Sulphur Limits for Ships Forces MDO Demand to Dwindle.
Suppliers in European marine fuels hub only selling 0.1% sulphur MGO as there is ‘no demand’ for MDO. Sulphur limits for ships at berth sees MDO demand dwindle. Suppliers in the leading European bunkering ports of Rotterdam and Antwerp are not moving the volumes they previously were due to the new Sulphur limits that took effect 1 March 2010.
Bio Bunker Fuels Are Here to Stay
The Marine Environment Protection Committee (MEPC) of the International Maritime Organization (IMO) has approved proposed amendments to the MARPOL Annex VI regulations to reduce harmful emissions from ships.
The main changes are a progressive reduction in sulphur oxide (SOx) emissions from ships, with the global sulphur cap reduced initially to 3.50% (from the current 4.50%, effective from 1 January 2012; then progressively to 0.50 %, effective from 1 January 2020, subject to a feasibility review to be completed no later than 2018.
The limits applicable in Sulphur Emission Control Areas (SECAs) would be reduced to 1.00%, beginning on 1 March 2010 (from the current 1.50 %); being further reduced to 0.10 % , effective from 1 January 2015.
This reduction is adversely affecting the European MDO markets as prices plummet.
The principal regulation changes are as follows:
• the sulphur limit applicable in Emission Control Areas beginning on 1 March 2010 would be 1.00% (10,000 ppm), reduced from the current 1.50% (15,000 ppm);
• the global sulphur cap would be reduced to 3.50% (35,000 ppm), from the current 4.50% (45,000 ppm), effective from 1 January 2012;
• the sulphur limit applicable in Emission Control Areas effective from 1 January 2015 would be 0.10 % (1,000 ppm);
• the global sulphur cap would be reduced to 0.50% (5,000 ppm) effective from 1 January 2020, subject to a feasibility review to be completed no later than 2018. Should the 2018 review reach a negative conclusion, the effective date would default to 1 January 2025; and
• introduction of a fuel availability provision under regulation 18 Fuel Oil Availability and Quality that outlines what actions are appropriate should a ship be unable to obtain the fuel necessary to comply with a given requirement under regulation 14.x
Sulphur levels in the air and in the drainage basins of central Europe is above acceptable limits by the European Commision. The 1999/32/EC directive regulates the use of fuels in European areas. As the shipping activities produce a severe part of the critical sulphur emissions in areas of Europe regulation is the only answer. The commission defines fuel grades according to the fuels sulphur content levels. Some indications are the availability of the Low Sulphur Fuel Oil is a problem to supply according to the demand as a result of the new regulation. MDO prices will continue to be unstable until supply meets the new demand.
US Gas Consumption Down, Biofuels Replacing Oil
High Fuel Prices
Three years ago, petroleum-based gasoline consumption was the highest the U.S. had ever seen. But thanks in part to biofuels, including biodiesel and ethanol, the amount of gas we use has actually gone down since the peak of 2007.
This article in the Kansas City Star says that while the recession and the increased popularity of smaller, more fuel efficient vehicles has helped cut petroleum use, alternative fuels have done their part and will cover any expected increases in fuel use. And by 2035, American motorists are expected to use less gasoline than they do now:
“We’re on a slow but inexorable path away from petroleum. This is a big deal,” said James Williams, an analyst with WTRG Economics, an oil and gas consultancy.
That decline is reverberating through the oil industry. Refineries now use only 78.5 percent of their capacity, the lowest level since the federal government began routinely collecting the information in 1990. Valero Energy, which once bought refineries enthusiastically, now snaps up ethanol plants instead…
Federal tax incentives for ethanol, though widely criticized, have helped increase production from less than 1 billion gallons in 1992 to 10.5 billion last year. That reduces by 5 percent the amount of gas the country needs.
The article goes on to say that the Energy Information Administration believes that in the next 25 years, petroleum will still account for 88 percent of the fuel for cars and light trucks with the rest coming from mostly ethanol, followed by electricity, natural gas, hydrogen and propane. And some experts believe that alternative fuels could grow even faster if the right infrastructure is put in place. Posted by John Davis – February 1st, 2010
Oil falls below $82 in Asia on weaker crude demand
SINGAPORE – Oil prices fell below $82 a barrel Tuesday in Asia on expectations a frigid cold spell in parts of the U.S., Europe and Asia will ease in coming weeks, weakening crude demand.
Benchmark crude for February delivery was down 61 cents to $81.92 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange.
On Monday, a weakening U.S. dollar helped push the contract to a 15-month high near $84 a barrel before it settled down 23 cents at $82.52.
Crude prices have jumped from $69 a barrel a month ago as cold winter weather, especially in the U.S. Northeast, boosted demand for oil products such as heating oil. Forecasters now expect those freezing temperatures to rise the rest of this month.
“The bullish impetus off of the dollar weakness was largely offset by warmer Northeast temperature expectations for the next couple of weeks,” Galena Illinois-based Ritterbusch and Associates said in a report.
The euro fell slightly against the dollar in early Asian trading Tuesday and the dollar was steady against the yen.
In other Nymex trading in February contracts, heating oil fell 1.7 cents to $2.16 a gallon and gasoline fell 1.32 cents to $2.13 a gallon. Natural gas futures were up 2.6 cents at $5.48.
In London, Brent crude for February delivery fell 64 cents to $80.33 a barrel on the ICE Futures exchange.
Biodiesel Fuel For Marine Use Is Great News for Fleet Operators
The Washington State Ferry Biodiesel Research & Demonstration project was a complete success. Marine diesel now has an alternative, Marine Biodiesel is now alive and well and spreading throughout various marine applications. Download the full project information here .With the new EPA standards for emissions going into effect Dec 2010, this fuel will become an industry standard.
EPA Says Dec 1, 2010 fuel sulfur content may not exceed 15ppm
On December 1, 2010 fuel sulfur content may not exceed 15ppm.
EPA established the National Clean Diesel Campaign (NCDC) to promote diesel emission reduction strategies. They finalized new clean fuel and vehicle emission standards that will lead to dramatic emission reductions in new diesel-powered engines.
The long-term emissions standards, referred to as Tier 4, apply to newly-built locomotives and marine diesel engines. These standards are based on the application of high-efficiency catalytic after treatment technology and would phase-in beginning in 2014 for marine diesel engines and 2015 for locomotives. These standards are enabled by the availability of ultra-low sulfur diesel fuel with sulfur content capped at 15 parts per million, which will be available by 2012. These marine Tier 4 engine standards apply only to commercial marine diesel engines above 600 kW (800 hp).
