April 2017 Commerce Club Luncheon

By Judith Schultz, GHPB

Tahir Faruqui, president of Shell North America LNG, presented an optimistic outlook for the future of LNG marine fuel at the Port Bureau’s Commerce Club luncheon at Brady’s Landing on April 13, 2017. Reminding attendees that any forward-looking statements should not be considered speculative business purposes concerning the Shell family of companies, Faruqui plunged in to the “fun stuff” with a broad overview of Shell’s involvement across the value chain.
“Many people think we’re an ‘oil company’. We’re not,” he explained. “We’re actually an energy company. It’s surprising to many people to find out that two, maybe even three years ago, globally we became more gas than oil in terms of our global operations … 51% gas; 49% oil … I’m excited about that because I represent the gas side of the business!”
The future of the energy market involves many components, including opportunities for expanding the role of LNG as a cost-effective, cleaner power source for homes and transportation. Part of Faruqui’s role in this evolving market at Shell is to “help grow the demand, consumption, and help facilitate the development of the infrastructure needed to bring those [liquid natural gas] molecules to the market.”
Narrowing his focus to the potential of LNG as a marine fuel, Faruqui described it as “the next frontier.” At present LNG is a plentiful, cost-competitive alternative marine fuel that is virtually free of sulfur and particulates. This makes it an attractive fuel option for shippers to meet environmental regulations for reducing emissions.
“When I think about LNG as an energy-efficient alternative and also an environmentally-friendly commodity — when I look at the new frontier, marine fuel cannot be ignored,” he stated. Faruqui indicated that marine sector estimates could represent as much as 700 million tons of consumption, an important factor when considering reducing vessel emissions via a cleaner marine fuel.
Challenges to wide-spread adoption of LNG marine fuel are infrastructure and the cost of converting vessel systems to utilize the new fuel. Faruqui said Shell is committed to the future of LNG marine fuels.
He described Shell’s technology innovation as well as work in developing a global LNG marine bunker supply network. Investments include operations in Singapore, the Middle East, and Europe, with an eye to Houston and South Florida on the Gulf. Shell is also an energy supplier at the GATE terminal in the Port of Rotterdam to increase the availability of LNG marine fuel.
Faruqui acknowledged that the transition to LNG marine fuels by shippers is a path that presents some financial challenges. However, there has been commitment to LNG marine fuels within the industry. Carnival Corporation signed an agreement with Shell in late 2016 for fuel supply for two new LNG-powered ships. He also mentioned the recent announcement that Shell would be supplying the world’s first LNG-powered crude oil tankers.
In his final presentation comments, Faruqui mentioned the Elba Island liquefaction facility under construction in Chatham County, Georgia. Originally an LNG import facility, the two-phased project by Kinder Morgan is adding liquefaction and export capability to the existing LNG terminal. (According to online media releases from both companies, Kinder Morgan purchased 100% of Shell’s equity interest in the Elba Island project in 2015, while Shell continues to retain 100% of the project capacity.)
“It opens up a tremendous opportunity for us on the Gulf of Mexico and the related markets – for me the related markets are the Caribbean and the Central American regions.” These regions are “energy-starved” and Faruqui feels LNG could be an apt energy solution for these areas. “To me,” he stated, “that becomes an interesting play because it creates a window or market grid that doesn’t exist today.”
The session closed with a Q&A that continued the focus on the future opportunities for LNG developments.
Editor’s Note: CAPT Kevin D. Oditt, Commander, Sector Houston-Galveston, USCG, will be the guest speaker for the Commerce Club on June 8, 2017. Individual seats and table sponsorships are available. Reserve your seat at www.txgulf.org/commerce-club or by calling (713) 678-4300.

  • Date May 9, 2017
  • Tags May 2017