Karpowership – Turning on the Gas

When we last looked at Karpowership they were consolidating themselves as a leading provider of power generation ships. Now they’re entering the LNG sphere.

“It’s been a challenging few months since we last spoke,” admits Patrick O’Driscoll when we start talking.

He is not the only one to feel that way, it has been a dramatic year since our last meeting.

“As someone who is typically on the road week-in, week-out, visiting different countries and continents every week, business life has changed,” he reflects. “We’ve had to adapt, and it’s been a challenge.”

When we last talked with O’Driscoll, Karpowership was preparing to bid for a contract providing for South Africa. It was the largest tender running in the power generation sector. The tender closed in December 2020, followed by a period of evaluation before the company was granted ”preferred bidder status” for three sites in March 2021, a major milestone to securing a contract, smack in the middle of another lockdown starting. Legal and financial processes grind on and must be concluded before the contracts can be finalised.

“Our submission went in just before Christmas and there was a lot of hype and excitement around it, but then Covid hit, again,” O’Driscoll recalls. “After the evaluation our primary challenges were just managing resources and people in and out of South Africa, working through protocols, licensing, permitting and so on, to ensure everything was in place. It’s been exciting, but normally I would have been doing more on the ground than I have been.”

The Fuel of the Future

While Covid-19 has presented businesses with an unprecedented array of challenges, Karpowership has also made landmark achievements since we last talked.

“We have been adapting ourselves to become an LNG focused business, which has probably been one of the biggest successes we’ve had,” O’Driscoll tells us.

O’Driscoll is particularly proud of this achievement as he sees it as aligning Karpowership with much larger trends across the energy industry.

“LNG is a fuel of the future. Emitting 50% less than coal and 17% less than diesel, it makes an ideal transitionary fuel, especially for South Africa,” he says.

Sub-Saharan Africa in particular is aiming to move away from thermal and coal power plants but needs to do so pragmatically and realistically.Countries require a lower emission bridging fuel that secures energy supply as they transition to a greener grid – and LNG is ideal. Though they’re heavily dependent on coal at the moment and have been for many years, gas is the fuel of the future for them.

For South Africa specifically, while the country is not gifted with abundant gas resources of its own, its proximity to Mozambique, and access to the global LNG market, make the transition to natural gas compelling. Gas is a critical component of the country’s energy strategy, and Karpowership is well positioned with the requisite skills, technology and production capacity to support the transition.”

The figures O’Driscoll shows us are hard to argue with.

Against diesel and other fuels, Karpowership’s LNG performance offers a 25% emission reduction in carbon dioxide equivalent, an 80% reduction in nitrogen dioxide, and almost no environmentally damaging sulphur dioxide. Natural gas also doesn’t create the dust and fumes that liquid fuels do, making carbon footprint 50% cleaner than coal.

“We’re now a global LNG-to-power player, which is significant if you look at how LNG is growing globally as an efficient, reliable and cleaner way to power economies,” O’Driscoll tells us. “Karpowership has the ability to provide LNG gas-to-power solutions on a global basis, all in-house. That certainly has been a big difference on where we were with Powerships last year.

Having the vision and ability to implement and deploy our LNG strategy at pace has delivered a clear competitive advantage. Our Senegal LNG project is underway and Mozambique will be converted following, and once financial close is met, South Africa will be operating with LNG power. You can see the shift across the industry.”

Leading the Way

Today Karpowership has a global fleet operation of over 5,000 MW running on natural gas and liquid fuel. They hit their 2021 mid-year target of ensuring 50% of operational supply is powered by natural gas and LNG. O’Driscoll says they want to convert that capacity entirely to LNG, for Africa and beyond.

“There’s huge growth evolving in the LNG sector. I see us being able to look to more geographical growth across Africa – and beyond into the Americas and Asia,” he points out.

“LNG makes power generation significantly cleaner and greener while enhancing economics and affordability. It is substantially cheaper than running diesel. What’s more, you can drive efficiencies by buying LNG in larger quantities, so you create economies of scale.”

O’Driscoll also points out that the switch to LNG could not be more timely.

“One of the biggest challenges emerging economies face is having to reconcile the large-scale investment required to achieve energy security against the environmental imperatives the various transitionary fuels bring. South Africa for instance, needs dispatchable, reliable and more affordable power,” O’Driscoll explains.

Employing LNG as an intermediary fuel that benefits both the energy and industrial sectors of the country can go some distance in securing South Africa’s economic future while reducing its environmental impact.

“We’re going to see governments setting new targets to lower their emissions even more than they have already committed to. Net Zero targets are being set and we believe LNG has a significant role to play in making these a reality,” O’Driscoll says.

“Current power plants can be converted to utilise LNG. We’re seeing plants being installed, we’re making LNG readily available across the globe from our FSRUs, and our Powerships which will operate in tandem. The FSRUs will be used as a strategic storage supply for countries’ gas needs.”

These needs are felt hardest in developing markets, which rely on diesel imports because they don’t have access to indigenous gas and pipelines. For Karpowership, these places are an opportunity, not only to open up new markets but to make a real difference to people, to partner in economic growth through sustainable, reliable energy supply and to mitigate environmental impact.

“We want to give people the opportunity to realise their gas ambitions, supporting thriving economies for the countries in which we operate,” O’Driscoll says. “If they don’t have a natural resource or a pipeline from a neighbouring country, we cover the cost of infrastructure, bringing that investment to them in the shortest time possible. With no capital investment from the country’s businesses or government, we supply the equipment and build that infrastructure. Then we get paid for that through consumption and power generation. It’s a shared value win-win.” It may seem a radical proposition, but the benefits are dramatic.

“A country would normally have to look for foreign direct investment of a billion dollars to build that infrastructure,” O’Driscoll tells us.

“It could take five years to build that up – or even longer if the skills are not available. Then they award it to someone and it is another ten to fifteen years before it is complete. We can deliver reliable, value-for-money, dispatchable power direct to grid in nine to twelve months or even in shorter periods because we pre-invest our own capital, knowledge and belief in that market.”

O’Driscoll also acknowledges that renewable energy will play a part in the coming energy transition, but he argues that this will only be possible with LNG’s support.

“If the sun shines, you have solar power. If the wind blows you have wind power. But if the sun doesn’t shine and the wind is low you rely on power stored in batteries, which is expensive. What’s more, while battery storage is a compelling aspect of a renewable future, the reality is that the technology is just not up to the task of truly dispatchable power yet,” he tells us.

“We need to get the right power generation mix between current and future renewable programmes in place.  Energy demand is growing exponentially and currently, no one power generation technology is able to meet it completely. There is a place for everyone at the table and we all need to work together to get the job done.”

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