Heading for IMO 2020

Inevitable change for marine industry stakeholders ahead

The new International Maritime Organization legislation on fuel sulphur will have a huge impact across the shipping and its associated industries. Watch video footage as Infineum fuels and marine lubricant experts, Steve Benwell and Marco Corradi, discuss the implications for industry stakeholders and explain their thoughts on future fuels and lubricant requirements.

From 1 January 2020, new International Maritime Organization (IMO) legislation means ships will be unable to use fuels containing more than 0.50% sulphur, unless fitted with an appropriate exhaust gas cleaning system. This change is set to have huge implications across the industry, from refiners and bunkerers to ship operators/owners and right through to lubricant, base stock and additive suppliers. Industry may have been talking about IMO 2020 for several years, but it’s only now, as the new fuels become available, that the full extent of the fuel and lubricant challenges are becoming clear.

A multifuel future seems inevitable and, while initially most ship operators are likely to opt for low sulphur marine gas oils (MGO) before transitioning to very low sulphur fuel oils (VLSFO), there will still be some high sulphur fuel oils used in conjunction with scrubbers and a limited use of alternative fuels. Marco wanted to hear about how the anticipated change in fuel use might impact refiners.

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Marco: So, talking about the refineries themselves, what impact is this going to have on refineries and how they might operate?

Steve: This is a really interesting question, because there's various different types of refineries around the world, with various different levels of complexity. The complex refineries that are able to process the residual part of the barrel, upgraded into lighter products, they are going to be in really good shape, as you go forward. Their unit margins are going to be going up because they never produce any heavy fuel oil anyway in the base case and all of those lighter materials that they make by upgrading the heavier materials into the lighter grade products are just going to be more valuable.

Those refineries that don’t have the ability to process those heavy molecules, the residual portion of the barrel, they’ve got more of a problem. One of the ways, the easiest way in which they can do that is just to use lower sulphur crude. Now that’s going to drive up the value of low sulphur crudes, but it also means that they’re going to be pushing typically a lot more waxy, paraffinic materials, because low sulphur crudes tend to have higher paraffinic content than high sulphur crudes. Now what that means is, that’s going to have an impact on the whole refinery circuit, it’s not just about marine fuels. People tend to forget that marine fuels is only about 5% of refinery capacity globally, so the tail cannot wag the dog, as it were. So, if you change to a low sulphur crude, you can have an impact on all the other products, whether it’s yield, whether it’s performance, and so that’s the type of stuff, and we’re encouraging our refinery customers, if you’re going to change crudes let us know. Because especially in the middle distillate area, the cold flow performance and the cold flow response in those products can be very different. And then, when you come to marine fuels, whether it’s a marine distillate or even a heavy fuel oil, you can run into wax management problems. So, managing wax through the whole distribution system, is clearly going to be a challenge.

What is evident is that there is a disconnect in the way refiners look at fuel production and availability versus the expectations of ship operators post IMO 2020. The refiners are looking to maximise refinery economics by producing the most profitable streams. This means they may feed areas other than marine fuels, which may impact the availability of low sulphur fuels, something that is somewhat lost on the broader industry.

And, the challenges do not stop with fuel availability concerns. The changes brought about by IMO 2020 at the refinery level could also impact base stock availability, which, as Steve and Marco explain, may also have knock on effects to lubricant formulations.

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Marco: When it comes to refineries as well, one of the areas that I think on the lubricant side we sometimes get some questions about is the impact of IMO 2020 on Group I availability, on base stock availability. it’s not that IMO 2020 is driving the industry away from Group I base stocks, it is a consequence of the fuel change that is going to result in less Group I availability in the longer term.

Steve: The feedstock for Group I base stocks is VGO, right, and if you’ve got a low enough sulphur VGO, then that’s a really good feedstock for a VLSFO, a low sulphur fuel oil, or even a hybrid fuel. It doesn’t contain any residual but you might blend it with a residual if you want to make a VLSFO or you may just use it as is, if you want to make a distillate material and it’s all going to depend on, well is it more valuable as a Group I base stock feed or is it more valuable as a marine fuel feed?

So, you’re going to see a change in the balance between Group I and Group II solutions? And what impact does that have from an additive perspective?

Marco: When it comes to the cylinder lubricant side then we work on technologies that can work in both, often sometimes we might run a programme where it is our target to have a particular level of performance in the Group II, knowing then that the Group I will only be better. That’s something that we might do, because we’re always trying to raise the performance bar of our technologies.

On the trunk piston side in the four-stroke area there we have chemical solutions, technology which enables our products to work as well in a Group II formulation, as it does in a Group I, and we’re working on the next generation of those as well as we speak.

With the fuels options broadening, there are a lot of questions coming from the wider marine industry about the compatibility and stability of the various fuels that will be available post IMO 2020.

