It took Ardmore Shipping several years to appreciate exhaust gas scrubbers, but now the Irish product tanker owner has taken the decision to install the cleaning devices on nearly a quarter of its owned fleet in the coming year.
Ardmore announced in its fourth-quarter 2022 earnings report that it will fit scrubbers on an initial six vessels within 2023 during scheduled dry dockings at a cost of some $10m, saying the investment is expected to generate a return of roughly 60%.
This is a much different decision from the one Ardmore took some four or five years ago, when shipowners were debating adopting the devices to meet IMO 2020 carbon-reduction mandates and the company opted out.
TradeWinds caught up with chief executive Anthony Gurnee on the sidelines of the company’s investor day event in Manhattan on Tuesday and got the rundown on why minds had changed.
“We don’t really like to run with the crowd. It’s not our thing,” Gurnee said.
“We kind of looked at the investment holistically at the time. We were strapped for cash along with everyone else. And so we didn’t really feel we had the money. And we didn’t really feel good about the environmental aspects of the investment.”
There is still debate about the environmental fallout today, with focus on carbon removed from the air being dumped into the seas amid some research showing there can be harmful consequences to marine life.
But as for the economic decision, there is no such debate. Shipowners that opted for the exhaust cleaners have made returns even beyond their typical projections and the premium continues as fuel spreads remain wide.
“To be honest, it’s worked out better than we thought it would, even when you take into account the full capital expenditure and the operating expenses and so on,” Gurnee said.
“We were kind of scratching our heads and thinking, ‘OK, should we consider installing scrubbers now?’ And then this new technology popped up and we really like it. It’s cheaper, much easier to install, faster, higher quality. You’re not going to a Chinese shipyard using guys with a blowtorch for two months and that sort of thing.”
Ardmore said in its earnings presentation that the installations will come during scheduled dry dockings, thereby essentially eliminating off-hire costs, and each unit will be ready for carbon-capture use as that technology continues to develop.
Gurnee estimated each installation would run between $1.5m and $1.8m.
“Essentially no off-hire associated with it, and it actually consumes less electricity because the pumping rates and the pressure are lower as well. We just think it’s more efficient and cheaper,” Gurnee said.
