As we enter the New Year the spotlight is on sulfur, fuel cost, and quality. As of January 1 global limits on sulfur were reduced to 3.5% and on August 1st the North America ECA zone becomes active with a 1.0% limit. Fuel costs since 1st quarter of 2011 have pretty much remained above $640 a ton for RMG 380. However a number of refineries are expected to cut production as they shut down for upgrades.
Ralph E. Lewis considers whether reners can step up their processing capacity to meet the huge increase in demand for low sulphur fuel that will be necessitated by emissions regulations.
To understand potential supply challenges, it is important to understand how low sulphur distillate is produced, what renery production trends have been and world demand for these fuels in recent years’.
DNV Petroleum Services has tested four fuel oil samples delivered off the coast of Benin, Ghana and Ivory Coast, representing HFO delivered between 22 May and 30 May 2011 with density above the ISO 8217:2005/2010 maximum limits.
The tested densities were in the range of 1010.0 to 1015.4 kg/m³ while the density stated on the corresponding Bunker Delivery Notes was 991.0 kg/m³. The bunkers came from one supplier and involved two bunker tankers.
The purpose of this Marine Notice is to update shipowners and operators on the application of the International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001 (‘the Bunkers Convention’) in Australia.
This Marine Notice supersedes Marine Notice 9 of 2009 and includes updated information on the application of the Bunkers Convention to oil tankers.
The Bunkers Convention entered into force internationally on 21 November 2008 and the Protection of the Sea (Civil Liability for Bunker Oil Pollution Damage) Act 2008 implements the Convention in Australia.
The main focus of the presentations were an examination of the current situation in the marketplace, what can we expect as new tighter regulations move closer to enactment, and what lies ahead from a macro economic standpoint. All these dynamics will continue to determine future prices and quality for bunker. Let us first look at the current state of the deep sea fleet. With the now widely adapted practice of slow steaming we have seen a rapid expansion of the active fleet since the recession. According to Lloyd’s 2011 statistics the deep sea fleet is as follows:
We had informed you that the Pacific Merchant Shipping Association had successfully appealed CARB regulations mandating the applicability to 24 nautical miles off the coast.
At that time, the court had agreed that the CARB had no mandate to regulate air pollution beyond 3 nautical miles from the coast.
A few days ago we reported on a number of contaminants present in bunker fuels supplied in Houston and at least three ships reporting machinery damage. We are now reporting about a sample of fuel bunkered in Sevilla, Spain.
It would appear that since ISO 8217 does not check for presence of contaminants, far too many liberties are being taken with bunker fuel supplied.
With just few days to go before the 1 January 2010 start-date for the European Union (EU) rule mandating consumption of 0.1% sulphur content marine gasoil (MGO) in port, shipowners are investigating all options to ensure that auxiliary diesel engines and boilers will safely accommodate the new fuel.
EU officials stated that they would amend the EU sulfur directive. The new directive would be made public by 2011. The amendment pertains to harmonizing the EU regulations with those of Marpol Annex VI.
With reference to the 1.00% sulfur limit in ECA areas, we have received many queries from our customers and we give interpretations below. The bodies that will ensure compliance will the MARPOL regulations will be the State Port Authorities. Already, Norway has announced that they will accept 1.00% sulfur content only.
A DNV Petroleum Services (DNVPS) survey on the operational impact of the European Union 0.1% marine fuel sulphur limit – enforced on Jan 1 this year – has revealed potentially critical issues. Among the 65 shipping companies that responded to the survey, 40 percent felt the EU member states were not harmonised in applying regulatory standards when verifying compliance with the 0.1% marine fuel sulphur limit. This lack of uniformity could confuse and dampen the shipping community’s confidence in the ability of the EU to enforce its own environmental regulations.
“DNV had previously expressed concerns that the 0.1% sulphur cap effectively meant ships at berth in the community ports must use marine gas oil, notwithstanding many of the boilers on board would not have been modified by Jan 1 to burn this type of fuel,” said DNVPS managing director Tore Morten Wetterhus. “Now that more ships are presumably equipped with the installations to minimize gas oil-related risks, such as fuel pump leakage and boiler explosion, shipboard personnel face new worries not knowing what to expect from port state inspections in different EU ports.”
Close to 40% of the respondents said their vessels did not have the tank flexibility to segregate gas oil and heavy fuel oil. Another 15% reported filter choking and fuel pump seizures when switching from normal sulphur heavy fuel oil to the much more expensive gas oil on entering the EU community ports.
