The Wilhelmsen Premier Marine Fuels
- Bunker Seminar- Autumn 2009
Is it possible to ban the use of heavy fuel oil as bunkers?
Possible consequences of the proposals after the Full City spill and
the implementation of MARPOL Annex VI
Lysaker 8 October 2009
[email protected]
Manager Research and Projects
INTERTANKO
International Association of Independent Tanker Owners
A non-governmental organization established in Oslo in 1970 to
represent the interests of tanker operators
at international, regional, national and local levels
Membership
260 Members
45 countries
3,100 tankers
250 million dwt
330 Associate Members
Spokesman – information service - meeting place
Oslo - London - Washington – Singapore - Brussels
Norway wants to ban the use of HFO as
bunkers after the Full City accident
A great deal of misunderstandings
and wrong information?
Full city became a tanker
Bunkers became crude oil
Norway championed Annex VI?
Catastrophe?
The accident to a large
extent became a question
of using Heavy Fuel oil as bunkers
Does shipping have to switch to lighter
bunkers?
Can it be done?
Shipping and the emission
•
•
•
•
Fleet ~ 60,000 ships (above 400 GT)
Carries ~ 7,507,000,000 ts goods per year, over
An average distance of 4,400 miles, which
Carries ~ 80% of total world trade
•
•
•
•
Consumes ~ 11% of world oil
Represents ~ 2.7% of CO2 emission
Emission of SOX, NOX, etc regulated by MARPOL Annex VI
Regulations on GHGs on the way
The world fleet is cost-efficient
pollution per tonne-mile is superior
to any other transportation mode
Economics of scale: One VLCC ~ 8,000 tank trucks
but
Shipping and the environment
Shipping burns the dirties part of the barrel
Burning the Residual Marine Fuels cause
emission with:
SO2
NOx
Heavy metals
Soot/particles
Emission cause:
Premature deaths, (39,000 per year in Europe)
(James Corbett prof. University of Delaware)
Destruction of nature, acidification, utrophication,
etc…
Reducing harmful emissions from ships
May 2005 MARPOL Annex VI into force, but max 4.5%/
1.5% SECA sulphur limit unacceptable to many parties.
IMO started to work for stricter requirements
INTERTANKO’s was seeking a solution that was:
• Ensuring a solid platform of requirements;
• Realistic and feasible;
• Produced a long term and positive reduction emissions from ships; and
• Contributed to a long term and a predictable regulatory regime
INTERTANKO saw that:
– The world was moving towards cleaner fuels
– No abatement technology was available
– The introduction of multiple SECAs was problematic
Reducing harmful emissions from ships
• Onboard abatement technology
– Scrubbers, filters, separators, catalysts
(Reg 4… any fitting any fitting, material, appliance or apparatus to be fitted in a ship
or other procedures, alternative fuel oils, or compliance methods used as an
alternative to that required by this Annex if such methods are at least as effective in
terms of emissions reductions as that required by Annex VI
• ECAs
– Sulphur/Nitrogen Emission Control Areas
• Type and quality of fuel
– Heavy fuel oil = a blending of refinery residues and
distillate
– Middle Distillates = gasoil and diesel
Why switching to distillates?
INTERTANKO proposed switching to distillates:
a long term simple, solution for 10 good reasons:
1. Reduced overall fuel
Cleaner, Simpler and more
consumption
Efficient ships
2. A global reduction of emission
•
•
•
•
•
SO2 - 60-80%,
PM - 80-90%,
NOx -15%,
No heavy metals,
Less soot
Reduced health problems for crew and
dockworkers
No onboard waste
No control or monitoring problems
Why switching to distillates?
•
..continue:
6. Cause less engine breakdowns
7. Cause far less pollution when pilled
8. Provides a opportunity for the
development of more efficient
engines (w. less emission)
9. Applies to all ships and all current
engines
10. No safety problem in connection
with switching fuels
Cleaner, Simpler and more
Efficient ships
New measures adopted at MEPC 58:
SOx emissions
Emission Control Area (ECA) 1.0% limit
Global 3.5% limit
ECA 0.1% limit:
IMO review
Global 0.5% limit
Extension?
