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BUNKER FUELS
Regulation and practice
David SpringettSGS MARINE SERVICESOctober 2012
© SGS Group Management Ltd. Geneva Switzerland 2012 Not to be reproduced without permission
Overview
Regulatory· ISO 8217 - 2010· ECA’s· Marpol
In real life· In practice· Cost implications
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Engine manufacturers Shipping companies
Major refinersTesting agencies
ISO 8217
Who has set the Agenda?
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2010 revision
Current edition ISO 8217 published June 2010
Superseded the third edition published in 2005.
2005 edition itself was a massive change from 1996 due to environmental requirements
2010 standard built on 2005 and addressed some issues.
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2010 Revision part 2
These standards are always a consensus between various interests.
That consensus has shifted dramatically since 2005
The environmental content aligned with MARPOL VI and this link will remain solid as we move forward.
Standard amended slightly in July 2012 for H2S
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So where do we stand? – 2010 vs 2005
Adoption of 2010 revision has been very slow Suppliers, are reacting to demand as and
when needed The ISO standard is NOT mandatory, although
Marpol is.· Only as a part of a contract or where locally
legislated Probably about 75-80% of bunker supplied in
2012 are to 2005 standard· Cost premium· Charter parties· Availability – see above
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SUMMARY
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What about other areas?· In the short to medium term we might expect Singapore,
Hong Kong, Japan and Australia
Source: IMO
USA/Canada ECA
Source: US EPA
Reductions in 2020320 000 MT NOX = 23%90 000 MT PM = 74%920 000 MT SOX = 86%According to EPA
Cost = $3.2 BillionBenefit = $20 Billion
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Industry Challenges (1)
Increased costs are the biggest challenge of all
Total world bunker market approx 200 million tonnes· Asia approx 70 million tonnes. · USA 25 million tonnes
– Fairly equally divided between USEC,USWC,USGC· ARA 24 million tonnes· Med – 16 million tonnes· Russia 10 million tonnes
If ECA’s are implemented in the regions· As above, estimated between $75 and $200 a tonne extra just to
reach 1% Numerous Quality challenges
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Hot Spots
The most common quality challenges can be split into two main categories
Quality itself........· Sulphur· Catfines (Al+Si)· Others, such as viscosity,
density etcBunker with care..........
meeting that quality has a cost
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Meeting Sulphur requirements Main Regional challenges
· UAE - Fujairah· Korea - Busan· USWC – Long Beach· USEC - New York, Miami· USGC – Houston· Italy
Cost estimates for even 1% sulphur are probably between $75 and $200 per tonne – possibly achieved by.........· Naturally low sulphur crudes· Re-direct land based fuel to sea· Re-blending· Desulphurisation
The IMO 2020 regulation for 0.5% would basically require distillates· About 200 million tonnes of it....· And this causes capacity issues
At 4.5% Sulphur was not critical – it is when we get down to 0.5%
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Aluminium and Silicon (Catfines)
Two Issues· Local refining· Extra risk with lower sulphur
blends – increased use of slurry oils
Main regional challenges· ARA· Houston· USEC
Most engine manufacturers recommend 15ppm Al+Si· A purifier usually removes only
60-70%· Settlement in service tanks can
be an issue
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Other Issues
Density· Increased use of slurry oil as a
blending component Stability
· Increased use of other resources Chemical Contamination
· Possible sharp practice Ignition quality
· CCAI· · · · Usually between 800 and 880.· Not always a reliable indicator
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Practical supply issues Utility demand is declining in USA
· Advent of LNG and renewables– LNG raises its own challenges
Residual fuel production declining accordingly Sulphur levels in imported US fuel oil
· Approx 70% over 1%· Canada, Mexico, Russia· Most of the 30% low sulphur oil was from
Algeria/North Africa/ARA Japan - post Fukushima Where does that leave us?
· Pre 2015– Europe ECA experience
· Post 2015?
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Future solutions?
Fuel is almost 50% of ship operating costs LNG
· Not the answer to all the issues· Short sea trading
– Ferries, Regular trade· Very expensive to fit/retrofit
“Scrubbing” technology· Open and closed systems, various brands – Alfa-laval, Hamworthy,
Wartsila.MAN etc· Verification/ wash water content.........· SCR · Expensive
Low Sulphur fuel· Distillates
Oil, Gas & Chemicals Services
Conclusions
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Current challenges• High fuel
prices• ECA zone
expansion• Environmen
tal pressure• Depressed
freight rates• Low
margins
(Re)Action• Better
routeing / planning
• Slow steaming
• Retrofit for alternative fuels
• Retrofit Scrubbing
Back to the future?• Advanced
vessel design
• New build LNG
• New build with scrubber
• Bio fuels?• Alternate
fuels
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SGS Marine Services
Quantity Inspections· SGS presence in all major ports with SGS personnel to
IFIA/local standards· Single point contact
Quality testing· Routine analysis – dedicated labs· Dispute analysis – SGS ISO 17025 network· Forensic testing – SGS M-Scan
Lubricating oil testing – SGS VernolabEnvironmental testingSpecialist work – P&I, NDT, HACCP etc
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