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Staying Ahead of Technology

NEW SYSTEMS AND SAFETY

Looking into the not so distant future there are new concerns for surveyors, owners and lenders.

LNG powered vessels are being launched almost weekly. There is also a push by engine manufacturers and shipyards to have standard fuel oil powered vessels retrofit to Liquefied Natural Gas. LNG is the fuel choice of propulsion to meet current exhaust emission standards and will be with us for the next 10 to 20 years. But technological advances and the need to meet stricter Green House Gas (GHG) emission regulations will force the move to fuels that are cleaner over their lifetime. That means clean in their production, use and disposal, and clean in the manufacturing of the systems through which they are used.

“Experience is the name everyone gives to their mistakes.”

– Oscar Wilde (1854-1900)

All of the new systems bring new safety issues. LNG involves flammable gas. Storage and onboard delivery systems must be redundant and include safety switches, valves and alarms. Hybrid vessels also have battery blocks which must have protection from the fire dangers associated with lithium batteries.

Surveyors need to be concerned with the fueling system safety features, how the bunker port is arranged, and what the LNG fueling safety procedures are.

When surveying one of these vessels, the type and capacity of the fueling system are both important parts of the vessel’s value, but the condition and efficacy of the associated safety systems are also extremely important.

We are used to being around a “benign” fuel, diesel oil. The new fuels and fuels of the future, like LNG and ammonia, might take a mindset more like being around gasoline. There is also the future possibility of “layered technology” where LNG is blended with a bio-fuel or methane.

The days of simple fuel pumps and fuel rails on larger commercial vessels are numbered.

BATTERY CONCERNS

With LNG or other future fuels, be they ammonia, bio fuels, hydrogen, or even solar or wind assist, batteries will be involved.

I have read of at least six types of lithium batteries that can be used in electric vehicles. Some of these types may not be transferable to the larger sizes needed in marine vessel storage banks. Since the technology is changing so quickly there are no hard statistics on battery life. What is known is that the larger the battery the better it seems to stand up to drainage and recharging cycles. Currently some scientists believe the life of a battery block to be around 10 years. In their systems, ABB appears to guarantee a 10-year life. Other systems speak of a five-year life. Therefore, like engine overhauls, battery block life can be a major maintenance or life extension cost affecting a vessels value.

Along with battery renewal there is the flip side, battery recycling. What can be done to salvage battery components? Will salvage recovery be enough to partially offset the cost of battery block renewal and a factor in future values calculations? This will be changing as battery design and materials change. There are already businesses that are set up to recycle/reuse some parts of some of the lithium battery designs.

This leads to the ecological problem of how “green” hybrid electric vessels are. In use there is no question that electric power or electric assist saves fuel burn. But if you include the manufacturing and disposal of large marine battery blocks, does one still reduce overall GHG? There are indications that with continued improvements in the market and in the right usage there is and will be savings.

Another plus on the electrical side is the growing use of more efficient neodymium magnets in permanent magnetic motors. These magnets are used instead of windings and have a long life, are efficient, and reduce maintenance costs.

ROLLING SNAKE EYES?

The owners who jumped into retrofitting their ships with exhaust scrubber systems, feeling it was the safest approach to compliance with the IMO 2020 emission standards, are now repenting in leisure.

This time last year the anticipated cost difference between the then acceptable High Sulfur Fuel Oil (HSFO) and the post January 1, 2020 Low Sulfur Fuel Oil (LSFO) was estimated to be in the range of $300 to $400 per tonne. A ship’s engine retro fit could be paid off within a year of operation. The retrofit breakeven price differential for LSFO was estimated at $170 per tonne. In 2020 the price spread has been averaging closer to $70 per tonne, running the payoff time for a scrubber system to closer to five years.

Scrubber maintenance has also become a costly problem. Class societies are talking about seeing systems out of order or requiring constant maintenance. Anecdotally there is a story of an operator who estimated scrubber system maintenance at $10,000 per year per ship and the actual cost has been closer to $100,000. Your mileage may vary.

