6/6/2014 1 February 2010 Jet Fuel Supply Integrity The impact of Manufacturing and Distribution on fuel quality Dr. Anthony Kitson-Smith Oulton Hall June 2014 Economics of Marine Import Terminal vs Refinery •Refining margins have been strong for the last few years, but are currently poor •The older refineries are going to be increasingly challenged: •They are a long way away from the new, growing markets and emerging sources of crude •New refineries are now being built closer to these markets •New legislation, especially environmental, will add cost and complexity •Product specifications – across all products •Manufacturing restrictions – CO2, SO2 emissions •Drive to use cheaper, harder to run crudes: •More impurities to process out •More corrosive properties leading to higher maintenance costs
Transcript
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February 2010
Jet Fuel Supply IntegrityThe impact of
Manufacturing and Distributionon fuel quality
Dr. Anthony Kitson-SmithOulton HallJune 2014
Economics of Marine Import Terminalvs Refinery
•Refining margins have been strong for the last few years, but are currentlypoor•The older refineries are going to be increasingly challenged:
•They are a long way away from the new, growing markets andemerging sources of crude•New refineries are now being built closer to these markets•New legislation, especially environmental, will add cost andcomplexity
•Product specifications – across all products•Manufacturing restrictions – CO2, SO2 emissions
•Drive to use cheaper, harder to run crudes:•More impurities to process out•More corrosive properties leading to higher maintenance costs
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World JetDemand & Supply Imbalance
Economics of Marine Import Terminal vs Refinery
• Simply put: - There is an excess of global refining capability, super refinerieshave been built in developing countries/emerging markets, built specificallywith the intention to export to large sea going vessels, on a huge scale withmodern technology and local resource efficiencies which dwarf those of theolder, smaller, and less efficient to run refineries sitting in mature marketssuch as Europe and North America – strangled further by the continuedinvestments needed to meet the complexities of the ever more stringentproduct specs for all clean and dirty grades, as well as on the manufacturingprocess itself - CO2, SO2 emissions etc.
• This is not new, this trend has been developing for the past 20 years and isset to increase as the AG/East continue to add to their refining capabilities.
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Economics of Marine Import Terminal vs Refinery
• This trend is amplified for Jet fuel for three key reasons
1) The Jet product specification is (in theory) Global, it lends itself to a marketthat needs to balance via global arbitrage more than any other finished grade.
2) Jet fuel typically has lower returns than other more complex/lower sulphurgrades and those refineries in the mature markets that have invested toupgrade de-sulphurisation kit to meet these complexities therefore choose tomaximise those other grades over jet. As a result we have typically seenrefinery Jet yields drop in the developed markets of Europe and NorthAmerica.
3) Jet fuel demand is in essence concentrated in a few key hub locations, othergrades have to dissipate to a much wider network, typically petrol retailerforecourts, manufacturing locations/agriculture, thus incentivising large bulkmovements of a single grade to develop to what should be a more efficientbulk import system.
QUESTION TIME
Which of the following statements best reflects your view?
1. Full compliance with EI 1530 essential throughout thesupply chain?
2. Full compliance with EI 1530 essential even if the supplychain is limited as result?
3. Full compliance with EI 1530 essential only for the supplychain from storage direct to airport?
4. Never heard of EI 1530
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Quality Assurance Fundamentals
Make it Right and Keep it Right• Make it right is the responsibility of manufacturing.
• Purchaser needs to be sure of provenance and quality .
• Keep it right is the responsibility of supplier.• Don’t break the quality chain.• Understand the issues• Take great care of the interfaces
MAKE IT RIGHT – THE ISSUESHeavier Crudes / Increased Barrel Whitening will result in:
Increased use of cracking processes since percentage of light productsneeded from Crude will increase and specifications tighten.
More cracking means less stable fuels (Higher Olefin Content – unlesshydrotreated.)
