IBP1059_19

LNG FOR TRANSPORT: THE STATE OF THE

ART OF TECHNOLOGIES THAT USE
LNG IN TRUCKS AND SHIPS AND
ITS APPLICATION IN BRAZIL
Ana Claudia S. Pinto¹, Luiz Paulo B. da Silva²,
Carolina O. de Castro³, Marcelo F. Alfradique4

Copyright 2019, Brazilian Petroleum, Gas and Biofuels Institute - IBP

This Technical Paper was prepared for presentation at the Rio Pipeline Conference and Exhibition 2019, held
between 03 and 05 of September, in Rio de Janeiro. This Technical Paper was selected for presentation by the
Technical Committee of the event according to the information contained in the final paper submitted by the
author(s). The organizers are not supposed to translate or correct the submitted papers. The material as it is
presented, does not necessarily represent Brazilian Petroleum, Gas and Biofuels Institute’ opinion, or that of its
Members or Representatives. Authors consent to the publication of this Technical Paper in the Rio Pipeline
Conference and Exhibition 2019.

Abstract

The transportation sector represents a large part of energy consumption both in Brazil and in
the world. The increasing environmental concern has directed efforts towards the use of cleaner
fuels. Therefore, initiatives are being implemented around the world, such as the proposal by
the IMO that will implement a reduction of the sulphur limit for marine fuels from January
2020. With this, the use of more fuels has been stimulated to be clean. The use of natural gas
has advantages over other fossil fuels since its use produces lower rates of carbon dioxide
emission and does not produce nitrogen oxides, particulate matter or sulphur oxides. Therefore,
the article explored two uses of LNG, its use as fuel for ships and for trucks, thus building the
state of the art of applying this technology worldwide. In addition to the international scenario,
it was analyzed how these forms of LNG applications would integrate the Brazilian gas chain.
For this, the paper proposes an analysis of the opportunities and challenges of the use of LNG
as fuel in Brazil. The analysis shows that in some places such as the United States, China and
the European Union the use of LNG as fuel is well advanced and growing. As for Brazil, there
are prospects for increasing natural gas production and presenting a more advantageous price
when compared to diesel.

Keywords: LNG. Ship. Truck. Sustainability. Transportation.

1. Introduction

The transportation sector is one of the major energy consumers and represents 56% of
sectoral energy consumption in the world (IEA, 2016). In Brazil, according to EPE (2018a), the
transport sector accounts for about 32.7% of energy consumption by sector. Ordinarily the fuels
used in the transportation sector are of fossil origin and are highly polluting like diesel, gasoline
and maritime oil bunker. The transport sector contributed about half of the world's NOx
emissions, 12% of SO2 emissions and 7% of particulate emissions (PM2.5) in 2015. It is
estimated that 6.5 million deaths around the world are associated with low air quality (IEA,
2017).
______________________________
1
Chemical Engineer – EPE
2
Electrical Engineer - EPE
3
Geologist – EPE
4
DSc. Chemical Engineer - EPE
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Therefore, with this pollution scenario and growing global environmental concern,
many countries have been active in limiting pollutant emissions from heavy vehicles as well as
light vehicles and shipping. In addition, stricter standards are being adopted, including those
adopted by the European Union, Japan and the United States can substantially reduce the
emissions of pollutants related to the combustion of road freight transport (IEA, 2017). In
another strategic decision to reduce emissions, the International Maritime Organization (IMO)
will implement a reduction of the global sulphur limit for marine fuels. These limits will be
3.5% to 0.5% from January 2020 and maintenance of 0.1% for ECA (Emission Control Area)
regions, which will promote the implementation of new technologies or the use of new fuels
(IMO, 2019).
Consequently, the society has been looking for strategies and new fuels to support the
new regulations. Among the many options, natural gas, mainly in the form of LNG (Liquid
Natural Gas), has been indicated as one of them. LNG is gas stored in the form of liquid at
temperatures between -110 °C and -164 °C. Compared to other forms of gas storage, LNG has
a higher energy density. The energy contained in 1m³ of LNG corresponds to the same energy
contained in 3m³ of CNG. Figure 1 shows the LNG value chain, as well as the two applications
studied: the use of LNG as a fuel for trucks and ships. Typically, natural gas produces lower
rates of carbon dioxide emissions and does not produce nitrogen oxides, particulate matter, or
sulphur oxides.

Supplier Terminal Logistics Storage / Customer

s Filling
Station
LNG carrier

Pipeline Figura 1. Cadeia Produtiva do GNL

Figure 1: LNG Value Chain
Source: Adapted from GABL, 2017.

Therefore, the present work aims to explore the use of LNG for both trucks and ships.
The analysis seeks to understand the evolution of these applications in the world, as well as
their degree of maturity. In addition to the world scenario, the article seeks to understand the
opportunities and challenges of using LNG as fuel in the Brazilian market.

