think about tomorrow - greener shipping summit...

GREENER SHIPPING SUMMIT 2016 Think about Tomorrow

Tuesday, November 15 – Eugenides Foundation

Stavros Hatzigrigoris – Maran Gas Maritime Inc.

Greener Shipping ?

Definitely not this Green…

And this is what my presentation will remind you, only two days to write it…

In case you did not realize, this is what people call a Russian Salad…

Topics

•  MEPC 70 EEDI

•  MEPC 70 0.5% SULPHUR HFO

•  MEPC 70 BWT

•  Innovation (The Future)

•  Innovation (today) •  MARKET •  A Song From the Past

MEPC 70

The decision has been taken to revise the requirements of Phase 3 of the EEDI and possibly extend the EEDI requirements to Phase 4.

MEPC 70 EEDI

CURRENT EEDI NUMBERS

Required EEDI Attained EEDI

% Power Speed Minimum Power

VLCCs 2.51 2.12 84.5 % 25,330 15.7 25,209 SuezMaxes 3.559 2.755 77.4 % 15,310 14.8 14,018 174k LNG (HSHI) 8.9683 6.99625 78.0 % 19,422 19.5

174k LNG (HSHI) 9.93912 5.4223 54.6 % 19,438 19.5

MEPC 70 EEDI

FUTURE EEDI NUMBERS Joint Industry Project – VLCC Design

VLCC EXISTING DESIGN NEW DESIGN

Capacity 340,000 m3 410,000 m3

LOA 336 m 350 m

Beam 60 m 63 m

Depth 29.5 m 32 m

Draft 22.5 m No Change

MEPC 70 EEDI

FUTURE EEDI NUMBERS Joint Industry Project – SuezMax Design

SuezMax EXISTING DESIGN NEW DESIGN

Capacity 175,000 m3 250,000 m3

LOA 274 m 310 m

Beam 48 m 56 m

Depth 23.7 m 25 m

Draft 17.2 m No Change

MEPC 70 EEDI

New designs performance fuel (MT) per 10,000 MT of cargo CONSUMPTION/10,000 MT DWT EXISTING DESIGN NEW CONSIDERATION Improvement

VLCC 2.15 1.96 9%

SuezMax 2.64 2.56 4%

Additional benefits due to reduced port dues etc.

Demand in Million Tons 2012 2020

HFO 228 36 (scubbed)

MDO/MGO/ 0.1% ULSHFO / 0.5% LSHFO

64 39 0.1% S 233 0.5% S

LNG 8 12

TOTAL 300 320

MEPC 70 0,5 % S HFO

•  Global distillate production will grow faster than demand. •  Assumptions in the CE DELFT study.

MEPC 70 0,5 % S HFO •  The IEA has predicted that shipping will account for 9% of the

distillates demand in 2020 vs 3% in 2015.

•  36 M tons 3.5% HFO means that approximately 3,600 scrubbers will have to be installed in less than 2.5 years (mid 2017 to 2020) The exhaust gas cleaning systems association (EGCSA) has indicated that if they work at full capacity only around 2,800 scrubbers can be delivered until 2020.

•  Scrubbers will not be easy to install on ships already ordered.

MEPC 70 0,5 % S HFO PRICES

•  Singapore today 3,5% S HFO 380CST 270 USD/MT 3,5% S HFO 500CST 262 USD/MT 0,1% S ULSHFO 432 USD/MT

•  Price differentials estimated for 2020

First indications were at around 30 USD/MT then the differential skyrocketed to anything between 100 USD / MT to 200 USD / MT. The DELFT study foresees a price differential of 21 USD/MT between 0,1% LSMGO and 0,5% S HFO and 129 USD/MT between 0,5% S and 3.0 % S HFO.