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Steve: We’ve been doing a lot of work in that area recently, we’ve come out with couple of new products in this area and our focus has really been on the total sediment specification for fuels. A lot of people are still relying on the old world in high sulphur fuels and we believe that may not necessarily hold for these new fuels. These new fuels are going to exist much closer to the boundary of instability even if they meet specification to begin with.

We’ve seen examples where a fuel may actually start off as on-spec but then as it’s used over the lifetime of that fuel it can go off-spec. And we’ve developed these additives to ensure ship operators are going to have trouble-free operation, in other words they are not going to run into these types of things. If you’re sitting in an environment where you believe that the old way of doing things is going to protect you in the new world, I think you may be in for a surprise.

Looking ahead, the number of fuels-related issues is expected to increase. Stability is certainly a concern and one issue could arise from the fact that there really is nowhere else for the materials that would typically go into high sulphur fuel oil to go. For example, the levels of slurry oil in marine fuels is expected to increase post IMO 2020, which may contribute to fuel instability. Complexity is increasing and ship operators should demand fuels that give trouble-free operation throughout their use onboard.

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Marco: I’ve seen comments, even presentations that talk about the fact there may be premiums for straight refinery fuels. You know they’re controlled, you know what the refinery is generating vs what the traders or bunkerers are providing where there might be mixtures, so it’s going to be quite a complicated world for a ship operator in terms of… one of the challenges and some of the OEMs have been saying this is “do not mix fuels, keep them segregated in multiple tanks on your vessel”.

Steve: Not always possible.

Marco: Not always possible… Some vessels, maybe the larger ones, will be able to do that and you’ll be able to run down one tank completely before you start burning another tank where the fuel has come from somewhere else because it might not be possible so you might see sludging, deposits, combustion issues, all the problems we’ve seen and we see them already in the marine world.

Steve: And we’ve actually seen some people putting out these new fuels and they’re putting a limit on their guarantee of stability. I’ve heard “30 days, we only guarantee stability for 30 days”, now these fuels will be in the system for about 60-90 days. and if they are only guaranteeing 30 days of stability then they could run into problems on the water.

Ship operators are going to have to demand that the suppliers of the fuel are going to ensure that their fuels are going to give them trouble-free operation in the whole period of time that they’re going to use that fuel. I think that’s a bit of a change, high sulphur fuel oils in the past have generally all been about the same and they’ve all given approximately the same type of performance in the real world - and there have been very few problems – less than one half of 1% I was told by an industry expert of high sulphur fuel oils have actually had a problem. And we’re expecting that to go up by at least 10-fold, maybe 20, and so that’s a major problem we’re going to have to overcome.

One of the biggest concerns coming from the marine industry is the uncertainty around whether using the new IMO 2020 compliant fuels will impact operability. This not only raises issues of the cost and expense of being out of action but also the safety implications of being on the ocean with no power.

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Steve: And so, as we go through this, the areas where you could see an impact to the point where you could stop propulsion, there are a few of them in the VLSFO environment that could have that impact: wax, if you clog up a system with wax and you starve the engine of fuel then you’re not going to be able to run that. Asphaltene destabilisation, if you clog up a purifier or clog up your filters, you can’t use that fuel. So these are real world examples of where it can have a major impact on ship operability

Currently the focus of industry attention is on the implications the IMO sulphur reduction might have on the refinery and the quality of the various products that might be available. But, it is important that it does not lose sight of the fact that changes here are also likely to affect marine lubricant formulation requirements.

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Marco: In the two-stroke area, when you say things are not going to be the same in the future and doing the same stuff in the future is not going to work for you then I totally agree. We’re hearing already indirectly about deterioration or performance issues that are being observed in the field. So, you can’t simply take a current technology that works in a high sulphur fuel environment and just down treat it and use it in a low sulphur fuel situation – it doesn’t work that way when it comes to the formulation technology.

Steve: So why doesn’t it work that way? Why can’t you just take a high base number and say well I don’t need as much because I don’t have as much sulphur, why is it that you need to change the formulation?

Marco: It’s the nature of the detergent chemistry itself. These formulations in heavy sulphur fuel oil environments are almost completely detergent in some instances. And the detergent itself is a chemical compound, it has a core, which is the neutralising power, which allows you to deal with the acids from the sulphur in the fuel and it is stabilised by the surfactant, by the soap, the detergency, the cleaning power that comes as a chemical around it as a sheath. If you take out the base, if you take out this neutralisation power because you don’t need it in a lower sulphur fuel environment then you’re also coincidentally removing the detergency characteristics as well, the ability of that detergent to clean up the vessel.

The VLSFO future that is expected means some marine lubricants will need reformulation in order to maintain engine cleanliness. And, with a wide variety of options available, finding the optimum solutions and understanding the pros and cons of the different routes has been at the centre of much of Infineum’s marine lubricant R&D activity in recent years.

