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CMA 2015

A New Direction for Marine Fuels?

Intertek ShipCare Services

Steve Bee

Global Business Director

.

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Sulphur Regulations – Global and ECAs

Emission Control Areas:

As far as requirements within an ECA are concerned, the sulphur content of fuel oil used on board ships shall not exceed the following limits:

1.50% m/m prior to 1st July 2010

1.00% m/m on and after 1st July 2010

0.10% m/m on and after 1st January 2015

Global Regulations:

The Sulphur content of any fuel oil used on board ships shall not exceed the following limits:

5.00% m/m prior to 19th May 2005

4.50% m/m on or after the 19th May 2005 and prior to 1st January 2012

3.50% on or after the 1st January 2012

0.50% on or after the 1st January 2020

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Fuel Classifications – ISO 8217:2010

Changes to Distillate Fuels:

• ISO8217:2010 highlighted 4 distillate grades of fuel

New DMZ grade with min viscosity of 3.0cst - all other characteristics identical to DMA

• DMC modified and re-graded as RMA-10

• New specs for H2S, Acid Number, Lubricity and Oxidative Stability have been added.

• Min viscosity for DMA has been raised to 2.0cst

• A min viscosity requirement of 2.0cst has been added for DMB

• The specification for “appearance” has been amended

Changes to Residual Fuels:

ISO8217:2010 highlighted 11 grades of residual fuel

• RMG and RMK expanded to include additional viscosity grades

• RMF and RMH categories have been removed

• New specs for CCAI, H2S, Acid Number and Sodium content added.

• Sulphur limits not tabulated – control now based upon legislative / statutory requirements

• TSP assigned as the reference test method/TSA added as an alternative test method

• Ash limits reduced and max limit is now dependant upon specific grade

• Changes to Vanadium limits

• Combined Aluminium and Silicon limits reduced

• Assessment criteria for ULO (Used Lubricating Oil) amended

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Global International Bunker Demand

Bunker Fuel demand will increase by 20million mt by 2020

By 2025 0.1%-0.5% Distillate will increase to 160million mt/yr

By 2025 Residual fuel demand will still be 80million mt/yr

0

50

100

150

200

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2014 2020 2025

Fuel

Mill

ions

mt

Global Marine Fuel Usage

LNG 0.1%MDO 0.1-0.5% MDO

Other MDO 1.00% RFO 3.5% RFO

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Fuel Quality – 2014 v 2013

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5

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Residual Distillate Residual Distillate Residual Distillate Residual Distillate

Q1 % > ISO Limits Q2 % > ISO Limits Q3 % > ISO Limits Q4 % > ISO Limits

Marine Fuels "Exceeding Spec-limit" 2013 v2014

2014 2013

Q1 % > ISO Limits Q2 % > ISO

Limits Q3 % > ISO Limits Q4 % > ISO

Limits

Residual Distillate Residual Distillate Residual Distillate Residual Distillate

2014 29.6 11.4 29.4 12 31.3 9.7 29 11.5

2013 22.7 7.6 28.2 13.1 27 13.1 30.4 12.2

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Fuel Quality 2014: >ISO Limit v >95% Confidence Limit

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Residual Distillate Residual Distillate Residual Distillate Residual Distillate

Q1 Q2 Q3 Q4

Marine Fuels: >ISO Limit v >95% Conf. Limit 2014

>ISO Limit (%) > 95% Conf. (%)

Q1 Q2 Q3 Q4

Residual Distillate Residual Distillate Residual Distillate Residual Distillate

>ISO Limit (%) 29.6 11.4 29.4 12 31.3 9.7 29 11.5

> 95% Conf. (%) 9.2 8.2 10 8.5 9.6 5.9 8.8 7.7

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Fuel Quality– 2013 / 2014

• Sample submission rates for 2013 show an 80 / 20 split between residual and distillate samples.

