Threat of contaminated fuel easing, but looming sulfur cap is wild card
The last thing a mariner wants to worry about is an unreliable prime mover. But it’s become a top concern for many due to recent fuel contamination issues, particularly along the U.S. Gulf Coast.
When an aircraft takes to the skies, there is an implicit understanding that the entire fuel supply chain has been carefully crafted to deliver consistent, high-quality product. Planes, as a consequence, spend most of their existence in the air, reliably shuttling people and goods from city to city and from continent to continent.
On the water, the supply chain may be less exacting, but the expectation that fuel will be of appropriate quality to get a vessel home has long been taken for granted. However, recent events in the Gulf and elsewhere around the world have shattered that expectation.
In early 2018, vessels began to report problems that sometimes made power plants inoperative. Given the large number of vessels involved and the geographic proximity of the incidents, bunker fuel became the prime suspect.
“Members have had problems in the Gulf,” said Kathy J. Metcalf, president and chief executive officer of the Chamber of Shipping of America. She said operators who have tested their fuel after loading and found problems are segregating the contaminated product and offloading in their next port of call.
“We were the first entity to come up with an explanation for these problems,” said Steve Bee, group commercial and business development director at Veritas Petroleum Services, a global testing company.
According to the U.S. Coast Guard, blended products such as intermediate fuel oil (IFO 380) have fouled fuel pump plungers and caused pump seizures and other system-related failures. The contaminated fuel is also believed to increase sediment levels at separators and filters and, in some cases, may completely clog these systems. Standard testing methods in ISO 8217 specifications have not been able to identify the problem.
Instead, companies like Veritas used their chemical analysis skills in testing that included extraction-gas chromatography and mass spectrometry to ferret out the culprit.
Questions about contaminated bunker are at the heart of a legal dispute between Thorco and World Fuel Services over the grounding of the freighter Thorco Lineage in French Polynesia in June. The ship took on fuel in Panama and later experienced engine failure.
Courtesy La Depeche de Tahiti
Veritas and another firm conducted tests on samples from multiple vessels and found a contaminant identified as 4-Cumyl-Phenol (CAS No. 599-64-4), a phenolic compound. All fuel oil samples were found to have the compound in the concentration range of 300 parts per million to 1,000 ppm. That might not sound like much, but it was enough to cause serious problems in the Houston area, the epicenter of the contamination in the U.S. While the threat there has eased, many maritime stakeholders remain cautious.
Some in the industry have publicly speculated that the grounding of the freighter Thorco Lineage as it was sailing from the U.S. to Australia last summer may have been linked to bunker fuel contamination. Reports also show that in recent months, fuel contamination issues have been identified in Singapore, the world’s largest ship refueling hub. Closer to home, problems have been reported in Panama (where Thorco Lineage’s fuel originated) and the Dutch Antilles.
According to Bee, this is not the first time fuel contamination has been an issue — some problems date back a decade — but it is perhaps the most widespread episode so far. He said his company has tested about 50 vessels in the Houston area, along with 20 in Panama and 10 in Singapore. In the case of Houston, Bee estimated that an equal number of vessels might have had problems that his firm was not consulted about.
“Where certainty is lacking (regarding the cause of fuel problems) this also affects liability, and it is likely that some questions may be raised about previous bunker fuels carried on vessels and the onboard fuel management procedures,” the International Bunker Industry Association (IBIA) has stated. “Shipowners would be well advised to carefully document procedures and retain all relevant fuel samples.”
The liability issues also could involve insurers. Dieter Michael Hugel, president of the underwriting company Gulf Coast Marine LLC, said that so far his firm “has not had any claims issues regarding contaminated bunker fuel,” though he stresses to many of the vessels that he insures to not use bunker fuel.
While contamination may be the most obvious symptom, Bee said a more serious malaise — and one with longer-term implications — is the International Maritime Organization (IMO) mandate for reducing sulfur content that is roiling the fuel markets. Recent contamination on the Gulf Coast may have been due to a formulator trying to find a way to reduce sulfur in an acceptable blend, he speculated.
