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Eddy Van Bouwel

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International Petroleum Industry Environmental Conservation Association ... Bitumen. Conversion. to lighter. products. TREAT-MENT UNIT. 9 ... – PowerPoint PPT presentation

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Title: Eddy Van Bouwel


1
MARPOL Annex VIRefinery Considerations and
StrategiesOutcomes from IPIECA workshops on
shipping emissions
  • Eddy Van Bouwel
  • ExxonMobil
  • 27th International Bunker Conference
  • Gothenburg April 27, 2006

2
Who are we?
  • International Petroleum Industry Environmental
    Conservation Association
  • Founded 1974 - Global Membership national
    multinational petroleum companies / associations
  • Interaction/cooperation with UN other
    international organizations (Special Consultative
    Status with UN)
  • Secretariat based in London
  • Tackling global issues
  • Global Climate Change
  • Biodiversity
  • Social Responsibility
  • Oil Spill Preparedness Response
  • Fuels and Transportation
  • Health

3
IPIECAs Aims
  • To represent the views of our members, and enable
    consultation with appropriate UN agencies and
    others dealing with global issues
  • To promote realistic, science-based, economically
    efficient solutions to global environmental and
    social concerns
  • To develop international petroleum industry
    consensus on key global issues, in close
    cooperation with key stakeholders

4
Company Members
5
Association Members
6
MARPOL Annex VIand the Refining Industry
MARPOL Annex VI
EU SLFD
The oil companies European association for
environment, health and safety in refining and
distribution
7
Crude Composition / Demand
Crude Variability
LPG Mogas Kero/Jet Distillate HFO
Maya Arab Light Demand
  • Product yields and qualities vary by crude
  • Average world wide crude composition similar to
    Arab Light
  • Product yield from crude heavier than demand
  • Additional processing or conversion required to
    convert Fuel Oil

8
Refining Overview
LPG
TREAT-MENT UNIT
Gasoline
Crude Oil
Aviation Fuels
Diesel
Conversion to lighter products
D I S T I L L
V A C U U M
Fuel Oil
Bitumen
9
Sulphur is Concentrated in the Bottom Products
300 ppm S
1600 ppm S
1.5 S
3.3 S
  • Arab Light crude sulphur content 1.9

10
Low Sulphur Fuel Demand
Note implementation of a North American SECA
could almost double global LSBF demand
2005
2007
2015
Source CONCAWE
11
Meeting the EU LS BFO Demand
  • Segregation of low sulphur blend streams
  • Optimisation of crude diet
  • Blending to specification
  • Declining demand of (LS) HFO for inland use
  • Demand for Baltic and North Sea SECAs and for
    European ferries likely to be met based on
    operational adjustments, with some refinery
    investment
  • Response will be driven by market forces (premium
    LSFO vs. HSFO)

12
Long Term Choices Refiners are Facing
  • Blending
  • Change Crude feedstock
  • Desulphurise Residual fuels
  • Complete conversion to distillate fuels (eg
    Gasoline and Diesel)
  • Exit the Bunker market find land based
    customers (eg Power Stations)
  • In each case there are unknowns
  • In some cases other stakeholders hold the answers

13
Desulphurisation of HSFO
  • Significant increase in refinery CO2 emissions
  • Technological challenges
  • Stability reserve decreases
  • Potential problems with inter-fuel compatibility
  • Significant premium required to make option
    attractive versus conversion to distillate fuels

Results generated by EU Refining Model based on
38/bbl crude price scenario
Source CONCAWE
14
Refinery Economics
  • Behaviour based on what refiners believe the
    market will do perhaps not what was envisaged
    by regulators
  • For refiners willing to invest, conversion route
    may be more attractive
  • Economics likely to be better
  • Investment decisions can be based on known (or at
    least assumed!) differentials
  • Regulatory endpoints are known and markets are
    familiar

15
Bunker Market Compared to Gasoline/Diesel Markets
  • Historically, the oil industry has responded to
    market demand by adapting to make the fuels that
    are required
  • Bunkers are different!
  • End of the line in the refinery
  • Energy and capital intensive to desulphurise
  • Desulphurisation changes the nature of the fuel
  • CO2 lifecycle costs may be higher
  • Investment costs US250M-500M/refinery
  • Differentials and regulatory endpoint ?
  • Exiting the market is a real option