2. Methodology

This paper starts with bibliographical review to contextualize the technology and
characteristics technical, economic, environmental and recent application in the world for ships
and trucks LNG applications. After that, it studies the market opportunities of the insertion of
the use of LNG as fuel in the Brazilian energy market.

3. Use of Natural Gas as fuel for Ship

Shipping has been responsible for about 90% of international trade. Typically, the fuel
used like marine fuel is Heavy Fuel Oil (HFO). Due to a residual product from the refineries,
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HFO combustion generates a large amount of pollutants. The global pollution from maritime
transport represented 2.6% in 2015. In order to reverse this situation, the IMO has established
new pollutant limits with a global limit on Sulphur content of 0.5% versus the current 3.5%.
For ECA areas continues with the limit of 0.1%, the same as in 2015 (Shell, 2019).
To attend the new regulation some alternatives may be adopted like the use of low
sulphur fuel, natural gas or installation of scrubbers. Most vessels are expected to adopt low
sulphur fuels, especially in the initial phase of the transition. Scrubbers can be seen as a short-
term solution, there are about 2,500 vessels with scheduled scrubbers to be installed by 2020.
However, some issues restrict their use, such as restrictions of the discharge of wastewater from
the scrubbers in territorial waters in China and Singapure, for example. Therefore, in this
scenario, natural gas appears as a solution, especially in regions with serious air quality
problems or in the regions of ECA's where the sulphur levels are substantially lower (SEA \
LNG, 2018).
In relation to the diffusion of LNG as marine fuel, this percentage already corresponds
to about 2% of the fuels used nowadays (Olmer et al, 2017). With a current fleet of 159 vessels
in operation and 145 already commissioned, these vessels have a predominantly European
shipping area, most notably in Norway, as can be seen in Figure 2 (DNVi, 2019).

1 4
Norway
82
82 Asia
America
Europe
15 Global

29 Middle East
91
Oceania

Figure 2: Navigation region of LNG vessels

Source: DNVi, 2019.

With a large environmental advantage, the use of natural gas is more attractive when
compared to conventional marine fuels, since its burning drastically reduces or even
extinguishes SOx, NOx and particulate emissions, contributing to quality improvement.
Regarding greenhouse gas emissions, the use of LNG can generate a reduction of 10% when
compared to ships using HFO (Speirs et al, 2019). A comparison of emission marine fuels can
be observed in Table 1.
Table 1: Characteristics of emission between different types of fuels

Emission HFO MDO1 GNL

SOx 0.049 0.003 traces
CO2 3.114 3.206 2.75
CH4 traces traces 0.051
NOx 0.093 0.087 0.008
PM 0.007 0.001 traces
Source: Le Freve, 2018.
1
Marine Diesel Oil
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Usually, there are two technologies most used in natural gas engines for ships: Lean-
Burn and Dual Fuel. Lean-Burn motors are designed to be fueled only with LNG and operate
using the Otto cycle principle. These engines convert about 42% of the energy contained in the
fuel into power, being much used in small vessels such as ferries, small cargo ships and small
offshore support vessels. Dual Fuel engines work with natural gas and some other fuel, such as
MDO or HFO. These engines operate on the principle of the Diesel cycle (Speirs et al, 2019,
Buades, 2017).
In terms of costs, historically LNG vessel costs were of higher value and thus a barrier
to adoption. Recently, prices have been substantially lower. This reduction in costs is due to the
experience gained in new built ships, improved technologies and efficiency acquired by
shipyards, and favorable market conditions for both buyers and builders (SEA \ LNG, 2018).
Exemplifying these costs, Figure 3 shows a comparison between the costs of some types
of ships, with same engine size, moved to LNG and moved to Fuel Oil or to Marine Oil. The
costs of LNG ships are 6% to 10% higher than ships to other fuels. (Speirs et al, 2019).
Ship Cost - Value in 2017 ($)

160.000.000,00
140.000.000,00
120.000.000,00
100.000.000,00
80.000.000,00
60.000.000,00
40.000.000,00
20.000.000,00
-
Short Sea Deep Sea Container CO2 Vessel

Heavy Fuel Oil /Marine Oil Fuel Low Pressure Dual Fuel (LNG Fuel)

Figure 3: Cost Estimation of LNG vessels versus vessels with traditional fuels
Source: Speirs et al, 2019; Yoo, 2017.

