Not all crude oil is created equal, as it ranges from light-sweet crude to heavy crude oil; with some of the heaviest stuff coming from Cold Lake Alberta.
In the "good old days" oil was refined in topping refineries. This was (as I understand it) basically atmospheric refining, where light products were boiled off. With light crude the refiner got about 75% light product with 25% residual oil. With the shift to heavier crude oil refiners added complexity to the refining process, squeezing more light product from the feedstock. Valero gives a good overview of this evolution on their Quebec City refinery website. What is evident from their comments is that they are configuring this refinery for heavier crude oil.
Industry consensus is that the supply of light crude is shrinking. The peak oil theory is proposed by some and opposed by others. However, the continuing drive towards cleaner refined product requires increased complexity of the refining process, which eventually configures the refinery to be able to use heavy feedstock, including residual fuel. Valero's Corpus Christie refinery is such a refinery, capable of refining the heaviest (and residual) oils into light product, asphalt and petroleum coke.
The way I read it is that with the shift towards heavier feedstock the refiner needs to increase his ability to squeeze more light product from the heavier oil; he needs to increase the complexity of the refinery. Then he needs to remove more pollutants from the refined product to meet the tightening fuel quality standards; again increasing the complexity of the refining process. On top of that demand for refined product keeps rising, which the refiner needs to satisfy with increased yield from existing refineries. So that eventually he has upgraded from the Quebec refinery in 1981 to the Corpus Christie refinery of 2010, cutting residual oil from something like 25 - 30% down to 0%., leaving no base stock for marine fuel blending. While this Valero example shows the extreme case, the continuing shift towards heavier residuals globally confirms the theory. Let's face it, refiners will supply premium products longer than furnishing residuals for a discounted marine product, which means heavy fuel will disappear before we run out of gasoline and diesel.
Tuesday, April 19, 2011
Thursday, April 7, 2011
MARPOL matters
IMO posted the biannual agenda of the DE Sub-Committee for 2012-2013. For the DE-56 meeting a total of 23 agenda items are listed, of which item 19 caught my eye.
Under 19 the "Revision of the Revised guidelines on implementation of effluent standards and performance tests for sewage treatment plants (resolution MEPC.159(55))" will be discussed. Target completion date for this task is 2012, suggesting that revised sewage regulations are in the works.
My friend, Dennis Bryant posted on his blog today the following from the USCG:
"The US Coast Guard issued a notice announcing that, in accordance with IMO Res. MEPC.191(60), the restrictions on discharges from ships in the Wider Caribbean Region (WCR) special area (SA), as specified in MARPOL Annex V, Regulation 5, will come into effect on May 1, 2011. The WCR includes the Gulf of Mexico. Once the restrictions come into effect, no person may discharge, within the SA, garbage from a ship except (under limited conditions) food wastes. 76 Fed. Reg. 19380 (April 7, 2011).
Under 19 the "Revision of the Revised guidelines on implementation of effluent standards and performance tests for sewage treatment plants (resolution MEPC.159(55))" will be discussed. Target completion date for this task is 2012, suggesting that revised sewage regulations are in the works.
My friend, Dennis Bryant posted on his blog today the following from the USCG:
"The US Coast Guard issued a notice announcing that, in accordance with IMO Res. MEPC.191(60), the restrictions on discharges from ships in the Wider Caribbean Region (WCR) special area (SA), as specified in MARPOL Annex V, Regulation 5, will come into effect on May 1, 2011. The WCR includes the Gulf of Mexico. Once the restrictions come into effect, no person may discharge, within the SA, garbage from a ship except (under limited conditions) food wastes. 76 Fed. Reg. 19380 (April 7, 2011).
Wednesday, March 30, 2011
Marine Fuel - 2
Carrying on from last weeks comments on declining residual oil quantities.
The Globe and Mail published recently an article about the fact that heavy oil is gaining weight in energy markets, based on comments at the World Heavy Oil Congress in Edmonton, earlier this month. According to the experts, by 2030 heavy oil will make up 16 - 20% of the world total supply of oil, up from below 6% today.
