2020 fuels: The end of a “false sense of security”?

Matt Wright of Argus Media Consulting Services points out problems still arise, citing the widespread bunker contamination that showed up last spring. However, he adds that flouting advice “will soon be far more likely” to result in ugly consequences.

Both the long-awaited ISO/PAS 23263:2019 and the 64-page Joint Industry Guidance (by CIMAC, IBIA, IPIECA et al) point to new complexities. For example, both state crew should find out – preferably before purchase – the nature and type of the fuel alongside properties such as viscosity, density and cold flow, adjusting temperatures for storage and line feed as necessary.

But viscosity, for example, can vary widely: various bodies report seeing 0.5% sulphur fuels with anything from 30CST to the more common 380CST.

It stands to have real, physical impact as such diversity calls for the same again in management. Likewise, according to the Guidance thinner fuels, while within spec, may also uncover other troubles such as worn fuel pump plungers and injectors and could result in “excessive leakage [that] will either limit the power that can be developed and the responsiveness to load change demands or, in extreme cases, even cause an engine to stop or fail to restart”.

Cat fines typical of thicker fuels may also be present and just to make it more complicated, ISO’s PAS points out many blends have a waxy nature with a higher pour point and therefore may need warming even if the fuel has a relatively low viscosity. Further elements to consider include heat or cold transfer from the next tank along or external bulkhead.

MGO-GO-TO

As a result, it looks as if there could be a rise in MGO take up, the likely go-to fuel for a number of ships “while owners wait for the risks to be sorted out… but we don’t know yet how big a trend this will be”, admits Wright. Beyond practical concerns – there are potential issues around fuel switching as well as gas formation in boiler pipelines or furnaces – its main disincentive is the price. While MGO reached around US$266 per tonne in September, it may rise, he says: “Our forecasts show from being US$30 above the new VLSFO fuels, this gap could be closer to a US$100 per tonne average in 2020.”

AVAILABILITY

So, what about the availability of the new, very low sulphur fuel oils? Both Wright and Einemo remark there are now daily announcements from suppliers saying they have VLSFO in place at a broad range of bunkering facilities.

Despite this, Mariella Bottiglieri Green of Giuseppe Bottiglieri Shipping isn’t convinced, saying she and a number of her fellow owners “are still concerned”. She adds: “Although we’ve been told ‘VLSFO will be available’… it could be a bit like shopping at Christmas, they may have it… till there’s a demand.”

However, owners shouldn’t assume that not having VLSFO to bunker automatically allows for filing a fuel oil non-availability report – FONAR: “Even if MGO is US$100 per tonne more, if it’s available, then that’s what you have to take on,” says Einemo.

That’s not the end of the issues: the most significant concern compatibility.

CHEMISTRY

Taking it back to basics, a residual fuel has asphaltenes uniformly distributed throughout – kept in suspension by the fuel’s aromatic content. But it alters on heat refining or when two different fuel oils or cutter stock are blended. This upsets the equilibrium leading to the agglomeration of asphaltenes, which then drop out as sludge.

It wouldn’t be a problem without the wide variation on the cards. “There’s some speculation that as the number of different types of fuels in the market will rise, there will be a higher risk of incompatibility between the bunkers,” says Einemo.

In very broad terms, two component streams will underpin the majority of the new blends. On one hand there is very-low sulphur residue and on the other, the more paraffinic vacuum gas oil (VGO); these tend to create divergent products.

Wright underlines it’s a very mixed picture. For example, while Northwest Europe has a large amount of VGO resources and could see a significant volume of low-asphaltene fuels, in the Asia Pacific/Singapore and Middle East regions, “we expect very-low sulphur residue blends to take the largest share”.

There are diverse pressures: VGO comes at the cost of gasoline production, so it stands to rise or fall depending on refining margins and automotive demand; although even that’s not a given as some could be attracted away by higher gasoline prices. On the other hand, there’ll be more residue blends if further refineries invest in kit to transform high-sulphur crude into a low-sulphur source.

As a result, the blends stand to vary in different locations and even seasons – despite coming from the same supplier. While a few big brands are guaranteeing compatibility between their offerings, these will be priced “at a premium” he adds.

Fortune stands to smile on some: one operations manager for a large fleet told TMS “as our ships have enough tanks to segregate fuels and a regular route through the largest hubs… we don’t foresee too many problems”.

That’s not the case for others. The nature of Bottiglieri’s business takes the ships worldwide, often away from the main bunkering ports. “I need to load a compatible fuel for the entire length of the contract – or we are out of commerciality,” she says. Moreover, fuel segregation won’t, in the main, be possible for a proportion of the company’s vessels: while a number of the fleet have six tanks, some have just two.

CONTINGENCY PLANS

One thing all agree on is that ships will have to think through their options in advance if they’re approaching a bunker facility without an empty tank.

And quite a lot of thought should concern contingency measures.

After all, the process requires a lot of intersecting links: for example, although the PAS states “suppliers are encouraged to provide information” on fuel characteristics and it is undoubtedly good business practice, it’s not mandatory and as seen from experience, it is not always meticulously correct. Then there’s the time aspect: will it be available early enough for crew to adapt or review options?

Likewise, “bunkering vessels won’t be able to wait at the ship’s side for a lab test result… they’ll have onward calls to make”, says Einemo.