4. Use of Natural Gas as Fuel for Truck

Another frequently studied route is the use of LNG as fuel for HGV's (Heavy Goods
Vehicles). Energy consumption in the freight sector has increased by about 50% in the last
decades, corresponding to about 32% of the energy demand related to transportation, with
demand mainly derived from petroleum fuels, mostly diesel. About half of global diesel demand
is in the cargo transportation sector (IEA, 2017).
With increasing environmental concerns, several countries have studied and/or adopted
LNG as a cleaner fuel alternative, particularly in the cargo transportation sector. Some countries
are standing out in this process, as observed in Figure 4, which represents the most significant
countries with truck fleets. It can be observed that China compared to the other countries is the
one with the largest fleet currently, followed by the United States and Italy (Speirs et al, 2019).

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Figure 4: Major countries with LNG trucks in operation.

Source: Speirs et al, 2019.

The main motivation for shifting fuel to trucks for LNG oil derivatives is emissions
reductions and issues related to energy supply security. In May 2018, the European Commission
proposed a 15% reduction in emissions by 2025 and a 30% reduction by 2030 when compared
to the emissions of 2019. The United States has already implemented a National Heavy Vehicle
Program that will last between 2018 and 2027. This program proposes emission reductions of
8% to 14% compared to 2017 emissions for some subcategories of heavy vehicles (Speirs et al,
2019).
Another initiative to encourage the use of LNG as fuel is the creation of so-called Blue
Corridors. In Europe, for example, a Blue Corridor was created with the objective of endorsing
LNG as an alternative for medium and long distances, first in a complementary way, in the
future in a substitute way. The EU funds the project and has partners such as gas companies,
truck manufacturers, engineering companies and LNG suppliers (GABL, 2017).
There are two technologies commonly used for LNG trucks: mono-fuel engines
running the Otto cycle and bi-fuel engines operating on the diesel cycle. While Otto cycle
engines operate 100% with LNG, diesel cycle engines can operate from 50% to 95% with LNG
and the rest with diesel (DENA, 2014). Otto cycle engines have an environmental advantage
when compared to Diesel cycle engines. These engines have a reduction of NOx emissions of
around 80% and noise reduction of around 50%, in compliance with the most recent emission
standards, EURO IV (Le Fevre, 2019).
With the constant technological development, LNG trucks have shown a recent
increasing of the autonomy. Models such as New Stratis NP from Iveco have autonomy of up
to 1,600 km (Iveco, 2019). Another model, such as the LNG-Powered Scania Trucks, also
features autonomy of about 1,100 km without the need for refueling (Scania, 2017). Both
models operate in the Otto cycle.
When compared to Diesel trucks, LNG trucks have the advantage of using a fuel at a
lower price, thus generating savings. However, its price is usually higher, around 20,000 to
30,000 euros (GABL, 2017).

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5. Application in Brazil

Brazil has a natural gas infrastructure, with 9,409 km of extension, distributed by all
Brazilian regions, but mostly located in the coastal region. The gas consumed in Brazil has three
origins: domestic, imported through pipelines or in LNG form through regasification terminals.

Figure 5: Brazilian natural gas infrastructure

Source: EPE.

LNG plays a key role in the Brazilian gas market. Currently, the LNG infrastructure in
Brazil has three terminals in operation totaling 47 MMm³/day regasification capacity and two
future projects confirmed with a total regasification of 42 MMm³/day to be added in the
infrastructure (EPE, 2018b). In Brazil, there has been a growing discussion about the use of
LNG as a fuel. This is a great option to develop the natural gas demand. There is a growing
potential to replace traditional fuels such as diesel by LNG.
The high price of diesel is a key factor to stimulate the use of LNG in trucks. Recently,
in the year 2018, the country was severely affected by a truckers strike motivated mainly by the
price of diesel. Natural gas historically has cheaper prices than diesel, as seen in Figure 6.
In addition, it is important to point out that part of the diesel used in Brazil is imported.
In the year 2017, Brazil imported 34,000 m³/day of diesel oil, about 23% of the consumption in
the country. Furthermore, an increase in the national natural gas supply is expected to be around
40% between 2017 and 2027 (EPE, 2018b). Therefore, one of the alternatives to monetize this
increase in production could be the use of gas as fuel in the form of LNG mainly. This use could
also be beneficial for the Brazilian trade balance since it would decrease the import of diesel.

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Figure 6: Comparison between natural gas and diesel prices

Source: MME, 2019.

