National Shipbuilding Research ProgramNSRP

DISTRIBUTION STATEMENT

Marlin Class LNG PropulsionPaul Hengst – General Dynamics NASSCO

3/9/2017

Charleston, South Carolina

AgendaTopics & Meeting Objectives

Topic

GD NASSCO Introduction

LNG Basics

Natural Gas Market

LNG Propulsion

Design Implications

Bunkering

TOTE Containership Project

Meeting Objectives

Provide quick overview of Liquefied Natural Gas (LNG) and Natural Gas Market

Discuss the basics of LNG propulsion and the associated design implications

2

NASSCO IntroductionOverview

• Headquartered in San Diego, California• Business Unit of General Dynamics – part of marine group with EB and BIW• Major Facilities in:

• Virginia: NASSCO-Norfolk and NASSCO-Earl ~ 950 employees• Florida: NASSCO-Mayport ~ 150 employees

• Overview NASSCO-San Diego:• ~3375 employees; 400+ core subcontractors• Only remaining full service shipyard located on the US West Coast • Current Programs:

• ESB (Expeditionary Support Base)• ECO Tankers• TAO 205 Class Auxiliary Oilers

• Prime maintenance provider for USN ships home-ported in San Diego

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LNG BasicsLiquefied Natural Gas

• LNG is Natural Gas, liquefied for transport in most applications

• Liquefied Natural Gas takes up 1/600th the volume of natural gas in its gaseous state

• Odorless, colorless, non-toxic and non-corrosive gas

• Liquefaction removes unwanted particles (dust, acid, etc.) and then condenses the natural gas to a liquid at atmospheric pressure by cooling it to -162oC (-260oF)

• LNG is reduced in volume further than Compressed Natural Gas (CNG), making the energy density 2.4 times heavier that CNG (or 60% of diesel fuel, or 70% of gasoline)

Gas Terminal located in Chiba, Japan 4

LNG BasicsTypical LNG Supply Chain

Delivered to shore side re-gasification plants

Transported via pipeline to consumers

Transported via shipboard cryogenic containers

Natural Gas is processed at on-site production facilities

Natural Gas is liquefied and stored for future transport

GAS LIQUID GAS

LNG can be found in abundant supply around the world, with some of the largest deposits located domestically in the U.S.

Natural Gas ProducedM3 per year

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Natural Gas (NG) MarketNorth America

***

***

Current Shale Plays

Shallowest, Youngest

Intermediate Depth, Age

Deepest Depth, Age

Mixed Shale and ChalkMixed Shale and LimestoneMixed Shale and Tight Dolostone-

Prospective Shale Plays

Basins

Layered Plays

0

5

10

15

20

25

30

Trill

ion

Cu

bic

Fee

t

Natural Gas Production by Source1990-2035

Alaska Coalbed Methane

Lower 48 Offshore Lower 48 Onshore (Conventional)

Tight Gas Shale Gas

• The North American continent possesses significant natural gas reserves

• The U.S. has the 5th largest NG reserve globally

• Most recent data suggests that the U.S. maintains ~nine billion m3 of accessible NG

•Or 84,000 fully loaded AMSEA LNG Tankers

• Drilling technology advancements have granted access to formerly unavailable gas sources

• At current consumption, experts estimate that the U.S. has enough NG reserves to fulfill 100-120 years of demand

• Other studies indicate that LNG maturity will positively impact the U.S. economy regardless of export vs. domestic consumption balance

Source: U.S. EIA (based on data from various published studies, 09MAY11)*Source: CIA World Factbook, https://www.cia.gov/library/publications/the-world-factbook/rankorder/2179rank.html

Source: NERA Consulting, “Macroeconomic Impacts of LNG Exports from the United States” +

SHALE GAS

Significant Natural Gas reserves will encourage a shift towards U.S. export, break

dependency on Middle East oil, drive the need for marine transportation, and offer

opportunities for shipbuilding

Marcellus Shale

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• The International Maritime Organization (IMO) set regulations to cut sulfur dioxide emissions in 2020 by 86%

• Worldwide limits reduced from3.5% to 0.5%

• Impacts all vessels

• No impact to existing EmissionsControl Areas (ECAs)

• Vessels operating in North American ECA (200nm from the US coast) stillmust meet stricter sulfur limits (0.1%)

• New Regulations likely to drive up fuel prices worldwide

• Owners of older less fuel-efficient vessels will be greatly impacted, may lead to increased scrapping of older tonnage

