Shell Marine prepares for more cylinder oil uncertainties
The technical, commercial and regulatory variables in play when considering a ship owner’s optimum cylinder oil supply solution continue to rise. Shell Marine Global Technical Manager, Dr Sara Lawrence, offers a perspective for 2018.
New two-stroke and four-stroke cylinder oils, a state-of-the-art blending facility in Singapore, additional delivery ports and new technical services saw Shell Marine complete a strong year in 2017.
Sustaining the mood into 2018 is MILES (Marine Integrated Lubrication and Expert Solutions), an initiative that combines purchasing options, services and an extensive range of lubricant products in a multi-faceted strategy for customers to address their most pressing operational concerns. It includes new and different delivery options and a coherent response to digital disruption in the maritime sector.
MILES not only takes full advantage of digitalisation; it is a proposition which addresses the challenges shipowners face today from regulators, new engine technology, new fuels and efficiency pressures. As well as providing optimal volumes/port liftings recommendations, it can also be evolved to offer entire lubrication management for a vessel, combining stock levels and demand planning that includes operating profile and even “flexi pay" schemes.
Insight into MILES is given by Shell Marine Global Technical Manager Dr Sara Lawrence, whose perspective focuses on the technology behind Shell Marine’s lubricant products and the technical services developed to support them in the field. In this context, she explains MILES as “a way of better understanding what creates value for the customer that Shell Marine can address through end-to-end integrated solutions”.
Dr Lawrence sees MILES as acknowledging the significance shipping customers attach to the price of lubrication without losing sight of value for money. “There is tangible added value if the product is ‘better’ in the sense that the time between overhaul for engine components increases,” she observes. “The incremental costs between two lubricants is insignificant against the total cost of ownership of a marine engine.”
Over the last decade, cylinder oils have needed to address numerous industry ‘pain points’, due to an unusual combination of environmental and commercial pressures. In terms of lubricant selection, the industry’s move towards slow steaming to save fuel and regulatory restrictions on emissions pose different challenges for cylinder oils.
As one consequence, Dr Lawrence has been intimately involved in Shell Marine’s development of higher BN cylinder oils to address the susceptibilities of the most modern, high-efficiency engines to cold corrosion under the part-load operations required for slow steaming. She has also worked with the R&D team in the development of lower BN oils for marine use, in response to the need to run two-stroke marine engines on 0.1% sulphur content fuels in Emissions Control Areas.
Coming into 2017, the Shell Alexia two-stroke cylinder oil portfolio covered fuel types from LNG to HSHFO, operating regimes from full load to slow steaming, and engines of all ages. It extended from Alexia S3 - a 25BN oil for ECAs, Alexia S4 (BN 60) and Alexia 50 (BN 70) to the 100BN Shell Alexia S6 which was developed to perform with HSHFO in conditions where oils are under extreme stress.
In 2017, Shell Marine formally introduced Shell Alexia 140, whose high 140 BN delivers even more protection1 for modern engines against cold corrosion and can be mixed with lower BN oils to adjust base number as vessels move in and out of ECAs. Shell Marine has secured a No Objection Letter (NOL) for use from MAN Diesel & Turbo, which also used the product as its first test oil for ‘ACOM’ - Automated Cylinder Oil Mixing; Shell Alexia 140 has also been successfully used with Maersk Fluid Technology’s ‘blend-on-board’ technology.
The approach of the 2020 IMO global 0.5% cap on marine fuel sulphur content means that cylinder oil optimisation to deal with changing fuel composition continues. Post 2020, both LNG and HSHFO will “have a place”, Lawrence says, but owner decisions taken to date suggest low sulphur fuels as the shipping industry’s mainstay fuel. This means that, while the two-stroke product portfolio is largely in place, a new BN40 product is under field trial, for launch in early 2019. “We anticipate significant volumes of higher BN cylinder oils being replaced by BN40 or BN70 grades,” she says.
Shell Marine also upgraded its four-stroke crankcase oils in 2017 to be “2020 ready”, says Lawrence, under the Shell Gadinia and Argina brands. The new oils have been optimised to deal with the faster viscosity increase and BN depletion experienced by oils in modern medium speed engines, which work at pressures between 10-17% higher than their predecessors and oil temperatures approaching 300 degrees at the top crown.
Lawrence says that the approaching 2020 deadline will also add impetus to the uptake of cylinder oil monitoring, testing and analysis services. She notes that, in the two-stroke segment, deliveries of Shell Alexia products can be combined with the Shell LubeMonitor service.
