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Ammonia-ready VLCC design as a decarbonization option

In a joint industry project, DNV and its partners investigated the rationale of ammonia as a future fuel for a new LNG dual-fuel VLCC tanker design and the business cases for converting the vessel to ammonia and compared it to other alternatives.

Ammonia-ready VLCC design as a decarbonization option

Ammonia is considered an important potential energy carrier in the energy mix of a decarbonized shipping fleet. Ammonia (NH3) combustion emits water and nitrogen but no carbon compounds. Green ammonia produced from harvesting wind or solar energy is therefore a potential climate-neutral fuel.

DNV’s carbon risk framework has been adapted to study the feasibility of ammonia when used as ship fuel in a joint industry project (JIP) between DNV, TotalEnergies, Samsung Heavy Industries and a major Asian energy transport company. The JIP analysed a very large crude carrier (VLCC) design assumed to operate on a Middle East to Far East Asia route at a speed of 13 knots.

The existing VLCC specifications were studied to determine what should be done to minimize the costs and effort of a potential future retrofit when switching from LNG to ammonia. This assessment was based on the DNV draft rules for ammonia as fuel. The ship was assumed to begin operating in 2024 and have a 20-year lifespan. The study also looked at safety, environmental compatibility, costs and the overall business case for the individual fuel and operating scenarios.

For an ammonia-ready newbuild, the design arrangements must account for both LNG and ammonia. For example, ammonia requires larger tanks to achieve the same level of autonomy – which has implications for the superstructure – and a stronger support structure underneath. Other design properties, such as tank and piping materials, should be chosen with a potential retrofit for ammonia in mind. Ultimately the owner and yard must decide jointly about the desired degree of ammonia-readiness.

There are five key considerations for a conversion and retrofit from dual-fuel (DF) LNG to DF ammonia on a vessel designed to be “ammonia-ready”. The LNG fuel gas supply system (FGSS) must be replaced entirely. Modifications are necessary on the tank system, main engine, safety systems, gensets and boilers. The required technology is not fully available at present (2021).

The energy density of ammonia is considerably lower than that of LNG, almost half in terms of volume, limiting the vessel’s autonomy. The bunkering strategy of the vessel must be reassessed.

This diagram reflects the IMO carbon emission reduction trajectories: a minimum alignment curve, which aims to achieve a 70% reduction in carbon intensity by 2050 relative to 2008 (aligned with the current IMO 2050 target), and a curve aiming to achieve net-zero carbon emissions by 2050. (AER: CO2 emissions per vessel capacity divided by distance sailed.)

The study examined two operating profiles and two fuel strategies for the ship under investigation, which is equipped with a dual-fuel engine and will operate on LNG as long as compliance allows. To prevent the vessel from becoming non-compliant, it will eventually be converted to ammonia. Two strategies for alignment with CO2 reduction scenarios are compared: Progressive introduction of bio-LNG Retrofit to operate on ammonia (for either main engine or main engine and auxiliaries) LNG fuel will keep the vessel compliant for 17 years in a minimum alignment scenario. Conversion to ammonia will not be economically credible at this vessel age and progressive incorporation of bio-LNG will most likely be preferred. When aiming for net-zero emissions by 2050, LNG fuel will be compliant with this more ambitious trajectory for the first ten years of operation and then conversion to ammonia or bio-LNG are the two options.

Various other key market players may influence the picture by imposing their own carbon-reduction schemes. The EEOI-based decarbonization trajectory used by the Sea Cargo Charter places greater emphasis on the operating profile and time spent in laden condition and appears more challenging than the minimum alignment trajectory. (EEOI: Annual CO2 emissions divided by the product of distance sailed in laden condition and actual cargo on board.)

This comparison of the total cost of ownership (TCO) for the scenarios investigated in the study is speculative considering the uncertainties regarding fuel prices, fuel availability and other factors. Nevertheless, based on current assumptions the key influential factor for TCO is fuel cost. The “net zero by 2050” scenarios come with higher overall costs. The LNG with progressive bio-LNG option is found to be the least costly solution. A future CO2 tax will further increase the TCO without changing the overall conclusions dramatically.

Key influential factors for the business case include fuel availability and prices, a potential future CO2 tax, the slope of the decarbonization trajectory, and retrofitting expenditures (CAPEX). In the present study, the gradual mixing-in of bio-LNG has a lower TCO than the ammonia option. However, a variety of factors could shift the picture and make ammonia appear more feasible. It is important to bear in mind the uncertainties affecting the study, in particular fuel price developments, fuel taxation, fuel availability in the relevant trading area, the regulatory decarbonization trajectory that will be applied, and the shipowner’s own decarbonization ambitions.

The additional costs to enable the VLCC to run on LNG (rather than conventional fuel oil) were about US$20m. On top of this, an additional approximately US$2m was needed at the newbuilding stage to make the vessel ready for a future retrofit to ammonia. In the study, the most cost-effective compliance strategy in all cases was to operate on LNG with increasing amounts of bio-LNG blended in. There is a way towards 2050, but the “right” direction is very ship- and trade-specific, and a range of assumptions need to be established.

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