Refineries, to process heavier oil, require to upgrade the refining process in order to get adequate quantities of refined product from the feedstock. The upgrade of the refining process results in lower quantities of residuals that are not suitable as base for marine fuel blending. They are too heavy and S-content is way too high to be used as base for IFO blending. As a rule of thumb, the S-content in the residual is typically more than twice the S-content of the feedstock.
The EIA charts show how residual declined, without a major shift towards heavier feedstock. Looking forward we'll need to factor in the increase in heavier feedstock as well as increased synthetic crude oil quantities.
The Globe and Mail published recently an article about the fact that heavy oil is gaining weight in energy markets, based on comments at the World Heavy Oil Congress in Edmonton, earlier this month. According to the experts, by 2030 heavy oil will make up 16 - 20% of the world total supply of oil, up from below 6% today.
Refineries, to process heavier oil, require to upgrade the refining process in order to get adequate quantities of refined product from the feedstock. The upgrade of the refining process results in lower quantities of residuals that are not suitable as base for marine fuel blending. They are too heavy and S-content is way too high to be used as base for IFO blending. As a rule of thumb, the S-content in the residual is typically more than twice the S-content of the feedstock.
The EIA charts show how residual declined, without a major shift towards heavier feedstock. Looking forward we'll need to factor in the increase in heavier feedstock as well as increased synthetic crude oil quantities.
Wednesday, March 23, 2011
Marine Fuel - 1
From time to time I look at the EIA website, mostly out of curiosity. The US Energy Information Agency publishes the US statistics on oil related matters every Wednesday.
The EIA's weekly supply estimates have in their right columns the links to graphs, showing historic trends to 2011 for specific products and groups. The ones I find of interest are the trends for crude oil refinery inputs, gasoline, distillate fuels and residual fuels. What these graphs indicate to me is that refinery yields have increased over the years. US refiners are producing more refined product from lower feedstock quantities, thereby leaving less residual oil for marine fuel blending. The EIA figures suggest that US refineries produce a lower percentage of residual oil than others.
If we take the US refining trend towards higher refinery yields as indicative for how global refining evolves, then it is reasonable to project that somewhere down the line there won't be enough residual fuel to satisfy the demand for industrial and marine fuel.
The EIA's weekly supply estimates have in their right columns the links to graphs, showing historic trends to 2011 for specific products and groups. The ones I find of interest are the trends for crude oil refinery inputs, gasoline, distillate fuels and residual fuels. What these graphs indicate to me is that refinery yields have increased over the years. US refiners are producing more refined product from lower feedstock quantities, thereby leaving less residual oil for marine fuel blending. The EIA figures suggest that US refineries produce a lower percentage of residual oil than others.
If we take the US refining trend towards higher refinery yields as indicative for how global refining evolves, then it is reasonable to project that somewhere down the line there won't be enough residual fuel to satisfy the demand for industrial and marine fuel.
Wednesday, November 17, 2010
Bilge Alarm Readings
The test procedures for the 15ppm Bilge Alarm are described in MEPC 49 Test Specifications. Basically, the accuracy of the Bilge Alarm is determined by comparing its readings against a known flow of Test Fluid injected into a known flow of water. The grab samples are analyzed in a laboratory to Standard ISO9377-2:2000, using solvent extraction and gas chromatography for the determination of the hydrocarbon oil index in water.
The methodology is clear and the oil content for the test effluent is known. Therefore, in the approval process, the Bilge Alarm is demonstrated under controlled, predictable and repeatable conditions. To get the Bilge Alarm approved, the instrument needs to correctly display the optical effect created by the known oily water mixture, as the equivalent parts per million of oil content. In other words, the instrument is calibrated for this purpose before the approval test, then shown to read oil content correctly.
