Marine Fuels Where are we? Where are we going? How will we get there? PETROLEUM SERVICES INC. Dr. Rudolph Kassinger rudolph.kassinger@dnvps.com Sulfur content vs. Viscosity Grade -- 2006 Visc, cSt @ 50oC World Singapore % Sulfur Rotterdam "60" 1.86 - - - - "180" 2.51 2.85 2.39 3.38 3.36 "380" 2.66 3.16 2.60 3.46 3.45 "500" 2.78 3.79 2.83 3.15* 3.11* Fujairah Houston *<1% samples Intertanko March 26th, 2007 Dr. Rudolph Kassinger Slide 2 2006 Fuel Quality by Sulfur Range 0.5% Sulfur Increments Intertanko March 26th, 2007 Dr. Rudolph Kassinger Slide 3 2006 Fuel Quality by Sulfur Range 0.5% Sulfur Increments Intertanko March 26th, 2007 Dr. Rudolph Kassinger Slide 4 Where Are We Going?* • From: “The Impact of Marine Emission Legislation on the Bunker Industry”, by Robin Meech, presented at IPIECA Workshops on Marpol Annex VI Singapore, Washington, Brussels, February 2006 RMeech@RobinMeech.com Intertanko March 26th, 2007 Dr. Rudolph Kassinger Slide 5 Residue Properties ATMOSPHERIC VACUUM Crude %S Dens % Dens cSt @ 99oC %S * % Dens cSt @ 99oC % S** ** Arab Hvy 2.85 898 53.7 981 96 4.35 (82) 23.1 1051 59e3 6.01 (59) Arab Lt 1.79 856 44.6 951 24 3.10 (77) 14.7 1022 1.8e3 4.34 (46) WTI 0.35 835 40.3 923 21 0.68 (78) 10.4 984 1.2e3 1.04 (39) Brent 0.26 831 36.8 840 12 0.58 (82) 5.6 986 7.7e2 1.07 (28) 6 0.29 (29) Ardjuna 0.10 Intertanko March 26th, 2007 837 34.5 918 16 0.18 Dr. Rudolph Kassinger (62) 6.2 1023 5.5e Slide 6 Blending to Low % Sulfur Specs % S hi - % S Spec % S hi - % S MGO wt. % MGO = Intertanko March 26th, 2007 Dr. Rudolph Kassinger Slide 7 Blending to a Low Sulfur Limit Examples, IFO to 1.5% S Blended Fuel Visc Function of MDO Visc @ 40oC 10 cSt 25 cSt IFO, 380 cSt %S MDO, 0.5% S (0.1%) wt. % MDO needed 3.5 66.7 19(58.8) (25) 39 (49) 2.0 33.3 67(26.3) (92) 107 (137) Examples, EXAMPLES Residue to 0.5% S 0.68 - 0.5 % MGO = = 26.5 wt. % 0.68 - 0 1.04 - 0.5 % MGO = = 51.9 wt. % 1.04 - 0 Intertanko March 26th, 2007 Dr. Rudolph Kassinger Slide 8 * From: Refining to Meet Low S Bunker Fuel, A. Madden, Exxon Mobil, Marpol Annex VI consultation Meeting, February 23, 2006 Intertanko March 26th, 2007 Dr. Rudolph Kassinger Slide 9 Tanker Case Study* from Well to Hull Total (Mbtu/trip or kg/trip) a Variable CD R0 LSD Total energy 19,901 18,013 22,624 Fossil fuel 19,850 17,981 22,562 Petroleum 18,267 17,145 20,539 CO2 (tons) 1,537 1,512 1,781 41,786 41,396 46,439 PM10 327 1,272 370 SOx 627 20,447 440 NOx SOURCE: Energy Use and Emissions from Marine Vessels: A Total Fuel Life Cycle Approach, J. J. Winebrake, J.J. Corbett and P.E. Meyer, Journal of the Air & Waste Management Association, Vol. 57, January 2007. Intertanko March 26th, 2007 Dr. Rudolph Kassinger Slide 10 Near Term Practical Considerations Intertanko March 26th, 2007 Dr. Rudolph Kassinger Slide 11 Changeover Calculations 4.5 MT/hr consumption. Full service and settling tanks at start of change-over Fuel Change Over 4.00 80.0 Change-over time to reach 1.5% S 3.50 70.0 3.00 2.50 Sulphur [%m/m] 4 LSFO %Sulfur 60.0 1.5 99 2.00 40.0 3 1.5 92 2 1.5 76 1.50 1.00 0.50 4 1 45 0.00 2 30.0 20.0 10.0 0.0 0 3 50.0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 1 Settling tank Sulphur [%] 1 Time [hr] Service Tank Sulphur [%] Settling tank Volume [m3] 38 27 Settling Tank Volume [m3] HFO % Sulfur Changeover Calculations 4.5 MT/hr consumption. 