity of between 7 and 8 million tonnes per year by early 2024, TotalEnergies said.

TotalEnergies forecasts the LNG bunker market could reach 10 million mt a year by 2025 and represent 10% of the bunkering market by 2030.

LNG provides immediate benefits

In April 2018, the IMO laid out its strategy for the shipping industry to reduce its total GHG emissions by at least 50% from 2008 levels in 2050.

SEA-LNG, a multi-sector industry coalition established to demonstrate LNG'S benefits as a viable marine fuel, last year said that an independent study reconfirmed that greenhouse gas reductions of up to 23% were achievable from using LNG as a marine fuel, depending on the marine technology employed.

LNG also comes with numerous other advantages-- it is a proven and mature technology, is readily available, has a rapidly growing bunkering network.

Although LNG has been criticized for its contribution to methane slips, engines are being developed to address this issue. LNG's viability is proven on a well-to-wake basis, and depending on the technology employed, is capable of reducing GHG emissions by about 23% compared with standard conventional fuels, an independent study commissioned by industry coalitions, SEA-LNG and SGMF, stated.

Hapag Lloyd and CMA CGM are among global shipping companies championing the use of LNG as a marine fuel by putting in orders for LNG-powered ships

In Asia, AET, a subsidiary of MISC Berhad, remains committed to using LNG as a marine fuel, while Japan's Mitsui O.S.K. Lines also plans to launch 90 LNG-fueled ships by 2030.

Shippers, however, currently have to pay high prices for the fuel.

S&P Global Platts assessed LNG as a bunker fuel at Rotterdam at $26.26/gigajoule/cu m Jan. 18, compared with $20.35/gj/cu m for methanol as a bunker fuel at the port and $15.88/gj/cu m for delivered 0.5% sulfur fuel oil, the currently prevalent bunker fuel.

The next step

"As a next step in its evolution, we believe that biomethane, together with LNG, can provide a viable pathway to achieve shipping's decarbonization goal. The biomethane market is growing and has huge opportunities to become a global industry," TotalEnergies said.

In 2020, biomethane production reached about 50TWh globally via supply from 1,100 operating plants and this has the potential to grow to reach a capacity of 8,500 TWh, the company said.

Estimated sustainable global supplies could potentially exceed the future energy demand of the global shipping fleet and bioLNG will likely be commercially competitive relative to other low- and zero-carbon fuels.

S&P Global Platts Analytics expects around 60% of total bunker demand to be replaced by alternative fuels to achieve IMO's 2050 emission reduction targets.

Expanding LNG-fueled fleet could enable a pivot to bioLNG without needing to undertake any modifications, meaning the existing supply infrastructure would be fit for bunkering purposes with either fuel when bioLNG becomes scaled up, TotalEnergies said.

"This benefit alone will help reduce the capital outlay for brand new alternative fuels infrastructure, which it is estimated, could run into trillions of dollars," the company said.

The company believes biofuels is an option for today. It plans to increase biofuels production capacity from 0.3mt/year in 2020 to 2mt/year by 2025 and 5mt/year by 2030.

To effect that, TotalEnergies is seeking to develop existing assets, such as its La Mede biorefinery, which was converted from a conventional refinery in 2019 and has the capacity to produce 500 KT of biofuels annually.

A long-term alternative is hydrogen. In July 2020, TotalEnergies set up a Clean Hydrogen business unit, with the goal of shaping the company's ambition to become a large-scale producer of carbon-free hydrogen.