There are also some stories of open loop scrubbers where the mix of sulfurous exhaust and salt water has eaten away areas at or around the scrubber discharge allowing ingress of water. And while on the subject of open loop systems, more countries and ports are banning ships with open loop scrubber systems as they don’t want the sulfurous discharge in their harbor water. The argument still rages as to whether the discharge is or is not ecologically dangerous.

Not confined to either open loop or closed loop type systems, there have been failures in a vessel’s exhaust stack, where these systems are installed, that allowed salt water to pour down into the engine room causing extensive damage and even a few cases of loss of propulsion or generator power.

Currently ships with scrubbers still show a slight advantage in charter rates over non-scrubber ships using LSFO, but it’s difficult to see this as an overall advantage that would warrant a valuation premium.

I’ve been commenting on all the changes that will be coming in order to make transportation cleaner. These technologies will apply to cars, trucks, construction equipment, aircraft and marine. So many entities are pushing their research their products and their services. A group called the Green Shipping Project headquartered in Vancouver and supported by the University of British Columbia has assembled a worldwide group of educators, NGO’s and some governments to study and independently quantify the economics of green initiatives. Their website https://greenshippingproject.com/projects/ shows some of the studies done, most involving port facilities.

While COVID-19 disrupts the world the marine industry continues on a technological roll. Even though the United States is not politically involved in some of the technological research and changes, domestic engine companies and industrial manufacturers who sell internationally have to stay competitive. This is also true of U.S, flag vessels, whether large blue water cargo vessels or oilfield service vessels, which have to conform to world standards in order to work around the world.

So while the DLS staff have been cut off from face-to-face education, the growth of marine related webinars have been a blessing. DLS has tried to stay current on technological changes by sitting in on important webinars and internally spreading information we have learned. Some of this also comes to you, our readers, through this monthly posting.

Norman Laskay
nlaskay@DLSmarine.com

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Matt McDaniel DLS Marine Survey and Appraisal

Matt McDaniel

Hull & Machinery Surveyor

Areas of Expertise:

  • Hull and Machinery
  • Damage Assessment and Repairs
  • Condition
  • Inspections
  • Project Management

Memberships / Professional Certification:

  • NAMS-CMS

Background:

Matt began marine surveying in 2014 and has experience with damage causation, reviewing transit plans, new construction, cargo transfers, salvage operations, on/off charters, and general condition surveys. He joined the Hull & Machinery department at DLS in 2019.

mmcdaniel@dlsmarine.com
Jessie Page DLS Marine Survey and Appraisal

Jessie Page

Hull & Machinery Surveyor

Areas of Expertise:

  • Hull and Machinery
  • Diesel Technician
  • Marine Repair and Fabrication
  • Engine Causation Analysis
  • Equipment Damage
  • Vessel Conditions and Safety

Professional Certifications:

  • NAMS-CMS

Certified Specialist in Caterpillar diesel engines to include:

  • Small Engine Fuel Systems
  • Medium Engine Fuel Systems
  • Engine Diagnostics
  • Electronic Sensors and Control Logics
  • Electric and Electronic Troubleshooting
  • 3500 A/B/C Diesel Engine Master Mechanic I MUI/MEUI

Background:

Jessie joined DLS in 2021 with extensive experience in the marine industry. Jessie began his career as a shipfitter, machinist, and propulsion machinery installer at a shipyard. He then spent ten years as a diesel technician doing everything from routine mechanical repairs to complete engine overhauls and dynamometer testing. Jessie specializes in engine failure analysis and recognizing improper maintenance and installation. He is able to make recommendations regarding failure causation and potential imminent failures. Jessie transitioned to marine surveying in 2016 and is now a part of the DLS Hull & Machinery department.

jpage@dlsmarine.com

Ave P. Boudreaux

Marine Surveyor

Areas of Expertise:

  • Hull and Machinery
  • Project Management Supervisor (QC) – overseen numerous construction and delivery schedules for vessels
  • Extensive knowledge of U.S. Coast Guard and ABS rules and regulations for vessel construction and repair

Education:

  • Rolls-Royce Z-Drive Failure Analysis Seminar
  • Flex-Core and Aluminum Welding Course
  • Extensive training in engine, gear, and shaft alignment
  • Extensive training in vessel repair and new construction

Memberships / Professional Certification:

  • NAMS-CMS

Background:

Mr. Boudreaux has 15 years experience with offshore supply vessels, crewboats, and anchor handling tugs. During this time, he served 8 years in vessel repair and new construction, 3 years in vessel operation and logistics, and 4 years as a vessel port captain.

