DOSSIER

 

Woodside - shipping increasingly interested in blue fuels


The shipping industry is increasingly showing interest in blue future fuels due to their being much less expensive than green fuels, said Adrian Macmillan from Woodside Energy in a DNV webinar

The shipping industry, and other industrial buyers of low carbon fuels, are increasingly showing interest in ‘blue’ fuels made with gas with carbon capture and storage, due to their having a lower cost, said Adrian Macmillan, Head of New Energy Shipping, Woodside Energy, based in Perth, Australia.

He was speaking at a DNV webinar on Feb 8, “Maritime Energy Transition Summit 2024.”

Mr Macmillan thinks the shipping industry needs to commit to buying future fuels at much bigger volumes if fuel producers will have confidence to invest in a supply chain. Currently there are plenty of demand signals from shipping but they are not firm enough demand signals, he said.


Blue vs green fuels

The discussion about blue (made with carbon capture) vs green (from renewable) fuels has changed, he said.

“If I reflect back 12 months ago, the conversation was very much about green, green, green, but many parties not truly understanding what that meant,” he said. “We’ve seen quite a transition over the last 12 months.”

“If you look at a ‘gas with CCS’ solution [blue] that’s significantly cheaper than a renewable based solution when we have a 2030 focus,” he said.

“At this stage we see a lot of interest in gas with CCS options compared to our 100 per cent renewable options.”
“It’s easy to look at 2050 solutions. The world needs to move to a renewables based solution by 2050. [But] how do we get a cost effective transition? We need to do whatever we can to meet lower carbon intensity from well to tank with minimum cost.”

“We can offer both to the market, but we see strong interest in the lower carbon options with ‘gas with CCS’ there.”

Shipping companies, and also power generation companies, are increasingly discussing fuels in terms of the overall carbon intensity involved in making them, rather than the pathway by which they were made, he said.

“At Woodside, we tried to stay away from colours [blue and green definitions],” he said. “They aren’t particularly helpful. It doesn’t necessarily give you the clarity of the carbon intensity of the future fuel products.”


Firm demand volumes

From an energy producer perspective, the orders made so far for dual fuel vessels don’t translate into a large demand volume for future fuels, compared to interest being shown by other possible industrial customers for these fuels, such as aviation.

There is much indication of a big demand from shipping, or “demand signals”, but they are not “firm demand signals,” he said.

Woodside committed in 2021 to spend $5bn by 2030 on new energy products and low-carbon services. It is considering the best way to make these investments.

From the maritime sector, “we need clarity of where, when, how much, how frequently, carbon intensity of that delivered product,” he said.
“At least in the near term, 2030 time frame, [volume commitments] are going to be required for investment decisions to be made [by the fuel producer],” he said.

“By 2050 hopefully we’re back to a spot market with large volumes of future fuels available.”

It is important for a fuel supplier to know where the fuels will be supplied to ships. While ammonia and hydrogen may have zero carbon in the fuels, as soon as they are transported to a customer, there will be carbon emitted in their transport. So the overall fuel supply has a carbon intensity, which reduces their value as a future fuel.

All future fuels, biofuel, methanol, ammonia and liquid hydrogen, “are going to probably be three to five times [today’s] fuel cost,” he said.


Collaboration

To make future fuels available and adopted, “there’s a number of parameters we need to work with,” he said. There’s a need to “collaborate with multiple parties across the supply chain.”

“There’s many global efforts underway looking at how do we get these commercial and technical elements aligned together. Those are really good vehicles. Good technical and regulatory progress is being made.”

 

 

 

  LMB-BML 2007 Webmaster & designer: Cmdt. André Jehaes - email andre.jehaes@lmb-bml.be