Global requirements for lower sulfur marine fuels that begin next year will support US energy goals, a group of 14 Republican US senators today told a skeptical US administration.
A decade of investment meant US refiners were poised to benefit from the tougher requirements administered by the International Maritime Organization (IMO) that begin 1 January, 2020, a group including US senators Bill Cassidy (R-Louisiana) and Jim Inhofe (R-Oklahoma) said in a letter addressed to President Donald Trump.
"Timely implementation of the IMO 2020 standards will bring tremendous advantage to our country and serve as another success story in your mission to achieve American energy dominance," the senators wrote.
Nearly all global shippers must next year adopt fuel systems with emissions equivalent to 0.5pc sulfur, down from the current 3.5pc sulfur limit. Vessels can run costlier, lower sulfur distillates, use exhaust scrubbers capable of removing sulfur from emissions or move to alternative fuels, such as liquefied natural gas.
Refiners and shippers expect the change to create a short-term surge in demand for lower sulfur distillate as the major marine fleet competes with on-highway, heating oil and jet fuel demand for supplies. Many US refiners operate the complex and expensive equipment needed to wring lower-sulfur fuels from cheaper, higher-sulfur crude and other feedstocks. Less complex refineries accustomed to running those cheaper supplies and selling higher-sulfur production into the bunker fuel market will struggle. Argus estimates that the regulation will displace about 2mn b/d of high sulfur fuel oil in 2020.
Today's letter echoed many of the points refiners have stressed to the administration since Trump officials expressed alarm last fall that the policy could raise fuel prices in an election year.
The administration has since cooled that concern. US Coast Guard deputy for commercial regulations and standards Ben Hawkins said last week that he expected the rollout of IMO standards to challenge marine fuel supply in some ports next year.
"We do expect there are going to be some bumps," Hawkins said at a US Association for Energy Economics conference in Washington, DC. "But what we expect is that, with transparency and consistency, it will be easier to navigate the bumps ahead."