As we all know, bilge water aboard a ship, or more accurately the effluent from the Bilge Separator is not the same mixture of oil and water as the one in the approval process. In the approval process the IMO Test Fluid "C" is used, which is a 1kg mixture of water, containing 25g of heavy fuel RMG 35, plus 25g of light fuel DMA , plus 0.5g surfactant and 1.7g of iron oxides. By comparison,the effluent coming out of the Bilge Separator contains typically more than 2 types of oils as it contains heavy fuel, light fuel lube oils as well as other oils; it contains probably more than 0.5g of surfactants as cleaners and detergents are present, from the cleaning of surfaces and as part of modern lube oils as well; solids content of the effluent most likely is quite different too. Then of course there is the color of the bilge water, also different than the test liquid. All this to say that the Bilge Alarm does not compare apples with apples; it is tested with "apples" but then required to read "oranges" aboard a ship.
The Bilge Alarm is approved by IMO for on-line, continuous measuring, using an optical value as a reference for oil content. The measuring system is at best an approximation, rather than a scientific measurement of hydrocarbon content in water. Port State Control procedures confirm that compliant bilge water effluent is determined by a calibrated Bilge Alarm and not a laboratory analysis.
Because the Bilge Alarm is calibrated to a specific oily water mixture, there will be a difference between the actual hydrocarbon content of compliant real life effluent and the test liquid. How big the difference will be is dependent on the complexity of the bilge water the Bilge Separator has to treat.
The methodology is clear and the oil content for the test effluent is known. Therefore, in the approval process, the Bilge Alarm is demonstrated under controlled, predictable and repeatable conditions. To get the Bilge Alarm approved, the instrument needs to correctly display the optical effect created by the known oily water mixture, as the equivalent parts per million of oil content. In other words, the instrument is calibrated for this purpose before the approval test, then shown to read oil content correctly.
As we all know, bilge water aboard a ship, or more accurately the effluent from the Bilge Separator is not the same mixture of oil and water as the one in the approval process. In the approval process the IMO Test Fluid "C" is used, which is a 1kg mixture of water, containing 25g of heavy fuel RMG 35, plus 25g of light fuel DMA , plus 0.5g surfactant and 1.7g of iron oxides. By comparison,the effluent coming out of the Bilge Separator contains typically more than 2 types of oils as it contains heavy fuel, light fuel lube oils as well as other oils; it contains probably more than 0.5g of surfactants as cleaners and detergents are present, from the cleaning of surfaces and as part of modern lube oils as well; solids content of the effluent most likely is quite different too. Then of course there is the color of the bilge water, also different than the test liquid. All this to say that the Bilge Alarm does not compare apples with apples; it is tested with "apples" but then required to read "oranges" aboard a ship.
The Bilge Alarm is approved by IMO for on-line, continuous measuring, using an optical value as a reference for oil content. The measuring system is at best an approximation, rather than a scientific measurement of hydrocarbon content in water. Port State Control procedures confirm that compliant bilge water effluent is determined by a calibrated Bilge Alarm and not a laboratory analysis.
Because the Bilge Alarm is calibrated to a specific oily water mixture, there will be a difference between the actual hydrocarbon content of compliant real life effluent and the test liquid. How big the difference will be is dependent on the complexity of the bilge water the Bilge Separator has to treat.
Thursday, October 21, 2010
World Oil Demand in 2011
In the October 2010 Monthly Oil Market Report OPEC provides data on the current global oil situation.
Total world oil demand is projected to grow by 1.05 million barrels per day, or 1.22%. Demand is driven primarily by growth in the developing economies, where demand is expected to grow by 2.05%, whereas demand in the OECD will only grow by 0.13%. Primary drivers for the growth in oil demand are the developing countries, lead by China and India.
What may be of interest to marine is how OPEC sees residual oil shrinking. According to to the forecast, the primary drivers for growth in oil demand are gasoline (+19%), other products (+19%) and gas/diesel oil (+26%), while residual fuel is projected to shrink by 10% in 2011.