MEPC 70 0,5 % S HFO PRICES If the price of 0.5% LSHFO is very close to the LSMGO price then consumption may shift to LSMGO or MDO. If the DELFT study is correct then in 2020 the 0.5% S HFO consumption will be 6 times higher than the 3.5% S HFO consumption. This will create huge logistical problems to the bunkers suppliers. The consensus is that the refineries in Europe and the US (Before Trump) will not be able to satisfy the demand for distillates whilst a surplus may exist in the Far-East. This may increase the demand for shipping. Refineries cannot be upgraded overnight. There is no guarantee that the refineries will prioritize the production of 0.5% S HFO over needs that they may have.

MEPC 70 BWM A little bit of history

Pushed ABS, LRS, DNV GL, BV, KR and CCS in early October 2016 to discuss the BWM issue in the IACS Environmental Panel and produce / publish a position paper stating : 1.  The lack of final standards.

2.  The long time needed to obtain approvals acceptable to IMO and to the USCG.

3.  The long time needed for evaluating the systems available in the market, the production and transportation time, the modification design time, the plan approval time and the time needed for installation of a system. Even if a system is ordered today it will be very difficult to install it and certify a ship before 8-10 months.

4.  The lack of sufficient operational experience with the systems available in the market and the large number of teething (and may be more serious) problems with the operation of the BWTSs.

6.  The fact that the installation of a BWTS may require many more modification on a ship (larger generators, replacement of large size pipes etc.).

7.  The fact that an increase of the ballasting - de ballasting time may not be acceptable to bulk carrier or tanker terminals.

8.  The lack of an emergency response (what happens if a system is not operational ?) framework.

9.  The fact that not all systems are suitable for all ships (for example large capacity UV systems are bulky, many systems do not have Ex certification etc.).

10.  The issue of training of the Officers of the ships, Class Surveyors, PSC inspectors etc.

11. Any other issue that the Panel may consider as hindering the smooth and efficient entering into force of the BWM Convention.


The request was rejected by the GP Committee (only 3 Societies supported it) but was reintroduced to it after a single Society pushed hard to explain that the intention was to discuss technical and not political issues. The result was the document that you can see below.


I call this document a thin “soup” lacking salt and pepper in it….


*

* Inclined on purpose

A stronger support is needed in the May 2017 MEPC to avoid serious complications with BWM Convention. The US citizens managed to elect Tramp as their president but the USCG has still to approve a BWTS.

Things are not always as they appear…..


Innovations Combined gas and steam (COGES)


Gas turbines have no restrictions on gas fuel from start to full load. • Diesel continuous operation on gas fuel is often limited to 10% to 100% and requires pilot fuel as well. • Gas turbines reduce fuel supply changes.

Gas turbines not subject to de-rating due to low methane number (MN) fuel. • Medium speed and Otto cycle low speed diesels de-rated ~10% at MN=70 & 80 respectively • 63% of LNG has MN<80… challenge when using FBOG

Gas turbines easy to monitor and control, just like airplane engines. • Gas turbines have 19 required alarm points (LR rules part 5) • Diesels have 41 required alarms… before multiplying by the number of diesels

Dual fuel diesel operator feedback* on impact of fuel gas quality. • High N2 content & superheated LNG can lead to engine de-rating ΰspeed limitation • High portion of FBOG increased diesel knocking


Advantages •  High environmental performance - IMO Tier III •  No methane slip •  Proven technology with high reliability (>99%) •  Power density provides ship design flexibility •  80% lighter & 30% smaller •  Reduced vessel downtime with simplified maintenance •  Life cycle cost advantages

Disadvantages •  Performance at partial load

Innovations

Collapsible Shipping Containers or how to further destroy the container market…

Innovations

Ballast Free Ships

Innovations Ballast Free Ships Instead of adding weight for ballast, the bulk carrier design has trunks running the length of the hull that are open to the sea when no cargo is carried. As ballast water is not stored, there is no need to perform ballast water exchange or install onboard ballast water treatment equipment. Three longitudinal trunks per side, in a deepened hull, provide safe operating draughts. The pressure difference between bow and stern induces a flow of seawater that is exchanged about once an hour. Computational fluid dynamics (CFD) has been used to demonstrate the pressure differential is great enough and that flow will occur when the vessel is underway

Innovations The Ulysses Project

•  Funded by the EU •  Before 2020 reducing Greenhouse emissions by 3% •  Before 2050 reducing Greenhouse emissions by 80% compared to 1990 Remember the population of earth is increasing.

