LPG as a Marine Fuel stirs up more interest

Interest for LPG as Marine Fuel begins to grow as emissions regulations become stricter and IMO deadlines approach. Barging activities seem to be an area of partricular potential. WLPGA members Dorian LPG and Astomos are leading the way.

The Global marine propulsion engine market is expected to reach $12 billion by 2022, growing yearly at around 4.1% from 2016 to 2022 and it is expected to witness robust growth during the forecast period owing to various ongoing government investments in shipbuilding industry and inland waterways. 

The increase in production and sales of ships globally and the rise in international seaborne trade, partly also due to increase in demand for resources such as crude oil, coal, steel, and iron from developing countries, drive the market growth.  Over 90% of the world’s goods by weight and volume are transported by sea. Offshore exploration and production is expected to grow to 45% from 35%, over the next decade. However, stringent environmental regulations and large capital investment required to set up new manufacturing facilities hamper the market growth. Irrespective of these challenges, rise in usage of inland waterways and advancements in technologies, such as new alternative fuel propulsion engines technologies, are expected to provide various opportunities for these technologies and boost market growth.

Amongst these technologies, the use of LPG as an engine fuel is the most commonly accepted alternative fuel in the world today. Despite this, LPG has not made its entry yet at any significant level into the marine market segment. LPG as propulsion fuel is today almost absent from the shipping sector and especially from commercial vessels, where the vast majority of engines are diesel, whereas alternative fuels solutions as CNG and LNG continue their growth. In smaller commercial and recreational vessels with inboard and outboard engines, LPG has been also little exploited up to now, although there are some areas/countries where it has indeed been used.

However, regarding larger commercial and passenger ships, and in light of the 2020 IMO mandate, LPG is starting to get attention as it stands as a likely alternative amongst the other gaseous fuels. Ship operators with traditional propulsion plants and fuels, cannot meet the new 2020 regulations without installing expensive exhaust after treatment equipment or switching to low‐sulphur diesel, low‐sulphur residual, or other alternative fuels, all of which impact bottom‐line profits. As attention turns to an array of possible solutions, heavy-sulphur fuel oil with scrubbers, distillates, blended fuels and LNG, to comply with the IMO's 0.5% global sulphur cap regulation, LPG may gain more acceptance as a viable solution, next to LNG, which in reality, is less easy and more expensive to implement.

LPG supply surplus is also another element in favour, with surpluses ranging from 15 to 27 million tonnes per year, which is either used or “lost”. The dropped prices of LPG (comparatively also with LNG) driven by the shale gas revolution is also an important driver for market entry. Shipbuilders are already considering vessel designs that use LPG as propulsion fuel.

There is no reason why LPG cannot be used in all sizes of vessels from the largest of ocean going ships, down to the smaller boats with inboard or outboard engines. LPG can play a major role in this changing environment and re-establish itself in the position that it deserves as an ideal alternative clean marine fuel.

Poten & Partners have already identified this trend, click below to read more