25% fill of service and empty settling tank at start of change-over Change-over time to reach 1.5% S (hours) HFO % Sulfur LSFO % Sulfur 4 1.5 22 3 1.5 20 2 1.5 16 4 1 8 3 1 7 2 1 5 Possible Quality Problems with Low Sulfur Residual Fuel Fuel Stability / Compatibility Ignition / Combustion Quality Higher Abrasives Content Unfamiliar Low Sulfur Cutter Stocks Greater Variability in Physical Properties Need for Lower TBN Cylinder Intertanko March 26th, 2007 Dr. Rudolph Kassinger Slide 14 Back-up Slides Section I Intertanko March 26th, 2007 Dr. Rudolph Kassinger Slide 15 Marine Exhaust Emissions Air 8.5 Kg Fuel Derived Emissions, g/Kw hr CO2 H2O SOX NOX Particulates Nitrogen Oxygen Fuel 175 g/Kw hr Engine (~ 7 MJ/Kw hr) 8675 g/Kw hr input MEMO: Fuel Composition %C 86.5 %H 10.4 %S 2.7 %N 0.4 Intertanko March 26th, 2007 555 163 9.5 2.2 N/A 6715 1230 8675 g/Kw hr output Ratio’s H/C 1.44 C/S 89 C/N 202 Ratio’s SO2/SO3 NO/NO2 Air/Fuel Dr. Rudolph Kassinger 95/5 10/90 49/1 Slide 16 How Does Marine Transport Fit into Global Emissions? Marine Residual Fuel Consumption _ ~ 3.5 M B/D* Estimated @ 200 Million MeT/yr = 5.3% (4.2 vol. %) of Global Oil Consumption 1.9% of Global Energy Global CO2 from marine Fuels MT/yr 645 Global CO2 from Distillate and Fuel Consumption MT/yr (3086 MT) 9845** *based ** on DNVPS average marine residual fuel density BP World Energy Outlook Intertanko March 26th, 2007 Dr. Rudolph Kassinger Slide 17 Global SOx (PM and Fuel N) A Different Story Global S from Marine Fuels 5.2 MT/yr Global S from Light and Medium distillate 5.2 MT/yr Global Fuel N from Marine 0.8 MT/yr Global Fuel N from Light / Medium Distillates ≤0.05 MT/yr Global Particulates not quantified = Assumes: Light Distillate 1500 ppm S Medium Distillate 2500 ppm S Intertanko March 26th, 2007 Dr. Rudolph Kassinger Slide 18 Table 6 - Container Ship Case Study Total (Mbtu/trip or kg/trip) a Variable CD R0 LSD Total energy 182,905 167,359 209,702 Fossil fuel 182,442 167,063 209,125 Petroleum 167,890 159,297 190,375 14,135 14,055 16,511 384,058 384,619 430,446 PM10 2,982 11,799 3,407 SOx 5,683 189,909 3,981 CO2 (tons) NOx SOURCE: Energy Use and Emissions from Marine Vessels: A Total Fuel Life Cycle Approach, J. J. Winebrake, J.J. Corbett and P.E. Meyer, Journal of the Air & Waste Management Association, Vol. 57, January 2007. Intertanko March 26th, 2007 Dr. Rudolph Kassinger Slide 19 Typical Fuel Products Flow Plan Intertanko March 26th, 2007 Dr. Rudolph Kassinger Slide 20 2 Year Average 216 181 98 148 Source: “BP World Energy Outlook” Intertanko March 26th, 2007 Dr. Rudolph Kassinger Slide 21 Air Emissions Regulations Scorecard In Place IMO Annex VI - 4.5% S Global Cap on ISO RM grade fuels - 1.5% S (6g SOx Kw hr) cap in SECA area - Engine NOx limits (17g/Kw hr for ≤ 130 rpm EU 1999/32 and 2005/33 - 1.5% S SECA Cap CARB - 0.5% S cap on MDO/ISO DMA requirement in 24 nm zone for auxiliary/diesel electric engines Various Local Area S caps Intertanko March 26th, 2007 Dr. Rudolph Kassinger Slide 22 Air Emissions Regulations Scorecard In the offing IMO - BLG Working Group report - Submission of revised Annex VI to MEPC EU - stated plan for further reduction on % S (0.5%/2g SOx/Kw hr) EPA - stated plan to apply for ECA designation - Cooperating with Canada and Mexico CARB/CA Other jurisdictions eyeing SECA designation Intertanko proposal to require distillate fuel Broad action likely on PM Intertanko March 26th, 2007 “no net increase in emissions” policy Dr. Rudolph Kassinger Slide 23