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Chemship owners face difficult choices
HARD TO PORT
CONFERENCE REPORT • IPTA’S ANNUAL CHEMICAL AND PRODUCT TANKER CONFERENCE ARRIVED AT A TIME WHEN OWNERS ARE HAVING TO FACE SOME DIFFICULT CHOICES
THE MARITIME SECTOR as a whole is facing up to some difficult changes, not least the requirement to reduce sulphur oxide emissions that enters into force next year. The chemical tanker sector is no exception to this – and it has plenty of its own problems as well.
The extent of the challenges facing the sector were well illustrated by the hefty turnout at the Chemical and Parcel Tanker Conference, held in early March in London. Organised by Navigate Events in collaboration with the International Parcel Tankers Association (IPTA), the two-day conference features a wide range of presentations on the hot topics, although the event’s chairman, Capt Ian Finlay, opened proceedings by stressing that the two most contentious issues are the global sulphur cap and the International Maritime Organisation’s (IMO) emerging strategies to deal with greenhouse gas (GHG) emissions.
Indeed, IMO secretary-general Kitack Lim made an early appearance to stress the importance of those two strands in IMO’s current work. As had been the case with the imposition of the sulphur cap – the so-called ‘IMO 2020’ provision – where various interests had assumed that the deadline would slip in the face of industry push-back, there will be no relaxation in IMO’s efforts to reduce the environmental impact of shipping activities. Indeed, IMO 2020 will be followed by IMO 2030 and IMO 2050 as the Organisation introduces a phased approach to GHG emissions reduction.
TO CAP IT ALL Anyone in the audience who needed more detail was provided with the full story by the first speaker, Kirsi Tikka from classification society ABS, who has been intimately involved in the development of industry’s approach to the new IMO rules. She described the IMO 2020 sulphur regulations as “probably the most significant rule change since the double hull requirements in the 1980s”, as they will impact not only the shipping industry and bunker suppliers but also refiners and, potentially, other fuel consumers.
Ms Tikka said ABS expects that the 0.5 per cent sulphur cap will probably be met mainly through the use of compliant fuels, predominantly marine gasoil (MGO) and 0.5 per cent low-sulphur fuel oil. Some shipowners have chosen to go for exhaust scrubbers, which will allow them to continue to burn non-compliant fuels, but the comparative economics of the two options are as yet unclear. She predicted, however, that the switch away from standard grades will involve as much as 3.0m bpd.
There are, though, some technical challenges to the use of 0.5 per cent sulphur fuel oil; there are concerns over the safety of the new grades, consistency in quality and availability, and compatibility with existing engines. Nor is there yet any standard for such fuels: the current ISO 8217 standard
does not address them, although there will be a publicly available specification to provide guidance on application of ISO 8217.
There is also still a lack of firm information on what types of fuel will be available where and Ms Tikka predicted a period of volatility in 2020. “We can expect changes in product flows, including crude oil, slow steaming to control the immediate price increase, and a number of vessels out of service for installation of scrubbers,” she said. Charterers may have some input in the process, expressing a preference for compliant (and thus efficient) ships or for those with scrubbers. In any event, there is likely to be a reduction in effective fleet capacity, and she expected to see accelerated scrapping.
Industry is starting to look beyond 2020 to the viability of LNG and other alternative fuels, but more of that later.
IMO ACTIVITY Ms Tikka looked at what the IMO’s Marine Environment Protection Committee (MEPC) has been up to recently. At its 73rd session in October 2018, MEPC adopted a resolution prohibiting the carriage of non-compliant fuel, along with guidelines for fuel oil suppliers and users. MEPC’s next session, taking place next month, is expected to adopt guidelines for consistent implementation.
The Sub-committee on Pollution Prevention and Response (PPR) also looked at consistent implementation at its sixth session in February 2019, and addressed some technical concerns over the impact of the sulphur cap on fuels and machinery. PPR 6 also drafted amendments to Annex VI of the International Convention for the Prevention of Pollution from Ships (Marpol), including definitions, fuel verification procedures and the installation of designated sampling points. It also produced draft guidelines on onboard sampling and the role of port state control in monitoring compliance. PPR 6 also worked on developing guidance to ship operators on what to do with any non-compliant fuel oil remaining onboard their vessels.
