Low sulphur fuel supply from 2015 - Maritime Journal

Posted - September 5, 2013 -  Maritime Journal

The maximum level of sulphur allowed in shipping fuel is set to drop from 1% to 0.1% in EU Sulphur Emission Control Areas (SECAs) in 2015, writes Barry Newton of the Geos Group – specialists in the storage, sales and distribution of marine distillates.

Sulphur, a natural element of crude oil from which shipping fuel is derived, is a key cause of air-polluting particulates (soot) emitted by ships. The new sulphur level regulations are intended to reduce the amount of air pollution generated by the shipping industry, and improve air quality. In order to comply with the new rules, companies operating ships at sea in SECAs will need to switch to a low sulphur (0.1%) fuel such as 1,000ppm marine gas oil (MGO).
Workboats operating around the coastline of northern Europe – tugs, dredgers, offshore support vessels and so on, already burn MGO, so will this really affect them? The answer is most definitely yes. An increase in demand for MGO from a greater number of ships over a much larger area is likely to result in a significant shortage of stock. If ships can’t get the fuel they need, they can’t sail and delays are incurred; schedules are disrupted and costs soar. The new sulphur level regulations could cause major fuel supply problems for workboat owners and operators from 2015 – so they need to start considering their options now.
So how will the shipping industry cope with a sudden increase in demand for low sulphur fuel? One option is to reduce the emissions from heavy fuel oil to the level permitted in SECAs. The scrubbers used in this process are big, costly and difficult to retrofit on vessels already in operation, so this is not an ideal solution. Moreover, scrubbers consume a lot of energy, which causes carbon emissions, so any environmental benefit of the exercise may in part be offset by a negative environmental impact elsewhere.

Another option workboat owners and operators might consider is switching to liquefied natural gas (LNG) as an alternative source of shipping fuel. A relatively new technology, the uptake of LNG by shipping companies is still fairly low, although it is on the increase. For newbuilds, LNG is an attractive option, but adapting existing vessels for LNG usage is largely impractical and expensive. At the moment there are not enough LNG bunkering stations or storage facilities in the ports of northern Europe to satisfy any sudden spike in demand.
There is no guarantee that oil refineries will produce more marine gas oil to meet increased demand either. A complex crude oil distillation process yields a number of different grades of fuel, MGO being just one of them, so it is not possible to simply produce more MGO on its own. In addition, the desulphurisation units in oil refineries are extremely costly, so any large scale increase in the production of low sulphur fuel would require major capital investment.
Marine gas oil suppliers are considering the option of importing low sulphur fuel from other countries, the USA for example, when demand increases in 2015. This option raises a number of questions, is there sufficient storage space? How will quality be affected? Will prices go up? The full extent of the impact of the new sulphur regulations is still very much unknown, and the debate over its potential environmental benefits rumbles on. What is clear however is that workboat owners and operators are facing a very real threat to their supply of low sulphur fuel, so they need to start planning now and discussing the matter with their fuel suppliers.
For further information visit www.geosgroup.com

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