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Steve: Obviously, when you burn a fuel it doesn’t burn completely, in some cases these are poorly burning fuels and you end up with partially combusted fuels going down into the lubes. So, you know, the VLSFO range of different materials that could be used in that is really quite large. You can be heavily cracked, heavily aromatic type materials, all the way through to heavily paraffinic, no cracked materials, no asphaltenes, so what impact does that have on the lubricant side of things?

Marco: It can have a huge impact, I think. These are the unknowns at the moment in terms of the industry, because the fuels that are going to be used are not really necessarily out there yet. We’re beginning to see these low sulphur fuel oils come on to the market; the 0.5s, the straight runs have already existed but these hybrid fuels we’re beginning to see them becoming available but we haven’t yet seen a glut of them on the market, because I think the whole industry is reluctant to transition. You almost don’t want to be the first mover if you’re using a new fuel because you don’t know the problems it’s going to bring. You don’t know the problems in combustion, you don’t know the problems in cleanliness, you don’t know how your engine is going to respond

So, everyone is trying to wait until as late as possible in the fourth quarter of this year before they transition into these new fuels, but absolutely we need to be ready with lubricants solutions to deal with that, I mean, that’s the nature of the lubricant, to help lubricate the engine and keep the engine clean and allow the engine to operate under whatever conditions and whatever fuel is being burnt.

This is actually quite a challenge for the marine industry, it is trying to reinforce to the industry that there is a value to higher quality lubricants because a higher quality lubricant will make sure that your engine is operating better for a longer period of time. You will not be spending as much money or time in terms of downtime, vessel in dry dock, replacing parts or having engineers coming onboard fixing things, you save money that way.

The fuels are brand new, and only just starting to come into the market, which means many operators are waiting until as late as possible in the fourth quarter of this year before they make the transition. While some degree of testing has been undertaken, both Steve and Marco can see a period of some uncertainty ahead.

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Steve: the supply demand will probably be fairly close to in balance as we go in, probably enough, but we’ll wait and see. But that means there could be a very large variation in the types of fuels that are being used. I mean we’ve seen from highly paraffinic materials, which have high pour points, you know, the ship has to be able to heat those, keep them fluid, which may mean their heat capacity requirements are significantly greater. All the way through to very aromatic highly cracked, now those may have combustion problems and it’ll be a niche area where combustion problems. We’ve got solutions in those areas and then in the middle, if you start to blend these things in the middle with various different components you can start destabilising the asphaltenes and that’s where the new asphaltene management technology comes in and so we’ve prepared ourselves in that situation as well. But until they are actually out there, it’s going to be very interesting to see exactly what comes into the market, exactly what the problems are. I don’t think anyone is really going to know until they start using them for real.

Marco: It’s going to be a multi fuel environment, a multi fuel future, multi problems, unexpected problems are going to happen; be it the first of January, middle of next year, when are you going to see the introduction or increase in issues that people are experiencing? And we’re going to need to be able to move quickly in terms of offer solutions to our customers or have technologies that we are testing which are dealing with different issues or problems that you might experience. And being able to respond to those is going to be very important to the future.

The exact impact IMO 2020 may have across the marine and related industries remains uncertain. But, one thing that seems clear is that IMO emissions reduction programmes do not stop here. There is much more to come in the next five years, with further sulphur cuts and wider NOx controls expected. In addition, IMO is working to reduce greenhouse gases, with its initial strategy targeting to reduce CO2 emissions per transport work, as an average across international shipping, by at least 40% by 2030, pursuing efforts towards 70% by 2050, compared to 2008. Visit IMO for more details.

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Marco: In the background the IMO are setting very ambitious decarbonisation targets, for the whole marine industry. And that’s going to drive a lot of research and development over the next five years. 2050 is the big target, but there’s a step at 2030. If you think about the lifetime of a vessel, how long it exists on the waters, then you need to have the fleet beginning to transition to these decarbonised solutions by early 2030s.

Steve: I think one of the areas in this interim step as you go to a low carbon, the fuel itself may change, but in these interim steps I think fuel economy is going to become increasingly important and that’s an area where both fuels and lubricants can have a significant impact.

Marco: And this is an area, where I have to say, in all my time at Infineum, the area where the fuels and lubricants divisions of our organisation are really working together to understand the issues because we’re both seeing problems from different sides

Because when it comes to the future, when it comes to that new technology needed, when it comes to here’s a problem no one foresaw or here’s a problem to a particular customer, in a particular region of the world, using a particular fuel, under certain conditions, what do we have in the toolkit that can enable a solution to be deployed relatively quickly into the market? So that’s important.

As these new regulations come into force, some of the technology innovations from automotive applications will be applied to the next generation of marine diesel engines. Infineum will continue to draw on the experience it has gained from research on diesel fuels and lubricants in heavy-duty diesel vehicles and diesel passenger cars to anticipate future operability challenges.

Watch this video to find out more about Infineum technology solutions for IMO 2020.

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