Tight US LNG bunker barge availabilities combined with an increase in LNG spot bunkering demand is creating a disconnect between LNG bunker supply and demand, according to panelists at an industry event.
The LNG for bunkering market "is a victim of its own success" Matthew Jackson, vice president of business development for shipping and new energy with ship owner Crowley, told the Argus Sustainable Marine Fuels Conference in Houston, Texas. The LNG bunker market has gradually become more spot oriented as natural gas liquefaction has become more readily available, allowing producers to enter into short-term offtake agreements, Jackson said. But that has contributed to a shortage of LNG barges, as owners need 7-10 year contract commitments to invest in newbuild barges.
Under the Jones Act, only US-flagged ships are allowed to operate between US ports. So-called Jones Act vessels, which include LNG bunker barges, also have to be build in US shipyards. US shipyards have lengthy construction times, said Blake Littauer, president of LNG supplier Puget LNG. This puts LNG bunker suppliers and LNG bunker barge owners at odds with each other, he said.
Interest in LNG for bunkering is expected to continue to grow with the industry turning its sights on low-carbon bio-LNG. Bio-LNG delivered by barge in Florida is around $1,600/t fuel oil-equivalent, John Lindquist, head of LNG bunkering for GAC Bunker Fuels, told the conference.