Use of synthetic/ bio components
Which Means: Greater use of Anti-Oxidants Greater need for Hydrogen Treating (Increased Saturation) Greater need for improved detergent additives in ground fuels Higher mix energies to achieve homogeneity
Which Means: More vigilance for importers Higher risk of mixing issues Higher risk of off-specification during transport and storage
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JET SPECS – RISK AREAS
appearance colour acidity aromaticssulphur
totalsulphur
mercaptan
hydroprocessed
components
severelyH P C s
distillationtemps
flashpoint
densitydistillationresidue
distillationloss
freezingpoint
viscosity
specificenergy
smokepoint
copperstrip
corrosion
JFTOTtube
depositrating
particulatesMSEPwithout
SDA
existentgums
MSEPwith SDA
COMPOSITION
VOLATILITY
FLUIDITY
COMBUSTION
CORROSION
THERMALSTABILITY
CONTAMINANTS
SHIPPING
MARINETERMINAL
IMPORTPROCESS
Conductivity FAME
• Choice of Vessels• Vessels selected based on industry-accepted change of
service practices (HM-50 etc)
• Inert Gas systems• Soot and Acidic gases may cause cargo to be off-
specification on arrival.
• Loading• Documentation to ensure traceability
• Bon Voyage• Additive Dosing• Purchase of Cargoes - FOB/ spot• Ship to Ship transfers and traceability
• Facilities• Supply Logistics on shore, segregated? FAME?• Marine arms and unloading hoses – Dedicated?
• Other Risks• Filtration required?• Segregated tanks for imports• Microbiological growth checks• Water management• Water management• Water management
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Hazy fuel from ship’s receipt after 1 week settling
Water in Ship’s Cargo– Can you Handle it?
MARINE RECEIPTS
Filtration – Keeping it RightSTORAGE FACILITIES & DESIGN
• Can your receipt filters handle the pace?• 5th Edition EI 1581 suitably sized• Similarity• Bypass for wet bottoms?• Correctly maintained
• Cost Effectiveness• Filtration vs additional tankage• Need for pre-filtratio
• Other considerations• Need for recirculation• Need for additive dosing/ re-dosing• Salty Jet?
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Coalescer elements showing signs of majorsalt contamination - poorly maintained Meroxunit at upstream refinery
Filters – Fit for purpose…..STORAGE FACILITIES & DESIGN
STORAGE FACILITIES & DESIGN
• Former refinery off-site facilities?• Are pipelines segregated from other grades• Can jetty lines cope with import
flow rates• Is testing complete prior
to discharge• Is receipt monitored during
discharge
• Receipt Tankage• Is import tankage designed for
bulk dewatering• No re-run capability for drains.• Product recovery system
• Other considerations• Microbiological Monitoring?
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• Vertical tanks should ideally be frangible cone roof toprevent ingress of rain and minimise entry of airbornedust/sand.
• In tropical climates ‘Internal’ floating roofs are desirablefor safety and environmental reasons. External floatingare not recommended
• Tank floor should be cone down with single central sump.Plates must be lapped to ensure flow to sump with nowater retention
• Horizontal tanks must slope to a sump at the lowest point.• All tanks should have top hatches to enable sampling,
dipping and inspection• All tanks require safe access to top fittings.
• Tanks shall have separate inlet and outlet connections• Terminals tanks should have a raised suction but a
floating suction is preferable
STORAGE FACILITIES & DESIGN
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Refinery Tanks• Typically flat bottom, side drain,
unlined, maybe open floatingroof
• May not be in “ideal condition”
• Usually need to improvedewatering as single drain toosmall for effective waterremoval
• May need to line floor and 1st
metre of wall to improvedewatering
STORAGE FACILITIES & DESIGN
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Tank plates correctly lappedand low point sump belowtank plates……..pity aboutthe flushing line
Tank plates incorrectly lapped– microbial slime on tank
floorRecirculation line createsbarrier to good circulationand draining.
STORAGE FACILITIES & DESIGN
Other Tanks Issues
Other Tanks Issues
STORAGE FACILITIES & DESIGN
Tank plates correctly lapped and lowpoint sump below tank plates……..pityabout the flushing line
Tank inlets – angled? Diffuser? JetMixer?
Tank outlets – raised? Upturned/slotted? Floating (and working)?
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KEEP IT RIGHT - FACILITIES
• Capex versus Revenue? (Spend now or pay later?)• A well designed system will prevent contamination and possible fuel
degradation from:• Other products, Untested fuel• Dirt, water and rust• Unapproved additives• Microbiological contamination• Unsuitable construction materials
• The system should ensure that contamination is easily detected andeffectively removed
• Adequate, efficient and effective sampling points• Frequent systematic checks• Operating experience significantly influences type and frequency of
checks
• Better facilities allow management of distressedcargoes……….
• Off-spec cargo costs can easily exceed $1m – NO ONE WANTSTHIS!
