INTERVIEW: Proman Stena Bulk JV will capitalize on methanol's cost efficiency

Methanol as a marine fuel is cost competitive today and will become more so as demand stimulates increased infrastructure across ports, officials at Stena Bulk and Proman said in an interview Aug. 9.

The comments come after a joint venture between the two companies, Proman Stena Bulk, announced in July its second methanol-powered newbuild tanker had been delivered. Both vessels will consume 12,500 mt/year of methanol, according to company material.

Stena Bulk is a major tanker shipping company. It controls a combined fleet of around 110 vessels. Proman is an integrated industrial group and global leader in natural gas derived products, such as methanol, and services.

"For our operational activity, methanol is cost competitive, widely available, uses proven technology and can take advantage of existing infrastructure," Erik Hånell, president and CEO, Stena Bulk, said.

Hydrocarbon derived methanol is cost competitive today and over the last ten years has become 10% cheaper compared with marine gasoil, Anita Gajadhar, managing director, marketing and logistics at Proman, said.

"As the supply and demand situation develops for green methanol, there is every reason to believe that its price will drop as well, bringing blends of low-carbon and renewable methanol into cost competitiveness in comparison to other marine fuel options in the long term," she said.

Methanol currently compares well on a cost by calorific value basis with other fuels. Platts, part of S&P Global Commodity Insights, assessed methanol as a bunker fuel at $19.82/gigajoules at Rotterdam Aug. 8, slightly more expensive than the prevalent bunker fuel delivered 0.5% sulfur fuel oil, which it assessed at $17.20/gj.

Both these were cheaper than MGO at $21.98/gj and LNG as a bunker fuel at $56.90/gj.

Increasing methanol's reach

One advantage of methanol as an alternative marine fuel is that it is already available at all major global bunkering hubs and it is fully fungible, whether green or conventional, Gajadhar said. This means volumes in one port can be swapped with volumes in another if there appears to be a shortage at one location, so vessels do not have to change their destination port, she added.

Ideas such as these to reduce potential barriers will require longer term certification but result in improved distribution synergies and support a reduced emissions footprint, Gajadhar said.

Initially, the JV's vessels will run on conventional methanol produced from natural gas, which can be substituted for renewable methanol when more supply comes online. Proman said in August 2021 it had entered into an agreement with leading UK port operator Global Energy Group to develop a renewable power-to-methanol plant utilizing local sources of captured carbon dioxide to be located at the Nigg Oil Terminal in the Highlands of Scotland.

In March 2022, Proman said it will aim to supply Maersk with 100,000-150,000 mt/year of renewable methanol from its new 200,000 mt/year methanol facility in development in North America.

According to Platts Analytics' reference case for July, alternative fuels will account for just 2% of the global bunker fuel demand of 328 million mt in 2030, compared with almost zero currently. Methanol will make up 34.3% of the alternative fuels, hydrogen 18.6% and ammonia 14.7%.

In 2050, alternative fuels are forecast to account for 13% of the global bunker consumption of 300 million mt. Ammonia will account for 41%, followed by methanol at 32% and biofuels at 16%.