Natural Gas (NG) MarketEmission Update

• Use low-sulfur distillate fuel (MGO)

• Meets requirements, but fuel priced at a premium

• Using MGO over HFO adds $3M per year per vessel to Matson’s vessel operating costs based on current rates

• Burn ultra-low sulfur fuel Heavy Fuel Oil (HFO)

• Fuel availability and pricing unknown at this time

• HFO (3.5% sulfur) with an exhaust gas scrubber

• Retrofitting existing vessels invasive and time consuming

• Capital cost $5M - $10M (Int’l), plus ~$2M Operating Cost (NaOH, power, maintenance)

• LNG

• Meets current emissions requirements, plus well positioned to address future regulations

• Very limited bunkering supply network and LNG fuel pricing uncertainty exist

• Equipment / systems expensive to install ($15M - $20M)

Natural Gas (NG) MarketEmission Update – ways to meet the new developments

LNG PropulsionAdvantages of LNG as Source Fuel

• Reduced Emissions

• LNG reduces Carbon Dioxide (CO2) Emissions 20-25% compared to diesel fuel

• LNG reduces Sulfur Oxide (SOx) Emissions 90-95% compared to diesel fuel

• LNG reduces overall particulate emissions compared to diesel fuel

• LNG reduces Nitrogen Oxide (NOx) emissions to within IMO Tier III Limits (effective in 2016)

• Operational Costs

• Lower Price compared to diesel fuel

• Better Efficiency via higher calorific value compared to diesel fuel

• Abundance of Gas

• NG is currently being produced domestically in abundance

• The U.S. has an estimated ~271.9 trillion cubic feet (TCF) of NG reserves

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LNG PropulsionChallenges

• Storage/Range

Allocation of space for LNG tanks needs to be considered

Due to LNG density and tank dimensions, LNG tanks require 3 to 4 times the volume of a bunker oil tank to carry the same energy in LNG

Based on tank size, and available space for installation of tanks, the range of a vessel can be limited

MITIGATION: Propulsion plants are dual fuel. Some owners use MGO as a range augmentation fuel and back up fuel.

• Capital Costs

Capital costs for LNG propulsion equipment can range between $10-20M on a 700-800 ft long vessel

Bunkering barges are the most likely method of converting shoreside natural gas to LNG for ship’s usage. These capital costs are solely dependent on the size of the barge(s).

MITIGATION: Payback period for the LNG propulsion equipment can be short depending on operational profile and fuel consumption very short (1-3 years is common) due to fuel savings

• Limited Infrastructure

Current infrastructure is not as established, compared to other fuel sources

MITIGATION: Energy companies are rapidly accelerating plans to expand supply side infrastructure. This trend is starting in the United States. Companies like Shell are taking a very aggressive role in this expansion.

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LNG Tanks Fuel Gas Supply (FGS) Room Engine Room

1) LNG Tanks – Two 900 m3 tanks2) Fuel Gas Supply (FGS) Room3) Dual Fuel Main Engine

4) Dual Fuel Aux Engines (x3)5) Gas Valve Unit (GVU) for ME6) Gas Valve Unit (GVU for DFDG

LNG PropulsionTypical High Pressure Fuel Gas System

Stored as Low Pressure Liquid-162oC (-260oF)

Compressed to High Pressure Liquid 300 Bar

Converted to High Pressure Gas 300 barA, 45oC

Gas heated 5.5 barA, 40oC

Converted to Gas

2

46

1

5 3

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1) LNG Tanks – Two 900 m3 tanks2) Fuel Gas Supply (FGS) Room3) Dual Fuel Main Engine4) Dual Fuel Aux Engines (x3)5) Gas Valve Unit (GVU) for Main Engine

6) Gas Valve Unit (GVU) for Aux Engines7) Double Wall Gas Piping

LNG Propulsion Key Components of Marlin Class Containership Project LNG Propulsion System

1

2

34

56

7

7

1

2

1

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Design ImplicationsImpact of LNG on Traditional Ship Design

• Range/Tank Size

• Volume/space required for LNG tanks is greater – possible range restriction

• The decision to locate tanks either above or below main deck has design trade-offs

• Based on economy of specific trade routes (considering distances travelled between ports, container

size, fuel availability) the addition of large LNG tanks could impact cargo space

• Tank Location

• Double-walled piping is used for all LNG transfer systems, which could add cost if bunkering stations

or engines are located on opposite ends of the ship

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• Boil Off Gas (BOG) Management

• Boil off gas management offers the operator

the ability to capture and burn otherwise

lost fuel

• ABS requires boil off gas management

systems that can properly ventilate, re-

liquefy, or burn excess boil off gas

Design ImplicationsReliability of Dual Fuel Propulsion System

• Redundancy

• Dual fuel system automatically switches over to diesel mode if there is a single gas mode failure

• Many LNG fuel gas systems have redundancy with rotating equipment: feed pumps, HP pumps, etc.

