News: BC Ferries' CEO says LNG is the fuel of the future

Passenger Ship Technology 4th Quarter 2014 - November 17, 2014

The use of LNG as fuel is a pivotal part of British Columbia Ferry Services’ strategy, with its chief executive and president Mike Corrigan calling it a game-changer.

Earlier this year the British Columbia-based ferry operator announced the construction of three newbuilds that can be operated on dual fuel - LNG and diesel - and the conversion of two Spirit class ferries.

Mr Corrigan told Passenger Ship Technology: “We call this a game-changer for BC Ferries, as after labour our biggest operating cost is diesel fuel. We believe LNG is the fuel of the future.” Indeed, he said that the strategy was for all future newbuilds to deploy LNG as fuel.

Remontowa shipyard in Poland won the bid to build the new vessels, which will be 105m long, and handle 145 vehicles and 600 passengers. They are still at the design stage, the aim being to cut steel at the start of next year. The first two are due for delivery towards the end of 2016, while the third will be delivered at the start of 2017. Explaining why BC Ferries chose Remontowa, Mr Corrigan said: “All the best shipyards in the world were interested. Remontowa came through on a number of fronts: workmanship, price and direct experience of dealing with LNG.”

Highlighting the benefits of using LNG, he explained that it was abundantly available in in British Columbia, leading to a price that he described as “quite low.” Importantly, the logistics infrastructure is already in place: there are established plants to manufacture the LNG and a distribution system in place to deliver it to the ferries. “Currently we refuel our vessels two or three times a week with trucks and we will do this with the new dual-fuel ferries,” Mr Corrigan said. While the new vessels will be dual fuel, he said that 99 per cent of the time they would operate on natural gas. The diesel is there as a back-up, in case of any problems in terms of the supply of LNG, or if the cost of natural gas was to increase.

The two Spirit class ferries to be retrofitted with LNG - Spirit of Vancouver Island and Spirit of British Columbia - are expected to be ready in 2017 and 2018. BC Ferries is in the process of getting final approval from the British Columbia Ferry Commission to retrofit them.

“We are retrofitting them obviously for the environmental side, but also the financial savings are huge, which keeps fares down,” said Mr Corrigan. “The use of LNG, plus greater hull efficiency, means that we will save CA$9.2 million (US$8.3 million) compared to the current cost of operating these vessels.” The two ferries are BC Ferries’ largest vessels and the biggest consumers of fuel.

BC Ferries has a defined strategy when it comes to deciding about retrofits: a refit needs to take place in the vessel’s mid point of life. This is the case not just for potential LNG retrofits, but for refits generally. Mr Corrigan explained: “These two Spirit class ferries were built in the early 1990s, so they are reaching the mid point of their lives. This is the best time to carry out conversions, as we still get payback for buying their new engines. If the vessel is too far along in life, it would not be worth replacing its engines. And if the vessel is too new, it has not fully depreciated its current engines, so there will be a financial penalty.”

In terms of retrofitting other vessels in BC Ferries’ fleet, he said that the company would continue to look at this, but reiterated that this needed to be at the right point in the vessels’ lives.

While it is too early to disclose the design details of the planned retrofits, Mr Corrigan was able to say that BC Ferries was looking at two options when it comes to placing the LNG tanks. They will either go in the large void spaces to be found in the ferries’ hulls, or on the outside decks. This decision forms part of the evaluation that BC Ferries is in the process of carrying out.

When it comes to expanding and developing its fleet, BC Ferries is not stopping with LNG newbuilds and retrofits. It is currently building a cable ferry to serve the Vancouver Island to Denman Island route. Vancouver Shipyards is building the ferry, which should be in service by late summer next year.

The advantages of replacing a traditional ferry with a cable ferry are numerous. “It will deliver the same level of service from a safety and operational liability standpoint for half the amount that it is currently costing us. It will give us savings of CA$2 million (US$1.7 million) a year. These are significant savings, especially as we are really concerned about being as efficient as we can be and keeping our fares as affordable as possible. This is the way to do it and be innovative.

