Oct 1, 2018
An article by Grahaeme Henderson, VP for Shell Shipping & Maritime.
From the energy we use to the food we eat, the clothes we wear and the things we use every day, we enjoy a lifestyle where we can find everything on the shelves of our local shop or through a simple swipe or click on our screens.
Global trade has transformed life to what it is today, and shipping is the backbone of this trade. More than 50,000 ships sail our seas today, transporting goods from all corners of the earth. As this trade grows, so does shipping. According to the United Nations Conference on Trade and Development (UNCTAD), in 2016, ships carried more than 10 billion tons of trade for the first time. But while responsible for efficient transport of large quantities of vital goods and energy, seaborne trade results in emissions to the environment.
The main type of “bunker” oil for powering ships is heavy fuel oil, derived as a residue from crude oil distillation. Traditional marine fuel contains sulphur which, following combustion in the engine, ends up in ship emissions into the air. Sulphur oxides (SOx) are known to be harmful to human health and in the atmosphere, SOx can lead to acid rain.
For the shipping sector, upcoming International Maritime Organisation (IMO) regulations to reduce sulphur require immediate action and some big decisions.
Shipowners need to decide if they want to continue using high sulphur fuel oil in conjunction with scrubbers or exhaust gas cleaning systems; or switch to low sulphur fuel options, including distillates; or the new and virtually sulphur-free LNG fuel.
Each option will require a cost outlay, so there really isn’t a quick and cheap fix to this. It is a time for big decisions that will have long-term impact, not just for ship owners, but also a significant bearing on trade, economics and the environment. It is a challenging moment for the industry, however it is also the kind of situation in which an industry can really outperform itself. The key is that informed decisions are taken now.
Shell has a clear vision into 2020. We will be prepared, and we can help ship owners and charterers be prepared, too. We’re developing a variety of fuel product offerings to the shipping industry that include marine gasoil (MGO) and very low sulphur fuel oil (VLSFO) supply in key bunker ports; high sulphur fuel oil (HSFO) supply for ships with on-board scrubbers; and liquefied natural gas (LNG). The market will continue to need multiple types of fuel to meet the industry’s demand, such as LNG, 0.10%S, DMA, and 3.50%S for ships with scrubbers. Shell will provide multiple products at key ports.
We are currently working with our customers to test our new 0.50% very low sulphur marine fuel oil (VLSFO) in Rotterdam, Singapore and New Orleans. We also continue to improve our lubricants, and we have optimized our cylinder oils to cope the changing fuel compositions that will come with the 0.50% sulphur cap.
Growth of the cleaner burning LNG fuel to power ships of all sizes is increasing. LNG is available in 150 global locations and overlapping with key maritime hubs. Shell is working towards a very robust marine LNG supply chain to fulfil our marine customer needs across the world with bunkering infrastructure in place or in development across the Americas, Europe and Asia.
January 1, 2020 is fast-approaching, and the decisions to comply with the new regulation need to be made now. Investments need to be taken, engines need to be upgraded and fuels need to be tested. The change and immediacy of transition may seem to be a formidable prospect. But, it’s a step towards a lower carbon transport system that urgently needs to happen.
Choices that need to be made soon and at Shell, we are ready to work together with all stakeholders to assist in a smooth transition.