“Results of our own testing and from our customers show that reductions in feed rates can be achieved with an overall cost reduction to customers.” An excellent example of this is the close collaboration with Oskar Wehr, where by using the Shell LubeMonitor service, the owner cut its cylinder oil costs by reducing the oil feed rate by 0.2 g/KWh in each of 25 vessels, whilst still complying with the equipment manufacturer’s feed rate recommendations.
Shell estimates that up to 3 million b/d of HSFO demand will be displaced by 0.5% sulphur content fuel. This will create challenges as it is anticipated that a large percentage of these fuels will be blended or hybrid fuels which are very different in characteristics to current fuel oil. There is some experience of such fuels in ECA zones (0.1% Sulphur) but in those cases, fuel purchasers can limit their supply sources to guarantee product consistency.
Dr Lawrence points out that, once sulphur capping ‘goes global’, managing bunkered fuels from different locations will need to be carefully managed, as the same sulphur content will not guarantee the same quality.
“Shell Marine has been concentrating on developing its technical services for a world where there is much more uncertainty and the likelihood is that the quality of fuel will vary,” Dr Lawrence says. Better monitoring of lubricant performance for engines in service, for example, backed by advanced technology to communicate data from ship to shore improves decision-making when it comes to lubricants logistics.
“I fully understand that there might be hesitation over spending more on technical services, given that for some it is still all about survival, while owners have EEDI/MRV/CO2/2020 and ballast water to contend with, and falling crew competency thrown into the mix. But, increasingly, investing in cylinder oil technical services should be considered in the context of the consequences of putting it off or avoiding it altogether.”
1 compared to lower BN alternatives.
Enquiries:
Shell Marine Global:
Oliver Lim
+65 6477 7499
o.lim@shell.com
About Shell Marine
Shell provides lubricants for the marine industry through its Shell Marine business. It serves over 10,000 vessels, ranging from large ocean-going tankers to small fishing boats in over 700 ports across 59 countries. The advice and technical services we provide help our customers achieve maximum value from using our lubricant products across all types of machinery and equipment on a ship.
Royal Dutch Shell plc
Royal Dutch Shell plc is incorporated in England and Wales, has its headquarters in The Hague and is listed on the London, Amsterdam, and New York stock exchanges. Shell companies have operations in more than 70 countries and territories with businesses including oil and gas exploration and production; production and marketing of liquefied natural gas and gas to liquids; manufacturing, marketing and shipping of oil products and chemicals and renewable energy projects. For further information, visit www.shell.com.
Disclaimer
Disclaimer
Cautionary Note
The companies in which Shell plc directly and indirectly owns investments are separate legal entities. In this content “Shell”, “Shell Group” and “Group” are sometimes used for convenience to reference Shell plc and its subsidiaries in general. Likewise, the words “we”, “us” and “our” are also used to refer to Shell plc and its subsidiaries in general or to those who work for them. These terms are also used where no useful purpose is served by identifying the particular entity or entities. ‘‘Subsidiaries’’, “Shell subsidiaries” and “Shell companies” as used in this content refer to entities over which Shell plc either directly or indirectly has control. The terms “joint venture”, “joint operations”, “joint arrangements”, and “associates” may also be used to refer to a commercial arrangement in which Shell has a direct or indirect ownership interest with one or more parties. The term “Shell interest” is used for convenience to indicate the direct and/or indirect ownership interest held by Shell in an entity or unincorporated joint arrangement, after exclusion of all third-party interest.
