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LNG marine fuel projects hit snags

Dec 5, 2014 12:36 PM

Liquefied natural gas (LNG) bunkering projects in North America are changing or being postponed, sometimes without the market being told officially. Developers are definitely reconsidering two major infrastructure schemes and there is doubt about a third. 

Jacksonville, Fla., has been a big focus of attention, with facilities for road transportation and ships being built or planned. But the status of one of them, a liquefaction plant at St. John’s River to supply ships and trucks, is in doubt. Announced in September 2013, the 300,000-gallons-per-day plant was to be built by Eagle LNG, a consortium of Clean Energy Fuels (in which oil tycoon T. Boone Pickens owns an interest), Ferus Natural Gas, GE Ventures and GE Financial Services.
    
Clean Energy in October told Professional Mariner that it has backed out of the plan. “We are no longer involved in the project and will be getting our LNG from third parties,” said company spokesman Patric Rayburn.

Rayburn declined to give details of the new sources and whether the company is still involved in Eagle. Recent public mentions of Eagle have omitted Clean Energy as a partner. 

GE Financial spokesman Andrew Kattell said, “We are merely investors” and declined to give any more details. Ferus and GE Ventures did not respond to messages and calls seeking comment.

Jacksonville port was intended to be a big beneficiary of the plant, as Crowley and Sea Star are basing LNG vessels there. Port spokeswoman Nancy Rubin said the port is not involved in project decisions. “We are huge supporters of LNG and will continue to give as much help as possible to companies doing projects,” Rubin said.

The second project on hold is a Shell liquefaction plant at Sarnia, Ontario. This was intended to be the supply source for Interlake Steamship’s diesel-powered Mesabi Miner, which was to be converted to LNG. “Shell has put the plant on hold,” said Mark Barker, president of Interlake. “We came a long way with them and worked closely and are still on good terms. It just didn’t quite work out.”

Barker said the planning and design of the new engines for the vessel were at an advanced stage. 

“But we did not get to the stage of putting in a new engine and the vessel is again operating with the existing engines,” he said. “There is definitely a future for LNG on the Great Lakes, but it’s all about timing. We have been one of the early movers for LNG, but the difficulty is that there are not yet any liquefaction plants or in-port facilities on the lakes. The infrastructure needs to be put in place first and supply has to be multifaceted,” said Barker, in a reference to the need for more customers than just lake freighters.

“The Gulf of Mexico has more flexibility and ability to supply a variety of users,” said Barker. Interlake is still very interested in the fuel, he said, “but I don’t know when and if we will be involved in it. We are reassessing the issue.”

Shell did not respond to phone calls seeking comment.

The oil company’s project at Geismar, La., could also be in doubt. One industry report said the decision to postpone this was made at the same time as the Sarnia cancellation.

Harvey Gulf’s plan to build bunkering facilities at Port Fourchon, La., is likely going ahead. Wartsila has recently been awarded the contract for the control systems for the shore-based fueling facility. No details have been made available of where the LNG will come from.

New projects continue to be unveiled. Tenaska NG Fuels and Waller Marine want to build an LNG and compressed natural gas (CNG) plant at the Port of Greater Baton Rouge. Operations are planned to begin in the first quarter of 2017 with an initial production of 200,000 gallons of LNG a day. 

Paul Bingham, economics practice leader at CDM Smith, said developing LNG bunkering facilities poses a dilemma for the maritime industry. “There remains a chicken-or-the-egg problem in who will risk the capital for fueling facilities without the vessel customers already in place, and the vessel operators or owners reluctant to buy vessels and hoping that fueling facilities will be built in many ports so as not to severely limit where the vessels can operate,” Bingham said.

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