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Dutch IGCC pioneers chalk up pain and gain Emergency response is behind schedule in the European public sector A new refining industry in Europe's Asian Corridor Commission proposes milestone energy proposal Replace fuel oil with distillate? Cancelled projects will sustain margins “Marine distillate not fuel oil from 2010” Branson's biofuels megastore You heard it here first: refinery CO2 storage a reality in Norway Buncefield 2: Investigation critical Where now for Swedish Class 1 diesel My slow awakening to climate change The luckiest motorist alive Safety row goes on over Europe's largest LNG terminal New WHO guidelines on city air quality put focus on diesel Would LNG really 'evaporate harmlessly' in an accident? Another lesson in the thermobaric bomb Spare a thought for the oil-rich But will the good times keep on rolling? Carbon storage and the zero emissions refinery Everything just changed E85 and high octane gasolines The problem of small-minded young engineers New Permit Regulations Biodiesel newbuilds and a new green superfuel Spilled wine and our split industry Drilling down into the prospects for IGCC The beginning of the start of the end of oil | Replace fuel oil with distillate? But how, ask refiners “It can’t be done, at least not in that timetable.” You get a pretty strong reaction when you put the ideas contained in a Marpol submission by the independent tanker owners association to a seasoned refinery contractor. You may recall that we wrote here about their proposal that a new quality of distillate should replace today’s high and low sulphur fuel oils in the global bunker market. “Technologies are there, of course, but it would increase costs tremendously and increase CO2 by 20 to 30%,” says my friend the contractor. Interestingly, the tanker owners I spoke to for my December column say they would be willing to pay up to double today’s price for a new, cleaner, more reliable fuel. As long as such a price increase affected all operators globally, they say they could live with what would represent for some a 30% increase in operating costs. While, on the matter of emissions, they may not necessarily feel that a refiner’s increased CO2 emissions is their problem. The vessel owners say poor fuel quality is hindering their ability to meet new emissions targets, that it increases engine room workloads, and, worst of all, is now presenting them with the unwelcome prospect of having to invest millions per vessel in new fuel tank installations and an emissions scrubbing technology at not much more than the prototype stage of its development. But these arguments probably won’t help raise Perth-based Costa Tsesmilis’s jaw from the floor. He wrote in saying he was astonished by the proposal: “It seems inconceivable that there is a proposal in place to eliminate High Sulphur Fuel Oil (HSFO) usage completely by 2010-15,” he says. “Apart from the impact on the shipping industry, attempting to eliminate all HSFO usage at sea would also have a massive cost impact on the downstream oil industry,” he continues. “Eliminating HSFO may not be technically or logistically feasible in the 2010-15 timeframe without massive investment to existing refineries.” My contractor friend, meanwhile, sees parallels with earlier clean fuels initiatives: “What Intertanko is in principal proposing is let’s have a cleaner burning fuel as a new standard from a certain year in the future. From an environmental point of view, it’s an interesting trend. The EU and EPA did this earlier by highlighting that from a certain year onwards they needed cleaner burning fuels. “The question for me is does it have to be diesel only, or could it be Low Sulphur Fuel Oil (LSFO)?” he says. “That is what makes a substantial difference. If you just need to desulphurise that is one thing, if you need to desulphurise and hydrocrack, that’s another thing altogether.” Of course, many refiners are already looking at ways to get out of heavy fuel oils production. Hydrocrackers at Normandy in France, Porvoo in Finland, and Scanraff in Sweden are part of this trend, but there’s a very important upside to building those units: Tidy profits from a tight regional diesel market. And this is precisely why Intertanko’s proposal is hardest to live with. “The diesel market is empty already,” says my contractor friend. “There is no surplus to do this with.” As a result, he says, refiners already need to look for ways to maximise diesel production from heavy fuel at the lowest possible hydrogen consumption.” And there’s another reason why these ideas are about as welcome as a hole in the head right now. There is simply no-one to carry out the projects that would be required. “2010 is just not makeable because we have so many projects that are stalled. We have projects that are stopped because they now cost twice what they would have cost five years ago.” Intertanko’s Technical Director, Dragos Rauta, says that while the timing of the proposal may seem abrupt to some, his organisation’s hand has been forced by a salvo of onboard emissions measures made as amendments to Annex Six of the Marine Pollution convention. The amendments must be adopted by 2008. He says his industry fully expects a move away from HSFO to LSFO and further expects that as lower sulphur crudes give way to a sourer crude slate, the price of low sulphur residuals will sharply increase. His industry, he says, is having to deal with 30 amendments to Annex Six, many of which place greater onus on a captain and crew to curtail emissions – something, he says, is better done in a processing plant. Amendments include: Lowering SOx emissions, lowering the sulphur cap in Sulphur Emissions Control Areas (SECAs) to 1% or even .5%, lowering NOx emissions limits – not only on new but also on existing engines and creating NOx Emissions Control Areas. “It’s pretty challenging,” says Dragos Rauta. “There is even a suggestion to add particulate matter – the unburned elements – into the emissions control area system,” he adds. Mr Rauta told me he is expecting a fairly challenging reception from the refining industry. A call to Europia did nothing to allay that possibility. “As far as my refining knowledge goes, converting HSFO and LSFO to diesel is not without CO2 emissions and costs,” says Martin Suenson at the European Refiners Association, Europia. He says that the impact of vessel-based emissions on human health and the environment once a ship is away from land is “zilch”. Therefore, contemplating a massive industrial upheaval is deeply cost-ineffective: “You would have to convert the entire global refining industry to fuel oil-free refining – which would take a while.” If we’re going to see a tussle over these issues, and we are, then it seems that the argument that will carry most weight is not the greenhouse gas emission impact of this proposal, but the energy security aspect. CO2 abatement for new power and hydrogen projects at refineries is already on the cards. Furthermore, running ships on a cleaner, more stable fuel with a higher calorific value, higher hydrogen content, offering safer operations and less discharges to sea will be seen by many as being intrinsically beneficial. But, set against that, speaks the politics of energy scarcity. “You’ve got a very high energy expenditure to crack fuel oils into distillates,” says Martin Suenson. “Our total crude production as a world would go up.” Few will welcome that outcome. | |||||||
Download Energy Industry Resumé with work samples Profile: Tim Lloyd Wright MA Here you'll find a brief profile of my work with international energy, transport and associated environmental issues. Energy trends articles You heard it here first: refinery CO2 storage a reality in Norway From the archive... Over-processed fuel leaves oil tankers adrift | ||||||||
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