Technical challenges for chemships

LET’S GET READY TO GRUMBLE

PREVIEW • THE PARCEL TANKER BUSINESS IS FACING A NUMBER OF DIFFICULT REGULATORY CHALLENGES AT A TIME WHEN THE MARKET REMAINS SUBDUED

THE 10TH CHEMICAL and Product Tanker Conference returns to London again this year, after a break in 2018. The conference, organised by Navigate Events on behalf of the International Parcel Tanker Association (IPTA), is the only meeting dedicated solely to the parcel tanker business and, as such, always reflects the important issues of the day for tanker operators and their customers.

Perhaps not surprisingly, then, the agenda for this year’s conference, which takes place in the middle of London’s maritime industry at the Grange City Hotel on 5 and 6 March, leans heavily towards environmental issues. This reflects the focus being placed by the International Maritime Organisation (IMO) on reducing greenhouse gas (GHG) emissions from shipping activities, fuel and engine efficiency, and the reduction in sulphur emissions through the imposition of a 0.5 per cent limit on sulphur in fuel oil as from 1 January 2020 – the so-called ‘IMO 2020’ provision.

As ever, IPTA’s general manager, Janet Strode, will provide an update on the latest round of regulatory changes specific to parcel tankers, particularly the impending changes to Annex II of the International Convention for the Prevention of Pollution from Ships (Marpol) and related measures. That presentation will be supported by some illustrations of how techniques and services can be applied to help tanker operators meet the new requirements.

This year’s conference will also have a relatively short session on freight markets. Among the presentations will be one from regular speaker Hugo Finlay, formerly managing director of Essberger Tankers but now a consultant for Drewry. Looking at the freight markets, Matthew Stone of Prima Markets will the discuss the interesting potential for chemical tankers to enjoy a boost in demand from the need to move renewable diesel and other low-carbon fuels and feedstocks.

ARE YOU EFFICIENT? The IMO-generated focus on environmental matters does not impact the parcel tanker sector – or even the broader tanker industry – specifically. Indeed, as IPTA has pointed out before, some of the measures put in place in recent years have been designed with containerships in mind and the Association has had to lobby IMO to get it to take the needs of parcel tanker operators into account.

A good example of this is the Energy Efficiency Design Index (EEDI); Annex VI of Marpol requires that the attained EEDI of new ships must not exceed the set EEDI for their type and size. The required EEDI is determined according to a reference

line value representing the average EEDI of ships delivered between 1999 and 2009, with reduction factors applied in progressive phases. The current Phase 1 requires a 10 per cent reduction compared to the reference line; Phase 2 begins on January 2020, when the reduction factor falls to 20 per cent.

It has been suggested that since many ships already meet Phase 2 or 3 requirements, this indicates that the requirements are not stringent enough. Proposals have therefore been made to review and possibly bring forward the date of implementation of Phase 3 requirements, and to introduce a Phase 4 that would tighten up the requirements even further.

This is certainly one area where IPTA feels that the requirements have been established on the basis of the container shipping sector. Together with other associations, it pointed out to IMO’s Marine Environment Protection Committee (MEPC) that, in the years up to 2009, tankers and bulk carriers were already designed for moderate service speeds and were provided with relatively low installed power relative to ship size. They therefore have limited potential to improve EEDI values by reducing installed power without risking the ships lacking sufficient propulsion and steering abilities to maintain manoeuvrability in adverse conditions.

While early implementation of Phase 3 would be feasible for some ship types and should be implemented, the Committee should avoid introducing impractical requirements for other ship types, and discussions of a possible Phase 4 should take into account the anticipated availability of alternative fuels, since this would be the only way for certain ship types to be able to meet the requirements.

SHOW US THE FIGURES IPTA is also concerned that there is a lack of verified data concerning EEDI values for new ships. Reporting of attained EEDI values is voluntary and, of the 850 tankers so far delivered during Phase 1, EEDI values have been declared for only 140; it is worse in the bulk carrier sector, where there are EEDI values for 62 of the 1,100 newbuildings. “This lack of verified data is a serious problem, meaning that analysts and decision-makers must calculate estimated index values that are subject to substantial uncertainty,” IPTA says. “This can lead to conclusions that may not be consistent with those that would be arrived at by the use of a complete data set and the potential for risky decisions to be made.”

IPTA and other associations have therefore proposed that the reporting of attained EEDI values by flag states should be made mandatory. The data that would be collected would greatly assist when it comes to considering a potential Phase 4.

The most common way for new ships to comply with EEDI requirements is by reducing installed power, but concerns have already been expressed about ships not having enough power to manoeuvre in certain conditions. MEPC has been asked to consider that, instead of reducing installed power, ships should be able to limit shaft power in order to comply with EEDI, but be able to ‘unlimit’ in circumstances where extra power is required for the safety of the ship, for instance in adverse weather.

Interim guidelines were developed in 2013 as a direct consequence of the introduction of the EEDI and remain the only regulatory instrument addressing the important safety issue of ensuring that ships have enough power to manoeuvre safely in adverse conditions. Work is underway to finalise this guidance but the establishment of adequate reference weather conditions for the determination of the minimum required propulsion power is a complex issue and finalisation is taking longer than anticipated.

FUELLING SPECULATION The IMO 2020 deadline is also not a specific issue for the chemical tanker sector but operators will have to deal with it. In fact, according to recent research by Drewry Maritime Research, they have some way to go, and with less than a year left.

