New Americas era For LNG Fuel Vessels Green Tech Conference Hyatt Regency Vancouver, BC 29 - 31 May 2013 John Hatley PE LNG Initiatives Americas VP Ship Power Wartsila North America Cell 281 221 4209 [email protected] Agenda What ? The Opportunities Target Markets Why ? Compelling Economic Savings 5 Drivers set Investment Clock How ? Integrated Gas Solutions LNG Availability Conclusions Recent Market Signals The Future Decade for Gas Agenda What ? The Opportunities Target Markets Why ? Compelling Economic Savings 5 Drivers set Investment Clock How ? Integrated Gas Solutions LNG Availability Conclusions Recent Market Signals The Future Decade for Gas Transportation Fuels Source: Wall Street Journal, Wednesday March 6, 2013 page B1 @ 0.2% …Natural gas has most growth potential 4 © Wärtsilä Annual Fuel Use : Gasoline Gallon Equivalents Thousands 0 20 40 60 80 100 120 140 160 Sources: Clean Energy, Annual Report 2011, and AARR adapted by JFH Scale thousands gallons… where’s marine? 5 © Wärtsilä Marine Market Development Target Scalability a large number of small lot consumers ... Prefer a small number of large lot consumers Harbor Tug Annual 268,600 Gasoline Gallon Equivalent 7 © Wärtsilä GGE Ferryboat Annual 664,000 Gasoline Gallon Equivalent 8 © Wärtsilä GGE Offshore Supply Annual 1,072,000 Gasoline Gallon Equivalent 9 © Wärtsilä GGE Mississippi Towboat Annual 2,058,000 Gasoline Gallon Equivalent 10 © Wärtsilä LDC GGE Great Lakes Bulker Annual 2,866,000 Gasoline Gallon Equivalent 11 © Wärtsilä LDC GGE Coastal Cruise Annual 6,801,000 Gasoline Gallon Equivalent 12 © Wärtsilä LDC GGE Container Ship Annual 28,090,000 Gasoline Gallon Equivalent 13 © Wärtsilä LDC GGE Annual Fuel Use : Gasoline Gallon Equivalents Millions 0 5 10 15 20 25 Sources: Industry sources, adapted by JFH Marine… scale millions… not thousands ! 14 © Wärtsilä 30 Annual Fuel Use : Gasoline Gallon Equivalents Millions 0 5 10 15 20 25 Sources: Industry sources, adapted by JFH Marine… scale millions… not thousands ! 15 © Wärtsilä 30 Agenda What ? The Opportunities Target Markets Why ? Compelling Economic Savings 5 Drivers set Investment Clock How ? Integrated Gas Solutions LNG Availability Conclusions Recent Market Signals The Future Decade for Gas LNG Logic… Economics ! Logic… Economics ! LNG provides compelling savings… Business Cases demonstrate Payback screen 2… 4+ years... Strong cash flows… Higher ROA, ROE 03/06/2013 Natural Gas Henry Price Forecasts EIA forecasts … prices recede… = gas bargain … 18 © Wärtsilä 19 What’s Natural Gas ? Natural gas a mixture of hydrocarbon gases associated with petroleum deposits, principally methane. Methane has the highest hydrogen to carbon ratio = lowest CO2. Methane [CH4] Ethane [C2H6] Propane [C3H8] Butane [C4H10] 4:1 (400%) 6:2 (300%) 8:3 (267%) 10:4 (250%) MGO 1.86:1 (186%) Gas Training Merchant / Mika Ojutkangas How clean ? Emission values [%] -25% LNG provides significant emission reductions versus traditional diesel engines 100 80 60 -85% 40 CO2 NOx -99% SOx 20 -99% Particulates DF Natural Gas Engine Diesel Engine 0 5 US Game Changers EPA Engine Emissions US centuries shale gas supply Emissions Control Area 2012 Natural Gas bargain EPA Fuel Standards 5 gas drivers …shale supply + bargain prices + 3 EPA mandates = set Investment Clock Source:http://www.google.com/imgres?imgurl=http://www.canadiansailings.ca/canadiansailings/portals/0/April_13/emissions_area_map.jpg&imgrefurl=http:// EIA March 2010 Shale Gas Plays Lower 48 States www.lngoneworld.com, www.bunkerworld.com, LR Fairplay Agenda What ? The Opportunities Target Markets Why ? Compelling Economic Savings 5 Drivers set Investment Clock How ? Integrated Gas Solutions LNG Availability Conclusions Recent Market Signals The Future Decade for Gas LNGPac A. Storage tanks F B. Evaporators C. Dual-Fuel Main engine D. Dual-Fuel Aux engines E. Bunkering station(s) E F. Integrated control system D A C B Wartsila single source…complete engineered package solutions minimize installation and operational risk for assured performance Go For Gas - G. Tirelli, 23 © Wärtsilä Bunkering procedure Bunkering Station 1. Collapse the gas pressure in the tank 2. Open the main filling line 3. Inert the piping with N2 (NOT shown) 4. Close the filling line valves To engines Bar(g) Glycol/water mixture 8 5 2 Time 24 © Wärtsilä LNGPac Customers Presentation Tank pressure increase 1. Open pressure control