Ms Tikka stressed the importance to owners of developing ship implementation plans (SIPs); they should assess the risks of burning compliant fuels and how to mitigate them.
The International Bunker Industry Association (IBIA) has its own recommendations on ship implementation plans, as IBIA director Unni Einemo explained. The SIP is a non-mandatory form to help ships plan and demonstrate the steps that have been taken to make them compliant. There is an appendix covering the impact on machinery systems, which will help owners prepare plans for operating with a variety of fuel types with different handling characteristics, and another appendix on tank cleaning options.
Ms Einemo offered a simple mnemonic for shipowners: Prepare the hardware, Plan for the switch, and Practice fuel switching. Crews will need to be trained, especially if they have not already been involved in sailing in Emission Control Areas (ECAs).
There are, though, some unresolved issues, Ms Einemo said. Marpol Annex VI provides procedures for taking fuel samples for sulphur verification, but not for in-use samples. Furthermore, experience from ECAs has shown that the determination of non-compliance has been inconsistent and the current provisions leave room for different interpretations. There are also some outstanding issue for MEPC 74 to deal with, she said. Will ships have to de-bunker noncompliant fuel or can alternatives be agreed (and if they have to de-bunker, how will it be done)? What happens if the bunker delivery note says the fuel is compliant but the ship’s own tests suggest otherwise?
TECHNICAL DIFFICULTIES It is also apparent that 0.5 per cent sulphur fuel oil will be blended from different components, including distillates and lowsulphur residual fuels, and that each supplier will have its own approach. This will raise some interesting safety issues, particularly surrounding the measurement of flashpoint.
Claus Vogel of MAN Energy Solutions looked at what the 2020 sulphur cap means for marine engines. Those that run lowsulphur fuel oil will need new cermet piston rings and engineers will need to look at lube oil performance. He predicted that scrubber uptake will be slow due to the upfront investment needed and a lack of confidence in future price spreads. As a result, MAN is forecasting that only 13 per cent of the fleet will be equipped with scrubbers by 2035; Vogel also said he believes that LPG will start getting attention as an alternative fuel.
An operator’s viewpoint was provided by Michael Eskling, managing director of »
DECK EQUIPMENT WILL NEED TO BE ADAPTED TO ALLOW
THE REQUIREMENTS OF IMO 2020 TO BE MET, PARTICULARLY
global chartering at Uni-Tankers, who said there is still plenty of uncertainty about the future – crew training procedures, bunker segregation, costs – even though the future is only ten months away. “It’s a whole new world, especially for owners,” he said.
He advised those worrying about IMO 2020 to make a plan, educate their crews and trial new procedures, and to be safe. “Don’t switch fuels in busy trade lanes,” he advised. “Start now!” he said, although it’s probably already too late to be making a start.
Eskling advised owners to talk to their bunker suppliers and ensure that they know where to find the fuels they need. It will not be good if they have to rely on MGO for a compliant fuel. He also said he expects compliant fuel to be widely available from the third quarter this year; he advised owners to start using it as soon as possible, so they have time to learn how to deal with it.
DECARBONISING SHIPPING If industry is beginning to get to grips with IMO 2020, it will not be long before they have a whole other world of worry. IMO’s approach to GHG emissions reduction will impose new restrictions as from 2030, with CO2 emissions needing to fall by 40 per cent from their 2008 level. By 2050 that figure will be 70 per cent, something that will be “quite a challenge”, according to Sveinung Oftedal from the Norwegian Ministry of the Environment, who is also the chair of PPR. “Are we doing this just to make life difficult for industry?” he asked. “No – it’s to make life possible.”
Agreement of IMO’s initial strategy on GHG emissions was reached in April 2018 at MEPC 72; in addition to the CO2 reduction targets, that meeting agreed to improve the energy efficiency of ships and the review of the Energy Efficiency Design Index (EEDI) – something that has been particularly problematical for chemical tankers – is an ongoing project.
