Trouble is brewing down in the bunker

Thirty years ago, the shipping industry was in the throes of its own economic recession and there were desperate decisions to be made about scrapping or re-engineering, ships that were just too expensive to run.
They were extraordinary times. That same year, 1979, it was decided to hold an international conference on marine bunkers, which was surely a brave move, as the brown envelopes were flying around like autumn leaves and the most productive use for all the unused tonnage was thought to be artificial reefs.
But there was a lot happening on the bunker front, what with the emergence of independent bunker suppliers as a force to be reckoned with, as the oil companies were withdrawing fast, and both the technology of combustion and the economics were changing fast. So a reasonable number of people turned up.
Thirty years on, and on cue the 30th International Bunker Conference was held in Oslo last month, organised by the BI Norwegian School of Management, against a background of economic and technical uncertainty which had many similarities to the confused situation which had obtained in 1979.
But that was then and this is now, the big difference being that in that earlier time of trial, governments were not dictating what could or could not be pumped into the bunker tanks of ships or fed into the combustion process.
“The road map to 2020” was the theme of the Oslo meeting, and it is quite clear that the traffic police along that 10-year road will be wearing green uniforms, with sniffer dogs accompanying them.
Emissions, even more than calorific values, will be dictating what goes into ships’ bunker tanks, as the shipping industry demonstrates its credentials as sustainable transport.
You can be quite negative about the environmental pressures, watching the activists with apprehension as they come up with ever more outrageous demands which, if they were accepted by impressionable politicians, seem quite ruinous.
Efficiency
You can buckle down and comply, thinking you have little choice in the matter. But you can regard it all as a challenge and opportunity, shipowner Wilhelm Wilhelmsen said, as he opened the proceedings in Oslo the other day.
His company, it would be fair to say, has a greener vision, and moreover, “the customers are placing environmental demands on us which they did not do in the past”.
So it makes good commercial sense to look at the business opportunities which can flow from environmental improvement and the development of environmental solutions.
And once you have a company as large and as international as Wilhelmsen, he suggested, all focused upon reducing environmental impacts, worthwhile improvements emerge in emission reductions, efficiency increases and a host of other processes and products, from ballast treatment to waste management.
The futuristic ‘Orcel’ concept ship may never be built, but, said Mr Wilhelmsen, has already done an amazing job in fostering creativity and producing useful ideas that have commercial value.
It was a positive note in which to begin this interesting meeting.
The world faces “tremendous energy challenges”, said ExxonMobil’s Eddy Van Bouwel, bringing us back to earth with a bump. Amid all the talk about windmills and biofuels, we will still be relying heavily on Opec crude oil by 2030, with a 30% increase in liquid demand 20 years from now.
More positively, perhaps, the oil company forecasts a major increase in energy efficiency, so we will be wasting rather less of what is so painfully extracted.
And as for the market for marine fuels, “low sulphur fuels are the future” despite the burden of having to convert refineries, and all this sulphur extraction leading to the carbon dioxide increases we were hoping to avoid. There are no easy answers.
The Shell Energy Scenarios have become quite famous and Shell’s Mark Harrison was on hand to offer the latest thinking on the future, if we manage to successfully navigate the present “discontinuities”.
Critical
Climate change driven policies, he suggested, were forcing us to confront “hard truths”, as it was certain that the energy market would rebound and a demand surge was inevitable.
We were, he said, entering a period of revolutionary transition, with Shell offering two alternative scenarios – ‘Scramble’, which posited a scramble for resources, short-term thinking against a belief that climate change was too big for us to handle, and ‘Blueprints’ – a more positive, constructive and long-term strategy in which actions outpaced events.
You take your choice. But shipping in all of this has “inescapable duties”, governments need aligned policies and cooperation is essential.
The next five years will be critical, Mr Harrison said, suggesting that “business as usual” is not a viable option.
How do we confront such awesome challenges?
Sveinung Oftedal of the Norwegian Ministry of the Environment is a regulator, spending a lot of time at the International Maritime Organization.
Pragmatically, he notes the different motivation of industry and government, shareholders and the public and made the observation that “the closer you are to the end consumer, the stronger the consumer pressure”.
Bunker suppliers, he noted “are far away”, although whether they are disenfranchised or empowered as a result, he left unanswered.
