Feasible SOx solutions Wärtsilä s Environmental seminar in Helsinki at June 22 nd, 2010 Vesa Marttinen, Director, Environmental Services Wärtsilä 1 Wärtsilä 30 April 2010 Decreased fuel cost / Vesa Marttinen
Introduction This presentation contains examples of SOx compliance solutions and their feasibility for Ship Owners and Operators. The aim is to highlight different alternatives with feasibility of them taking in to account optimized total result of operations including revenue potential, balance of capital and operational expenditure as well as fiscal result of sustainable impact. 2 Wärtsilä 30 April 2010 Decreased Fuel Cost / Vesa Marttinen
In next minutes we are to talk about... 1. Background 2. SOx regulations framework and learning's from the past 3. How to comply? Fuel Water 4. Secure the Total Result of Operations 3 Wärtsilä 30 April 2010 Decreased Fuel Cost / Vesa Marttinen
4 Wärtsilä 30 April 2010 Decreased fuel cost / Vesa Marttinen Background
Change is our common task Balance of Nature Environment Land and Sea Local and global Business Owners and Operators Yards and Suppliers Profitable Operation Society National International Secured welfare 5 Wärtsilä 1/3/2010
Cost structure PANAMAX TANKER Repairs & Maintenance (R&M) 3% Admin/Management 3 % Insurance 1% Stores & lubes 2% Sales 1% Capital costs 15% Manning 7% Canal tolls & misc 3% Cargo handling costs 1% Port dues 7% 15 year financing, 6% interest Bunkers 58% HFO = 400 /ton Total annual cost: 13 000 000 6 Wärtsilä 30 April 2010 Decreased Fuel Cost / Vesa Marttinen
USD/MBtu Fuel prices 35 30 HFO 380cst Rotterdam [USD/MBtu] 25 MGO Rotterdam [USD/MBtu] 20 15 10 5 0 Jan-00 May-00 Sources: www.lngoneworld.com, www.bunkerworld.com, LR Fairplay 7 Wärtsilä 30 April 2010 Decreased Fuel Cost / Vesa Marttinen Sep-00 Jan-01 May-01 Sep-01 Jan-02 May-02 Sep-02 Jan-03 May-03 Sep-03 Jan-04 May-04 Sep-04 Jan-05 May-05 Sep-05 Jan-06 May-06 Sep-06 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09
SOx regulations framework and latest learning's 8 Wärtsilä 30 April 2010 Decreased fuel cost / Vesa Marttinen
Where are Sulphur Emission Control Areas (SECA)? IMO SOx Emissions Control Areas (SECAs) are geographically defined areas where ships must limit their SOx emissions. They are defined as of follows >> SECAs Baltic Sea North Sea English Channel USA & Canada proposal to IMO for a SO x and NO x Emission Control Area. 200 miles from coast. Fuel Sulphur: First 1 %, then 0.1 % 2015, all ships. NOx: Tier III (present minus 80 %) 2016, new buildings. IMO adoption 2010(?), entry into force 2012(?) NS BS EC As of Feb 2006 9 Wärtsilä 1/3/2010
Learning's from the past SOx regulation will have impact to shipping community. Having said that it can still be compared to various SOLAS and MARPOL regulation amendments during the past years. Learning's from previous statutory regulation amendments: Once regulations are agreed they also come in to force There will be both operational and technical measures to comply with regulations Solutions will have a development boost few years before the date of entry Marine Environment (or safety, or security) will not change over night i.e. common sense is used with vessels specific date of compliance In first days there is understanding on over overall Health, Safety, Security and Environment. (ref. EU regulation for SOx from boilers ) 10 Wärtsilä 1/3/2010
11 Wärtsilä 30 April 2010 Decreased fuel cost / Vesa Marttinen How to comply
How to comply with SOx regulations - operational it seems now that the operational solutions are: Change from HFO operations to MGO (MDO) operations Proven technology, several Engines and Boilers already comply this way Full time operation is proven operations Switch when entering to SECA might be safety related operational issue. Challenges with MGO future price Challenges with needed amount of delivered to all ports for bunkering SOx emission trading Not established Could be used per vessel (like national NOx regulations) How to implement per owner/operator or per consortium? 12 Wärtsilä 21 January 2010 Cut Fuel Costs/ Mats Lagström
SOx compliance Cold Ironing Proven technology Equipments in land: heavy investment from port -> increased port fees Equipments on ship: sensible investment for both ports and ship owners Environmentally friendly only in case electricity is produced with less CO2, less SOx, less NOx, less waste and with lower material footprint compared to other solutions! 13 Wärtsilä 21 January 2010 Cut Fuel Costs/ Mats Lagström
