Prepared for Global Energy Group – Mr Loh Hong Leong

VM Industrials ADERCO Oceania

Francisco MALTA and Brendon DOWNS

Sulphur Cap 2020

Preparing For Change

©2018 Aderco · www.aderco.com

Sulphur Cap 2020: The buzz is building.
Over the past 6 months alone, 200+ articles and lots of conferences…

©2018 Aderco · www.aderco.com

The new reality on 1 January 2020
Today…

0.5% Global Sulphur ECA

0.1% EU & NA Sulphur ECAS
0.5% Hong Kong, China ECA*
*Could go to 0.1% before 2020

©2018 Aderco · www.aderco.com

3 options for achieving
0.5% sulphur compliance
… and they all come with constraints.

Exhaust gas cleaning technology

• Scrubbers (High-Sulphur Fuel Oil)

Alternative energy sources

• LNG, ethanol, methanol, biofuels…

0.5% sulphur-compliant fuels

• Low-Sulphur Marine Gasoil
• Low-Sulphur Fuel

©2018 Aderco · www.aderco.com

Achieving 0.5% sulphur
compliance from the fuel side
3 options for producing compliant fuels:

Re-blending with low-sulphur components

• Extra production cost ≈ USD 15-20 per MT

Blending of low-sulphur crudes

• Extra production cost ≈ USD 40-60 per MT

Hydro-desulphurisation
• Extra production cost ≈ USD 60-100 per MT

©2018 Aderco · www.aderco.com

0.5% sulphur fuel production
using existing blend components
A question of availability, quality and cost.
SR DIESEL Straight Diesel
FCC LCO Fuel Catalytic Cracking Light Cycle Oils <-cat fines
TR LT DIST Treated (reduced sulphur) Light Distillate
TRT AGO 85% Light Atmospheric Gasoil
“No problems with availability 
of
TRT PURCH GASOIL Treated Purchased Gasoil
suitable low-sulphur components…”
VGO Vacuum gasoil <- parrafinic asphaltenes IMO Study/CE Delft, 2016
H OIL BTMS Bottom Oils
TRT ARTES Treated Atmospheric Residues
ARTES Atmospheric Residues
VISBR TAR Visbreaking Residues (Asphalt) “Insufficient availability of suitable
TRT LCO Hydrogenated Light Cycle Oils low-sulphur components…”
LCO Light Cycle Oils BIMCO Study/ENSYS-Navigistics, 2016
SLURRY <- asphaltenes
MED HDS Medium Hydrodesulphurization (500ppm)
TRT KERO Treated Kerosene

©2018 Aderco · www.aderco.com

Different regions, Components to Blend
North America HFO Blending (2020)
Vol. (barrels/day) Vol. % Sulphur % (m/m) Viscosity cSt @ 50°C
Visbreaking Residues 9,071 2.88 3.494 -
different recipes Hydrogenated Light Cycle Oils
Light Cycle Oils
112,600 35.63
11,703 3.72
0.107
0.714
-
-
Slurry 45,320 14.41 0.939 -
Bottom Oils 40,100 12.75 1 -
Differences in blend Treated Light Distillates Med. Desulph. 500ppm 76,694 24.39 0.019 -
components and recipes Treated Light Distillates 18,770 5.97 0 -
Treated Kerosene 649 0.21 0.065 -
Desulphurised Kerosene 111 0.04 0.326 -
Total 315,018 100.00 0.444 14.17
ASIA HFO Blending (2020)
Components to Blend Vol. (barrels/day) Vol. % Sulphur % (m/m) Viscosity cSt @ 50°C
Fuel viscosities may vary by Atmospheric Residues 114,489 6.06 2.103 -
as much as 100 cSt, if not Treated Light Distillates 291,104 15.40 0.030 -
Bottom Oils 241,081 12.76 1.000 -
more, depending on the region Treated Atmospheric residues 1,243,327 65.78 0.263 -
Total 1,890,000 100.00 0.450 110.70
EUROPE HFO Blending (2020)
Components to Blend Vol. (barrels/day) Vol. % Sulphur % (m/m) Viscosity cSt @ 50°C
Straight Diesel 224,083 23.05 0.552 -
Fuel incompatibility issues Fuel Catalytic Cracking Light Cycle Oils 113,224 11.65 0.587 -
Treated Light Distillates 27,316 2.81 0.044 -
Fuel management issues Treated Atmospheric Gas Oil 85% 351,048 36.12 0.148 -
Treated Purchased Gas Oil 5,404 0.56 0.015 -
Bottom Oils 152,943 15.73 1.000 -
Treated Atmospheric Residues 97,981 10.08 0.250 -
Total 972,000 100 0.450 17.20
Source: CE Delft

