Every refinery could be making product blends with different characteristics to meet the 0.50% sulphur limit in 2020, according to the lead author of the official availability study presented to the International Maritime Organization in 2016. Questions are now being asked about what this means for fuel quality and handling of these various fuels on ships.
Products with sulphur close to 0.50% will likely account for the biggest share of the global bunker market in 2020 (76% of oil based fuels in the study’s base case) as opposed to fuels meeting the 0.10% sulphur limit required in emission control areas (ECAs) (13% of all oil based fuels in the study’s base case) or high sulphur fuel oil (HSFO) used by ships equipped with sulphur abatement technology, according to Jasper Faber of CE Delft. He was a speaker and panellist at a forum hosted by IBIA during London International Shipping Week (LISW).
The model used in the CE Delft study for the IMO separated the world into seven regions and combined refining capacity in each region into a regional ‘super-refinery’. The blend components available for these regional ‘super-refineries’ to produce a compliant fuel that also meets the SOLAS flashpoint requirement and typical marine fuel quality parameters could consist, for example, of hydrotreated residuals, or light ends blended with heavy-oil bottoms, Faber said. The study predicted that the regional average 0.45% sulphur fuel blend produced in Europe would be a 17.2 cSt product while in Asia it would be have an average viscosity of 110.7 cSt. But these seven regional ‘super-refineries’ do not exist so in reality the characteristics of fuel blends could vary from each refinery, Faber told the IBIA forum.
Since CE Delft did the study in 2016, the potential for very poor compatibility between these various blends has become a major discussion point in the industry and at the IMO. Faber said the question of compatibility between fuel blends from different refineries had not been in the terms of reference for the study which was commissioned by the IMO to help determine whether there would be sufficient global availability of low sulphur fuels by 2020. In light of the ensuing discussions, he said he wished that it had been.
“The compatibility discussion is a red herring,” according to one of the IBIA forum participants, a fleet bunker buyer speaking from the floor. He said it isn’t good practice to blend different product batches onboard with today’s fuel oil blends either, and operators need to segregate products. But he said the stability of the low sulphur fuel blends is a different issue and “we need to look at that”.
Michael Green of Intertek, the current Vice Chairman of IBIA, told the forum that every regulatory change in sulphur content had caused a change in fuel quality, usually for the worse, until 2015 when the ECA limit changed from 1.00% to 0.10% sulphur. This meant the end of blending mainly residual fuel oils with lower sulphur cutter stocks to create a 1.00% sulphur fuel as most ECA demand was met by using distillates, and the quality of heavy fuel oil blends had improved. In 2020, however, renewed blending of heavy fuel oils to produce a lower sulphur blend may bring back problems.
A similar note of caution about 2020 fuel blends was heard at another LISW panel debate hosted by Lloyd’s List. Iain White, Global Marketing Manager ExxonMobil Marine Fuels and Lubricants, said ship crew need to become more attuned to fact that two fuels may be absolutely fine independently but incompatible if you mix them in the ship’s fuel tanks and fuel systems. He noted that crew on quite a few ships lack the knowledge of how to run fuel treatment plants on ships today, which does not bode well for 2020. Another panellist agreed that we should expect fuel compatibility issues, adding that ship crews will need to know good segregation practice. Moreover, he said ships will need fuel test results quicker.
Because of these anticipated compatibility issues, the most basic fuel systems many ships have today with just two fuel tanks will not be good enough for 2020, according to Tim Wilson, Principal Specialist, fuels, lubes and exhaust emissions at Lloyd’s Register. He said ships will need multiple fuel tanks to tackle the variety of fuels expected to come into the market.
Fleet bunker purchasers, meanwhile, have different attitudes to experimenting with some of the ECA-compliant ultra low sulphur fuel oils (ULSFOs) available in the market today according to two panellists at IBIA’s forum.
Sia Ratajczak of Heidmar, said they had initially thought trying the various ULSFO alternatives to marine gas oil (MGO) for the 0.10% sulphur limit wasn’t worth the risk, but had changed their minds. Now they do buy these fuels, and it is part of the “2020 training” to get more and more ships to gain experience in operating with these alternative fuel types, she told the forum.
Rob Philips of Arcelor Mittel, however, said they have not been using any alternatives to MGO for ECA compliance to date. “We need a bigger discount before we start experimenting,” Philips said. At present, the company’s baseline compliance plan with the global 0.50% sulphur limit in 2020 is using MGO.
The expectation is that fuels meeting a 0.50% sulphur limit will cost less than fuels complying with the 0.10% sulphur limit. Robin Meech of Marine and Energy Consulting and IBIA’s current Chairman said the discount of 0.50% versus 0.10% sulphur products may be just $45 per tonne. The question is whether this is significant enough for ships to choose to run on two different products or just operate on 0.10% sulphur fuels at all times.
The IBIA forum, held in London on 13 September during LISW was more than fully subscribed. Attendees were treated to presentations and panel debates with expert participants, followed by drinks sponsored by Intertek.