SOx Compliance - Scrubber Exhaust Gas Proven technology Moderate investment for ship owners Additional sludge ~10% (no extra fee) Works with freshwater, where NaOH is added to neutralize SOx. ph ph NaOH unit Fresh water Scrubber Water Treatment CLOSED LOOP = Zero water discharge in enclosed area Cooling Process tank Holding tank Seawater Sludge tank 14 Wärtsilä 1/3/2010
300 350 400 500 550 600 650 700 750 800 850 900 Scrubber operating cost saving and payback of investment Scrubber operation cost saving and payback time 16000 15000 14000 13000 12000 11000 10000 9000 8000 7000 6000 5000 Operating cost savings 1000 /year Payback time (years) 1,2 1,1 1 0,9 0,8 0,7 0,6 0,5 0,4 0,3 Fuel cost saving versus operating costs 160 140 120 100 80 60 40 20 0 USD/MWh Fuel May 2008 Fuel cost saving = MGO - HFO difference = 50 150 USD/MWh Fuel August 2009 Operating costs 5 USD/MWh: Caustic soda Pumping Water Maintenance Caustic soda August 2009 Fuel price difference (MGO-HFO) [USD/t] 15 Wärtsilä 1/3/2010
SOx Compliance - LNG 4 6 3 1 5 2 Proven technology Moderate investment for ship owners Bunkering facilities are pending from SECA areas 1. Storage tanks, 2. Evaporators, 3. Gas valve unit, 2. 4. Bunker Station, 5. Dual-Fuel Main engine, 6. Dual-Fuel Aux Engine 16 Wärtsilä 30 April 2010 Decreased Fuel Cost / Vesa Marttinen 9/25/2017
Natural Gas As Marine fuel -20% Emission values [%] 100 90 80 70-80% 60 50 CO 2 NO x -100% 40 30 20 SO x Particulates -100% Dual-Fuel engine in gas mode Diesel engine 10 0
Secure the total result of operations 18 Wärtsilä 30 April 2010 Decreased fuel cost / Vesa Marttinen
Screening alternatives Revenue and Capital Operating cost saving and impact Technology Retrofit Secured revenues 2 nd hand value CAPEX Immediate savings Reduced impact to environment Savings on tax and fairway/harbour fees Operation & Maintenance Secured revenues Operational Expenditures System improvements Condition based maintenance Energy saving operations Reduced impact to environment Solutions Project development SOx solution retrofit projects Consulting and Training System optimizers Environmental Analysis Agreement based maintenance 19 Wärtsilä 30 April 2010 Decreased fuel cost / Vesa Marttinen
Ship owners selection and enabling actions Vessels trading group onboard Aux. engine SCRUBBER Propulsion SCRUBBER Propulsion LNG Aux. engine LNG ashore Share of fleet Technical SOx solutions Saving potential (time in SECA) % of fleet 1 Technology for auxiliary and main engines Average EUR m per annum MGO vs. HFO Some times Half time 70% 20% Fuel switch HFO-MGO Cold Ironing Cold Ironing 0.5 M 1 M Full time 10% 2 M 1) In this case the fleet does not include small ships To avoid transportation shift from sea to shore the society to consider 30% support for SOx solutions during 2011-2014. This supports the environmentally friendly way. Wärtsilä SCRUBBER payments are connected to vessels fuel bill saving. Wärtsilä September 25, 2017 Vesa Marttinen
21 Wärtsilä 22 June 2010 Vesa Marttinen The profit of business from purchase or charter of vessel through operations years to sale or re-delivery is the period to optimize. This includes revenue, cost, and impact to environment. Thus total result of operations.
22 Wärtsilä 30 April 2010 Decreased fuel cost / Vesa Marttinen BACK-UP
Scrubber water flow Water flow comparison 50 45 40 35 30 25 20 15 10 5 0 m 3 /MWh 50 SWS water flow 24 FWS circulating water flow 0,2 0,2 FWS water FWS effluent consumption flow Bleed-off. Small amount of scrubbing water extracted to remove contaminants. Disposal: Never overboard. Storage: Process tank with some buffering capacity permits: Operation of scrubber with waste water treatment plant out of operation. Also vice versa. Effluent. Cleaned bleed-off. Disposal: At open sea discharged overboard. Storage: A holding tank: Offers storage capacity when operating in a zero discharge mode. Permits cleaning of bleed-off anytime, also when scrubber not running. Sludge. Disposal: In port, never overboard. Storage: In ship s sludge tank, possibly in the existing tank with separator and other sludge. SWS = Sea Water Scrubber FWS = Sea Water Scrubber 23 Wärtsilä 1/3/2010
SO x Scrubber: operate HFO, meet environmental demand 1. Immediate savings in SO x Emission Control Areas. July 2010 the increasing premium for low-sulphur fuel will impact the need and by 2015 the ROI even less than one year. 2. In EU ports from 1.1.2010 SOx compliance need to be met. SOx scrubbing is serious alternative. 3. In global operation drastic savings in 2020 are evident. 4. Savings apply to all ships regardless of age. 5. Wärtsilä SOx scrubber is first approved marine scrubber. 24 Wärtsilä 1/3/2010