Surprisingly, almost a third of the respondents did not routinely test the quality of their gas oil purchases, despite the risks of their ships consuming fuels not compliant with the 0.1% fuel sulphur limit.
In the worst case, an untested fuel could be so severely ‘off-specification’ that it causes substantial engine damage and jeopardizes the safety of crew and cargo at sea.
“As a marine fuel management company, it is especially unsettling for DNVPS to find that some ship operators are gambling with safety when they choose to use gas oil of unknown quality. There must be much more awareness on problems commonly associated with this type of fuel; for instance, low flashpoint and low viscosity,” Mr Wetterhus cautioned.
On a brighter note, he said 90% of the survey respondents believed their crews were familiar with the onboard routines for complying with the EU fuel regulations, but many also felt continuous training would be necessary.
To update the shipping community on marine fuel regulations, related operational challenges, and the latest changes to the ISO 8217 marine fuel specification, DNVPS has been organising seminars and round-table discussions in its key markets. Targeted locations include Singapore, the Netherlands, Norway, Greece, Germany, Dubai, USA and Canada.
The explosion and subsequent sinking of BP/Transocean’s ‘Deepwater Horizon’ rig in the Gulf of Mexico has resulted in oil hitting the US shoreline. According to McQuilling Services, the US Gulf of Mexico is home to the majority of US PAD III (Alabama through New Mexico) refinery operations, accounting for 8.5 mill barrels per day of refining throughput, or 48% of total US crude runs.
The operator Eni announces two new oil discoveries made in Block 15/06, Nzanza-1 and Cinguvu-1, offshore Angola. Statoil has a 5% working interest in this block.
Both wells, located around 350 km north-west of Luanda in 1,400 metres of water depth, successfully reached the objectives in the Lower Miocene targets where oil pay sands with good reservoir characteristics were encountered.
Please refer to our technical update (2010/3/7 ? Comments on clause 5 of ISO 8217 2010) which also included a note on Annex B for Deleterious substances. We have a very important point to make on.
Viswa Lab has commented on ISO 4259 in our technical update 2009/12/28 ? ISO 8217 2010 DRAFT UPDATE. Therein, Viswa Lab had commented that the benefit of the test precision should not be passed on to the supplier. This is the stand MEPC has taken in the case of sulfur content for ECA areas. MEPC had ruled that the sulfur should be 1.50% or less and no variation on this will be permitted.
EU Commission Communication, Commission Recommendation of 21.12.2009 on the safe implementation of the use of low sulphur fuel by ships at berth in Community ports C (2009) 10289, on the relaxation of the introduction of EU Directive 2005/33 is addressed to national governments of member states.
As we enter the New Year the spotlight is on sulfur, fuel cost, and quality. 
Ralph E. Lewis considers whether reners can step up their processing capacity to meet the huge increase in demand for low sulphur fuel that will be necessitated by emissions regulations.
DNV Petroleum Services has tested four fuel oil samples delivered off the coast of Benin, Ghana and Ivory Coast, representing HFO delivered between 22 May and 30 May 2011 with density above the ISO 8217:2005/2010 maximum limits.
The purpose of this Marine Notice is to update shipowners and operators on the application of the International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001 (‘the Bunkers Convention’) in Australia.
The main focus of the presentations were an examination of the current situation in the marketplace, what can we expect as new tighter regulations move closer to enactment, and what lies ahead from a macro economic standpoint. All these dynamics will continue to determine future prices and quality for bunker.
Please refer to our technical update 2010/4/7.
With just few days to go before the 1 January 2010 start-date for the European Union (EU) rule mandating consumption of 0.1% sulphur content marine gasoil (MGO) in port, shipowners are investigating all options to ensure that auxiliary diesel engines and boilers will safely accommodate the new fuel.
The explosion and subsequent sinking of BP/Transocean’s ‘Deepwater Horizon’ rig in the Gulf of Mexico has resulted in oil hitting the US shoreline.
The operator Eni announces two new oil discoveries made in Block 15/06, Nzanza-1 and Cinguvu-1, offshore Angola. Statoil has a 5% working interest in this block.
EU Commission Communication, Commission Recommendation of 21.12.2009 on the safe implementation of the use of low sulphur fuel by ships at berth in Community ports C (2009) 10289, on the relaxation of the introduction of EU Directive 2005/33 is addressed to national governments of member states.