Timothy Walton, a senior analyst at the Center for Strategic and Budgetary Assessments, said LNG is part of a broader trend of transitioning to cleaner fuels in the industry.
He said the move to LNG has been led by three factors: IMO changes requiring reductions in sulphur emissions, a shift from the "go slow" movement that started in 2008 to cut down on fuel costs in the industry, and a desire to identify new technologies that can drive down the costs of ship operations.
"Fuel prices are about 50 percent of the price of the operating cost of a ship. Technology has improved greatly in recent years to make LNG a more practical fuel, Walton noted.
"There’s been a glut of natural gas, and now that there are new storage and transportation options, it’s feasible to start to use it within ships," he said. "So, as we look at the ship market, a growing number are becoming dual-powered. In the U.S., a large number of Jones Act ships are becoming dual-powered. Even crude oil tankers are using LNG as their primary propulsion, while they’re transporting crude oil. It’s almost ironic, but they’ve done the business analysis and it works."
Walton said that the number of LNG-powered ships is expected to grow from about five ships a decade ago to 220 ships by 2020. However, LNG ships are unlikely to take over the industry anytime soon.
"It’s been an enormous growth from a low baseline, but that’s going to be less than 2 percent of total fuel use by 2025," he said. "It’s likely going to be a small component.