The current global fuel sulphur cap is at 3.5% sulphur in the fuel and 0.1% sulphur when the vessel is in the ECA. There has been a huge debate on the upcoming new global fuel sulphur cap which is at 0.5% worldwide and 0.1% sulphur in fuels when the vessel is in the ECA.
On one end, shipowners and various stakeholders expressed their concerns in meeting the global 0.5% fuel sulphur cap and following protests from various stakeholders who wished to delay the deadline to 2025, the IMO commissioned a firm of consultants to assess availability of compliant marine fuel for the original 2020 deadline. The regulation as it currently stands (MARPOL Annex VI, Reg.14) stipulates that the global maximum permissible sulphur limit on marine fuel will be 0.5% outside of the Emission Control Areas (ECA).
As such, this coming October could prove very crucial regarding the future of the industry, as the International Maritime Organization (IMO) will hold the 70th Marine Environment Protection Committee (MEPC) meeting where it is anticipated that there will be an announcement on the timing of the implementation of the new global sulphur cap for marine fuels.
To comply with the new sulphur regulations there are only three main options, switch to 0.5% fuel, install scrubbers or convert to use LNG, all carry different benefits, risks and not least costs. IBIA is concerned that the industry may not have access to sufficient supplies of compliant 0.5% low sulphur fuel by 2020 to meet shipping demands going forward. Regardless of any announcement from the IMO in October, the EU has already stated its policy by adopting the 0.5% for all member states in 2020. This is written into EU legislation and not open to debate. Effectively this means that vessels trading in northern Europe will be subject to the ECA sulphur rules, while Mediterranean EU states will have to conform to 0.5% sulphur content fuel, possibly ahead or the rest of the globe.
Exxon Mobil has announced production of 40,000 barrels of ultra low sulfur fuels a day at its Beaumont Refinery.
As the shipping industry is worried on the global low sulphur fuel availability – here is a good source of information where Exxon Mobil has announced plans to increase production of ultra-low sulfur fuels at its Beaumont refinery by approximately 40,000 barrels per day, further strengthening its integrated downstream portfolio while meeting environmental standards.
Construction is scheduled during the second half of 2016 to install a selective cat naphtha hydrofining unit, which uses a proprietary catalyst system to remove sulfur while minimizing octane loss. Startup of the flexible technology, known as SCANfining, is expected in 2018. Gasoline produced using this technology will meet the U.S. Environmental Protection Agency’s Tier 3 gasoline sulfur specifications.
“ExxonMobil continues to strengthen its portfolio of world-class refining assets,” said Steve Cope, director of North America refining, for ExxonMobil. “This investment further enhances the competitiveness of our U.S. Gulf Coast refineries.”
Installation of the selective cat naphtha hydrofining unit is the facility’s second expansion project in a year, following the announcement of the Beaumont refinery’s capacity expansion in 2015, and demonstrates ExxonMobil’s long-term view and disciplined approach toward advantaged business investments. Beaumont is well positioned to competitively supply high-demand growth markets around the U.S. in the face of a challenging industry environment.
“This specialized unit will improve our product yield, and demonstrates our technology advantage and focus on increasing energy efficiency,” said Fernando Salazar, manager of the Beaumont refinery. “This project represents the largest capital investment in our Beaumont refinery operations in more than a decade, and will benefit the local economy with both temporary and full-time jobs.”
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