Future Marine Fuel Quality Changes: How might terminals ... · Future Marine Fuel Quality Changes:...
12
Future Marine Fuel Quality Changes: How might terminals prepare? Further reading from IHS: What Bunker Fuel for the High Seas? A global study on marine bunker fuel and how it can be supplied
Transcript of Future Marine Fuel Quality Changes: How might terminals ... · Future Marine Fuel Quality Changes:...
Future Marine Fuel Quality Changes: How might
terminals prepare?
Further reading from IHS:
What Bunker Fuel for the High Seas? A global study on marine bunker fuel and how it can be supplied
© 2015 IHS No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent.
WHAT WE DO
We offer information, analytics and expertise
to organizations around the world.
© 2015 IHS 02
ABOUT IHS
ANALYTICS
EXPERTISE
INFORMATION
WHO WE ARE
Every decision matters.
That’s why leaders rely on IHS to help them
make the best choices.
As the premier provider of global market,
industry and technical expertise,
we understand the considerations
that guide important decisions.
© 2015 IHS No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent.
Topics of this presentation
Current status of relevant regulation;
Options for compliance;
Maritime preparations;
Implications for terminals.
3
© 2015 IHS No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent.
Ships emissions will have to reduce substantially
Current ECAs : North Europe and North
America
Other ECAs possible, but not forthcoming
Study by the IMO in 2018 is considered too
late by many stakeholders.
4
0.0
1.0
2.0
3.0
4.0
5.0
2005 2010 2015 2020 2025 2030
Global
ECA
Max Sulfur content, wt%
Review in 2018 to determine availability
of LS fuel and start date for 0.5% S limit
MARPOL Annex VI, SOx emissions Other regulation and initiatives
NOx emissions Tier III in ECAs: down 85% for new ships from 2016 (postponed to 2021).
Energy Efficiency Design Index: new ships to be built according to certain CO2 emission reduction targets
-10% from 2015, -20% from 2020 and -30% from 2025
In 2020 the European Union will cap Sulfur content of bunker fuel in the European Economic Zone at 0.5%S.
Irrespective of any postponement to 2025 of the global switch by the IMO
The EU was discussing a directive that could oblige 139 ports to have LNG bunker supply infrastructure in place by 2020 (postponed to next decade)
© 2015 IHS No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent.
It is unlikely that the IMO regulation will cause a
complete switch to 0.5%S bunker
5
Fuel Compliance
Scrubbing
LNG
FUEL COMPLIANCE: Ships will burn fuel oil with a maximum content of
sulfur as set by the new specifications.
USE OF EXHAUST GAS SCRUBBERS: Some ships will invest in on-
board devices to scrub SOx from exhaust gas. They will carry on burning
high sulfur fuel while achieving equivalent SOx emissions. We estimate
that for large ships the investment cost can be paid back by the fuel price
differential quite rapidly.
BURN LNG: Natural gas burns clean, so LNG is another option. This
has higher capex, but it will help with meeting other emission reduction
targets related to NOx and particulates.
The new emission regulation allows the use of SOx abatement devices to meet SOx emissions
equivalent to 0.5%S fuel, while burning high sulfur fuel.
There are three main options currently being considered by ship owners to meet the new
emission regulation
Reality is likely to be a combination of all three; but what will be the mix?
© 2015 IHS No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent.
Early indications indicate a shippers using more
volumes of compliant fuel
6
1500
1700
1900
2100
2300
2500
2700
2900
Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014
Fuel Oil Gasoil
PORT OF ROTTERDAM QUARTERLY BUNKER QUANTITIES
Source: Port of Rotterdam Bunker Report © 2015 IHS
• Several companies have launched 0.1%s bunker fuel as alternative to usual
bunker fuels such as MGO
© 2015 IHS No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent.
Scrubbers are economically attractive versus using
0.5%S fuel for the largest ships in the longer term
7
• 30% of world’s ships
account for 100% of HFO
demand
• Of these, the 17,000
largest ships account for
80% of HFO demand
• They are all expected to
see a payback time of
about 2 years or less on
installing scrubbers
• The main concern for this
scenario is what to
assume in respect of the
period of time that will be
needed for this to happen
Scrubbing economics: 0.5%S HFO = 3.5%S HFO +
230$/t, never in an ECA, max 60% load
0
1
2
3
4
5
0
10
20
30
40
50
60
70
80
90
100
0 5 10 15 20 25 30
%HFO payback time, 100% Global
Figure 5, Scrubber payback, 100% global and never in ECA
Source: IHS © 2014 IHS
% o
f b
un
ker
dem
an
d
% of ships
Payb
ack
tim
e
© 2015 IHS No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent.