KEEP IT RIGHT – OPERATIONS• Operating standards and procedures?
• JIG/API/EI Compliant (ICAO 9977)• Tank certified after receipt?• Daily water draw off• Required Settling
• Operating personnel• Trained, motivated and Competent (understanding)• “Understand” document records and trending
• Inspection and Verification process• Annual “external eyes” expert audit check?• Internal review process• Waiver authorisation with appropriate management endorsement• Close monitoring of operational interfaces
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QUESTION TIME
Which of the following statements best reflects your view?
1. The supply chain has self-audited for years, that is OK
2. The supply chain needs independent oversight paid by thesuppliers
3. The supply chain needs independent oversight paid bypassenger levy
4. The key part of the supply chain for oversight is that partinvolved in direct supply to airports
STORAGE FACILITIES & DESIGN
Tank-side Dewatering• Quickflush tanks with product return• Easy visual assessment of sample
Full Scale Dewatering• May need to employ large volume “wet
bottom” or tank flush tank• No re-run capability so conserve or waste
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SAMPLING AND TESTING
• Sampling compliant with industry practise?• Fixed sample points flushed• Tank top sampling with dedicated equipment?• New/clean and rinsed sample containers• Labelling
• Testing• Laboratory competent to test Jet fuel• Partakes in recognised lab cross-check scheme• Effective QC scheme
• Certification• Authorised signatories?• Up to date with required standards and methods
KEEP IT RIGHT - CERTIFICATION
• Sampling compliant with industry practise?• Fixed sample points flushed• Tank top sampling with dedicated equipment?• New/clean and rinsed sample containers and labelling…..
• Testing• Laboratory competent to test Jet fuel• Partakes in recognised lab cross-check scheme• Effective QC scheme
• Remediation Capability• Tank to tank transfer? Recirculation capable?• With or without filtration………….
• Certification• Authorised signatories?• Up to date with required standards and methods
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KEEP IT RIGHT - DELIVERYInland OptionsPipelines.• Dedicated? Segregated manifolds?• Tank design meets requirements and
Filtration if direct to airport• Fungible
Road and rail loading• Dedicated?• Usually direct to airport, so tank design and
filtration requirements apply
Marine OptionsBarges usually direct to airport, so tank designand filtration requirements apply
Large marine transports – pumping rates, jettyoccupancy, dedicated lines, arms
SUPPLY INTEGRITY
HOS Ltd. Buncefield Terminal(Dec 6th, 2005)~50% of Heathrow Supply
Hurricane Katrina Aug 29th, 2005Took 12% of US Refining CapacityOff-line
Volcanic Ash The Rainy Season
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Contaminated water bottoms of a mainrefinery supply tankSupply Suspended
SUPPLY INTEGRITY
Heavily Contaminated Water bottom fromStorage Tank
Supply Suspended
QUESTION TIME
Which of the following statements best reflects your view?
1. The greatest risk to supply integrity is from longer supplyroutes
2. The greatest risk to supply integrity is at the refineries
3. The greatest risk to supply integrity is at the airports
4. The greatest risk to supply integrity is the lack of effectiveoversight
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KEEP IT RIGHT – SUPPLY…Refineries Direct to Airport• May only be tested once at the refinery, single point test reliance• Limited options for contamination, but little independent oversight
Marine Import Options• More complex supply chain, but multiple testing and independent
oversight.
• Higher risk of contamination and loss of traceability
Summary• The simple supply route has no guarantee of quality and integrity
• More complex supply chains may increase risk, but with multiple sources supplyreliability can be better than the simple chain
• Quality assurance, good procedures, close monitoring and expert input andoversight are all critical to the integrity of the complex supply chain.
QC - The Bottom Line
Principle #1• Redundancy is a major part of achieving and maintaining
acceptable standards of Quality Control and Operational Integrity• Eliminating redundancy by cost cutting = Trouble
Principle #2• Shortfalls in equipment specification and performance, due to
poor design or deterioration can often be offset by improvementsin operating procedure
Principle #3• Hardware and Procedures will become outdated if not updated
as standards evolve
Choose your Supply Route with Care!
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QC - The Bottom Line
Any contra-indications or unusual observationsSHALL ALWAYS be investigated and the causesidentified and resolvedOperational and commercial pressuresSHALL NEVER be allowed to compromiseQuality Control
