Impending ammonia export boom will create new opportunities to retrofit LPG carriers - Rystad Energy
Retrofitting existing liquefied petroleum gas (LPG) carriers to transport the projected 121 million mt/year of ammonia by 2050 will reduce the cost burden of building new ammonia carriers, Rystad Energy suggests.
PHOTO: Concept image of NYK Line's dual-fuel very large LPG-ammonia gas carrier. NYK Line
Fuel producers are considering using ammonia to transport hydrogen amid the global decarbonisation drive, energy intelligence firm Rystad Energy reports. This is because ammonia is "a safer and more cost-effective method" to transport hydrogen in large volumes.
Rystad Energy estimates that global traded volumes of ammonia will reach 76 million mt/year by 2035, and then surge to 121 million mt/year by 2050. The majority of these volumes will come from North America, Africa, and Australia.
It estimates that 200 very-large ammonia carriers (VLACs) will be needed to handle this projected rise in export volumes by 2050. Building 200 new ammonia carriers will require an investment of at least $20 billion, it adds.
These additional costs can be mitigated by converting existing LPG carriers into ammonia-ready carriers. “Given the availability of over 1,450 LPG carriers, converting these vessels into ammonia-ready carriers offers a robust transition strategy for shipowners, particularly as demand for LPG tonne-mileage is anticipated to decline amid decarbonisation efforts,” Rystad Energy explains.
Ammonia can be transported by slight modifications to LPG vessels since both gases are liquefied under almost the same conditions. A study by the US Department of Energy said, “Conventional LPG systems have been the basis for the design principles for the ammonia storage systems. Both fuels are pressure-liquefied under similar conditions.” Ammonia gas needs to be cooled to–33°C to turn liquid at atmospheric pressure while LPG needs to be cooled to −42°C.
Some companies, such as Japan's Nippon Yusen Kabushiki Kaisha (NYK Line), have already placed orders for dual-fuel very large LPG/liquefied ammonia gas carriers. NYK's upcoming vessels, scheduled for delivery in 2025, will be equipped with separate cargo tanks to carry LPG and ammonia simultaneously. The vessels will initially run on LPG but be ready to use ammonia fuel in the future.
Furthermore, Rystad Energy recommends converting existing LNG import and export terminals to handle ammonia to ease the burden of constructing ammonia storage infrastructure from scratch.
“Converting LNG terminals could be a good solution, not only optimising current infrastructure but also spurring a re-evaluation of strategies that can cope with the scale of the expected market expansion,” Minh Khoi Le, head of hydrogen research at Rystad Energy concludes.
By Konica Bhatt
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