• Figures for the early part of 2014 show similar submission rates

• Whereas actual test figures show an overall increase, in submission of distillate products for analysis, of 20% across the year

• As a result identification of distillate products “exceeding the specification limits” increased.

• An increase in the uptake of services related to distillate fuels – BQS.

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Fuel Quality– 2014 / 2015

• Beyond 2015 submission how will rates change – 70 / 30 ? 60 / 40?

• We did not need to wait until the 1st Jan 2015 to find out.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Oct-14 Nov-14 Dec-14 Jan-15

Marine Fuel Sample Submission Rates

Residual Distillate

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Fuel Quality– 2014 / 2015

"Off Specs" 2014 Average Q1 2015

>ISO 8217 Limits 26.00% 21.00%

> 95% Confidence Interval 9.60% 8.00%

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Distillate Fuels – Quality Issues?

• 2015 ECA 0.10% = increased demand for distillate product.

• Not all distillate fuels are low Sulphur; therefore lower Sulphur content requires additional treatment processes

• Treatment processes can have a detrimental effect on final fuel quality causing issues such as: Lubricity Issues

Reduced Oxidation Stability

Poor combustion characteristics

Possible presence of FAME

Reduced Flash point

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Distillate Fuels – Quality Issues?

• Widespread issues relating to lubricity, oxidation stability etc…. have yet to be seen.

• However, some issues with Cold Flow Properties have been noted.

• Problems with reduced cold flow properties can lead to issues such as this…….

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Distillate Fuels – Cold Flow

• Cloud Point - temperature at which the distillate fuel becomes slightly opaque in appearance - wax crystals begin to come out of solution.

• Cold Filter Plugging Point - is defined as the highest temperature at which a given volume of fuel will fail to pass through a standardized filtration device in a specified time, when cooled under specified conditions.

• Pour Point - is stated as being the lowest temperature at which oil ceases to flow upon cooling.

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Lubricity – ISO 12156-1, IP450

• Testing only required on distillates if the fuel has Sulphur level <500ppm (0.05%)

• Specification: 520um Corrected Wear Scar Diameter (wsd1,4)

• ULS MGO have greatly reduced lubricating value for fuel delivery systems exposing pumping systems to possible failure.

• Sulphur Content within the fuel offers lubrication – True or False? FALSE

• Hydro processing to remove Sulphur removes minor species form the fuel.

• Minor species such as N Species, O Species and other Polyaromatics.

• These minor species provide the natural lubricating qualities of the fuel.

• Removal of Sulphur = Removal of Minor Species = Removal of Natural Lubricity.

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Lubricity Testing

Between 1st December 2014 – 23rd February 2015, Intertek ShipCare tested the lubricity (ISO12156-1) of 129 samples from 42 countries, which had a sulphur content below 0.05%,

19 samples (15%) had a wsd result >520um

(16 were from the USA, 84%)

11 samples (8%) had a wsd result >580um

(11 were from the USA, 100%)

53% of USA lubricity samples exceeded the specification limit of 520um

37% of USA lubricity samples exceeded the 95% confidence limit of 580um

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Oxidative Stability – ISO 12205

• Only a Distillate Fuel Test

• Measures inherent stability under accelerated oxidising conditions.

• Hydro-desulphurisation removes naturally occurring anti-oxidants that provide physical & thermal stability of the fuel

• Instability through contamination can occur from the transportation of bio-derived material.

• Specification – 25g/m3

• Principle of this test is a filtered distillate sample which is aged at 95ºC for 16 hours whilst bubbling oxygen through the sample.

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Hybrid Fuels.

• New fuels designed to meet the 0.10% max sulphur ECA limit.

• ExxonMobil HDME 50

• Cepsa DMB 0.1%

• Lukoil Eco Marine Fuel

• Shell ULSFO

• Gazprom 0.10% Product

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Hybrid Fuels.

• Typical test properties of products examined show a strong similarity to low viscosity residual products.