But Mr Oftedal was also quite positive about the consequences of regulation, which could stimulate technology and innovation, with technology providing spectacular results.
Engine failures
When the going gets tough, he clearly means, the tough get going and do innovative things which they might not otherwise have done, if the regulator had let them alone.
But you cannot ignore the uncertainties. Brian Wood-Thomas of the World Shipping Council pointed out the worrying certainty that a lot of regulation will necessarily be retrospective, with an awful lot depending on the successes of the engine manufacturers and the production of answers to the questions about availability of distillate fuel.
Joe Angelo of Intertanko worried about this too, but suggested that there was a compelling case for clean fuels, with concerns about scrubber residues, the plethora of tanks, possible engine failures with fuels and lubes being swapped around at critical moments.
Man’s inhumanity to propulsion machinery as a result of failure to test fuel might sum up a gruesome intervention by DNV Petroleum Services’ Dag Olaf Halle, who pointed out that the basic quality of residual fuels had barely changed for 50 years, but the amount of blending that was going on saw increasing quantities of cat fines, chemicals, wastes, phenols and alkalis creeping in to the products offered to unsuspecting ship operators.
Illustrating his talk with pictured of gunged-up machinery, abraded piston rings and various lumps of tortured steel, along with engines which resolutely refuse to start, and the only ignition taking place as fires, Mr Halle puts a good case for testing.
I would suggest that charterers need to see this presentation even more than owners, but I am known for my partiality in this respect.
“We need to make coal a friend,” was the rather alarming thought offered by Goris Vermeulen of Vergo Consultancy, although to put this into context he was speaking about different fuels and their availability over the medium term.
Prices will reflect supply and vulnerability of energy sources, the paucity of spare capacity, and he forecasts “constant price inflation” for the next 10 years, a time when we will experience more change than we have in the past fifty years.
But we are always subject to surprises and we don’t know what might be invented that will stand all these predictions on their respective heads.
For the past umpteen years we have been told that LNG is the fuel of the future, but it was interesting to hear Per Magne Einang of Marintek pointing to the highly-successful operation of LNG-fuelled ships on the Norwegian coast and Norwegian offshore and
the orders for the first ro-ro ships designed to take this concept international.
It is clean, green and while it may be a bit expensive, greater availability and better distribution networks could make a difference.
Robert Loseth of Rolls-Royce was on hand to provide the practical engineering answers.
The passage along “the road map to 2020” said Marine and Energy Consulting’s Robin Meech, would be bumpy and unpredictable.
Apart from the effects from world trade “having fallen off a cliff”, he suggested that the growing demand for sulphur reduction would see fuel that would be “difficult to make and difficult to use”.
Scrubbing
Look to more ships breaking down, and fuel quality issues pressing in. As for the money side, Mr Meech suggested that “finance will be the driving force” with huge increases in price for the progressively lower sulphur fuel.
In an otherwise bleak trading picture with the credit crunch lasting longer in shipping than in the landside, he sees, paradoxically, good prospects for large product tankers, which will have to lug all this fancy fuel around.
Scrubbing will be a “no-brainer”, despite the technical problems. Whatever else, said Mr Meech, in his sweeping forecast of a future very different to that of the past, “we will have to clean up our act”.
This was a thought-provoking meeting, from the methods of emission indexing of ships proposed by Ulstein’s Dr Per Olaf Brett, to the deep concerns raised by Stena’s Johan Roos, who put in a plea for the forgotten ferry sector, as all the “deep sea driven” emission changes came into play.
Unlike the deep sea sectors, which are able to pass on fuel cost prices to their customers, ferries will see their passengers staying at home, and the truckers staying in their cabs.
It is these practical consequences which need to be kept to the fore, as we move into this uncertain future. One detected a good deal of sympathy for Mr Roos, whose shipping company, he said, had long targeted energy efficiency, put in place no fewer than 130 projects to save fuel and stop wasting energy.
And now, with the operations of the ferries apparently ignored, and little account taken of the cost to society of the new sulphur rules, they may as well not have bothered, as they are probably going to have to close down half their routes in Europe.
Some honest doubts on the net benefits, he suggested, might be useful, instead of all this fierce environmental certainty.
You should globally warm to this view.