©2018 Aderco · www.aderco.com

Cost factors on Blend Stock
Qty in Wt % in
Optimum Blend
% of Imputed Key Blend Result @ Spec
Tons Blend Option Value* Property Optimum Range
the blending side Atmospheric Residue
VGO Vacuum Residue
28,008
9,920
56.02
19.84
56.00
19.80
36.77Density, KG/CuM
22.30Sulphur Content, Wt %
957.70 <991
0.50 0.5><0.5

e.g. 380 cSt No6 Fuel Oil-%2S

LCO-LS 0,5%
/
/
0.00
0.00
0.00
0.00
36.91Flash Point, deg C
71.59Pour Point, deg C
177.30
21.40
>60
<30
FCC HCN / 0.00 0.00 89.68Viscosity @ 50 deg C 380 380><380
SLURRY LS / 0.00 0.00 69.15Ash, Wt % 0.011 <0.1
Low-sulphur component LS MGO / 0.00 0.00 125.36Concarbon, Wt % 18.00 <18
LS VGO 6,926 13.85 13.90 133.26Water & Sediment, Vol % 0.00 <0.5
selection driven by availability SR LAGO LS / 0.00 0.00 124.44Total Sediment Potential 0.005 <0.10
and cost SR Kero 5,146 10.29 10.30 41.94Vanadium, ppm 70.40 <350
Aluminium + Silicon, ppm 0.00 <60
% Min/Max
Blend
TOTAL 50,000 100.00 Specific Energy, MJ/kg 41.00 >30
Fuel incompatibility issues Minimum 100 Sodium, Mg/kg 2.00 <100
Maximum 50,000 CCAI 822 870

Fuel management issues Cost $/Ton 276.48

S. Price
365.00
$/Ton
Profit $/Ton 88.52
Total Profit
($000) 4,426.10
Source: Refinery Automation Institute
*Inputed Value: Effective value of the component in the blend. The lower the quality and/or the higher the cost, the lower the inputed value.

©2018 Aderco · www.aderco.com

Cost factors on Blend Stock
Qty in Wt % in
Optimum Blend
% of Imputed Key Blend Result @ Spec
Tons Blend Option Value* Property Optimum Range
the blending side Atmospheric Residue
VGO Vacuum Residue
30,000
2,721
60.00
5.44
100.00
3.50
94.31Density, KG/CuM
22.30Sulphur Content, Wt %
984.20 <991
0.50 0.5><0.5

e.g. 180 cSt No6 Fuel Oil-%2S

LCO-LS 0,5% 4,120
/ 0.00
8.24
0.00
8.20
36.91Flash Point, deg C
71.59Pour Point, deg C
98.90
3.00
>60
<30
FCC HCN / 0.00 0.00 83.47Viscosity @ 50 deg C 180 180><180
SLURRY LS 10,000 20.00 0.00 -64.73Ash, Wt % 0.04 <0.1
Low-sulphur component LS MGO / 0.00 0.00 125.36Concarbon, Wt % 16.10 <18
LS VGO 2,000 4.00 100.00 189.62Water & Sediment, Vol % 0.18 <0.5
selection driven by availability SR LAGO LS 1,159 2.32 4.00 124.44Total Sediment Potential 0.00 <0.10
and cost SR Kero / 0.00 0.00 -13.57Vanadium, ppm 32.70 <350
Aluminium + Silicon, ppm 19.70 <60
% Min/Max
Blend
TOTAL 50,000 100.00 Specific Energy, MJ/kg 41.00 >30
Fuel incompatibility issues Minimum 100 Sodium, Mg/kg 0.00 <100
Maximum 50,000

Fuel management issues Cost $/Ton 253.54

S. Price
365.00
$/Ton
Profit $/Ton 111.46
Total Profit
($000) 5,573.10
Source: Refinery Automation Institute
*Inputed Value: Effective value of the component in the blend. The lower the quality and/or the higher the cost, the lower the inputed value.

