FEATURE: Methanol bunkers in the limelight after Maersk's latest ship orders
16th September 2021 08:45 GMT


Methanol's allure as a marine fuel is gaining prominence in shipping's decarbonization drive, with its adoption set to rise after Maersk announced last month it will have eight deep-sea vessels running on sustainable methanol, industry sources told S&P Global Platts.

"We’ve already noticed a sizeable uptick in interest around methanol bunkers -- both conventional, carbon neutral and lower carbon methanol," Chris Chatterton, chief operating officer at the Methanol Institute, or MI, said recently.

There are 12 methanol-fueled ships currently operating internationally with at least that many more scheduled for delivery over the next 18 months, not counting the recent Maersk order, Chatterton said.

Maersk’s eight 16,000 twenty-foot equivalent vessels, which were announced on Aug. 24, imply an annual demand of 300,000-360,000 mt of renewably-sourced methanol, depending on factors like deployment and operational requirements, Platts reported recently. Maersk also has the option to order an additional four ships in 2025.

But Maersk is not the only one that has reposed its faith in methanol bunkers.

In January, Proman Stena Bulk confirmed that steel cutting has commenced for its methanol-fueled 49,900 DWT vessel, Stena Pro Patria, due for delivery early 2022.

Stena Pro Patria will utilize about 12,500 mt of methanol as fuel per year, significantly reducing the volume of carbon and GHG emissions resulting from the vessel’s commercial operations, especially when compared with the use of conventional marine fuels, it said.

In March, Singapore-headquartered Eastern Pacific Shipping said it had inked an agreement with OCI N.V. and MAN Energy Solutions to develop methanol and ammonia as marine fuels for sustainable shipping. July saw Japan's Mitsui O.S.K. Lines forge a strategic partnership with Vancouver-based Methanex Corporation for the commercialization of methanol as a bunker fuel by agreeing to acquire a 40% stake in Methanex’s subsidiary, Waterfront Shipping.

The MSC Group, a global operator across the transport and logistics sectors, had joined MI, which has well over 30 members, in July. MSC considers methanol to be one of the key long-term solutions available, Bud Darr, executive vice president of MSC Group's maritime policy and government affairs said in a statement then.

More recently on Sept. 15, shipping company NYK Line and global energy player BP had agreed to collaborate and identify opportunities to help transition from current marine fuels to various alternatives, including methanol.

Methanol has multiple sustainability pathways based on its different feedstocks, which means it can be produced almost anywhere. Most of methanol's storage and distribution infrastructure are largely in place, or can be readily re-purposed, industry sources said separately.

Meanwhile, methanol's inclusion in the International Maritime Organization's IGF Code last year has also boosted its prospects, they added.

On Aug. 13, Platts had proposed to launch daily methanol bunker fuel price assessments effective Sept. 27.


Widespread adoption to take time


However, for methanol to be widely adopted as a marine fuel, still holds some challenges. Its acceptability hinges largely on commercial aspects, some sources said.

Global methanol prices have increased on the back of supply disruptions from intense weather events and high feedstock prices.

Methanol in South Korea and Southeast Asia spiked $14/mt and $16/mt week on week, respectively, to $415/mt on Sept. 10, Platts data showed.

Compared with the industry’s interest in LNG bunkers, methanol’s uptick still lags behind.

“We can take it [LNG bunkers] in the same tank, same ships and we can burn it in the same engine. And that’s a challenge for methanol and ammonia,” Bunker Holding's COO Christoffer Berg Lassen said at an industry event recently.

S&P Global Platts Analytics noted that its base case 2030 fleet model forecast that 440 LNG dual fuel vessels will likely be delivered compared with 79 methanol fueled vessels along with a handful of other alternative fuels. This equates to 0.5% of the 2030 fleet, Platts Analytics added.

As a low-flashpoint fuel, methanol poses significant challenges that require a new approach to fuel supply, Alfa Laval said in a statement. Because methanol contains less energy than traditional fuels, it will also be necessary to rethink energy use on methanol-fueled vessels.

However, the technology company said it was addressing this wider energy picture with both existing and new solutions.

MI, in a recent report, urged the adoption of a well-to-wake approach in GHG accounting of fuels to promote alternative fuels in shipping, including methanol.

The tank-to-wake approach, currently used by the IMO, undisputedly places the burden of GHG emissions solely on ship owners, MI's CEO Gregory Dolan said.

“A well-to-wake approach would share the burden with fuel suppliers, power generators, port authorities and national governments; we can’t just look at what happens in the engine room and ignore how the fuel got into the ship’s bunkers in the first place,” he added.

Platts ,
16th September 2021 08:45 GMT