2010
2012
2015
2018
2020
EU fuel directive 0.1% limit in ports 01.01.0
No measures against ships that do not receive adequate supply
2025
New measures adopted at MEPC 58:
NOx emissions
Current regulation Tier I: existing ships built after 2000, base line
Tier II: 15.5% - 21.8%
reduction
ships built on, after 1 Jan 2011
Tier I: ships built 1990s
engine>5000 kWh,
cylinders = >90 ltrs
2010
Tier II: 80% reduction
ships built on, after 1 Jan 2016
Power output > 750 kW
In Emission Control Areas (ECAs) ONLY
2011
2016
Many preconditions: engine rating, fuel consumption, durability,
cost/benefit, availability of efficient upgrading system , upgrading at
the ship’s first renewal survey
The world is moving away from HFO
Oil consumption by product - % share
mbd
% share
36%
85
30%
69
Mdl distil. - % share
24%
Fuel oil - % share
N America FO %
18%
53
Total - ts
37
12%
21
6%
5
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
0%
Source: INTERTANKO/BP Review
How much MDO is needed for shipping
Bunker use 2007, HFO 324 m ts/
MD(G)O 54 m ts (14.4% of total)
Assume increase until 2015:
2% increase p.a. (2% reduction in 2009), and
Increased use of MDO, (req. by ECAs); and
Improved fuel efficiency, results in
The need of 425 m ts of bunkers in 2015
Assumes that 20% of bunkers
used is MDO in 2015
The HFO contains some 20-30%
cutter stock, which means that:
MDO will have to replace in 2015~
425*0.8*0.75 = 255 m ts of HFO
GLOBAL BUNKERING
ECA 2012
USA 12.70%
Canada & Mexico
0.30%
Baltic Sea 3%
North Sea 18%
ECA
Source: Poten & Partners
Rest of the World
66%
At what price?
Middle distillate price compared to HFO price
Fujarah
%
140%
120%
100%
80%
60%
40%
Source: INTERTANKO/Bunker World
Jun-09
Dec-08
Jun-08
Dec-07
Jun-07
Dec-06
Jun-06
Dec-05
Jun-05
Dec-04
Jun-04
Dec-03
Jun-03
Dec-02
Jun-02
Dec-01
Jun-01
Dec-00
Jun-00
20%
“Many refineries will be challenged if no action is taken
to meet future quality and emission legislation”
Residue upgrading projects of both the refinery
and the communicate will be satisfied:
•
•
•
•
•
•
“Enhance financial performance
Eliminate high sulphur fuel projects
Replace obsolete utility faculties
Meet future product specifications
Reduce total refinery emission
Provide cost-effective H2 production based on
converting residue
Enhance financial performance
• Produce power for refinery use and export
reduce emission
• Increase feedstock flexibility – chance to use
more business opportunities
low-cost crude oils.
Source:
• Secure or even expand and business
http://www.shell.com/home/content/globalsolutionsopportunities”
en/knowledge_centre/pres_speeches_papers/2006/r
efinery_residuals_010206.html
Dr. Joachim Wolff: license and service manager for liquid and gas gasification for Shell Global
Solutions. PhD from university of Dresden in thermodynamics.
Piete Zuideveld: departmental manger of the gasification and hydrogen manufacturing technical
department in Shell Global Solutions. Working for Shell for 27 years and has experience in
gasification, gas treating, gas to liquids and gas business development.
Techno-economic analysis of the impact of the reduction of sulphur
content of Residual Marine Fuels in Europe CONCAWE report no 2/06
Annex VI requires cleaner products:
Desulphurisation of Residue Marine Fuel complex,
expensive, the same is conversion,
but
delivers more valuable distillates
and
Blended fuel stability can cause problems
DnV reported that a large number of LSFs
deliveries contain excessive levels of highly
abrasive catalyst fines (AL+Si) from central
Eu. Ports (abrasive/instable/ignition problems)
The oil companies’ European
Association for environment,
health and safety in refining and
distribution
Quotes from CONCAWE report no 2/06
Residue desulphurisation is not a trivial matter. The process involved are complex, the plants are
costly and delicate to operate. Blended fuel stability can cause problems, especially with the heavier
sulphur residues. Conversion [to lighter products] also requires costly plants but delivers distillates
that are inherently more valuable than residues. Its economic prospects are therefore much better
than desulphurisation. Conversion is likely to be more expensive than desulphurisation, but not by a
large margin. As a result partial or full conversion will always be an option when desulphurisation is
considered. ….”refineries have a clear incentive for further conversion of its entire residual streams to
distillate products compared to residue desulphurisation to produce more LSFO”……………
Refiners upgrade to reduce HFO production
Essar Oil Gujarat refinery
“Conversion of entire negative margin FO into
high value added products and Pet Coke.”