16
The Need for Evaluation
  • Annex VI revision should aim to identify
    cost-effective, appropriate and scientifically
    valid measures addressing areas of concern, i.e.
    actual improvement on land based receptors
  • Need to consider
  • Actual environmental impact of emissions
  • Fuel availability and impact on fuel quality
  • Flexible approach mix of ship and fuel based
    measures
  • Technical developments, e.g. on-board scrubbing
    technology
  • Feasible time scale for compliance
  • Enforceability

17
Summary
  • There are some knowns and many unknowns about
    the future marine fuels market
  • Significant changes to the demand for low sulphur
    marine fuels beyond currently agreed SECAs and EU
    legislation will have significant impact on the
    marine fuels market
  • Marginal economics cannot be applied
  • Fuel quality considerations
  • In an extreme scenario of ships switching to
    gasoil, the EU middle distillate deficit would
    increase by 50 Mt/a
  • Market forces will determine outcome
  • We believe that the concepts of cost
    effectiveness and environmental sustainability
    need not be mutually exclusive
  • We believe a holistic solution will be more
    environmentally sound
  • Continued stakeholder dialogue is key

18
Back-up
  • Market Forces Model

19
Bunker Fuels Market Mechanisms
  • Regulatory Drivers
  • Enacted legislation
  • Fuel max 1.5 S Baltic Sea, North Sea and
    Channel, ferries (2006/2007)
  • 0.1 S fuel inland waterways/at berth (2010)
  • Possible future IMO or EU initiatives

20
Bunker Fuels Market Mechanisms
  • Regulatory Drivers
  • Fuel max 1.5 S Baltic Sea, North Sea and
    Channel, ferries
  • Possible future IMO or EU initiatives
  • Shipowners Decisions
  • Single or dual fuel operation
  • BFO vs. distillate
  • Onboard scrubbing
  • New ship vs. retrofit
  • Considerations
  • switchover procedures and time required
  • risk of engine stalls due to switchover errors
  • lube oil system considerations
  • scrubbing operability considerations
  • fuel cost differentials
  • compliance demonstration

21
Bunker Fuels Market Mechanisms
  • Regulatory Drivers
  • Fuel max 1.5 S Baltic Sea, North Sea and
    Channel, ferries
  • Possible future IMO or EU initiatives
  • Refiners Decisions
  • Short term
  • Blending and storage facilities
  • Crude adjustments
  • Longer term (possible future IMO or EU
    initiatives)
  • Make, convert or export
  • Deep desulphurisation
  • Deep conversion
  • Exporting to other markets
  • Shipowners Decisions
  • Single or dual fuel operation
  • BFO vs. distillate
  • Onboard scrubbing
  • New ship vs. retrofit
  • Considerations
  • low S HFO demand
  • high S fuel outlets
  • fuel price differentials
  • CO2 emission allowances
  • Considerations
  • switchover procedures and time required
  • risk of engine stalls due to switchover errors
  • lube oil system considerations
  • scrubbing operability considerations
  • fuel cost differentials
  • compliance demonstration

22
Bunker Fuels Market Mechanisms
  • Regulatory Drivers
  • Fuel max 1.5 S Baltic Sea, North Sea and
    Channel, ferries
  • Possible future IMO or EU initiatives
  • Shipowners Decisions
  • Single or dual fuel operation
  • BFO vs. distillate
  • Onboard scrubbing
  • New ship vs. retrofit
  • Other factors
  • Economic growth
  • Shipping volume growth
  • Shipping demand elasticity
  • Transport policy
  • Considerations
  • switchover procedures and time required
  • risk of engine stalls due to switchover errors
  • lube oil system considerations
  • scrubbing operability considerations
  • fuel cost differentials
  • compliance demonstration

23
Bunker Fuels Market Mechanisms
  • Regulatory Drivers
  • Fuel max 1.5 S Baltic Sea, North Sea and
    Channel, ferries
  • Possible future IMO or EU initiatives
  • Shipowners Decisions
  • Single or dual fuel operation
  • BFO vs. distillate
  • Onboard scrubbing
  • New ship vs. retrofit
  • Considerations
  • switchover procedures and time required
  • risk of engine stalls due to switchover errors
  • lube oil system considerations
  • scrubbing operability considerations
  • fuel cost differentials
  • compliance demonstration
  • Other factors
  • Economic growth
  • Shipping volume growth
  • Shipping demand elasticity
  • Transport policy
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