Design & Engineering Standards

3/16/2015: Brookings Institute panel on LNG as a marine fuel

Capt. John Mauger, chief of the Office of Design and Engineering Standards, spoke on a panel discussion on the use of liquefied natural gas, or LNG, as a marine fuel. His remarks focused on the evolving policy, regulatory and environmental factors associated with using LNG as a marine fuel.

Maritime Commons is providing you with a condensed version of Mauger’s remarks.

Delivered by Capt. John Mauger

The use of liquefied natural gas, or LNG, as a fuel is taking place in the broader context of some substantial changes in the U.S. economy right now. The Commandant of the Coast Guard talks about it in terms of an energy renaissance. In the last few years, we’ve seen a major shift in U.S. energy resources and the maritime transportation system plays a key role in adding value to those resources by getting them to market.

The industry is changing rapidly to meet these new demands. The Coast Guard is remaining engaged and working hard to keep pace with the changes in this technically complex industry. The Commandant’s instruction to us is, “The Coast Guard will facilitate commerce, not impede it.”

LNG as fuel is one of the elements of the energy renaissance. Two weeks ago, the HARVEY ENERGY was the first U.S. vessel to take LNG bunkers to the United States and our field office in Mobile, Alabama oversaw the transfer operation. A few months from now, Tote, Inc. will deliver the first U.S. flagged roll-on roll-off cargo container ship to operate with LNG as fuel. These are big changes that are happening now.

The Coast Guard is approaching the challenges of LNG as fuel by using the same authorities and operating concept that we currently apply to other prevention issues. Our overriding goal is to promote a safe, secure, environmentally responsible and efficient maritime transportation system.

As a regulator, we do this by regulating all aspects of the maritime transportation system to include the certification of mariners, vessels, waterways and facilities. Our concept of operations relies on the same three elements: standards, compliance and investigations.

We develop technical standards and regulations to promote safety, security and environmental stewardship. Our field inspectors assess compliance with those standards and when accidents occur, we investigate to drive lessons learned back into our compliance and standards processes.

With this model in mind, I want to stress that the Coast Guard has the necessary authorities, operating constructs and policies in place to effectively regulate this LNG as fuel. We already have standards in place related to fuel system design, mariner certification and the storage, use and transfer of LNG in the maritime environment.

Our focus has been on adapting the standards already in place to this new area. We have large ships carrying LNG and big facilities for transfers; we have standards for those large operations but how do we apply it to a smaller and more diverse scale in the LNG-as-a-marine-fuel market?

I’d like to highlight three key issues:

Assumptions within existing standards

As we apply our existing standards to this new issue, we have to be keenly aware of the latent assumptions that are in the existing standards. In many cases, we’re not developing ‘first principle’ solutions to this issue. Rather, we’re adapting the standards we’ve already developed for the carriage of hazardous material and for the transfer of cryogenic liquids to this problem. As we do so, we need to ensure that we understand all of the assumptions in the existing regulations.

We also need to make sure we are considering response capabilities. Today when someone delivers oil in a bunker barge, we don’t think about what happens in the event of an environmental response because we already have response capabilities in place. But as we look at look at LNG as fuel, and the hazards associated with carrying it in bulk, we need to ensure that we are equally prepared to handle a casualty.

As we’re developing the standards, we need to understand the underlying assumptions in our framework and make sure we figure those out. We have a strategy for doing this but it is a difficult and complex problem. We are cutting across segments of the industry that haven’t talked to each other before.

Diversification of risk within the LNG market

LNG, as a maritime cargo, is currently a relatively small market. There are not a large number of players and there are also high barriers to entry and a remarkable set of industry standards that go along with that. The Coast Guard sets the basic level for safety regulation. We realize that the industry has come up with very tight standards and, as a result, has a remarkable safety record in the LNG as a cargo business.

As we diversify and open up the LNG-as-a-marine-fuel market, we are looking at a much broader range of players and lower barriers to entry. Regulations will play a much more important role in setting the standard for the level of safety.

Environmental factors

I’d also like to discuss the environmental benefits of transitioning to LNG as a fuel. Many have heard that LNG is a clean-burning energy and fuel, but when you look at methane slip, life-cycle costs, production, transportation, delivery and burning, the environmental benefits of LNG as fuel can get a little bit murky.

We recognize that there is a vocal segment of the public that is against any type of fossil fuel development. This debate doesn’t change how the Coast Guard will do its job to ensure the safe and secure use of LNG as a fuel. But we need to be aware of this context because it shapes how these projects move forward.

The full two-panel discussion audio recording is available on Brookings website.

For further information about LNG fueled vessels and bunkering operations, you can visit the following websites:

Liquefied Gas Carrier National Center of Expertise

Brookings Institute: Fueling the marine shipping industry – A promising new market for LNG?

This blog is not a replacement or substitute for the formal posting of regulations and updates or existing processes for receiving formal feedback of the same. Links provided on this blog will direct the reader to official source documents, such as the Federal Register, Homeport and the Code of Federal Regulations. These documents remain the official source for regulatory information published by the Coast Guard.

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