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MA-A

ALL SHOWS

© INFINEUM INTERNATIONAL LIMITED 2016. All rights reserved

The Marine industry is experiencing a high level of uncertainty; conversely there is the opportunity for developing new fuel and lubricant technologies.


M2Market Trends

ALL SHOWS

Asia plays a greater role in global shipping

Shipping industry faces over-capacity to 2020 and beyond

Weak economy – freight rate hits all-time low in 2015

Top Ports by Container Volume

China (7)

Singapore (1)

South Korea (1)

UAE (1)

Europe (1)

65% China


Freight rates for 2015 were at an all-time low due to a weak global economy. Analysts suggest world fleet capacity could double over the next 20 years, with overcapacity until 2020. Asia’s importance in global shipping is growing, with 8 of the world’s largest ports, the majority being in China.


M3Market Trends

ALL SHOWS

Global fleet

grows

2%per year

Ship capacity

increased

3xsince 2000

Diesel engines power

>60%of ships

HFO is the

bunker for

>80%of ships


In recent years several trends have emerged: The global fleet has increased with new ships using state-of-the-art technology. Gross tonnage is significantly exceeding the number of ships, suggesting that the size of ships is increasing. Diesel engines are still the main marine propulsion system. And heavy fuel oil remains the main bunker fuel for most of the marine industry.


M4OEM Market Picture

Source: Grand View Research 2015, market share by engine output in MW

ALL SHOWS

MAN Caterpillar Mitsubishi

2-Stroke Low-Speed Diesel

88%MAN

WinDG − JV of CSSC

and Wärtsilä −might

change the landscape


The OEM market share has been fairly consistent. MAN leads the 2 stroke market...




ALL SHOWS

Wärtsilä MAN Caterpillar Other

4-Stroke Medium-Speed Diesel

52%Wärtsilä

Less concentrated

than 2-stroke market


And Wärtsilä leads the 4 stroke market. We will watch with interest the Winterthur Gas & Diesel, joint venture of the China State Shipbuilding Corporation and Wärtsilä’s 2 stroke engine business.




ALL SHOWS

WärtsiläOther Rolls-Royce Mitsubishi

LNG Propulsion

35%Wärtsilä

New entrants emerging

with growing popularity

of LNG engine


We see a fragmented market landscape emerging, as LNG grows in the marine sector. Wärtsilä and Rolls-Royce, as first entrants, gained over 50% of the market, although new entrants continue to emerge.


M5Emission Regulations

ALL SHOWS

SOx

SOx and NOx

Possible Future

Sulphur – 3.5% to 0.5% review in 2018

NOx – Tier II (14.4g/kWh)

Open Waters

Sulphur – 0.10% from 1/1/2015

NOx – Tier III (3.4g/kWh) 1/1/2016

ECAs


Sulphur and NOx emissions regulations impact the marine industry. Open sea regulations limit fuel sulfur to 3.5%, though that may decrease to 0.5% in the future. Open sea NOx regulations, will remain at Tier 2 limits for the foreseeable future. In emission control areas or ECAs, the sulfur limit was cut from 1% to 0.1% in January 2015. For NOx, since January 2016, Tier 3 limits apply. As ECAs grow, ship owners must adapt to comply with the new tightened limits.


M6NOx Reduction Challenges

ALL SHOWS

20% reductionTier II – 14.4 g/kWh

lower temperature of combustion

80% reductionTier III – 3.4 g/kWh

Conversion of pollutants through catalyst use

Options

Dry Methods

• Advanced Miller Cycle

• Injection Timing

• Nozzle Optimization

Wet Methods

• Air Humidification

• Direct Water Injection

• Fuel/Water Emulsion

Aftertreatment

• Selective Catalytic Reduction (SCR)

• Exhaust Gas Recirculation (EGR)

Increasing complexity and cost requires lubricant and hardware co-engineering


The 80% reduction in NOx emissions, which started this January, will have a significant impact on the emissions control technology used on ships. A wide variety of solutions are available, which means complexity and cost may increase. Because many of the technology approaches can impact lubricant formulation, co-engineering of the hardware and marine lubricant will be increasingly important.