To meet the 2030 and 2050 targets, it is clear that technical innovations and alternative fuel sources will be crucial. IMO has already sketched out a number of mandatory and voluntary measures for the short and medium term and the MEPC meeting in May 2019 is expected to consider proposals from member states and industry organisations. The plan is for the strategy to be revised in 2023 on the basis of discussions up to then.
Whatever happens, the 2030 and 2050 deadlines will involve a lot more work than
those associated with sulphur oxide emissions reduction; indeed, Oftedal said, some of the necessary technologies are still ten or more years away from development.
Some of those technological issues were addressed by Edwin Pang, senior naval architect at Leadship and the Royal Institute of Naval Architects’ (RINA) representative at IMO. Industry will be unable to meet the CO2 targets without alternative fuels, he stressed. MEPC 72 said that the carbon intensity of shipping should decline through the implementation of further phases of the EEDI for new ships, but Pang showed how various viable energy efficiency improvements could be applied without having an effect on a ship’s EEDI, suggesting that tweaks to the EEDI are not the right approach.
More detail was put on that by Jasper Faber of CE Delft, who ran through some of the measures that will have to be implemented. In the short term – up to 2023 – the initial IMO strategy envisages improvements to operational energy efficiency, along with the development of technologies to use zerocarbon fuels. In the medium term – from 2023 to 2030 – innovation and the use of alternative fuels will begin. After 2030, the strategy will aim to make the transition to zero-carbon fuels.
“Only measures that impact operational efficiency can ensure that the 2030 Level of Ambition is met,” Faber said. In the absence of low-carbon fuels, only speed reduction can achieve that goal, possibly combined with technical improvements such as energyefficient design and devices. Indeed, MEPC’s meeting in May will discuss a proposal from the Clean Shipping Coalition to impose a limit on average vessel speeds. Another paper from France is proposing a speed limit together with a maximum annual fuel consumption limit per ship from 2020.
In the medium to long term, attention will have to move to transitioning from fossil fuels to zero-carbon fuels such as hydrogen, ammonia, methanol, biofuels or synthetic fuels derived from waste CO2. There are a number of policy options, which may involve straightforward regulation or the development of financial mechanisms to prompt the use of alternative fuels.
PANEL BEATERS The issue for shipowners is that, if such measures are going to start appearing from 2030 onwards, they will affect ships being ordered or built today. New ships will need different fuel systems, and different arrangements, but the future is still uncertain. Will there be a dominant alternative fuel and, if so, which one?
Oftedal and Faber were joined in a panel discussion by two representatives of shipowners, Mark Cameron, COO of Ardmore Shipping, and Manish Jain, operations director of Womar. Cameron expressed concern about slow steaming, saying that minimum power needs to be available, even if it not used during normal operations. “Slow steaming is ok, but limiting available power is unsafe,” he said. Jain was concerned about the need for owners to invest in technology when they do not know if it will be allowed by IMO. He thought that it would be useful if IMO could generate a ‘white list’ of power technologies.
Oftedal advised owners to leave space in their new ship designs to accommodate new engines. These might well be larger than existing power units, as the energy density of alternative fuels will be lower. “Owners know this is coming and need to take account,” he said. Cameron felt it is a brave owner that is ordering ships now to trade in a post-2030 world. Indeed, he said, some owners have told him they will not be ordering new ships with traditional engines any more.
After the lunch break, three presentations looked at some practical examples of using technology to improve sustainability in shipping. Brian Madsen, head of machinery and systems at Knud E Hansen naval architects, pointed out that many ships are not operated at their design speed. After all, shipyards and designers are not to know what the market will require of a new ship. Barry Kidd of International Paint and Ole Jorgen Tveit of Jotun Paints both gave some illustrations of how hull coatings can improve vessel performance.
MORE FROM IMO Anyone expecting some respite from the onslaught of IMO regulations was to be disappointed, as IPTA’s Janet Strode came to the podium to deliver her regular update of changes specific to the chemical tanker sector. There are, for instance, a number of significant changes in the pipeline affecting the International Code for the Construction and Equipment of Ships Carrying Dangerous Chemicals in Bulk (IBC Code) that will enter into force on 1 January 2021.