To get this element to work smoothly and avoid delays a ship which has to top load could ask for a sample of the fuel to be bunkered prior to arrival so the D4740 spot test can be done before the vessel reaches the port. She adds: “If the spot test indicates a risk of incompatibility, seriously consider a TSP lab compatibility test against the next bunker. As this will take at least 24 hours or longer the crew will need to send off both samples to a lab in good time.” Of course, if the results are problematic, the ship will presumably have to make other plans while underway.

This process asks a fair amount of crew and owners, from being able to accurately execute and read spot tests at the required mix ratio, acquiring – and understanding the implications of – fuel specs and adjusting the operational parameters of onboard systems.

Further, there’s concern about what happens if and when these linked processes fail to deliver on time. While there will be more spot tests at the quay, Bottiglieri explains: “At some terminals you are really under pressure. And if there’s a delay, a few will even push you out: you can’t stop the chain. But, supposing I can’t move the vessel without burning something that’s shown at the last moment to be incompatible – what then? And who’s to pay for the costs involved?”

“There is potential for delay,” admits Einemo, but reiterates that “there’s detailed advice available in the Joint Industry Guidance on how to minimise the impact”. She adds: “Everyone has to realise massive delays aren’t in anyone’s interests, whether for ship operators or bunker suppliers.”

The stakes, as far as Bottiglieri is concerned, are high enough for the company to turn to branded compatibility-guaranteed fuels despite the price – which could be steep as this will require providers “to hold onto their fuel spec very tightly” says Wright, entailing component stocks being pulled back and forth across the world and likely adding an extra layer of volatility to the market.

However, testing and contingency planning may not provide a long-term solution for ships with few tanks. According to Einemo, vessels will need more than two bunker tanks in order to be equipped to deal with the rise in fuel variability. As a result, she is of the opinion that subdivision of existing fuel tanks on the next yard call may be the best way forward, despite the outlay.

INSURANCE

Anxious owners could be forgiven for believing insurance provides some kind of safety net “in case things go wrong”, one told TMS. However, they could be disappointed. Some may assume they’re fully insured under the contamination clauses as “the consequences are very similar”, remarks Ansuman Ghosh, Risk Assessor at Thomas Miller P&I.

He explains that while suppliers were answerable for last spring’s fuel adulteration incident, compatibility-related failures present a rather different picture as “owners are responsible for proper storage and segregation of bunkers onboard”. Despite this, he adds: “I am sure the blame-game in an actual scenario will be much more complicated,” though certainly “an owner will have lots more to prove in terms of due diligence and best practices”.

Given all this, why not just go for HSFO and scrubbers?

That’s not proving too easy, says Wright: “We are hearing that even scrubber fitting is taking far longer than originally thought, pushing installations into next year.”

However, the main issue is that HSFO stands to lose its place in many facilities, and while there will be plenty sloshing around it won’t necessarily be where it’s wanted. “We’ve known for some time that HSFO will no longer be available everywhere,” underlines Einemo.

As Wright concludes: “There’s a lot of advice. But yes, bunkering is going to take a lot more focus than in the past.” Bottiglieri is less than sanguine: “We want to help clean up, but this is like asking us to run a marathon on one leg.”

She adds the most troubling aspect is the uncertainty: “We just don’t really know how the various problems will work out, as yet. Ask me again in six months, and I’d be in a position give a better answer.” Having said this, Wright believes the challenges will be resolved: “The VLSFO fuels will be better understood in future, there will be some blend consolidation – and this will help.”

TRACING PROVENANCE

Even before the entrance of VLSFO, fuel issues have arisen; sometimes these have been accidental, sometimes due to adulteration by those looking to shave a few pennies from costs. Occasionally this wreaks havoc as it did in the ‘Houston’ affair, where owners and operators saw onboard systems fouled and in some cases engines shut down mid-transit.

But it undoubtedly happens more often than comes to light, and this is another worrisome element when it comes to VLSFO compatibility: a fuel that’s not quite what it says on the tin has a greater chance of creating a commingling issue.

However, BLOC and FTL have got together to create a tool that can track provenance and may also go some way to providing an answer for the wider compatibility questions.

BunkerTrace marries blockchain software with a DNA ‘signature’, explains CEO Marc Johnson, to allow full tracking of fuel composition. The joy of blockchain is that it gives a complete audit trail of any transactions. However, it wouldn’t work without the fuel delivery being irrevocably linked to a digital ‘fingerprint’, “created at the point of introduction of the marker… which is then uploaded via a QR code”, he explains. This means what’s being delivered can be shown to be what’s on the ticket.

In short, it means ships don’t have to wait for the results of a long, post-delivery lab test “by which time the vessel can have burned half the fuel” says Johnson; BunkerTrace can give a result inside a minute at point of delivery. “The default parameters place a pass at less than 2% adulteration, more than 5% is automatically a fail, between 2% and 5% flags up a ‘point of discussion’ with the provider,” says Johnson.

So, what about directly addressing fuel incompatibilities? This is not BunkerTrace’s core business, says Johnson, but he admits “it is a natural extension” that’s of interest to a number of stakeholders: “No one knows to what extent there will be compatibility issues, but one of the best ways to accurately monitor this is to generate an accumulated set of data points,” he explains. Thus pegging a full composition analysis – also supported by BunkerTrace – to a fuel on a database could address some of the challenges and give crews a way to see potential problems in advance.

By Stevie Knight