Own power plant using residues will fuel the
refinery
Neste Porvo refinery - commissioned 1965,
One of the most versatile and modern in Europe.
A new diesel line started up in summer 2007
enables the refinery to upgrade heavy fuel oil.
The world biggest, Reliance Jamnagar refinery,
with a large delayed coker, produces no fuel oil.
Sannazzaro Refinery Po Valley projects to reduce
the yield of fuel oil to zero by 2012 .
Cepsa's Huelva refinery, include
the construction of a new
hydrocracking conversion facility
with a 2 m tpa middle distillates
capacity. Raising total crude oil
distillation capacity only 17% will
increase middle distillate production
by 39%.
Regional requirements ECAs
• Air pollution knows no borders
• Most ships operate close to shore
• International shipping needs global
regulations
• Switching fuels – a safety problem
• More ECAs on the way (Tokyo Bay
Med, Norwegian Sea, Australia, Malacca?)
USA and Canada 200 nm ECA (1 Aug 2012?)
Nov
2007
May
2006
European Union (EU) Sulphur Directive:
Ships at berth (including at anchor) in an
EU port must use fuel with maximum
0.1% sulphur content
California Air Resources Board (CARB)
regulation:
As from 1 January 2012 ships must use
fuels with maxium 0.1% sulphur content
for their main and auxiliary engines when
within 24 nm of the shore
Emission Control Areas, the Baltic and the North Sea
Why not scrubbers?
•
•
•
•
•
•
Still under testing (5 pilot tests known*)
Large
Expensive
Difficult (impossible?) to install
CO2 emission (buffering effect)
leaves hazardous waste onboard
which no-one wants
• Tonnes of seawater need to be
pumped through the ship and
processed
• Pump redundancy
We are involved in transportation
– not waste treatment
*Ferry Pride of Kent (Krystallon) , Passenger Ship Zaandam
(Krystallon), Tanker MS Suula (Wärtsilä), CABU Baru,
(Clean Marine Klaveness), ferry Tor Ficaria
Refinery Capacity Additions – by region?
The graph indicate that refinery capacity is projected to increase by 9.8 mbd 2008-2014.
According to IEA high economic growth scenario oil demand will increase by some 2 mbd over this period (reduction on 2008 and 2009). Most of
the increased capacity increase over the period 2008-2014 is projected to come in Asia (4.9 mbd), but in 2013-15 most of the capacity increase
will come in the Middle East (1.7 mbd for this period). The IEA Medium Term Oil Market Report has an overview of refinery expansions 20092014. Totally 7.5 mbd is expected to be added over this period of which 2.4 mbd in China, 1.7 mbd in other Asia/Pacific and 1.2 mbd in north
America. The biggest expansion is expected in 2009 (1.8 mbd) of which 0.6 mbd in China and 0.9 mbd in the rest of Asia..
Refinery output OECD
The US – 16 mbd
Residuals
4%
Europe – 15 mbd
Residuals
8%
Residuals
10%
Others
7%
Asia/Pacific – 7 mbd
Others
28%
Distillates
24%
Distillates
20%
Gasoline
56%
Jet Fuel
9%
Others
46%
Distillates
36%
Gasoline
20%
Jet Fuel
10%
Jet Fuel
6%
Gasoline
16%
Incidents attended by ITOPF
over the past 5 years
Number
18
Tankers: 40
Non tanker: 66
15
12
9
6
7
14
14
10
9
12
8
17
13
3
2
0
2004
2005
2006
2007
2008
Source: ITOPF provides (objective technical advice and information on all aspects
of pollution response and the effects of spills on the marine environment).
Summary
Revised Annex VI will gradually come into
force as from 2010 in ECAs (2020 (25) sulphur emission limit
0.5% down from 3.5%)
INTERTANKO seeks: long term practicable
measures necessary to reduce emission
Shipping is energy efficient - but burning the dirties
part of the barrel cause pollution
Testing of abatement technology not completed
There are 10 good reasons for switching to distillates
Refineries are dynamic
Large investments necessary over a prolonged
period - no matter solution
Burning of HFO is cheap because the real costs
are not charged
The real costs involved are the costs to the society
which will be mainly be the impact on the environment
(cost effect of increased freight will be marginal)
The oil industry is moving towards cleaner fuels
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