In the Latin America, Argentina has been the pioneer in the use of LNG in trucks with
six trucks powered by LNG, with autonomy of 1,100 km owned by the transport company
Andreus. The trucks will be used as virtual pipelines and will transport gas from the Neuquén
and Mendonza wells to be used in the Anchoris power plant (Galileo Technologies, 2019).
Related to ships fueled by LNG, ANP recently launched the Resolution 789/2019,
which reduces the maximum sulfur percentage of marine fuel oils in compliance with IMO to
vessels that do not have an exhaust gas cleaning system. The new regulation changes the ANP
Resolution 52/2010, which establishes the specifications for marine fuels.
Petrobras is the largest producer of oil bunkers in Brazil. Brazilian oil, mainly of the
pre-salt, has a low sulphur percentage. The fuel oil offered by Petrobras already presents a low
percentage of 0.8% of sulphur in the majority Brazilian ports. It is expected that there will not
be much difficulty in producing oil marine fuel within the new regulation. In addition, the
company has already produced the first bunker oil framed in IMO 2020 with a sulphur content
of 0.34% (Argus, 2019). Therefore, the company can use this advantage to return to the
international marine fuels scenario.
With domestic production of low sulphur marine diesel, the use of LNG may face
challenges mainly in cabotage activities. However, one option where the use of LNG may be
very attractive will be for ships that carry out long distance routes, especially for ECA regions,
where the restrictions are more severe.
Many challenges need to be overcome for effective use of LNG as fuel. One of them is
the lack of infrastructure. All existing LNG infrastructure in Brazil is on the coast, and currently
has no storage bunker. Therefore, both for use by ships and for use by trucks would require
high investments in infrastructure. Mariani (2016) estimated that the cost of each refueling
facility for trucks would cost anywhere from $ 470,000 to $ 1,150,000 depending on the
technology.
Some alternatives could be implemented to minimize the effects of lack of LNG
refueling infrastructure. Currently, there are two federal highways, BR-101 and BR-116, in the
most coastal area, as can be seen in Figure 7, which pass near the LNG terminals, both existing
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and in development. Therefore, trucks traveling on these highways could use existing LNG
facilities, minimizing additional infrastructure costs and thus provide a stimulus for the
development of LNG use in trucks.

Figure 7: Representation of BR-101 and BR-116 highway

Source: EPE.

However, in order to attest to the feasibility of using LNG on highways showed, studies
and details need to be carried out to estimate the potential market and detailing the challenges
and possible entry barriers of the new technology.

6. Conclusions

The use of LNG as fuel has been discussed worldwide. There is a potential market for
its development, mainly due to gaps that have arisen due to the new regulations. Internationally,
in the United States, Europe and China, this market is already at an advanced stage of maturity.
In addition, the environmental advantages associated with the use of natural gas as fuel are
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undeniable mainly due to the reduction in pollutant emissions, thus improving air quality.
However, relative greenhouse gas emissions would be better achieved if biomethane were used
instead of natural gas of fossil origin. Another advantage are the more competitive prices of
natural gas compared to diesel. However, some challenges still need to be overcome, including
the additional cost of transportation facilities, the storage infrastructure and refueling stations,
for example. In Brazil, the discussions are still in an initial state. The use of LNG as fuel still
has many uncertainties and needs further discussion.

7. References

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BUADES, L.S., Implementation of LNG as marine fuel in current vessels. Perspectives and
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de Catalunya, 2017.
DENA. S, LNG in Germany : Liquefied Natural Gas and Renewable Methane in Heavy- Duty
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EPE, Empresa de Pesquisa Energética, Balanço Energético Nacional 2018: Ano base 2017,
2018a
EPE, Empresa de Pesquisa Energética, Plano Decenal de Expansão de Energia 2027, 2018b.
GALILEO TECHNOLOGIES, Novo combustível: a Galileo abasteceu a primeira frota de
caminhões a GNL do país. Notícias, 2019.
GABL, A., LNG for Mobility: Implications on heavy duty transportation. OIMV, 2017.
IEA, World Energy Outlook 2016, 2016.
IEA, The Future of Trucks: Implications for energy and the environment, International Energy
Agency- Paris, 2017.
IVECO, New Stratis NP – Pure Power, 2019.
IMO, Sulphur 2020 – cutting sulphur oxide emissions, 2019.
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MARIANI, F.,Cost Analysis of LNG Refueling Stations, European Commission, Seventh
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CNT, Anuário CNT do Transporte. http://anuariodotransporte.cnt.org.br/2018/ Accessed in
05/15/2019, 2016.
MME - Ministério de Minas e Energia, Relatório do Mercado de Derivados de Petróleo. nov,
27, 2019.
OLMER, N., B. COMER, B. ROY, X. MAO, and D. RUTHERFORD, Greenhouse Gas
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SEA\LNG, LNG as a marine fuel – The investment opportunity, 2018.
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SCANIA, Long-awaited gas giant, Sustainable Transport, 2019.
SPEIRS J., BALCOMBE P., BLOMERUS P., STETTLER M., BRANDON N., and HAWKES
A. Can natural gas reduce emissions from transport? Heavy goods vehicles and shipping;
Sustainable Gas Institute, Imperial College London, 2019.
YOO, B. Y., Economic assessment of liquefied natural gas (LNG) as a marine fuel for CO2
carriers compared to marine gas oil (MGO). Energy, 121, 772–780, 2017.
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