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Fueling ChangeAs far back as the Spring of 2010, TOTE began an exhaus- tive investigation as to how its Alaska ships were going to meet the soon-to-be implemented eco-requirements. They looked at everything, including scrubbers. Chiarello explains, ?After that two-year investigation, we came to the decision to convert the Orca ships to LNG. So that was the beginning of LNG for Tote as a marine fuel and then it just became a very easy decision when we decided to construct the Marlin ships to go with LNG as well. We?d already done the homework relative to the Orca conversions.? Pressed on the wisdom of his decisions regarding LNG, now with two years of hindsight in his back pocket, Chiarello refused to concede a single point about his retro t and new- build plans. Concerns over the uncertain future price of LNG, the arrival of a (possible) new white knight in the fueling mix (methanol), the high cost of infrastructure ? both on board and ashore ? and the slow pace of progress on the domestic bun- kering scene did not seem to concern the TOTE CEO. Addressing the price issue  rst, Chiarello insists, ?We did not ? and I?ve said this every time I?ve been asked ? make this decision from an economic perspective. We made this decision purely from an environmental impact perspective. When we  rst started the Orca conversion project, I said, ?We don?t know what the cost of LNG is going to be when the ships come out. We hope it?s low, but we don?t know.? So our decision was sole- ly based upon the environmental impact of LNG. We hope that there?s an economic bene t as well, but we?re making a signi -cant, half-billion dollar investment between the two new ships as well as a reconversion and re-engining of the Orca ships.? In terms of today?s price, Chiarello couldn?t even guess as to where it was, adding. ?I don?t follow it. I don?t watch it closely, to be honest with you, because it really doesn?t matter until the  rst ship is launched. But I don?t think it?s moved much and we don?t expect that it will.? Logistics, as it turned out, played a large role in TOTE?s decision(s). Chiarello pointed to the fact that the domestic U.S. market is different than it is overseas. Not always con- strained by the ECA?s, it makes sense for a carrier transiting open ocean much of the time to go with a low-sulfur diesel engine that you can scrub, if needed. The decision process for domestic, Jones Act carriers is a little different. Chiarello says, ?Our Alaska trade is in the ECA one hundred percent of the time. We never get outside of 200 miles. Our Puerto Rico service, we estimate is probably around 35 to 40 percent of the time we?re in the ECA. So, absolutely ? the LNG makes sense for us.? Using the Baltic bunkering model as an example, he added, ?We have two ports of call, running two ships a week. It?s just a ferry service, basically, back and forth. As long as you know where you?re going, the logistics work.? Conceding that the cost to build these environmentally cor- rect vessels was 10 to 15 percent higher than those being built with conventional propulsion, TOTE?s CEO also addressed the question of lost deadweight and TEU capacity due to the LNG bunker con gurations. He also declined to estimate how long it would be before TOTE earned back the engine price differential, saying instead, ?The capacity loss, approximately 55 TEUs, is less than 2 percent. A very small amount.? And he added, because TOTE is bringing in twice the TEU capacity in that trade corridor, the built-in economy of scale for that route will be increased by a factor of two. Chiarello insists, ?Losing 50 TEUs wasn?t really a factor in the decision. Absolutely not.? As to the apparently slowing of bunkering infrastructure con- struction ashore, TOTE, says Chiarello, is naturally watching the developing landscape but remains not only upbeat, but on schedule with their own particular arrangements. ?As soon as we announced that we were going to go with LNG in the new builds and also the conversion of the Orca ships, there were no less than half a dozen parties, literally, every week contacting us about being LNG suppliers, being partners with LNG sup-pliers. Shell [in reference to the oil major?s pullback in several high pro le North American LNG projects] is a big player in that landscape, but there are other signi cant players, and as a result, we?ve got a network of what we feel very strong partners for the LNG supply in the Paci c Northwest, which we haven?t formally announced yet. In the Southeast, in the Jacksonville area, we have arrangements with AGL Resources, Pivotal and WesPac. So we have no concern today or going forward relative to having LNG supplied for our vessels, on either coast.? Like Harvey Gulf CEO Shane Guidry, Chiarello and TOTE have no intention of ever running their new and repowered hulls on anything but LNG. Both CEO?s cite the enhanced maintenance issues that running on diesel would bring. On the other hand, TOTE went for the ?dual fuel? option for other rea- sons, some of which weren?t immediately obvious to the mar- ket. Chiarello explains, ?We went dual fuel, in part, because these are U.S., Jones Act vessels. The military, as happened to one of our ships many years ago in Desert Storm, could come to us and say, ?We need your ships. We?re in a time of war.? With LNG, you know, our tankage is going to be enough to handle the trades that we?re in which are very short; +/- 1,200 nautical miles. But, If they?re going to end up going over to the Middle East or Asia, they will have to burn diesel. So, we want to be  exible to not have a stumbling block from a fuel source side, to be able to make those requirements.? Partnerships: building blocks for LNG TOTE is the  rst to admit that the effort to bring LNG pro-pulsion to the container trades is anything but a task to be done in a vacuum. And the list of industry parties stirring the pot in the kitchen is wide, and it is impressive. General Dynamics NASSCO is constructing the Marlins at their shipyard in San Diego, CA while Daewoo Ship Engineering Company part of Daewoo Shipbuilding and Marine Engineering is providing FUEL MANAGEMENT www.maritimeprofessional.com | Maritime Professional | 3118-33 Q3 MP2014.indd 3118-33 Q3 MP2014.indd 318/13/2014 3:54:04 PM8/13/2014 3:54:04 PM