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Ship Owners Taking a Hard Look at Lube Costs

Ship owners are facing a seventh year of difficult economic times at the same time they are having to deal with new environmental rules as well as more complex engines requiring different approaches to lubrication. As a result, they are scrutinizing lubricant costs as never before.

Since taking responsibility for Shell Marines global business in October, I have spent a great deal of time speaking to customers. It became apparent that ship owners around the world face the same technical and vessel performance challenges, but the various regions have many differences.

Environmental restrictions, new engine designs and changing operational factors have spurred an intense period of innovation in marine lubricants. As a result, Shell and other suppliers have taxed their research and development budgets. Shell Marine Products operates its own dedicated testing facilities at the Marine Products Innovation Centre in Hamburg to solve the problems facing ship owners.

One challenge was the development of environmentally acceptable lubricants (EALs) that comply with the revised 2013 United States Vessel General Permit (VGP). The legislation mandates that commercial vessels built on or after December 19, 2013, and measuring at least 24 meters in length, use environmentally acceptable lubricants in all oil-to-sea interfaces while operating in U.S. waters. Commercial vessels built before that also must comply, unless the use of environmentally acceptable lubricants is technically unfeasible.

Environmental rules, including the limitation of marine fuel sulfur content to 0.1 percent from January 1, 2015, in Emissions Control Areas (or equivalence through exhaust gas scrubbing) have also been a main driver in the marine engine market. Their impact has been most telling in the two-stroke engine sector.

The position today does not compare with the years before 2007, when the economic environment for shipping was less challenging. Today, we are in the seventh year of an economic crisis in the shipping industry, and the biggest focus is on reducing fuel consumption, which has resulted in the introduction of new engine designs over the last few years.

While these engines consume less fuel – which is good in many respects – they are more complex and challenging to lubricate when used in slow steaming mode. Slow steaming has become the new normal for many ships to save fuel and refers to the practice of operating transoceanic cargo ships, especially container ships, at significantly less than their maximum speed.

The adoption of slow steaming regimes has brought new engine maintenance issues and a need for a focused response from cylinder oil suppliers. In load dependent cylinder lubricators, slow steaming may lead to lower feed rates; thus, higher base number (BN) cylinder oils are needed to protect against corrosion problems.

In addition to slow steaming, the introduction of higher stroke-to-bore ratios and modified exhaust valve timing all conspire to lower cylinder liner temperatures and create the potential to retain combustion gases from the previous stroke. These conditions promote acid deposition and corrosion of liner walls that could lead to excessive wear, piston blow-by, scuffing and subsequent failure. As a result of these challenges, many lubricant suppliers have launched new products with high base numbers to help neutralize the acids.

For lubricant suppliers, this has demanded commitments to R&D, logistics and product support. For ship owners, this situation has resulted in more complexity and the need to monitor engine and lubrication performance much more closely.

Responding to these conditions would have been difficult enough in a normal environment. In the current shipping crisis, however, it has stretched the resources of many players. And ship owners are increasingly forced to focus on short-term costs rather than long-term total cost of ownership.

For two-stroke engines, Shell, for example, now offers a range of lubricants formulated to combat all types of oil stress under the widest range of operating conditions. Some products protect engines operating with low-sulfur fuels in Emission Control Areas. Others are formulated to meet the needs of newer ship engines when burning high-sulfur fuel and even under slow steaming operation. Another group of cylinder oils have base numbers ranging from 25 to 100 BN to account for a range of fuel sulfur contents, engine types and operating profiles.

But new products also generate logistics and service challenges. With cylinder oils, for instance, Shell has needed to make a greater range of products available at more destinations over the last 12 to 18 months. We do not need to have all products available in all markets, but we have added a number of ports of product delivery in the last 12 months, based on our continuous analysis of vessel traffic and lifting patterns. Other marine lubricant suppliers have done the same.

To add value, lubricant suppliers need to respond as a service partner to customer needs. For example, clients are facing an erosion in the knowledge base held by crews. Technical service support and training are becoming critical parts of our contribution to the wider marine industry.

Looking forward, energy demand might double by 2050, suggesting the need for a mixture of energy resources. Shell believes that liquefied natural gas, for example, will play a role in the future of the marine fuels industry. There are still a few challenges, such as aligning the demand growth and supply infrastructure. However, LNG may well take a growing share of the two-stroke market.

The key to success remains preparation. The marine fuels market is changing, and new challenges will arise for shipping companies. The more marine lubricant suppliers become true partners to their customers and help them focus on their core activities, the more we help them to add value to their businesses.

Jan Toschka is general manager Shell Marine Products, based in Hamburg, Germany.