Methanol l – A A Cl Clean, Co Cost-Effective Marine Fuel Solu lutio ion MTCC Car Carib ibbean Reg egional Wor orkshop Jul uly 2, 2, 20 2019 19 I Cha haguaramas, s, Trinidad Jas ason Chesko, Sr Sr. . Mana anager, Glo lobal Mar arket De Development Methanex Corp Corporation
Agenda • Methanex Corporation • Methanol Marine Fuel • Attributes/Business Case • Commercial Developments 2
Methanex Corporation
Methanex The world’s largest producer and supplier of methanol to major international markets Production Sites Global Office Locations Distribution Terminals and Storage Facilities Shipping lanes Headquartered in Vancouver, Canada, Methanex operates production sites in Canada, Chile, Egypt, New Zealand, the United States and Trinidad and Tobago. Our global operations are supported by an extensive global supply chain of terminals, storage facilities and the world’s largest dedicated fleet of methanol ocean tankers. 4
Waterfront Shipping 28 vessels, including 7 methanol dual-fuel vessels with 4 more on order Me Medi dium Rang nge e Flee eet 50,00 000 0 DWT WT Metha Me hanol ol Dual al Fuel el Engi gine e Clas ass Lindanger er Tara ranaki i Sun un Mari ri Jon one Leik eikanger Mari ri Bo Boyle le Manc nchac Sun un Ca Cajun un Sun un Medium Range Fleet 45,000 - 50,000 DWT Class Cabo Negro II Caribbean Spirit Global Spirit Magellan Endeavour Patagonian Mystic Falkanger Finnanger Fjellanger Sabrewing Scarlet Ibis Tamiat Navigator World Navigator Taranger Handy Size Fleet 20,000 - 30,000 DWT Class SCT Matterhorn Mariline Marinex Medalta Adventurer Sakhara Lotus Marit Coastal Fleet 1,000 - 10,000 DWT Class Yelena Argo Chemist 5
Methanol Marine Fuel Attributes/Business Case
Marine Fuel Emissions Regulations Methanol & other clean burning marine fuels being phased in due to increasingly strict emissions regulations IMO Sul Sulphur Lim Limits s – Mar arpol An Annex VI VI IMO Nitr itrogen Oxid xides s Lim Limits s – Mar arpol An Annex VI VI IMO limits SOx content of fuel to 0.1% in ECAs. Global sulphur Tier III NOx limits effective in North America in 2016 and North cap of 0.5% (from current 3.5%) to come into effect in 2020. and Baltic effective 2021 (newbuilds only) Source: IMO 7
Methanol for marine Methanol is an innovative, Methanol l marin ine fu fuel economical alternative fuel solution with many benefits • Low emissions • Safe, environmentally friendly • Wide availability • Simple technology with low incremental cost • Competitive fuel costs • Fuel flexibility • Successfully in use today & commercialization activity Diesel bunker fuel Methanol expanding 8
Emissions Reductions Methanol is a clean-burning fuel that meets stringent emissions regulations Tier III Com omplia liant With With Water Inj njectio ion Source: Stena Lines Emission reductions when compared to heavy fuel oil 9
Methanol Reduces CO 2 emissions • Methanol (typically produced from natural gas) is a lower carbon content fuel compared to HFO, resulting in ~13% CO 2 reduction (Energy Efficiency Design Index) • Methanol production from renewables and/or utilizing excess CO 2 streams can reduce CO 2 significantly more 10 Source: Methanol Institute
Methanol - Environment, Health and Safety Methanol is a clear, colourless liquid that quickly and naturally biodegrades • More environmentally benign than conventional marine fuels i.e. HFO and MGO • Long history of methanol safe handling • International guidelines (IMO - IGF Code) for methanol as marine fuel being developed 11
Wide Availability Methanol infrastructure already in place and well positioned to reliably supply the global marine industry Methanol Global Terminal Locations Methanol global terminal locations based on available information; not a complete list Source: Methanex 12
Simple Technology Methanol has minor modification requirements and modest incremental cost New high pressure High pressure common rail system double walled pipe High pressure Inert gas system pump (nitrogen) Methanol tank in double bottom Source: Stena Line 13