“Some people might not consider this to be innovative, but from our stand point it is. It will be the first ship we have that is a cable ferry,” Mr Corrigan said.

He added that the route was right for the operation of a cable ferry, as it is only 1.9km, with sheltered waters. The company has prepared thoroughly by carrying out engineering work and studies leading up to the final decision to construct such a ferry. Asked if the introduction of the cable ferry could spark the launch of more ferries of this type, Mr Corrigan explained: “This is the only route we have at the moment which we see as having potential for a cable ferry. That said, there may be an opportunity in the future if we look at introducing different routes and services.”

The construction of the Intermediate class ferries is not just significant for their use of LNG. They are also an important step towards BC Ferries’ goal of standardising its fleet. The company currently has 17 classes of ships spanning 35 vessels, but wants to reduce this to just five classes.

This strategy was sparked with the delivery of BC Ferries’ three Coastal class vessels in 2008. Reflecting on their introduction, Mr Corrigan said: “The goal was to have a new, major class of ship that could operate on all of our main routes. Up until that point our ferries had only been capable of sailing on certain routes. That was our first attempt at standardisation and now we want to take it to next level with our Intermediate class. The majority of our vessels are in the Intermediate class range and that is why we feel we have such a huge opportunity here. We can have two sizes of ferry that are interchangeable and from the same hull design: a 145 car and an 85 car ferry.”

Highlighting the other advantages of inter-operability, Mr Corrigan said: “This strategy is all about more efficient operations and safety. If captains can move from one bridge to another, and engineers from one engineroom to another, then there are fewer risks from a safety stand point and lower training costs.”

Indeed the new Intermediate class ferries will use the company’s new standardised bridge design. “This is beneficial from a safety point of view, as our captains can get used to having the radars in the same place in every vessel and having all the other gears in the same place.”

Highlighting yet more benefits, he added: “They will be much easier to operate and, from a reliability standpoint, it will be much easier to move from one route to another. Right now if we do this, we have to train the crew on the new route for a period of time before we can operate it. But if the vessels are interchangeable, it will be much simpler.”

He said that five was the optimum number of classes to have in the fleet. However, this is not something that will be achieved quickly. “This is a medium-term strategy. It is a vision and it takes a while to get there, but if we do not start now we are never going to get there.”

These different policies need to be viewed in a wider context, as underpinning them all are BC Ferries’ customers and the company’s role in the life of the people of British Columbia. Mr Corrigan said: “We really want people to understand the role of BC Ferries in BC. The Government sets the policies and our job is to run our ferries as safely and efficiently as we can and with the best customer service. Ferries are always a hot topic in BC, as there are probably close to a million people dependent on our services. So they are always going to be a big part of life. We want people to understand our role and what we should be held accountable for: safety, reliability, on-time performance and customer service.”

He summed up: “All the things that a world class ferry operator should do is what we are trying to do each day.”

In his role as chief executive of BC Ferrries, Mr Corrigan sees it as crucial to create strong partnerships with other ferry operators in order to deal with current challenges and issues. A demonstration of this is that he was this year’s president of Interferry and hosted the trade association’s annual conference in Vancouver.

“Ferry operators are working together more. You see it at Interferry. A lot of the business issues are the same regardless of where you work, and the influence that IMO and the EU have on legislation will affect ferry operators. We need to make sure we get the best bang for our buck and how we do this is through the Interferry organisation.”

Despite the current challenges, he is optimistic about the future. “We see the economy turning around after all the turmoil and I am encouraged to see traffic coming back on our major routes.” But he warned: “Saying that, you never know when the economy will go south, and with 185,000 sailings a year you have got to keep your eye on the ball.”

The last time Passenger Ship Technology spoke to Mr Corrigan for its ferry operator profile was at the end of 2012, when he had been chief executive of the company for a year. After nearly three years at the helm of BC Ferries, what does he see as his greatest achievement? The answer comes instantly: “Our SailSafe culture safety programme. It has won three major awards and helped change the relationship at BC Ferries with employees and also the union, as well as helping us drive customer service.”

He finishes with a strong message: “I firmly believe that if you take care of safety everything else will take care of itself.” PST

Read more, click here.