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Low-carbon RNG producer Clean Energy Fuels says enters LNG bunker market

Highlights

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Clean Energy Fuels is making its first foray into the liquified natural gas bunker market with its contract to supply World Fuel Services with LNG to fuel two Jones Act Hawaiian container ships, Clean Energy Fuel said Sept. 21.

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The deal will help Clean Energy Fuels, North America's largest provider of renewable natural gas used in the transportation sector, to increase its market share for RNG, it said in a a statement. Clean Energy Fuels uses organic waste, including that from dairy farms, to make the low carbon intensity fuel.

Under this contract, Clean Energy Fuels will supply World Fuel with an estimated 78 million gallons of LNG for two container ships owned by Pasha Hawaii, giving Clean Energy Fuels a new outlet for its RNG production in the bunker fuel market.

"While we like [Clean Energy Fuels] for its RNG distribution capability, and upstream RNG JV's , we see entry into marine transportation fuel market as a major positive," wrote Manav Gupta, Credit-Suisse analyst in a research note.

The M/V George III is expected to begin operation in Q4 2021, and "will become one of the first natural gas-powered containerships to call on the U.S. West Coast and the first to service Hawaii," according to the Clean Energy Fuels statement. The second ship, the M/V Janet Marie, is expected to be operation shortly thereafter, it said.

Both ships will surpass the International Maritime Organization's 2030 standards requiring oceangoing vessels to have zero sulfur emissions and for a 90% reduction in nitrogen oxide and a 25% reduction in carbon dioxide as compared to liquid fuel oil, Clean Energy Fuels said.

To meet higher demand, Clean Energy Fuels plans to increase production from its Boron, California, LNG plant by 50% by adding a production train, it said.

The deal will help Clean Energy Fuels bolster LNG market share, which dipped in Q2 2021.

On the Aug. 5 Q2 2021 results call,

During its Aug. 5 second-quarter results call, Clean Energy Fuels said while total RNG gallons delivered increased 19% in the quarter from Q2 2020, to 101.4 million gallons, LNG deliveries in Q2 2021 declined to 12.9 million gallons from 15.9 million gallons a year ago. The overall rise was supported by CNG deliveries, which rose to 88.5 million gallons in Q2 2021 from 73.6 million gallons in Q2 2020.

For delivery to the Pasha Hawaii ships, World Fuel Services signed a contract with West Coast Clean Fuels to transport and load the LNG into the ships' fuel tanks.