Refiners tease plans for 2020 0.5% sulfur bunker fuels

As the shipping and bunker industries await the new 0.5% global marine fuel sulfur limit in less than two years, refiners have this week started to reveal some of their plans for the fuels they want shipowners to buy in 2020.
BP announced two new fuels to be available in Northwest Europe in a private meeting with shipowners during IP week, while ExxonMobil said Thursday that it would be likely to demonstrate its products later this year or early in 2019.
The International Maritime Organization's (IMO) global bunker sulfur limit is due to drop from 3.5% to 0.5% on January 1, 2020, forcing the majority of shipowners to switch from burning fuel oil to new, low-sulfur bunkers. 
But there is no universally approved specification for these fuels yet, and a wide range of refinery streams could be used to produce a 0.5% sulfur product.
The nature of the new bunkers is of interest both to shipowners and bunker traders seeking to find out the properties and likely cost of their fuels in 2020, and to the wider oil industry analyzing how much residual fuel oil will still be needed for marine blends in two years' time.
"It will not be a distillate world going forward, as some have said," Iain White, ExxonMobil's global marine field engineering services manager, said Thursday. "There's going to be a lot of blending, and there's still going to be a lot of residual fuel oil in what ships are using."
For the engineers and chemists seeking to avoid the new fuel blends causing engine failures, the two key properties to watch are stability -- whether a fuel will separate over time or under particular conditions -- and compatibility -- whether two fuels brought into contact with each other will separate. 
Sludge forming at the bottom of a bunker tank after a fuel separates can block a vessel's filters and lead to engine failure.
"I don't think we're going to see much of the 85% diesel and 15% fuel oil products," Jason Breslaw, BP's senior originator for distillates, said Thursday. "There would be stability issues."
Both refiners acknowledged they would not each be bringing a single 0.5% sulfur fuel to the market for 2020. BP showcased two to shipowners Monday -- one more aromatic in nature and the other more paraffinic -- and declined to comment on whether the two would be compatible with each other.
"It will be more than two, but less than 42," Exxon's White told S&P Global Platts in reference to his own company's plans for the number of fuels it will make available.
The wide range of products available and likely compatibility issues will cause some headaches in 2020 -- there will be no guarantee that a vessel bunkering a 0.5% sulfur fuel at Rotterdam will then be able to pick up a compatible fuel in Singapore as it goes east. 
Shipowners will either need to set space aside for additional bunker tanks to keep the range of fuels separate from each other, or take the risk of mixing them.
"Vessels with multiple bunker tanks will be fortunate and keep the products separate," BP's Breslaw said. "Others will have to comingle."
The wide range of products that need to be kept separate could also be a boon to the storage industry at the world's bunker hubs. 
While demand for fuel oil storage is likely to decline further in the run-up to 2020, a large number of smaller tanks for different grades of 0.5% sulfur fuels will be needed.
Stability is less likely to be a problem than compatibility in 2020 if shipowners buy from reputable suppliers, the refiners said. 
Any product sold under the International Organization for Standardization (ISO) standards will have a stability guarantee.
The current ISO 8217 specifications do not encompass 0.5% sulfur fuels, and a new set is not likely to be published before 2022. 
But the organization is currently working on a less formal 'publicly available standard' (PAS) to include the new grade, BP's Breslaw -- currently working with the ISO on this project -- said.
"We expect further information about 0.5% specifications to become available in the middle of next year," Edmund Hughes, head of air pollution and energy efficiency at the IMO, said Thursday.
ISO is expected to present details of its PAS to a meeting of the IMO's Marine Environment Protection Committee in spring 2019, Hughes said.



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