• Tested density in the region of 860 - 920kg/m³

• Viscosity in the region of 8.0 – 50.0 cst

• Low overall metal content

• High Pour Point

• Possible compatibility issues?

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Hybrid Fuels – Test Data ISO 8217

Test Method Units Hybrid”A" Hybrid “B” Hybrid “C” Hybrid “D” DENSITY ISO 12185 kg/m³@15°C 857 909.8 867.7 889.2 VISCOSITY ISO 3104 CST@50°C 12.1 36.9 8.5 18.8 VISCOSITY ISO 3104 CST@100°C 8.4 4 5.6 FLASH POINT ISO 2719 °C >70.0 >70.0 >70.0 >70.0 POUR POINT ISO 3016 °C 24 12 27 <-12 MCRT ISO 10370 %MASS <0.01 0.4 0.1 1.8 ASH ISO 6245 %MASS 0.016 <0.01 <0.01 0.01 WATER ISO 3733 %VOL <0.05 0.05 0.05 0.05 SULPHUR ISO 8754 %MASS 0.10 0.08 0.09 0.1 COMPATIBILITY ASTM 4740 SPOT# 1 1 1 VANADIUM IP 501 mg / kg 1 3 16 SODIUM IP 501 mg / kg 1 2 9 ALUMINIUM IP 501 mg / kg 6 < 1 4 SILICON IP 501 mg / kg 9 2 3 AL + SI IP 501 mg / kg 15 3 7 T.S.P ISO 10307-2 % (m/m) 0.05 <0.01 <0.01 <0.01 NET CAL VAL ISO 8217:A MJ/KG 42.23 42.75 42.48 CCAI ISO 8217:B INDEX# 801 789 792 IRON IP 501 mg / kg 10 2 10 NICKEL IP 501 mg / kg 5 2 21 CALCIUM IP 501 mg / kg < 1 3 2 MAGNESIUM IP 501 mg / kg < 1 < 1 2 LEAD IP 501 mg / kg < 1 < 1 < 1 ZINC IP 501 mg / kg < 1 1 < 1 PHOSPHOROUS IP 501 mg / kg < 1 < 1 < 1

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Hybrid Fuels – Test Data FIA

Test Method Units Hybrid “A” Hybrid “B” Hybrid “C” Hybrid “D”

FIA100 IP 541

Estimated Cetane Number (ECN) >40.0 >40.0 >40.0 >40.0

Ignition Delay (ID) msec 2.68 2.77 2.48 2.88

Main Combustion Delay (MCD) msec 2.97 3.07 2.78 3.16

End of Main Combustion (EMC) msec 9.75 9.48 9.67 9.66

End of Combustion(EC) msec 13.44 13 13.21 13.41

Pre Combution Period (PCP) msec 0.29 0.3 0.3 0.29

Main Combustion Period (MCP) msec 6.78 6.4 6.89 6.49

After Burning Period (ABP) msec 3.69 3.53 3.54 3.76

Maximum Rate of Heat Release (MaxROHR) bar/msec 3.74 3.29 3.46 3.74

Post of Maximum Rate of Heat Release (PM) msec 3.08 3.16 2.9 3.29

Accumulated Rate of Heat Release (AR) bar 7.73 7.91 7.75 8.04

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Hybrid Fuels – Combustion Profile

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Residual Fuels – Combustion Profile

Residual Fuel – ECN 18.2

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CONCLUSION

• So early into the new legislation period, we are seeing the quickly changing make-up of marine fuel submissions

• Distillates are not a “trouble-free” fuel solution

• Issues relating to cold-flow properties, stability and contamination

• New fuel types coming onto the market, such as Hybrids, but yet to be fully covered by an international standard.

• Moving forward the market will no doubt continue to evolve and be in a position to offer more fuel alternatives:

• Distillate

• Hybrids

• LNG

• Methanol

• Wind, Solar, Fuel Cells

• Abatement Technology/Residual Fuels

• All the above have certain specific benefits, but also certain potential associated problems.