LNG to Danske Færger A/S Cleaner and Greener Shipping

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1 LNG to Danske Færger A/S Cleaner and Greener Shipping 29 November 2010 by Per Gullestrup

2 Routes and Ferries Kanhave (110 biler, 600 pax) Kyholm (90 biler, 550 pax) Fenja (34 biler, 396 pax) Menja (34 biler, 396 pax) Sønderho (163 pax) Thor Sydfyn (50 biler, 292 pax) Villum Clausen (215 biler, 1055 pax) Hammerodde (1235 lanemeter, 400 pax Dueodde (1235 lanemeter, 400 pax) Povl Anker (262 biler, 1500 pax) Austal 2011 (357 biler, 1400 pax) Frigg Sydfyen (50 biler, 338 pax) Odin Sydfyen (50 biler, 338 pax) Spodsbjerg (49 biler, 226 pax) Ekstrafærge Vesborg (74 biler, 440 pax) 2

400 pax Dueodde (1235 lanemeter, 400 pax) Povl Anker (262 biler, 1500 pax) Austal 2011 (357 biler, 1400 pax) Frigg Sydfyen

3 Spodsbjerg-Tårs Ny double-end-færge Unique shallow draft conditions poses a challenge for optimization of fuel consumption 3

4 Spodsbjerg-Tårs Hastighed/vanddybde Ny double-end-færge KW KW KW KW KW KW KW 4

5 New Ferries ready for LNG Two engine rooms, one for MDO and one for LNG. Each room abt KW 4800 KW in total. 35 m 3 LNG tank in between. Capacity for 3 day s operation. Ferry can operate on 2400 KW i.e. either on LNG or MDO. 5

6 Why LNG? Today fossil fuels represent abt. 80% of Denmark s energy consumption. In 2008 the Danish Government appointed The Danish Commission on Climate, which has just published a report containing proposals for the eliminating the use of fossil fuels by Within the transport sector especially the shipping industry LNG could be an important intermediary step forward. LNG immediately eliminates the dangerous gasses No x (nitric oxide) and So x (sulphure dioxide) up to 90%. LNG is able to reduce Færgen s co 2 -emission with 20-25%. The ferries we built today have a lifetime of 30 years. We do not believe that MDO, however cleaned, will be feasible as future fuel. LNG is cleaner and, in general, more available in the long term. 6

Within the transport sector especially the shipping industry LNG could be an important intermediary step forward.

7 Oil versus LNG price In 2015 gas oil can contain max. of 0.1 % sulphur. Today gas oil can contain max. 1 %. This leads inevitably to an even larger difference in the prices on oil and LNG. 7

8 Challenges According to conventional wisdom LNG logistics requires an expensive net of LNG terminals with tank capacity 10,000 to 100,000 m3. Such facilities are not financially viable in the context of domestic ferry operation. LNG is widely available in Norway, and in the future also in Sweden. The LNG marketplace is still not as mature as the oil market. Our 3 small ferries require 35 m3 per day, i.e. only 10,000-12,000 m3/year. 8

Such facilities are not financially viable in the context of domestic ferry operation.

9 Challenges (cont.) We need a 2,500 m3 tank terminal based on quarterly supply of LNG. But there are basically no 2,500-5,000 M3 LNG tankers available for supply. Average size of LNG tankers are 125, ,000 m3. A 2,500 m3 terminal is very costly which leaves us with a small-scale LNG production plant solution. But where to place the Mini LNG plant (environmental concerns)? And will we be able to land a feasible agreement with a gas supplier based on the market price? 9

Average size of LNG tankers are 125,000-175,000 m3.

10 The way forward A small-scale LNG plant hooked up to the domestic NG net (available all over DK) will be an affordable solution. One lorry can supply all three vessels. A LNG lorry costs abt. 270,000 EUR (abt. 2 mill. DKK). We could wait until a LNG infrastructure is ready. Where everybody waits for others to take the first step. Or we could start on our own. 10

A LNG lorry costs abt. 270,000 EUR (abt. 2 mill. DKK).