M7Various Solutions for Sulphur Reduction

ALL SHOWS

Single Fuel Options HFO + scrubbers ...OR... Low S fuel

Dual Fuel Options LNG + Low S fuel ...OR... LNG + HFO

Low sulphur fuel availability In ECAs some engines will run on middle distillates

Scrubber technology and costScrubber penetration catches up before 0.5% regulation implemented

LNG infrastructureDual fuel for large engines and ships with fixed schedule (ferry, cruise)

CAPEX for refinery switch to MDONo new investment announced

HFO will remain fuel of choice for most marine applications

Issues Outlook


Sulfur level reductions are also driving significant change. Vessels operating within ECAs are opting for a single fuel strategy, using either high sulfur residual fuels with an exhaust gas scrubber, or running solely on more expensive low sulfur fuel. Some are adopting a dual fuel strategy switching from high sulfur residual fuel in international waters to low sulfur diesel fuel or liquid natural gas in ECAs. Although there are cost and availability challenges associated with each approach, heavy fuel oil will likely remain the fuel choice for most marine applications.


M8Cylinder Oil Lubricant Formulation Challenges

ALL SHOWS

Sea

ECAs

70-110 BN

70-110 BN

Base Number

3.5%

0.1%

Sulphur

Single lubricant approach is difficult

to achieve

Blend on Board

• Custom blending of the cylinder lubricant specific to the ship, operation and fuel type

• OEM reservations on approvals for finished oil blend


Regardless of fuel choice, cylinder oils need to deliver sufficient protection. Higher sulfur fuels require a high base number oil for acid neutralization, while low sulfur fuels need a base number of 40 or less. A single lubricant approach would be valuable but is increasingly difficult to achieve as sulfur levels continue to fall. One option being introduced is Blend-On-Board. The system blends in additional additive, tailoring the base numbers from 30 to 120 depending on need. However, some OEMs have concerns about the system’s ability to blend finished oils meeting their requirements.


M9Interest in CO2 Emissions and Fuel Economy

ALL SHOWS

2007-2012shipping accounted for

~3.1%annual global CO2 emissions

IMO ‘business as usual’

scenarios expect CO2

emissions to increase

50-250%to 2050

IMO has introduced

technical and operational

efficiency measures


The drive to cut CO2 emissions will also intensify. The International Maritime Organization (IMO) reports that shipping accounts for over 3% of global CO2 emissions annually and it is expected to rise in the coming years. The IMO has introduced measures to reduce CO2 but lower operating cost is the real driver for OEMs to improve engine, propeller, and hull designs.


M10Cold Corrosion

ALL SHOWS

Fuel Economy Operation

• Turbocharger cut out

• Slow steaming

Lubricants must be optimized for acid neutralization, detergency and dispersancy

Ship operation changes can cut fuel consumption significantlyCold corrosion is the central concern for 2-stroke marine engines

Engine Design

• Long stroke for fuel economy

After Treatment

• EGR/SCR


To optimize voyage efficiency, many shipping companies are adopting slow steaming and cutting out of the turbocharger. However, combining them with new engine designs and EGR, can result in cold corrosion of the liners, a particular concern for 2 stroke marine engines. Choosing the correct lubricant is a challenge. While a 100 base number oil may seem right to prevent cold corrosion, other factors including engine type and fuel sulfur level also have an influence. Low sulfur fuel, harsh operating conditions, and slow steaming, require a cylinder oil optimized for acid neutralization, detergency, and dispersancy.


M11Summary

ALL SHOWS

• Diesel engines continue to dominate marine market

• HFO will continue to fuel the majority of ships

− LNG penetration will remain low

• Emissions regulations are the key drivers for change

− New fuels require new lubricant solutions

• Fuel economy impacts lubricant formulations

− Cold corrosion is a central concern

Hardware and lubricant co-engineering is increasingly important


In our view, diesel engines running on heavy fuel oil will continue to be the main source of propulsion. As Sulfur and NOx limits tighten, increased use of low sulfur fuels will need new tailored lubricants. As engine design and ship operation change for fuel economy, it is essential a solution is found for cold corrosion. In our view, collaboration will be key to ensure hardware technology and marine lubricant systems are successfully co-engineered.

shows all ma-a - infineum · pdf file2-stroke low -speed diesel 88% man ... nox tier iii...

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