Forward-Looking statements
This content contains forward-looking statements (within the meaning of the U.S. Private Securities Litigation Reform Act of 1995) concerning the financial condition, results of operations and businesses of Shell. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management’s current expectations and assumptions, including (without limitation) those concerning Shell’s strategy and operating plans, macroeconomic conditions, future energy demand, supply and product mix, commodity prices, demand for Shell’s products, production results and reserve estimates, development, execution and management of projects, energy transition and climate change, management of safety and environmental risks, costs, cash capital expenditures, technology advancements, legislative, judicial, fiscal and regulatory developments, regional conflicts and trading conditions, and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Shell to market risks and statements expressing management’s expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statements are identified by their use of terms and phrases such as “aim”; “ambition”; ‘‘anticipate’’; “aspire”, “aspiration”, ‘‘believe’’; “commit”; “commitment”; ‘‘could’’; “desire”; ‘‘estimate’’; ‘‘expect’’; ‘‘goals’’; ‘‘intend’’; ‘‘may’’; “milestones”; ‘‘objectives’’; ‘‘outlook’’; ‘‘plan’’; ‘‘probably’’; ‘‘project’’; ‘‘risks’’; “schedule”; ‘‘seek’’; ‘‘should’’; ‘‘target’’; “vision”; ‘‘will’’; “would” and similar terms and phrases. There are a number of factors that could affect the future operations of Shell and could cause those results to differ materially from those expressed in the forward-looking statements included in this content, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for Shell’s products; (c) currency fluctuations; (d) drilling and production results; (e) reserves estimates; (f) loss of market share and industry competition; (g) environmental and physical risks, including climate change; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, judicial, fiscal and regulatory developments including tariffs and regulatory measures addressing climate change; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; (m) risks associated with the impact of pandemics, regional conflicts, such as the Russia-Ukraine war and the conflict in the Middle East, and a significant cyber security, data privacy or IT incident; (n) the pace of the energy transition; and (o) changes in trading conditions. No assurance is provided that future dividend payments will match or exceed previous dividend payments. All forward-looking statements contained in this content are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Additional risk factors that may affect future results are contained in Shell plc’s Form 20-F for the year ended December 31, 2025 (available at www.shell.com/investors/news-and-filings/sec-filings.html and www.sec.gov). These risk factors also expressly qualify all forward-looking statements contained in this content and should be considered by the reader. Each forward-looking statement speaks only as of the date of the publication mentioned in this website. Neither Shell plc nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this content.
Shell’s net carbon intensity and net-zero emissions target
In this content we may refer to Shell’s “net carbon intensity” (NCI), which includes Shell’s carbon emissions from the production of our energy products, our suppliers’ carbon emissions in supplying energy for that production and our customers’ carbon emissions associated with their use of the energy products we sell. Shell’s NCI also includes the emissions associated with the production and use of energy products produced by others which Shell purchases for resale. Shell only controls its own emissions. The use of the terms Shell’s “net carbon intensity” or NCI is for convenience only and not intended to suggest these emissions are those of Shell plc or its subsidiaries.
Shell’s operating plan and outlook are forecasted for a three-year period and ten-year period, respectively, and are updated every year. They reflect the current economic environment and what we can reasonably expect to see over the next three and ten years. Accordingly, the outlook reflects our combined Scope 1 and 2 target, NCI target and our oil products ambition over the next ten years. However, Shell’s operating plan and outlook cannot reflect our 2050 net-zero emissions target, as this target is outside our planning period. Such future operating plans and outlooks could include changes to our portfolio, efficiency improvements and the use of carbon capture and storage and carbon credits. In the future, as society moves towards net-zero emissions, we expect Shell’s operating plans and outlooks to reflect this movement. However, if society is not net zero in 2050, as of today, there would be significant risk that Shell may not meet this target.
The information provided above regarding Shell’s NCI and net zero emissions target are not intended, nor should they be construed as introducing, suggesting or making any claim, target or representation thereof other than what is included in the content.
Forward-Looking non-GAAP measures
This content may contain certain forward-looking non-GAAP measures such as free cash flow and underlying operating expenses. We are unable to provide a reconciliation of these forward-looking non-GAAP measures to the most comparable GAAP financial measures because certain information needed to reconcile those non-GAAP measures to the most comparable GAAP financial measures is dependent on future events some of which are outside the control of Shell, such as oil and gas prices, interest rates and exchange rates. Moreover, estimating such GAAP measures with the required precision necessary to provide a meaningful reconciliation is extremely difficult and could not be accomplished without unreasonable effort. Non-GAAP measures in respect of future periods which cannot be reconciled to the most comparable GAAP financial measure are calculated in a manner which is consistent with the accounting policies applied in Shell plc’s consolidated financial statements. These forward-looking non-GAAP measures are provided to assist readers in understanding management’s use and expectations of such measures and may not be appropriate for other purposes.
The contents of websites referred to in this content do not form part of this content.
We may have used certain terms, such as resources, in this content that the United States Securities and Exchange Commission (SEC) strictly prohibits us from including in our filings with the SEC. Investors are urged to consider closely the disclosure in our Form 20-F, File No 1-32575, available on the SEC website www.sec.gov.