But scrubbers are increasingly being installed,
particularly for devoted ECA service
8
© 2015 IHS No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent.
Does LNG offer a viable alternative bunker fuel?
9
0
100
200
300
400
500
600
700
800
900
US, largescale
liquefaction,low cost port
US, smallscale
Liquefaction,low cost port
US, smallscale
liquefaction,high cost port
Europe, lowcost port
Europe,higher cost
port
North Asia,low cost port
North Asia,higher cost
post
Asia,domestic gas,
small scaleliquefaction
$/ton foe Bunkering margin LNG price 3.5%S Bunker
0.5%S Bunker MGO/MDO
• LNG results in lower fuel costs than fuel compliance options (distillates or 0.5%S bunker)
• LNG prices are below 3.5%S fuel oil throughout the world, but after allowing for
bunkering margins most of the incentive is gone in most cases
• A ship equipped with scrubbers would tend to see similar fuel costs than LNG
© 2015 IHS No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent.
Despite space, safety and logistical drawbacks, there has been a
strong rise in LNG fuelled ships on order – including containerships
10
• Ferries and North Europe have currently the largest share of the market
• Recently growth with vessels destined for US market (Crowley, Tote, Washington State
Ferry, Royal Caribbean). End 2014, 50 LNG-fuelled ships in operation (mostly in Norway),
69 on orders – 38% in NWE, 28% in Norway, 28% in the U.S., 6% in Asia (Source DNV)
• Also, recent orders now include container ships (largest category for bunker demand – 18%
of total demand in 2015, 28% in 2040)
• Quite a few ships are “LNG ready,” designed with ability to convert to gas once in service
0 10 20 30 40
Tug
Ro-Ro/Ro-Pax
oil product & chemicaltankers
Containership
others
Upstream supply ship
car/passenger ferry
operating on order
LNG-fuelled vessel by category (operating+ on order)
© 2014 IHS Source: DNV
0
5
10
15
20
25
30
35
40
45
50
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
LNG-fuelled ships ordered
© 2014 IHS number of orders per year
Source: IHS, DNV
Note: we have chosen DNV figures, as more conservative. IHS Maritime figures show 144 ships vs.120
© 2015 IHS No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent.
Potential implications for terminals
11
For change to 0.1%S in ECAs
more MGO bunker demand
also other fuel compliant grades
So initially there is potential to need more grades to be stored
For change to 0.5%S worldwide
Unlikely to serve demand with sufficient quantity of compliant fuel
Likely to be greater use of scrubbers
LNG penetration may prove difficult to establish and grow in near/medium term
So potential to revert back to greater use of more typical heavy bunker fuels is likely post 2025
IHS Study Link
http://workspace.ihs.com/sites/sales/SPA/MultiClient Studies/What Bunker Fuel for the High Seas/What Bunker Fuel Study Brochure Aug 2013.pdf
IHS Customer Care:
• Americas: +1 800 IHS CARE (+1 800 447 2273); [email protected]
• Europe, Middle East, and Africa: +44 (0) 1344 328 300; [email protected]
• Asia and the Pacific Rim: +604 291 3600; [email protected]
© 2014 IHS. No portion of this report may be reproduced, reused, or otherwise distributed in any form without prior written consent, with the exception of any internal client distribution as may be permitted in the license agreement between client and IHS.
Content reproduced or redistributed with IHS permission must display IHS legal notices and attributions of authorship. The information contained herein is from sources considered reliable but its accuracy and completeness are not warranted, nor are the
opinions and analyses which are based upon it, and to the extent permitted by law, IHS shall not be liable for any errors or omissions or any loss, damage or expense incurred by reliance on information or any statement contained herein. For more
information, please contact IHS at Customer Care (see phone numbers and email addresses above). All products, company names or other marks appearing in this publication are the trademarks and property of IHS or their respective owners.
Contact:
• John McVay,
Managing Director – IHS Energy, Oil Markets and Downstream (OMDS) Consulting
+44 208 276 4783, [email protected]