Drewry says that only 21 vessels in the chemical tanker fleet have had scrubbers installed, with another 76 due to have retrofits in place by the end of the year; that leaves 98 per cent of the fleet not covered. While some more may be retrofitted over the course of 2019, there is inevitably going to be competition for yard space and supplies of suitable equipment. Those without scrubbers will, after 1 January 2020, have to burn more expensive low-sulphur fuel oil. »

PARCEL TANKERS ARE NOT ALONE IN FACING NEW

There is an alternative: to switch to other fuels such as LNG, LPG or methanol. While some newbuildings have been designed to be able to do that, the cost of retrofitting is high. Again, Drewry says that only 18 chemical tankers – all coated units and mostly in the 40,000 to 55,000 dwt segment – have dual-fuel engines capable of running on LNG. There are also a handful of chemical tankers capable of burning methanol, although these are mostly dedicated methanol carriers.

For most chemical tanker operators, then, it is looking inevitable that their fuel costs will increase significantly. Given current market dynamics, Drewry thinks it unlikely that they will be able to fully pass on those costs, suggesting that profitability will continue to be squeezed in 2020, just at the point when operators were optimistic that vessel supply and demand would be coming back into balance and support an improvement in rates. BUNKER MENTALITY While the maritime industry understands IMO’s action on sulphur emissions, it does seem that the use of different fuels will generate technical problems that have not really been allowed for in the IMO plan. For instance, MEPC has recently been working to draw up an implementation plan to assist shipowners in planning for the changeover. This will cover considerations such as risk assessments, the need for modifications to the fuel system, the capability to segregate fuels of different specification, the procurement of compliant fuel, documentation and reporting. In addition, fuel tanks will need to be cleaned before 0.5 per cent sulphur fuel is bunkered for the first time.

It is also far from clear whether compliant fuel will be available at all bunkering ports on 1 January 2020. IMO has accepted that this is a possibility and is working on a ‘Fuel Oil Non-Availability Report’ (FONAR) form. This will not provide an exemption and it seems likely that ship operators will be expected to bunker whatever low-sulphur fuel is available. This could mean dealing with differing viscosities and sulphur contents, which may require different lube oils, heating or other onboard handling.

If no compliant fuel can be taken onboard and a vessel has to use non-compliant fuel, what then happens when the vessel arrives at a port where it can bunker compliant fuel? Is any remaining non-compliant fuel to be de-bunkered? Will the bunker tanks have to be cleaned again? Then there is the issue of providing a sampling point so that Port State Control inspectors can take samples of in-use fuel; MEPC has agreed draft amendments that will require existing ships to have a sampling point fitted no later than the first renewal survey after the entry-intoforce of the amendments, which is expected to be in 2021. »

A number of potential safety issues have been identified in relation to very low sulphur fuels. These include flashpoint, cold flow properties, Cat Fines, stability and compatibility of the various blended low sulphur fuels that are coming into the market. With regard to this last point, it was pointed out that many suppliers are reluctant even to confirm that supplies of the same product produced in different parts of the world would be compatible. Testing kits that are currently available are not necessarily suitable for testing the new products, although ISO has advised that, even if they are not working properly they would be more likely to produce a false negative than a false positive, thus maintaining a safety margin.

IMO’s Maritime Safety Committee will be looking at some of these safety issues and industry associations are currently preparing guidance to highlight the potential risks and recommend mitigation measures.

THE COMMON CODE An issue of more specific relevance to the chemical tanker industry concerns the latest round of amendments to the International Code for the Construction and Equipment of Ships Carrying Dangerous Chemicals in Bulk (IBC Code). At its meeting in April 2018, MEPC adopted a new model form of the International Certificate of Fitness for the Carriage of Dangerous Chemicals in Bulk. The adopted revision focuses on the loading and stability information booklet and introduces a new paragraph 7 containing directions for the conditions under which ships must be loaded.

IMO’s Working Group on the Evaluation of Safety and Pollution Hazards (ESPH) has been looking at renewable and ‘energyrich’ fuels, the latter being a sub-group of renewable fuels derived from plant-based material but by a different process. They are comprised only of constituents that can be expressed as individual hydrocarbon chemicals. ESPH has identified a list of seven such alkanes, which will appear in the new Annex 12 of MEPC.2/Circ; they will be removed from Annex II (biofuels) and List 1, meaning they will no longer be able to be carried as Annex II products but must be shipped under Annex I.

ESPH has also agreed that the entries for paraffins in Chapter 17 of the IBC Code should be amended, with four new entries: • n-Alkanes (C10-C20) • Paraffin wax, highly refined • Paraffin wax, semi-refined • Hydrocarbon wax.

The first two will be subject to the new Category Y prewash requirements, while the second two will be recategorized to pollution category X.

IPTA says that, strictly speaking, the current IBC Code names and requirements will remain until a new edition of the IBC Code is issued in 2020. However, some shippers or operators may wish to apply the revised carriage requirements earlier than that. Indeed, IPTA says, that is already happening, with the consequence that some operators are having difficulty finding reception facilities at discharge ports. There is also a question as to who is liable for arranging and paying for a prewash when it is not yet mandatory.

This issue has been further complicated by the policy adopted by the Netherlands authorities in relation to the discharge of paraffin wax in Rotterdam and Moerdijk. An agreement has been reached with the principal Dutch shipper of paraffin wax to compensate them for the costs of a prewash following discharge of paraffin wax, providing the prewash is carried out according to a methodology prescribed by them that is more rigorous than that set out in Marpol Annex II. This agreement is intended to cover the period until the changes come into force and will then expire.

It is unclear, IPTA says, whether this means the Netherlands is formally applying the revised names and categories for waxes in advance of the entry-into-force date. If it is, then the compensation agreement will not apply to the Category Y waxes and there will be cost implications. HCB

This is just one of a number of complex and fluid provisions that affects all chemical tanker operators. Those who attend the Chemical and Product Tanker Conference next month will come away with the latest information. Full details about the event can be found at https:// cpt-conference.com.