Springtime 2012 in North America: a season of optimism as America’s favorite pastime launches spring training and heads into the long season ahead. How well prepared are the teams? Which team will have more success than others? Much will depend on their pre-season conditioning.
To some degree, the maritime community is entering into the pre-season for the implementation of the August 1st 1.0% sulfur requirement for the 200 mile North American Emission Control Area (ECA). Therefore, it is time to bring all team members together and prepare for the new guideline. So how do we train for the new season?
An Uneven Playing Field?
We start with an overview of the refinery landscape. Over the past year or so we have seen refinery closures in the Delaware Valley region, (Marcus Hook, Philadelphia and Trainer), as well as St Croix, Houston, and Hawaii. Another 7 refineries are up for sale in Europe and one in St. Lucia. With Wall Street suspected of driving up the price of fuel and a glut of oil and distillate in the northeast, many of these refineries are likely to become storage facilities. On the other hand, we are seeing increased arbitrage as new sophisticated refineries in Asia, India, and the Middle East have a growing appetite for crude, especially available Iranian crude. These modern refineries are geared to produce lighter products with a very small residual yield, thus more suppliers are facing challenges in bringing an HFO product to specification. As this transition continues, it will change traditional supply patterns. Now add on the 1% sulfur restriction and the blending challenges become even more heightened.
Spring Training
Over the last year, the USCG has given the maritime community a “learning-training period” for the new regulation, but active enforcement can be expected from August 1st and onwards. As a participating IMO flag State, the USCG is tasked with enforcing Marpol Annex VI. Hence, the methodologies used for ensuring adherence could include review of statutory Bunker Delivery Notes (BDN), log books examined for exact details of switchovers, Marpol samples or perhaps even tank samples taken to an approved testing laboratory.
We have seen the challenges the supply community faced in meeting the January 1st 3.5% worldwide cap. In fact, we are still receiving samples in April that are testing above 3.5% from Asia and the Middle East. From another perspective, we studied all HFO samples received in 2011 with almost one-third of all samples tested showing significant variances (beyond method precision), when comparing BDN figures to laboratory results. How is BDN data compiled? What about 1% sulfur content fuel? How can we be sure our vessels are in compliance as we enter the 200 mile zone? As demand grows for low sulfur HFO combined with sourcing patterns changing, will there be any issues with mixing of fuels currently on board? Will they be compatible?
Fundamentals & Game Savers
These questions lead us to the areas we need our teams to practice during their training, starting with ensuring that the fuel is compliant. This starts with proper sampling technique. Typically BDN sulfur data is taken from shore tank certifications, not the barge. Given the nature of today’s blended product(s), the amount of time a product has been stored in a shore tank, and then transported by a third party barge there exists the real potential for variances in BDN stated values vs. results from submitted samples taken by drip samplers on vessels.
An even bigger issue is the regulatory requirement vs. local practice. Marpol 73/78 Regulation 18 (7) (b) states that the supplier is to provide a representative sample of the fuel delivered which is to be used for determination of compliance by Port State Control (PSC). Furthermore, resolution MEPC 96 (47) guidelines for the sampling of fuel oil requires that the IMO sample should be taken at the receiving ship’s bunker manifold.
This sample may be an issue basis where bunkers are taken. For instance, in US ports due to insurance laws barge staff are not allowed to leave the barge. This makes it impossible to jointly draw samples at receiving vessel manifold to be sealed by supplier. Further, many barges are not equipped with approved sampling devices. We have seen many instances wherein supplier samples are taken through a spigot on the barge in a short period of time and sealed. This, of course, is not a true representative sample. In the event there is a Coast Guard challenge, the testing process would most likely be done on the Marpol sample. That 500ml of fuel could be the difference in avoiding costly legal battle/fines with PSC. By drawing truly representative samples and having them testing by an independent laboratory if there is a determination for off specification sulfur, a letter of protest (basis procedural requirements of ship’s flag administration) should be issued with copies to supplier, PSC, and records for the ship.
Another issue we see is that the supply community is selling fuel basis an ISO set of standards. This conflicts to some degree with IMO standards governing Marpol. With ISO, one could interpret basis reproducibility and repeatability that a 1.05% fuel is within specification of 1.0%, while the IMO is a bit stricter and would, after verification process, deem a 1.01% fuel out of specification.
So what can an owner/operator do to try and protect their interests? For starters, one could negotiate with suppliers to have sulfur levels basis IMO verification standards as opposed to ISO on precision. Prudent procedures would dictate that if there is any suspicion of the levels pushing above 1.00, then do not burn those bunkers in the ECA zone and treat as HS fuel.
The next area of training would be the technical aspects. Make sure that crews have a standard operating procedure (SOP) and are proficiently trained with a change-over calculator. This ensures the high sulfur fuel has been flushed out with 1.0% or under entering the combustion chamber, before entering the 200 mile zone.
Crews also need an SOP for changing over from a residual fuel to a distillate. We can simply look back to 2009 when CARB (California Air Resource Board) was introduced and numerous vessels lost power during the switchover process. A specific changeover practice that has been tested needs to be set up, (in conjunction with engine manufacturer recommendations), to ensure no loss of power due to issues such as viscosity.
Compatibility of fuels will also need to be tested before the mixing of any two fuels. Circling back to the changing refinery landscape, as the traditional supply chains are disrupted and less residual is available, the potential increases for incompatibility and asphaltenes falling out of suspension. That’s a situation that can’t be reversed and can lead to catastrophic engine failure. In this event, compatibility testing should be done as a standard practice.
Opening Day Expectations
So what might we expect from the USCG? According to statistics posted on the USCG web site there were a total of 28 vessels detained at US ports in the 1st quarter of 2012 for Marpol Annex VI violations. Looking at other Port State Control areas in 2010, The Netherlands PCS sampled and tested 135 vessels for sulfur verification. From January to July 2010 there were 72 vessels tested of which 5 were not in compliance. From July 2010 through December 2010 there were 63 vessels tested of which 46 were not in compliance. Of these 46 vessels, 10 had actions taken against them including fines. Given the long standing role the USCG has had with IMO, we expect active enforcement on August 1st. By taking the time to review fundamentals, set up game plans, and practice those skills, your team should be ready to compete in the new season.
(taken from Maritime Professional magazine's 2Q print edition)
