World Bunkering > News > Summer 2011 > Avoiding risk

As ExxonMobil points out in its Outlook for Energy report, few people outside the industry gave much consideration to the growth in deepwater drilling, but Deepwater Horizon put the increasing importance of deepwater drilling in meeting energy demand for the future into the spotlight.

ExxonMobil already has an operations integrity management system in place which is comprised of 11 separate elements, including standards that third parties doing work on the company’s behalf will need to meet.

The company is also working with other energy companies to develop a Marine Well Containment System, which will enable the industry to respond more effectively to a deepwater incident in the Gulf of Mexico, Exxon says. The new system will enable up to 100,000 barrels of oil a day to be contained in depths of up to 10,000 feet, which can be mobilised within 24 hours of an incident.

As Eddy Van Bouwel of ExxonMobil told the International Parcel Tankers Association conference for chemical and product tankers in March, ExxonMobil estimates that energy demand per capita in OECD countries will be flat in the period to 2030, even though gross domestic product is expected to rise more than 60%, while energy demand in non OECD countries will be 75% higher than OECD demand. Such statistics mean changes in the types of fuels used in the industry, not least with the introduction of emission control areas round the globe.

If global energy demand is predicted by Exxon to rise by about 35% by 2030 demand for natural gas will rise by 60% between 2005 and 2030. Other energy sources are set to increase including the use of nuclear and biofuels, wind and solar power. Given the arrival of the low-sulphur emission control areas, one of the debatable points is what the supply of low-sulphur fuels going forward will be. Many, including the International Chamber of Shipping, have argued that there is a need to look at availability of distillate fuel supplies ahead of the 2018 review stipulated in IMO guidelines.

Aside from looking at alternative sources of fuel, efficiency is the name of the game. “Without energy efficiency measures, energy demand would skyrocket,” Mr Van Bouwel said. Sulphur content in residual fuel of less than 1% is a “rarity” at present. Taking HFO through the desulphurisation process is an expensive business. There have been some highly publicised sales among the major oil companies recently, which point to the fact that oil majors are offloading certain parts of their portfolio of assets.

Trafigura subsidiary Puma Energy has bought ExxonMobil’s downstream businesses in six Central American markets, including marine fuel supply businesses in Guatamala and Panama. Commenting on the deal, Puma Energy’s chairman Pierre Eladari stressed the importance of the company’s growth in Central America. “It positions us as one of the leading fuel supply companies in the region. Together with our acquisition of the CAPECO terminal and network of service stations in Puerto Rico, we believe this creates one of the strongest and most dynamic players in this market.”

Other recent deals include Chevron reaching an agreement to sell Chevron Limited, including the 220,000 barrel per day Pembroke refinery, to Valero Energy for $730m plus another $1bn for Chevron’s inventory and “other items”. The deal is expected to be completed in the second half of the year, provided it receives the necessary green light from the regulators.

According to Mike Wirth, executive vice president of Chevron Downstream & Chemicals, the sale is “consistent with our global strategy to focus our business on markets where we are well positioned to deliver strong returns for our shareholders”. According to the company, downstream activity is now focused on North America and the Asia-Pacific region which are, Mr Wirth says, “markets where we enjoy our greatest competitive strength and opportunities for growth”.

Shell, meanwhile, signed a $1.3 billion sale and purchase agreement with Essar Oil (UK) Limited at the end of March for its 270,000 barrels per day Stanlow refinery. The deal includes marine fuels businesses associated with the refinery, although not non-local marine business or lubes.