TSA Conference 2019
Tank storage updates
As reported in this year’s TSA annual review, HSE
RIDDOR statistics show that the bulk liquid storage
sector remains one of the safest industries in the UK
with proportionally fewer injuries than almost all other
sectors.
http://wwe.hse.gov.uk/statistics/industry/
index.htm
Attending the 2019 TSA conference and exhibition,
Fuel Oil News was struck by more notable differences in
speakers’ views than found in previous years. Concerns
about the industry’s ability to maintain plant and
equipment, reduce the number of smaller incidents and
keep pace with decarbonisation were far more apparent.
One of TSA’s key objectives has always been to
encourage performance improvements and raise overall
standards within its membership.
Starting with an upbeat keynote speech from IHS
Markit’s Giacomo Boati, executive director, oil markets
midstream & downstream, had ‘overall good news for
the industry’.
As the industry looks to its future, visitors to the
exhibition, which took place alongside the conference,
were able to discover innovative new technologies
advancing inspection and control techniques through
the use of drones, lasers, virtual reality, robotics and
smart sensors.
Keynote speaker
Giacomo Boati
sees ‘high
uncertainty
around middle
distillates’
18 Fuel Oil News | December 2019
Choppy waters, the
biggest driver for
growth and peak
demand
Those concerned with marine fuels
are ‘navigating choppy waters’ said
Giacomo. Remarking that marine bunker
fuel in a low carbon world had to be the
‘most disruptive global marine event for a
long time’, he sees the potential for some
long-term uncertainty.
Whilst compliant fuel is likely to
be the default initially, it will be very
expensive for shippers. A big requirement
for marine gas oil is expected in February/
March 2020, a move which could further
tighten the middle distillate market.
Reaching a peak in quarter two, marine
gas oil’s share will increase from 32% to
53%.
Longer term more scrubbers are
expected to be installed. To date
around 2,000 have been fitted with
more due. Beyond 2020 Giacomo
sees ‘a strong adoption of scrubbers’
in the meantime many shippers will
continue to burn heavy fuel oil (HFO). A
significant amount of non-compliance
is likely, including around 8% in
controlled areas.
A greater switch to LNG-fuelled
ships is also foreseen. Whilst being a very
clean fuel, it is not without infrastructure
problems, however its importance to
shipping will grow.
As the market adjusts, refiners could
experience difficulties; shrinking HFO
demand is likely to see HFO going into
the power sector in the Middle East and
South America.
Giaocomo sees ‘high uncertainly
around middle distillates’ with the price
potentially ‘going through the roof’.
On the positive side this could result in
more opportunities for storage terminals.
Recent attacks on Saudi facilities have led
to concerns that similar events could put
further strain on this market.
With both shipping and aviation
miles needing to take a share of the
decarbonisation burden, IHS Markit has
been asked to investigate these non-road
sectors as government takes a stronger
view as to their regulation.
The biggest driver for growth and
peak oil predictions
The biggest driver for growth in the
fuels market is transportation. Giacomo
sees continuous growth for fuels with
China’s gasoline consumption expected
to peak around 2024. Optimistic about
the continued use of current fuels, the
adoption of alternatively fuelled vehicles
is seen as having little impact, particularly
in relation to HGVs even up to 2040.
Diesel remains the most economical
fuel for trucks, and going forward there is
much room for greater efficiency. In the
medium-term demand for road fuels is
seen as ‘positive’ and ‘relatively stable’.
With global peak oil demand around
2035 – ‘we still have some way to go
but demand will plateau’ with this being
earlier in Europe and the USA.
The largest truck markets are
China, Japan and the USA where there
is presently no market for electrification;
some vehicles run on natural gas, but the
majority are still diesel.
Faster changes will be seen in other
markets with an increasing uptake of
electric/hybrid by 2025 with 30% pure
electric by 2040. Globally, the car stock
is likely to change very slowly due to the
average car being kept for several years.
Presently fuels decarbonisation is
progressing slowly but 10 years from now
Giacomo expects ‘a significant impact
resulting from the strong sentiment
against diesel across Europe’, with IHS
querying peak diesel in 2021?
In order to meet present demands,
refineries are expected to run hard in
2020-2021 with Asia and the Middle
East dominating in terms of new refinery
runs. Seeing the biggest decline, Europe’s
gasoline surplus will tighten, gas oil
dependency will decline whilst robust
demand for jet fuel will see the deficit
increase.
Bringing both risk and opportunity,
global trade routes are expected to
change as the fuels balance across the
globe sees more disruption in the longer
term.