Cost Competitive Fuel Cost vs. Marine Gas Oil (MGO) - Methanol is an economically viable alternative marine fuel over the cycle - Methanol technology offers fuel flexibility – operate on methanol or MGO • Global 6% discount to MGO historically • Discount expected to rise post 2020 • Economics vary by region *Chart source: Platts and IHS Chemical • Methanol: Average of North America / Europe / Asia published spot prices. Price adjusted to energy equivalent of MGO (2.16 factor) • World MGO price based on Bunker Index all port benchmark 14
Low-Cost Infrastructure and Capital Costs - Methanol: Competitive fuel costs, fuel flexibility & low incremental investment = potential for short payback Mode Mo dest incr incremental l cos ost to o con onvert rt or or build build ne new Uti tili lize existin ing g sup upply ly chain in/i /infrastructure engin ngines to ope perate on n methan hanol • Engine technology straightforward/minor • Liquid fuel at ambient temperature & pressure modifications required • Low cost infrastructure • Small amount of diesel used as pilot fuel • Compatible with diesel infrastructure • Flex fuel (diesel or methanol) maintained mitigating commodity price & technology risks Eur European Mar aritim time Saf afety ty Agency y Study y – 2-3 3 ye year ar pa payb yback k on n me meth thanol l vessels ls – ne new or retrofit it 15
Methanol Marine Fuel Commercial Developments
Methanol in Use Today: Stena Germanica Ferry The world’s first methanol -fueled ferry • Stena Germanica ferry converted to run on methanol in 2015 • Gothenburg to Kiel • Powered by four Wärtsilä 4-stroke engines (24 MW total) • Straightforward fueling (liquid fuel) • Fuel switching (Methanol or MGO) is fast, simple and reliable. No loss in engine speed or output • Small efficiency improvements observed versus diesel 17
Methanol in Use Today: Waterfront Shipping Tankers The world’s first methanol -fueled tankers • Commercial-ready technology • In 2016, Waterfront Shipping launched 7 vessels with methanol dual-fuel MAN ME- LGI 2-stroke engines • 4 new methanol dual-fuel vessels on order Taranaki Sun Cajun Sun Mari Jone for 2019 delivery • Multiple ship owners • Operating safely and reliably, across the globe: ~54,000 operating hours. Modest Leikanger Mari Boyle Lindanger efficiency improvement over MGO demonstrated Medium Range Fleet 50,000 DWT Methanol Duel Fuel Engine Class Manchac Sun 18
Methanol Marine Fuel Projects Several Initiatives Supporting Commercialization of Methanol in Large & Small Engine Segments Proje oject Lo Locatio ion Descrip scriptio ion Part artners Tim Timeline line LeanShips Europe Engine Conversion Ghent University, Methanex & 2015-2019 (Volvo Penta D7) partners SUMMETH Sweden Road Ferry Swedish Maritime Assn, SSPA, 2015-2018 Conversion Methanol Institute & partners GreenPilot Sweden Pilot Boat ScandiNaos, SSPA, Methanol Institute 2015-2018 Conversion & partners Methanol Fueled Pilot Vessel, GreenPilot Project, Sweden MethaShip Germany Passenger Caterpillar, Flensburger, Helm, 2014-2018 shipping study Lloyd’s, MAN, Meyer Werft China MOT China Fishing Boat China Ministry of Transport (MOT), 2017-2018 Conversion Methanex, Tianjin University, CCS Fastwater Europe Waterborne Consortium of partners incl. 2019+ transport; four Methanex & Methanol Institute vessel types Green Maritime Netherlands Study of nine TKI Maritiem & partners 2019-2020 Methanol vessel types: 1 – 12MW Swedish Road Ferry, SUMMETH Project 19
Thank you! www.methanex.com linkedin.com/company/methanex- corporation @Methanex
Summary Methanol Marine Fuel Video https://www.methanex.com/about-methanol/methanol-marine-fuel
ADDITIONAL SLIDES
Emissions Reductions – Tier III NOx - Methanol significantly reduces NOx compared to diesel with current engine technology, but not quite to Tier III levels - Tier III NOx limits can be met with water + methanol (without need for EGR or SCR) EGR SCR CR Water er + + Meth thanol 1 2 3 • MAN has developed technology demonstrating Tier III NOx can be met with a mixture of methanol & water • Reduced additional capital and operational expenses related to SCR/EGR after treatment Source: MAN 24
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