World Bunkering > News > Winter 2010 > Renewed interest in blending

Blending, and in particular in-line blending, is a topic of renewed interest to the bunker fuel market. This interest appears to be driven by robust bunker prices combined with the increasing pressure on suppliers to measure and certify the quality and quantity of fuel to meet the requirements of ECAs, MARPOL Annex VI and the recently revised ISO specifications.

Conventional wisdom states that it is extremely unlikely that there is any bunker fuel supplied in the market today that has not been blended (in one location or another). It therefore seems logical that as higher accuracy and lower cost blending technology becomes available that, where possible, this will be utilised further and further down the supply chain. External pressures are driving changes in the bunker market and many believe that those suppliers that evolve to meet these demands will in the future be best positioned to capitalise on this market.

The adoption of in-line blending is seen as a significant strategy that a bunker supplier can use to improve their customer service, operational flexibility and value proposition. This article summarises feedback from some of the in-line blending equipment manufacturers about the trends, configurations and strategies being considered by their customers (physical bunker suppliers) throughout the world.

Who’s investing, and why?

There are a significant number of bunker infrastructure investment projects, both newbuild and expansion, which are developing in-line blending as a ‘core component’ of their facility and operations. Most of the companies making these investments are applying rigorous net present value (NPV) and return on investment (ROI) calculations to the blender as part of an overall operating philosophy focusing on ensuring the equipment delivers the best return for long-term operation rather than simply having the lowest purchase price.

When comparing the cost of an in-line blender with that of storage tanks, the differentials are not large. However, when consideration is also given to the reduction in capital lock-up and the flexibility of being able to blend on demand a batch at reduced cost, the payback periods are attractive.

Specialist in-line blending equipment manufacturers claim their customers will achieve savings of between $8 and $14 a tonne from this technology. Using the most conservative of these figures, indications are that even for fairly small facilities, with throughputs as low as 20,000 tonnes per annum, in-line blending can deliver a return on investment in less than a year, if correctly designed and utilised. As a result, physical bunker suppliers are developing new operational strategies and are placing demands on the manufacturers of in-line blending equipment to meet these evolving market needs.

Certification issues

Certification of the final blend, both for quality and quantity, is an important requirement of efficient operations. To achieve this, suppliers are demanding that in-line blending systems can accurately measure blend ratios and final blend output quantity. In most cases they also demand inclusion of equipment for the direct measurement of density, viscosity and/or sulphur, all of which can be used to control the quality of the final blended product.

In applications where the return on investment for on-line analysis (such as sulphur) is not justified, in-line blending systems must now be able to dynamically calculate the final blend quality based on the measured ratio of each component and the certified analysis of each feedstock. This enables the blender to automatically produce a certificate of quality for every batch blended. To accompany this, bunker suppliers are demanding that the blender package includes an automatic sampler to provide validation of the final batch blend quality parameters, in the event of a dispute.

Meeting customer demand

As the pressure increases for lower sulphur HFO, larger facilities are exploring the option to purchase and blend high and low-sulphur heavy fuel oils simultaneously, with the cutter/distillate using in-line blenders with viscosity, density and sulphur analysis to benefit from pricing differentials on high-sulphur products.

Due to the higher profile of newer flow measurement technology within the industry, customers increasingly want in-line blending systems designed to include their preferred choice, or a locally regulated type of flow meter. These could be a low pressure-drop solution like an ultrasonic flow meter, a direct mass measurement technology such as Coriolis, or a more traditional PD and turbine meter combination. As understanding of the flexibility of in-line blending increases, bunker suppliers are also looking to use more bespoke blending systems designed to meet their current needs as well as the ability to accommodate the future use of a much wider range of heavy and cutter stocks to continue meet evolving market demands.

IBIA’s role

What is evident is that in-line blending in the future is very likely to play a more prominent role in meeting the needs of physical bunker suppliers to deliver a range of bunkers that comply with specification from a wide range of feedstock products. What is also clear is that little formal or structured guidance exists for IBIA members (or others) about how best to minimise the risks and maximise the return from using in-line blending system within the bunker market. As a result, IBIA has formed a committee to address this topic. IBIA’s In-Line Blending Committee is preparing a concise guidance document to be published by IBIA on in-line blending of bunker fuels. The objective of the document is to provide impartial technical guidance for IBIA members who are considering the use of in-line blending for the physical supply of bunker fuels.

The guidance identifies the issues that need to be considered when selecting the most appropriate blending technology in order to meet the quality certification, operating profit and operational needs of a bunker supplier and its customers, as well as making recommendations against each consideration.

The committee formally met at the IBIA convention at Connecticut in September, where the preliminary draft of the technical guidance was discussed and the direction and content of the final document agreed. All that remains to be done is for the final amendments to be made and reviewed, after which it will be issued as a technical guide from IBIA.

Given IBIA’s unique position in the bunkering market and the increasing pressure on quality, quantity and compliance certification, IBIA is considering issuing technical guides on a wider range of subjects such as sampling, analysis, and quantity measurement.