The decision to implement a global sulfur cap of 0.5 percent, effective Jan. 1, 2020, was made by the IMO’s Marine Environment Protection Committee (MEPC) in October 2016 in London. The current global limit for sulfur is 3.5 percent for vessels operating outside of Emission Control Areas (ECAs).
The 2020 standard is an effort to sharply reduce sulfur oxide emissions from maritime sources, particularly for people living in port cities or near shipping routes. But the impact on the shipping industry is unknown. Bee said it boils down to increased costs and the potential for further contamination issues as the supply chain works to develop compliant fuels.
Marine fuel surveyor Maritec warned clients in July that six samples of ship fuel sold in Singapore had “resulted in severe sludging at centrifuges, clogged pipelines (and) overwhelmed fuel filters.”
Courtesy Wikimedia Commons
The regulations are included in Annex VI to the International Convention for the Prevention of Pollution from Ships (MARPOL). Annex VI sets increasingly stringent standards for reducing vessel emissions of both sulfur oxides (SOx) and nitrogen oxides (NOx). In 2008, when the amendment was adopted, a commitment was made to review the feasibility of the 2020 date before that time, allowing an optional implementation date of 2025 if sufficient fuels seemed unlikely to be available. The review was conducted in 2016 and concluded that compliant fuel oil would be available in sufficient quantities by 2020 for the shipping industry. While there are some limited exemptions — for instance, when the safety of the ship is at stake, or if equipment is damaged — the regulation otherwise covers essentially any fuel used on board.
To meet the new 0.5 percent standard, the IMO also touts the use of alternative fuels such as methanol, or the installation of scrubbers to capture sulfur in the exhaust stream. An additional IMO regime applies for ECAs, where the sulfur limit currently is even lower — 0.1 percent. Areas covered under this 2015 regulation include designated coastal areas of the United States and Canada, the Baltic Sea, the North Sea and portions of the Caribbean Sea around Puerto Rico and the U.S. Virgin Islands.
“The initial changes imposed on the industry in 2015 added hundreds of millions of dollars in additional costs, and in 2020 that will become many, many billions,” Bee said.
And it’s not just the IMO. Many complementary national measures have kicked in or will kick in, following the organization’s lead, he said. According to some estimates, operators by 2020 will be paying up to $400 more per ton of fuel than at present.
With the new deadline looming, Lars Robert Pedersen, deputy secretary-general of BIMCO, has called for bunker states that are committed under MARPOL Annex VI to take responsibility for enforcing the mandate among suppliers — particularly language ensuring fuel quality — which he asserts they have so far failed to do. Pedersen also anticipates more blending as suppliers rush to meet the deadline, and he questions whether the IMO is correct in assuming that adequate fuel supplies of the correct type and quality will be available in little more than a year.
Looking ahead to the challenges of 2020, Metcalf cited recently published guidance from the International Chamber of Shipping, which includes more than 40 national maritime trade associations. Aside from the obvious expected increase in bunker fuel cost, major issues that the global industry is concerned about include:
- Geographic availability of fuel.
- Composition of the blends of 0.5 percent sulfur fuel, which is expected to vary from source to source and may vary over time with the same source.
- Compatibility issues with blends and marine engines and lubricants.
- Safety issues associated with blends that may compromise the operation of marine engines due to components such as cat fines (leftovers from catalytic cracking).
- Port state control issues associated with action taken against a vessel in the early days after Jan. 1, 2020, if an operator is unable to procure compliant and/or compatible fuel in a specific port.
Discussions on the topic no doubt will only grow more heated in the coming months. For now, the Coast Guard simply recommends caution and awareness. Quoting an unnamed testing organization in a news release, the service suggests that vessel owners and operators pay attention to the terms of bunker requisitions; specify that the fuel must be absent of abnormal components; determine the acid number of the fuel; and carefully pay attention to the vessel’s fuel supply and fuel injection equipment.
The Coast Guard also recommends that any potential problem be communicated to relevant personnel, and that vessel operators “consult their bunker suppliers and other technical service providers regarding this issue.”