By the Blouin News Business staff

LNG-powered container ships: the industry’s future

by in Americas.

A container is loaded onto the Trinity container ship at a shipping terminal in Tokyo, Japan, on Tuesday, April 21, 2015. Bloomberg/Bloomberg via Getty Images

A container ship at a shipping terminal in Tokyo, Japan, April 21, 2015. Bloomberg/Bloomberg via Getty Images

The Isla Bella, the world’s first container ship powered by liquefied natural gas (LNG) launched on Saturday in San Diego. The ship’s maker, General Dynamics NASSCO, is now building a second LNG-powered ship for Sea Star’s TOTE subsidiary, to be delivered early next year. The cost of these two ships, which will serve the Jacksonville-Puerto Rico route, is $350 million. Sea Star’s President Tim Nolan said the company had two choices to comply with new EPA restrictions in the Caribbean, which go into full effect in 2019: install emission-limiting “scrubbers” in the diesel vessels it uses now, or build new LNG-powered ships. It chose to retire its old ships and invest in the future.

In 2010, the U.S. formally requested that the International Maritime Organization (IMO), an agency of the U.N., declare the waters around Puerto Rico and the U.S. Virgin Islands an “emission control area.” In 2011, the IMO did so, creating restrictions on nitrogen oxide, sulfur oxide, and other pollutants from shipping, which is a major source of emissions. The new restrictions will reduce environmental damage and the risk of asthma for residents in the area, and the cost of upgrading will be approximately $70 million in 2020, according to an EPA report.

A 2011 study found that the use of LNG could reduce carbon dioxide emissions from container ships by 20-25%. Ships would be faster and in the long run the use of LNG also would save money for some types of container ships. Isla Bella will reportedly reduce sulfur dioxide emissions by 98%, particulate matter by 99%, and nitrous oxide and carbon dioxide by 71%. Nolan wasn’t sure if the ships will reduce costs, because that depends in part on whether the price of oil goes up again. “It’s a 40-year investment — that’s the way we look at it,” Nolan said. “Because we have a commitment to the trade we have right now in Puerto Rico, and that’s a long-term commitment.”

The Isla Bella uses dual-fuel engines that will operate primarily on LNG but are also capable of burning diesel when needed. Besides having greater efficiencies in energy use, the two GD NASSCO vessels have an increased available volume for refrigeration equipment, which is vital for shipping medicines, produce, and other products. The ships will almost double the amount of cargo that can be transported between Jacksonville and Puerto Rico per week, the company said.

The two ships’ financing is backed by a $324.6 million Federal Ship Financing Program (Title XI) loan guarantee from the U.S. Maritime Administration. In order to be eligible, vessels must be manufactured in American shipyards by American workers, thus promoting the growth and modernization of U.S. shipyards and the U.S. Merchant Marine.

Crowley Maritime Corp., another Jacksonville shipping company that has routes to Puerto Rico, is scheduled to finish construction of two LNG-powered ships by 2017, according to the company’s website. The Isla Bella is the first of many more LNG-fueled ships that will be built, especially if the price of oil (and diesel) goes up again.