• Proven Engine Models

• MAN Slow Speed Diesel Dual Fuel (ME-GI model)

• High-pressure gas injection (same as diesel fuel mode)

• Parent Engine Series Sold: 351

• ME-GI Engine History: tested & in production

• ME-GI engine has not been used in operation yet

• Currently the most efficient engine available for marine propulsion

• Wartsila Medium-Speed Dual Fuel Engines

• DF Engine History: 539 medium-speed engines sold in last 20 years

• Primarily used on LNG Carriers for BOG management

• Smaller vessels are utilizing these medium-speed, four-stroke engines (offshore supply vessels, and ferries)

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Design ImplicationsExamples of Safety Considerations

• Firefighting Systems

• A water spray system is installed for cooling and fire prevention on exposed parts of LNG tanks

• Fuel Gas Supply (FGS) Room• FGS room is provided with mechanical forced ventilation capable of 30 air changes per hour to remove the possibility of leaks

getting into adjoined spaces• Audio and visual alarms are installed on the bridge and ECR for gas leak detection• Electric motors within LNG spaces require explosion protection

• Double-Walled Gas Piping• Double wall piping will use a gas detection system to monitor the void space between each pipe, which can quickly identify if any

leaks are present

• Dual Fuel Engine• Dual fuel engine operation has installed safety features that will disengage the LNG fueling system once a leak is detected, and

automatically activate the diesel fuel system

• Electrical Systems• Electrical systems are not to be installed in hazardous areas unless essential for ship operation• Cable penetrations shall satisfy the requirements regulating the dispersion of gas

• Tanks• Redundant containment and spillage protection• Automatic control monitoring or pressure and temperature• Automatic fire detection and protection

• Bunkering• Draining/purging/inerting provision• Ventilation and gas detection of bunkering lines

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Bunkering (Refueling)Bunkering and Replenishment At Sea Options

• Onshore Infrastructure (Pipeline-to-Pier)• Requires Large storage tank and/or long pipeline • Requires extensive permitting and certifications

• Bunkering Vessel or Barge• Ship to Ship LNG transfer is common practice in

the offshore industry and bunker barges are been

developed for the commercial LNG fuelling application

• Potential for safe technology extrapolated for FAS

operations

• Portable Tanks• Potential application for smaller vessels or short

range requirement.

• ISO container tanks limited to 42 m³ capacity

• Potential rapid refuelling by tank swapping

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BunkeringOther Considerations

• Bunkering Capability• Ships to ship or ship to barge bunkering is critical to developing infrastructure quickly for

LNG

• Bunkering operations require additional safety measures• Fewer connection (flanged) points to prevent leakage

• Emergency shut-down valves with gas detection available at the bunkering station

• Double wall hoses, similar to double walled piping required onboard

• Critical Check items• Ensure receiving tanks are pressurized. A difference in pressure or temperature will cause

the initial vaporization of the LNG, possibly triggering the pressure relief valve.

• Remaining LNG in hoses must be drained before disconnection (purge using heated LNG

vapor)

• Close all connection valves nearest to the manifold after purge (before disconnect)

• Bunker lines must be inerted after bunkering until all lines are gas free (receiving ship)

• LNG bunkering shall consist of 2 hoses, the liquid fill line and the gas return line, in order to handle the raise in pressure that will occur in the receiving tank

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TOTE Containership ProjectOverview

LOA: 233.0 m (764 ft)

Breadth: 32.2 m (106 ft)

Draft: 10.5 m (34 ft)

Speed: 22.0 knots

Main Engine Type: Dual

Fuel Slow Speed

Main Engine MCR: 25,191

kW (33,768 bhp) x 104.0

rpm

Aux Engine Type: Dual Fuel

Medium Speed (x3)18

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Questions?