What seems evident is that refined product demand growth impacts on residual fuel availability. This trend seems to have started with the oil crisis in the mid 70's and is now accelerating with the tremendous growth in the developing economies. Additional pressure on residual oil comes from slow growth on the oil supply side, which forces refiners to increase yield. In North America, the increased reliance on feedstock from the oil sands, shrinks residual oil supply from local sources.
Declining residual supply suggests deteriorating residual fuel quality, which is diagonally opposite to the tightening fuel quality requirements of IMO. This raises the question, by when will heavy fuel oil no longer meet the required fuel quality standards?
Total world oil demand is projected to grow by 1.05 million barrels per day, or 1.22%. Demand is driven primarily by growth in the developing economies, where demand is expected to grow by 2.05%, whereas demand in the OECD will only grow by 0.13%. Primary drivers for the growth in oil demand are the developing countries, lead by China and India.
What may be of interest to marine is how OPEC sees residual oil shrinking. According to to the forecast, the primary drivers for growth in oil demand are gasoline (+19%), other products (+19%) and gas/diesel oil (+26%), while residual fuel is projected to shrink by 10% in 2011.
What seems evident is that refined product demand growth impacts on residual fuel availability. This trend seems to have started with the oil crisis in the mid 70's and is now accelerating with the tremendous growth in the developing economies. Additional pressure on residual oil comes from slow growth on the oil supply side, which forces refiners to increase yield. In North America, the increased reliance on feedstock from the oil sands, shrinks residual oil supply from local sources.
Declining residual supply suggests deteriorating residual fuel quality, which is diagonally opposite to the tightening fuel quality requirements of IMO. This raises the question, by when will heavy fuel oil no longer meet the required fuel quality standards?
Wednesday, September 22, 2010
What can we learn from the Irika sentencing
The US DoJ posted their news release on the Sentencing of Irika Shipping S.A.
When the MV IORANA arrived in Baltimore in January 2010, crew members alerted the USCG port state control officer of illegal dumping of oil and garbage at sea. Granted, this was a blatant case of willful pollution, which no respectable company will tolerate, however, there are a few points in the press release worth noting, if a company operates into the USA.
From reading some of the USCG publications and comments by lawyers, it seems to me the following 2 things probably played a significant part why the fine for the offence was ultimately $ 4,000,000.
Irika pleaded guilty, by my count, to 8 felony charges, each carrying a maximum penalty of $ 500,000. While lawyers frown upon admitting guilt, it seems to me that cooperation by ship officers can significantly reduce the criminal penalty. My math suggests that the court imposed the maximum $500,000 per felony. Cooperation by the senior officers would have reduced the count by at least 2, or the fine by $ 1,000,000 or more!
What I suggest is that a company who's ships call on US ports, should have in place a vigorously implemented environmental policy and that their ship officers are aware on how to work with USCG officers during a port state control.
When the MV IORANA arrived in Baltimore in January 2010, crew members alerted the USCG port state control officer of illegal dumping of oil and garbage at sea. Granted, this was a blatant case of willful pollution, which no respectable company will tolerate, however, there are a few points in the press release worth noting, if a company operates into the USA.
From reading some of the USCG publications and comments by lawyers, it seems to me the following 2 things probably played a significant part why the fine for the offence was ultimately $ 4,000,000.
- Irika admitted the company had no budget for the vessel and no waste management plan, and crew members received little training regarding the company's environmental policies.
- Irika admitted obstructing justice in a couple of ways, including false statements by ship officers, destroying evidence, etc.
Irika pleaded guilty, by my count, to 8 felony charges, each carrying a maximum penalty of $ 500,000. While lawyers frown upon admitting guilt, it seems to me that cooperation by ship officers can significantly reduce the criminal penalty. My math suggests that the court imposed the maximum $500,000 per felony. Cooperation by the senior officers would have reduced the count by at least 2, or the fine by $ 1,000,000 or more!
What I suggest is that a company who's ships call on US ports, should have in place a vigorously implemented environmental policy and that their ship officers are aware on how to work with USCG officers during a port state control.
Subscribe to:
Posts (Atom)
Posts