11 Small-scale LNG plant 35 m3/day 11

12 Small-scale LNG plant layout 12

13 LNG Facts Current legislation Ships are built according to rules for: Flagging state (Søfartsstyrelsen) Class (DNV) Current regulations for the flagging state are IMO Resolution MSC.285(85) DNV principles are considered to be applied. In Scandinavia all present passenger ships, operated by LNG, are classed by DNV. 13

are IMO Resolution MSC.285(85) DNV principles are considered to be applied.

14 LNG Facts Installation on board Bunker Station The Bunker station is placed so that it efficiently can be operated from the quay ashore. Bunkering by tank trucks at night when ferry is idle. At bunkering the tank truck and the tank on board are a closed system no spill to the environment. 14

Bunkering by tank trucks at night when ferry is idle.

15 LNG facts Installation on board The LNG tank The LNG tank on board represents two tanks in one so that there is security for leak. The air space between the two tanks is isolated with perlite and is put in vacuo with the best isolation. Vakuum isolated tank from CRYO AB 15

The air space between the two tanks is isolated with perlite and is

16 LNG Facts Installation on board Ventilation All parts of the LNG/NG installation are made as double pipes. The core pipe inside the installation leads LNG or NG. The external pipe is utilized for ventilation and for detection of any leakages. Under normal circumstances no running of LNG or NG will leak to the environment. Gas detectors are installed on all ramifications and parts of the system so you always can identify/isolate any defects. 16

The external pipe is utilized for ventilation and for detection of any leakages.

17 LNG Facts Reduction by LNG operation Operation time Svovldioxid (SO X) Kvælstofilte (NO X) CO2 (kilo) (kilo) (kilo) Per hour/ship At 18 hours/ship ,987 Per year/ship 36, ,422 1,435,293 3 ships/year 108, ,266 4,305,879 3 ships 25 years 2,710,017 7,531, ,646,975 17

hours/ship 100 279 3,987 Per year/ship 36,134 100,422 1,435,293 3

18 Yearly costs of delivery for 2 LNG alternatives Århus Terminal Yearly consumption 63,224 MWh a 36 EUR/MWh (price incl. Delivery and terminal installation) Distribution in DK Total 16,957 mill. DKK/year 0,260 mill. DKK/year 17,217 mill. DKK/year Small-scale LNG plant The price of the natural gas is assumed to be negotiated with Shell at a price according to TTF-index or 15 EUR/MWh average the last 18 months LNG consumption of 63,224 MWh x 1,29 (production supplement) = 81,558 MWh a 15 EUR= 9,114 mill. DKK/year operational and financial costs 8,200 mill. DKK/year Distribution in DK 0,260 mill. DKK/year Total 17,574 mill. DKK/year 18

DKK/year Small-scale LNG plant The price of the natural gas is assumed to be negotiated with Shell at a price according to TTF-index or 15 EUR/MWh average the

19 LNG Facts Installation on board Economy Unless the installation is made during the present construction period, the figures here will be directivesignalling. (the costs in connection with yard are of course negotiable). Unless the installation is made after completion retrofit, yard stay has to be expected in10-12 weeks and an essential increase in cost. Estimated mill. EUR. Components to LNG contents Sub-supplier Price [EUR] 3 x 6L20DF, 3 x silencer, 3 x GVU, 40 m3 Storage Tank for LNG incl. Coldbox, Bunker Station, and valves 2,900,000 Yard Redesign 50,000 Structural changes of existing design 375,000 Production of pipes and trunks for NG/LNG 200,000 Ventilation system 175,000 Life support system, detectors, fire equipment etc. 100,000 Sundries 75,000 Total 3,875,000 19

Unless the installation is made after completion retrofit, yard stay has to be expected in10-12 weeks and an essential increase in cost. Estimated 1.5-2 mill. EUR.

20 Questions & Answers

Ports of Stockholm meets new environmental requirements with LNG

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