valve 2. LNG flow by the hydrostatic pressure into the vaporizer 3. LNG is vaporized and gas is returned to the tank To engines PBU Bar(g) Glycol/water mixture 8 5 2 Time 25 © Wärtsilä LNGPac Customers Presentation Normal operation 1. The “stop valve” and “master valve are opened (double block valves with bleed in between) 2. LNG is forced by the tank pressure through the product evaporator and instantly evaporated. Gas flows to the GVU Stop valve and master valve Product evaporator Glycol/water mixture M1 G1 M2 26 © Wärtsilä LNGPac Customers Presentation 5 March 2013 3 LNG plants each at 250K tons/yr Geismar, Jumping Pond, & Sarnia…Online 2015 Supply security and price stability = certainty …certainty breeds investment Source: http://www.bizjournals.com/houston/news/2013/03/05/shell-planning-lng-units-in-us-canada.html 03/06/2013 Geismar LNG Small Scale Facility Geismar … Online 2015… LNG @ 250K tons/yr 28 © Wärtsilä 03 June 2013 Sarnia LNG Small Scale Facility Sarnia…Online 2015… LNG @ 250K tons/yr 29 © Wärtsilä 03 June 2013 Jumping Pound LNG Small Scale Facility Jumping Pound…Online 2015… LNG @ 250K tons/yr 30 © Wärtsilä 03 June 2013 Agenda What ? The Opportunities Target Markets Why ? Compelling Economic Savings 5 Drivers set Investment Clock How ? History Adoption Integrated Gas Solutions Conclusions Recent Market Signals The Future Decade for Gas CNOOC July 2012 6500 HP Tugs 2 @ 6L34DF LNG engines Mechanical Drive Twin Z Props LNG Fuel ~ 50 m3 2 LNG tugs ordered June 2012... to work LNG Terminal Guangdong Province... Delivery 1st tug August 2013 32 © Wärtsilä 03 June 2013 12 November 2012 25 Year Milestone with 2,000 gas Engines… Millions Operating Hours…Tens Millions Horsepower = proven gas technology & LNG system 3 December 2012 Americas early adapter… CAPEX $180 Million + 2 options First LNG fuel ferry for Americas 34 03/06/2013 4 December 2012 Americas early adopter … CAPEX $380 Million + 3 Options 35 03/06/2013 6 December 2012 4+1 Harvey Gulf were 4 LNG fueled supply boats … now 5… CAPEX $290 Million + options 36 03/06/2013 15 January 2013 Viking Grace … LNGpac Tanks 2 @ 200m3 each Length: Breadth: Speed Passengers: Cabins: In service: Shipyard: Ship Owner: 214.0 m 31.8 m 22 knots 2800 880 2013 STX Finland Oy Viking Line Safe, Clean, LNG Cruise Ship … CAPEX $320 Million 37 © Wärtsilä 3 June 2013 16 May 2013 STQ orders 2 Dual Fuel LNG ferries at Davies... Joins earlier larger DF ferry ordered at Fincantierri ... #2, #3 LNG ferry for No Am. 38 © Wärtsilä 03 June 2013 Keeping Count ? THE NUMBERS Over $ 1 Billion CAPEX 1st Week December + prior during 2012… Americas marine segment committed to LNG fuel … the early adopters initiated a new gas ERA 39 © Wärtsilä 24 May 2013 Confirmation... poised for early transition to LNG fuel... availability supply meets owner demand 40 © Wärtsilä 03 June 2013 28 May 2013 17 May Houston... Wartsila introduced LNG early adopters as interested guests for pre-launch....largest SIGTTO meeting ever ! 41 © Wärtsilä 03 June 2013 Wartsila LNG Training Fort Lauderdale Target group: LNG as Marine Fuel New LNG training course Gas safety training New Gas safety training course Engine training Engine training course as with “normal” Ship power project LNGPac training New LNGPac course Shipping company management LNG_related_traini 42 Ship management 12.3.2012 Engine crew Deck crew Ship crew Gas Engine References Power Plants 52 sites 155+ engines Began 1997 Merchant Offshore Cruise and Ferry Navy LNGC PSVs/FPSOs LNG ferries Coastal Patrol •92 Vessels •370+ engines Conversion s •19 vessels •93+ engines •Began 1994 •1+1 vessels •8 engines •Began 2013 •Coming… Land & Sea segments…hundreds installations… CAPEX $30 Billion… it’s real & proven gas technology Drivers = Decade Shift to Gas Mandated Emissions & Fuel Restrictions Geographic emissions bubble encapsulates US/Canada Tight sulfur limits stress supply After treatment burdens diesels Source: US EPA web sites, Hatley capture various sources Paradigm shift to gas 1st on economics 2nd on emissions Early adopters moving ahead… soon early followers ! Mid decade market tipping point 03 June 2013 Agenda What ? The Opportunities Target Markets Why ? Compelling Economic Savings 5 Drivers set Investment Clock How ? Integrated Gas Solutions LNG Availability Conclusions Recent Market Signals The Future Decade for Gas
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