A number of products will move to Type 1, with some shifting between Type 2 and Type 3 or vice versa. There was nothing unexpected about this, Strode said. However, more significantly, several products will now be subject to the toxic vapour detection requirements, which bring with them specifications for the location of exhaust openings, vapour return lines, pressure/vacuum valves and stowage restrictions (specifically, not adjacent to fuel tanks). The list of products involved is long and includes some high-volume substances, including various alcohols, glycols and acids, as well as styrene, »
SLOW STEAMING LOOKS LIKE BEING THE
toluene, tall oil, ethylbenzene, vinyl acetate, some olefin mixtures, and others.
The methanol industry has expressed concern at these changes, particularly the stowage restrictions. Methanol is usually moved in dedicated tankers and the inability to carry cargo adjacent to fuel tanks will result in a reduction in overall carrying capacity. This seems to run counter to IMO’s efforts in terms of sustainability. Also, the classification of methanol as toxic – something that has proved contentious also in other modes of transport – runs into conflict with the International Code of Safety for Ship Using Gases or Other Low-flashpoint Fuels (IGF Code). IMO’s Working Group on the Evaluation of Safety and Pollution Hazards (ESPH) insists on the toxic classification of methanol but has agreed not to include the stowage restrictions in the special requirements for this product.
Recently adopted amendments to Marpol Annex II focus largely on issues surrounding the carriage of waxy products, following several incidents in which waxy residues washed up on beaches in northern Europe. There was a lot of discussion on this subject, Strode said, not least since the problem does not appear to be a feature elsewhere in the world. It was finally agreed to adopt a prewash requirement for 44 products, mostly vegoils and waxes, as from January 2021. The pre-wash is to be carried out at the port of discharge. If the problem persists, around 80 more cargoes have been identified as further candidates, including some alcohols, phthalates, polyolefins and tall oil.
IMO has also clarified that the new breed of energy-rich fuels derived from biological feedstocks and which comprise only individual hydrocarbon chemicals are to be carried under Marpol Annex I. ESPH will work on a full assessment of these products, which will be listed in a new Annex 12 to MEPC.2/Circ. Strode stressed that this change does not affect fatty acid methyl ester (FAME) biofuels.
GET OUT OF THE TANK There followed an interesting session looking at confined space entry and tank cleaning. Lance Nunez of Dow pointed out the huge amount of time surveyors spend inspecting tanks, something that is already a highrisk activity and getting riskier as purging becomes more common. Dow has been looking at the tools that are available to reduce or remove the need for confined space entry on the chemical tankers it uses.
For instance, Dow has begun using wash water analysis as an alternative to the wall wash test. This involves taking samples from inlets and manifolds during tank washing to look for evidence of prior cargo; when the wash water is clean, the tank is verified clean. So far, this process works best with stainless steel cargo tanks and not with all cargoes. One benefit is that the approach is strictly data-driven, so is objective and repeatable.
Dow is gradually expanding its use of wash water analysis, which is so far used on around 7 per cent of bulk shipments; the company is, Nunez said, beginning to get buy-in from its customers.
Further insight into the tank washing process was provided by Guy Johnson of L&I Maritime, who said that ships generally over-clean their cargo tanks in order to avoid failing the inspection. The wall wash test is strict but it is subjective – it only takes a random sample from the tank wall. Indeed, Johnson said, wall wash standards are now far stricter than cargo quality standards.
Johnson provided more technical detail on the wash water analysis test that is being used by Dow, applying UV spectrometry to analysis water quality. This approach, Johnson said, gives a more comprehensive analysis of the cleanliness of the tank as well as the lines – and it is the lines that are the source of most cargo contamination, he said.
Given all the other problems facing chemical tanker operators on the regulatory front, the potential to save time – and therefore money – by removing the need for surveyors to enter tanks must come as an unexpected boon.
HCB will follow up next month with a full report from the PPR6 meeting. Ongoing information relating to chemical tankers can be found on the IPTA website, www.ipta.org.uk. HCB