•  Phase I Existing vessels in 2020 ~ 10K •  Phase II New vessels built by 2020 ~ 7,5 K •  Phase III New vessels built by 2050 ~ 5,0 K

Innovations The Ulysses Project

VLCC Aframax Suezmax Handymax LOA (m) 310 259 274 183

Breadth (m) 56 47 44.6 32.2

DWT 270,000 115,000 160,000 53,160

Design Speed 14 15 15 15

ME type Sulzer RT flex 68 R1 7 cyl (7)

Wartsila RT flex 84T - D

Wartsila X72 R2/R2+6cyl

7RT-FLEX50

ME MCR (Kw) 21,910 14,700 16,800 11,340

ME FO consumption (t/day) 88.9 58.9 60.7 46

Types of vessels included in the study

Innovations Hull Survey Methods

Past

Future

Innovations Use of LNG as Fuel

MTM Aframax Tanker


MTM VLCC (To be delivered next week)


Cost Factors NB price VLCC 87 m USD LNG Fuel Extra 18-20 m USD NB price AFRAMAX 50 m USD LNG Fuel Extra 14-15 m USD Things may change after MEPC 70

Innovations achievable today •  Maran Gas Achilles – delivered at 21 January 2016

•  Woodside Chaney – delivered at 15 March 2016

•  Maran Gas Agamemnon – delivered at 10 May 2016

•  Maran Gas Pericles – delivered at 22 August 2016

•  Maran Gas Hector – to be delivered at 8 November 2016

Summary

The areas of improvement over the previous generations LNGC designs are:

1.  Propulsion Efficiency

2.  Structural Design

3.  Paints

4.  Safety and Environment

5.  ECO design

6.  Overall Efficiency

Propulsion Efficiency

Detailed study and model tests were carried out by HHI and concluded to the following efficiency improvements compared to the basic design: 1.Twin skeg design – 4.5% ~ 6.5% improvement in propulsion efficiency in design and ballast drafts, when comparing to single skeg 2. Optimization at various speed ranges and drafts, 3. Hull form and bulbous bow - Overall length was increased to 290m, skeg angle study was carried out (25 deg outboard) and bulbous bow optimization, 4. Design for reduced added resistance in rough weather,

Propulsion Efficiency

5. Installation of Hi-Fin - significant improvement in propulsion efficiency 6. Twisted Rudder with Bulb - Full spade rudder adds less resistance and improves maneuverability of the vessels,

7. Rudder angle – Based on CFD and model test results, 4.5deg of center for optimum design,

8. Propeller – A unique three bladed propeller selected and optimized for the application,

9. Shaft angle optimization for twin screw - 2.5deg of center as optimum design.

Structural Design

HSHI twin screw vessels structural design was assessed by two leading Class Societies and the scantlings were enhanced to meet both Class requirements, especially in critical areas.

LR’s ShipRight notation was included, aiming to high standards of safety, quality and reliability at the design stage and during construction.

ShipRight Procedures: Structural Design Assessment (SDA) – confirmation of primary structural members by comparing applied stress levels and buckling capabilities with permissible values Fatigue Design Assessment plus (FDA) – adequacy of critical structural details for 40 years operation in North Atlantic Ocean environmental conditions Construction Monitoring (CM) – verification of critical joint during construction

Structural Design

•  Vessels meet ABS SafeHull requirements and have been assessed to fully comply with:

•  Spectral Fatigue Analysis (SFA) - design fatigue life value to 40 years, •  Dynamic Loading Approach (DLA) – additional notation utilizing the most

current and advanced procedures taking into account the loading condition during model analysis,

•  Zooming Analysis – local 3D analysis in critical areas.