©2018 Aderco · www.aderco.com

Alarming problems TODAY!
Over the past few months fuel chemical contamination.

On spec fuel turning off-spec!!

IMPLICATIONS

• LOP – Engine Wear

• Downtime
• De-bunkering
• Legal action
• Reputational Damage

©2018 Aderco · www.aderco.com

Styrene, Phenol, DCPD “150˚C”, Indene ?
Ingredients normally used in resins, plastics, expanding foams etc..

©2018 Aderco · www.aderco.com

”Marine Fuel Stability and Compatibility –
Issues, Tests and Management”
Armelle Breneol, Marine Logistic Advisor,ExxonMobil

There are a number of precautionary measures that can be taken:

Avoid mixing bunker fuels from different sources wherever possible

Store fuels separately until compatibility testing has been carried out.

Do not mix straight-run fuel oil [atmospheric or vacuum distillation] with a cracked [processed] one.

Steer clear of mixing fuels with greatly dissimilar densities

Where possible choose fuels with similar viscosities and densities

Do not mix a fuel oil with a marine diesel oil or marine gas oil

©2018 Aderco · www.aderco.com

Fuel labs expect problems on
the path to 2020 and beyond
Estimated global demand of 320+ million tonnes
of 0.5% sulphur fuels creates new risks.
• Availability of blending components is not assured
• Wide range of hybrid fuels
• Reduced fuel compatibility and stability
• Higher catfines content in the blends
• Risk of off-spec fuels

• More expensive fuels

• Fuel management issues
• Higher OPEX

©2018 Aderco · www.aderco.com

Incompatibility Drop Test

Source: Aderco R&D - test ASTM D4740

©2018 Aderco · www.aderco.com
Back to the start
Modern refining extracting more value per Mt

C8H18 Hawaiian
Islands
C4H10 C4H8

Saturated – Alkane
Unsaturated – Alkene
Stable
Unstable
$$$ $$$
(With a shortage of hydrogen atoms, the
electrons attract hydrogen atoms from other
$ hydrocarbon chains and water - )
$

©2018 Aderco · www.aderco.com

Distillate diesels compromised
The economical “re-blending” solution to
automotive ULSF global demand results in a
compromised diesel.

Highlighted show evidence of hydrocarbon chains agglomerated without the Aderco dose and after treatment the
agglomerations have been dispersed, increasing the smaller particle numbers by 30%.

©2018 Aderco · www.aderco.com

The molecule and the micelle

Surfactant non-ionic technology – not charged

24/7 Heavy Fines

The surfactant action of Aderco molecule is purely physical.

©2018 Aderco · www.aderco.com

 Fuel Stability
Hydrocarbon chain agglomerations

Dispersing hydrocarbon agglomerations

Source: Aderco – CRIQ report PE848844

Water de-emulsification and purifier performance
Cat fines detection
Catalytic fines:
Used worldwide in complex refining… catalyst particles (aluminum silicate) cannot be
removed completely in a cost-effective way, and are found in blended heavy fuel.

Fuel pre-cleaning onboard ships has a removal efficiency of approximately 80% for
Before treatment catalytic fines. In order to avoid abrasive wear of fuel pumps, injectors and cylinder
liners the maximum limit for Al+Si de ned in ISO 8217:2010 is 60 mg/kg for RMG and
RMK category fuels.
24 hours
Chevron

After treatment
Microbial contamination prevention by water separation
Intertek analysis cfu’s and pH levels

Before treatment

24 hours

After treatment
 Fuel specifications unchanged
Fuel treated with ADERCO complies with AUSTRALIAN FUEL STANDARDS

18ppm

1L:55Mt

100% sustainable
>146 C˚ Flash point
Aderco Tank Cleaning Package
With a solution tailored to each vessel,
the best preparation saves costs, too.

Aderco 2055G

• No downtime/off-hire
• 6 months continuous treatment
• Reduces commingling risks
• Regenerates sludge into usable fuel
• Minimises sludge disposal costs and risks
Results with Aderco Tank Cleaning Package

©2018 Aderco · www.aderco.com

DNV GL Statement of Fact
5 – Fuel Incompatibility Prevention

©2018 Aderco · www.aderco.com

Sulphur Cap 2020
Preparing For Change

©2018 Aderco · www.aderco.com