Confidence in finding solutions means no "chicken and egg" risks to batch of methanol-fuelled bulk vessels
When agricultural shipping giant Cargill does something in shipping, the industry takes note. So, the company knew when it made the recent announcements about decisions to invest its own money into cleaner shipping, the industry would listen.
So being behind orders of at least four large bulk carriers that can be fuelled with green methanol makes shipowners and others take note, as does the confidence to admit that they have yet to confirm which trades they will put these ships on and how they will secure green methanol fuel.
Amongst its larger range of operations round the world, privately-owned Cargill is an agricultural commodities conglomerate, shipping huge volumes of grain, and other food products globally. As a landowner and producer it is in a position, being also one of the largest companies in the world, to influence shipping with long term charters.
In January this year it put out a press release describing how it has “kickstarted” methanol fuelled shipping for the bulk shipping sector – Maersk and other container lines had already done the same for shipping in general, with a spate of methanol fuelled containerships).
Effectively what Cargill has done is teamed up with shipowners J.Lauritzen in Denmark and Japan’s Mitsui & Co in Japan, to back newbuilding orders for large (81,500 dwt Kamsarmax) dry bulk vessels.
While the news at the time was focused on Cargill being seen as stimulating the market, Jan Dielemen president Cargill Ocean Transport told me (Fathom World’s Craig Eason) during an interview on the Nor-Shipping Blue Talk stage that the company has yet to determine what trades to put these vessels on, nor how they will get the blue or green methanol to fuel the ships. It is though, he insisted, not an issue they need to solve right away, but something they are certain will be solved by the time the vessels hit the water. The announcement of the order was to show shipping that there is growing confidence in methanol.
Methanol-fuelled vessels, particularly large ones with two stroke engines, will be dual fuelled, so built with two sets of fuel tanks, one set for the methanol, another for the diesel/fuel oil. Methanol also needs diesel or fuel oil as a pilot fuel for combustion in the engine (around 2% to 5% of the mix). Ship designers have said that a dual-fuelled vessel will have a premium of about 15% on similar sized ship using a similarly sized straight diesel engine. The capital increase being the lining for the methanol fuel tanks, the methanol fuel delivery system and the markup of the dual fuelled engine.
To date there are at least four confirmed dry bulk vessels on order with Japan’s Tsuneishi Shipyard, two through Mitsui and two through J.Lauritzen. There are options for more. Cargill is also in projects to install wind assist systems and underwater lubrication technology on vessels to reduced fuel consumption and greenhouse gas emissions.
The Kamsarmax orders come with confirmed long term charter contracts from Cargill to ensure the vessel employment. Total methanol fuelled orders are now reaching towards 100, with the majority being container vessels