Paints

Latest technology for antifouling (Silyl Acrylate) has been selected.

Water ballast tanks have been coated with Aluminum pigmented pure epoxy.

Hull roughness measurements have been taken prior to each vessel’s delivery to ensure minimum roughness which contributes to increased efficiency.

Safety & Environment

Vessels comply with ABS R2 and LR PSMRL Redundancy notations, assuring that propulsion power and steering capabilities are maintained upon a single component or machinery failure.

A Failure Mode and Effects Analysis (FMEA) study was carried out in order to identify any significant point failure on the equipment and vessel systems that provide functions critical to the vessel’s propulsion and steering capabilities. This is a core task in safety, reliability and quality engineering.

Overall Efficiency

The cost for carrying 1000m3 of LNG has been reduced by 41% in comparison to the vessels delivered until 2007.

The Market Outlook

Quoting reputable brokers - VLCC “While market conditions are expected to record a seasonal improvement in the winter months, the outlook remains challenging”. - Suezmax “While Suezmax market conditions could improve in line with seasonally higher demand in the winter months, earnings are not expected to reach as high as in late 2015. Suezmax fleet growth is projected to accelerate to 7.2% in 2017, which would represent the fastest pace of expansion since 2011, and growth is likely to significantly outstrip the pace of demand growth”. - Aframax “Crude Aframax market conditions could improve in the winter months from seasonally higher demand, in line with expectations for the larger crude tanker sectors. Overall, demand growth in the short-term appears unlikely to be able to match the expected expansion in the crude Aframax fleet of 2.9% in 2017, and greater vessel supply in the larger crude tanker sectors could also increase competition”.

Quoting reputable brokers - Product Carriers “In the short-term, the outlook for product tanker demand appears relatively positive, with deadweight demand for product tanker tonnage expected to increase by around 4% in 2016”. - LNG “The LNG carrier market appears to have bottomed out for now, but there remain ongoing challenges in the wider LNG sector. With a growing number of importers looking to rely more heavily on cleaner energy sources such as natural gas, there remain positive drivers for the further development of the LNG sector in the long-term. Meanwhile, the use of LNG as a maritime fuel continues to develop gradually, and a number of projects to expand bunkering infrastructure are underway”.

Quoting reputable brokers - Capes “While the Capesize market may see seasonally improved conditions in Q4 2016, the short to medium-term outlook remains difficult, as the extent of existing oversupply is likely to take some time to absorb. However, demand side trends appear relatively positive in the short-term. Continued expansion of iron ore production by the major miners in Brazil and Australia is likely to help support growth in global seaborne ore trade volumes next year”. - Panamax “The outlook for global seaborne coal trade remains subdued, with a number of pressures likely to lead to a further gradual decline in volumes. An increased focus on cleaner energy globally, but especially in Europe, is likely to lead to reduced reliance on coal imports in some areas”.

Quoting reputable brokers - Handymax “The outlook for the Handymax market remains very difficult. Coal exports from Indonesia, the worlds largest exporter, are projected to decline 7% this year, with weak Indian import demand a key driver, and the outlook for growth in global coal trade further ahead appears relatively weak. Growth in the Handymax fleet is expected to outpace expansion in the other bulkcarrier sectors in the coming years, with growth in dwt terms projected at 5.0% in 2016, and 3.6% in 2017. This pace of growth also appears likely to outpace the rate of expansion in the key seaborne trades impacting Handymax demand in the short-term, making it appear unlikely that the level of oversupply in this sector will be notably reduced in the short to medium-term”.

The Market Outlook But do we believe brokers? Even the reputable ones?? Tick a Box:

YES NEVER OCCASIONALLY ONLY WHEN IT

SUITS US

Do not know if “Naftiliaki” will have the questionnaires at the exit…

Thank you!

To make you feel better will finish the presentation with a song….

think about tomorrow - greener shipping summit...

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