Mr. Boudreaux served over 3 years as a marine surveyor performing numerous types of surveys in the marine industry prior to joining DLS.

 aboudreaux@dlsmarine.com

Norm Laskay - DLS Marine Valuation

Norman F. Laskay

Of Counsel

Mr. Laskay joined Stickney, Dufour & Associates, Inc. in 1988 as a partner. He is now of Counsel. He became a Marine Surveyor in 1974, having gained prior experience in steamship agency, bulk cargo handling and vessel operations. He has been involved in many aspects of marine surveying including hull, machinery and cargo, both inland and ocean. Since becoming an Accredited Senior Appraiser of commercial marine equipment, he has been active with the American Society of Appraisers’ International Machinery and Technical Specialties Committee. He has written a comprehensive exam for the Commercial Marine Appraisal specialty and has written a 30-hour course for the American Society of Appraisers on appraising commercial marine vessels and yachts and is the lead instructor.

Areas of Expertise:

  • Commercial Marine Appraisal
  • Hull Damage and Repair
  • Cargo Loading, Securing and Trip in Tow Preparation

Education:

  • Maine Maritime Academy Graduate
    B.S. in Marine Transportation
  • Continuing education credits in Law, Appraisal, Marine Survey, and Diesel Repair.

Professional Certification/Memberships:

  • NAMS Regional Board of Directors Member 1989-1994
  • American Society of Appraisers – Chapter Treasurer 1991-1994
  • American Society of Appraisers – Chapter President 1994-1995
  • Mark Twain Club (Charter Member)
  • Machinery and Technical Specialties International Committee 1995-Present

Publications

  • The Journal of the International Machinery & Technical Specialties Committee of the American Society of Appraisers “TUGBOAT DESIGN 101” Vol 13 No. 2 Fall 1996
  • The Journal of the International Machinery & Technical Specialties Committee of the American Society of Appraisers “KEEPING AN EYE ON YOUR MARINE ASSET” Vol 13 No. 3 Winter 1996
  • Marine Money, The Ship Finance Publication of Record “ASSET BASED APPRAISAL:, Vol. 21, No. 3, May/June 2006 Wrote the chapter on Marine Asset Appraisal for the American Society of Appraisers text book: “VALUING MACHINERY AND EQUIPMENT: THE FUNDAMENTALS OF APPRAISING MACHINERY AND TECHNICAL ASSETS” Second Edition. In 2008, revised the chapter for the future Third Edition and wrote an accompanying Work Book section.

Email: nlaskay@dlsmarine.com

  

Harry Ward President DLS Marine

Harry Ward

President

Harry Ward is the President of Dufour, Laskay & Strouse, Inc. Harry is a US Navy veteran and has spent much of the past decade in the maritime industry in sales, finance and general management. He has extensive experience in asset and business valuation and is working to maintain DLS leadership in marine appraisal and survey for another 50 years. Harry is a graduate of the US Naval Academy and served as a helicopter pilot and survival instructor through multiple tours of duty. He has an MBA from San Diego State University.

Areas of Expertise:

  • Fleet and Vessel Appraisals
  • Marine Business Valuation
  • Transaction Support – Due Diligence
  • Transaction Support – Marine M&A Advisory
  • Digital Inspection – Marine and Offshore Wind

Education:

  • U. S. Naval Academy, Annapolis, MD – 1991, Bachelor of Science
  • San Diego State University, San Diego, CA – 1999, MBA with emphasis in Finance

Licenses and Professional Associations

  • FINRA Licenses, Series 63 and 79 (Investment Banking)
  • American Society of Appraisers, AM
  • Certified Exit Planning Advisor, CEPA (Business value assessment and strategy development