Prospects and Opportunities for Using LNG for Bunkering in the Arctic
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ALEXANDER KLIMENTYEV, ALEXEY KNIZHNIKOV, ALEXEY GRIGORYEV PROSPECTS AND OPPORTUNITIES FOR USING LNG FOR BUNKERING IN THE ARCTIC REGIONS OF RUSSIA PROSPECTS AND OPPORTUNITIES FOR USING LNG FOR BUNKERING IN THE ARCTIC REGIONS OF RUSSIA Moscow, 2017 The report “Prospects and opportunities for using LNG for bunkering in the Arctic regions of Russia” Authors: Alexander Klimentyev, Alexey Knizhnikov, Alexey Grigoryev Science redactor Mikhail Grigoryev – member of science committee of the Security Council of Russian Federation, member of working group “Ecological security and rational using of natural resources” of State committee for develop- ment of Arctic, director “Gekon” Ltd. Reviewer Alexey Mastepanov – academic of RAS, director of Analyst center of energy policy and security of IPNG RAS This publication is supported by the European Climate Foundation. “Prospects and opportunities for using LNG for bunkering in the Arctic regions of Russia”/ A. Klimentyev, A. Knizhnikov, A. Grigoryev, WWF. – M., 2017. – 60 pages This study evaluates the prospects and opportunities for using liquefied natural gas as marine fuel in passenger and cargo shipping in the Arctic region of the Russian Federation. © Text WWF-Russia 2016. All right reserved. Photo of the cover: © Alexander Scryabin Distributed free of charge. Contents PROSPECTS AND OPPORTUNITIES FOR USING LNG IN ARCTIC REGIONS OF RUSSIA: WWF RUSSIA OVERVIEW . 6 INTRODUCTION . 10 The Scope of the Study . 11 The Geographic Scope of the Study . 11 SHIPPING AND TRANSPORTATION IN THE ARCTIC . 12 PORT INFRASTRUCTURE . 16 NORTHERN SEA ROUTE . 18 LNG PRODUCTION PROJECTS IN THE ARCTIC . 27 LNG Production Projects . 28 Yamal LNG . 28 Arctic LNG 2 . 29 Pechora LNG . 30 The Baltic Projects . 31 Potential Future LNG Production Projects . 32 TECHNOLOGICAL CHARACTERISTICS OF USING LNG . 33 Bunkering Scheme . 33 Opportunities for Using LNG as Bunkering Fuel . 35 Oil Spills and Environmental Impacts in the Arctic . 36 National and International Marine Fuel Standards . 37 Environmental Efficiency of LNG . 40 LNG Spills . 40 Atmospheric Emissions from the Use of LNG . 41 EVALUATION METHODOLOGY . 42 New Projects in the Arctic Region (LNG, oil, coal) . 42 Transit . 45 Coastal and Port Operations, Fishing Vessels . 48 LNG POTENTIAL . 49 Initial Investment Costs . 50 Operating Costs . 51 SUMMARY AND CONCLUSIONS . 55 REFERENCES . 60 Prospects and opportunities for using lng for bunkering in the Arctic regions of Russia | 3 List of Figures Figure 1. Existing and planned ECAs around the world . 11 Figure 2. Shipping routes in Arctic Ocean . 12 Figure 3. Distribution of the Arctic fleet vessels according to age, deadweight and using type of fuel . 14 Figure 4. Location of ports in the Arctic region of Russia . 16 Figure 5. The Northern Sea Route . 18 Figure 6. Turnover along the NSR, 1933-2016, in thous.t . 21 Figure 7. The Northern Sea Route transportation corridor and developing economic regions of Siberia . 22 Figure 8. Loading procedure of a Yamal LNG carrier . 28 Figure 9. The first Ice-class LNG carriers of the Yamal LNG project (Yamalmax) . 29 Figure 10. Loading procedure for an LNG carrier of the Arctic LNG 2 project . 29 Figure 11. LNG allocation plan of the Pechora LNG plant . 30 Figure 12. Loading procedure for an LNG carrier of the Pechora LNG project . 31 Figure 13. Type of LNG bunkering operation in a port . 33 Figure 14. Map of possible LNG production plants along the NSR . 35 Figure 15. A comparison of using LNG and diesel fuel in a Monchegorsk type vessel (winter time) . 39 Figure 16. Price history for main and alternative fuels . 52 Figure 17. Expected LNG prices in the Arctic region of Russia and LNG plants worldwide, $/mmbtu . 52 Figure 18. The reduction in harmful emissions in the Arctic region when using LNG as marine fuel (with the exception of СО2) . 59 List of Tables Table 1. Classes of ships, assigned to the Arctic ports and their ice categories . 13 Table 2. Distribution of vessels according to the type of marine fuel used . 15 Table 3. Cargo traffic estimates along the Northern Sea Route up to 2030 (forecast), in ml. t . 23 Table 4. The effectiveness of shipping along the NSR, compared to the Suez Canal, for different types of vessels . 25 Table 5. Transit shipping along the NSR . 25 Table 6. Existing and planned LNG projects for bunkering . 27 Table 7. Main characteristics of LNG according to GOST 56021-2014 . 38 Table 8. Heating value of different fuel types . 38 Table 9. An outlook on the use of LNG for bunkering around the world . 40 Table 10. Pollutant emissions when using HFO and LNG, kg/t . 41 Table 11. Average movement speed of vessels, depending on the season . 43 Table 12. Main types of vessels and estimates of the number required to provide shipments along the NSR for key development projects . 44 Table 13. Fuel demand and atmospheric emissions during shipments from Arctic industrial development sites in 2030 (in winter-spring conditions) . 45 Table 14. Transit forecast of the NSR . 46 Table 15. Atmospheric emissions comparison during transit along the NSR . 47 Table 16. Atmospheric emissions comparison during fishing, coastal and port operations . 48 Table 17. An assessment of LNG for bunkering value chains in different regions of the Arctic, $/t . 53 Table 18. An estimate of cost effectiveness of using LNG for cargo shipping as part of the Arctic industrial projects . 54 Table 19. Shipping structure and atmospheric emissions comparison for LNG and HFO, 2030 . 58 4 | Prospects and opportunities for using lng for bunkering in the Arctic regions of Russia Symbols and abbreviations BC black carbon DM (MGO) distillate marine grade (marine gas oil) ECA emission control area FLNG floating LNG Facility HFO heavy fuel oil IMO International Maritime Organization - an international intergovernmental organization, a specialized agency of the United Nations MARPOL International Convention for the Prevention of Pollution from Ships OC organic carbon PM particulate matter RM (HFO) residual marine grade (heavy fuel oil) LNG liquefied natural gas NSR Northern Sea Route.