CALIFORNIA STATE LANDS COMMISSION CUSTOMER SERVICE MEETING OCTOBER 28, 2009

1. CALIFORNIA STATE LANDS COMMISSIONCUSTOMER SERVICE MEETINGOCTOBER 28, 2009 MARINE AIR EMISSION CONTROL AND FUEL SWITCHING JOE ANGELO DEPUTY MANAGING DIRECTOR

2. INTERTANKO INTERTANKO is the International Association of Independent Tanker Owner representing more than 80% of the world’s independent tanker owners Our Members primary goal is to lead the continuous improvement of the tanker industry’s performance in striving to achieve the goals of: - Zero fatalities - Zero pollution - Zero detentions

3. COMMON APPROACH In 2005/2006 CARB and INTERTANKO sought a common approach to reduce air emissions from ships • CARB proposed that oceangoing vessels calling at California ports use distillate fuels • INTERTANKO proposed at IMO that all oceangoing ships use distillate fuels

4. DIFFERENCES However, were are two major differences • CARB required: - compliance by Jan 2007, later deferred until July 2009 - MDO with sulphur content of 0.5% max or MGO • INTERTANKO proposed: - compliance beginning in 2010 (2015) - distillate fuel with Sulphur content of 1% max, (0.5%)

5. DIFFERENCES • One of the main reasons INTERTANKO proposed later dates was to gain more knowledge and experience with the use of distillate fuels with sulphur content of less than 1% • INTERTANKO commented at CARB hearings supporting intent, but recommending delaying dates

6. OUTCOME CARB requires: • July 2009 – MDO with sulphur content of 0.5% max or MGO • Jan 2012 – MDO or MGO with sulphur content of 0.1% max IMO requires: • July 2010 - fuel with sulphur content of 1% max in ECA (July 2015 – 0.1% max) • Jan 2020 – fuel with sulphur content of 0.5% max worldwide outside ECA

7. PROBLEMS Three main problems with distillate fuel with a sulphur content of less than 1% LUBRICITY – concern with engine wear VISCOSITY – driving problem with engine failures FUEL FILTERS – clogged filters in distillate lines

8. TECHNICAL COMMITTEE “THIS IS AN ACCIDENT WAITING TO HAPPEN”

9. TECHNICAL COMMITTEE Immediate actions: • Obtain essential modification or safety exemption from CARB • Pre- test engines prior to entering California waters • Upon entry in to California waters, go to emergency conditions with manual operation at engines to maintain or increase fuel flow

10. TECHNICAL COMMITTEE Mid-term actions: • Change fuel pumps to positive displacement • Install chillers/coolers (partial solution that depends upon viscosity) • Additives to fuel in increase lubricity

11. TECHNICAL COMMITTEE Long term actions: • Require fuel with viscosity above 3 centistokes

12. ISO 8217 FUEL STANDARD • IMO has requested ISO to revise and update its marine fuel standard 8217 • ISO has completed Draft International Standard (DIS) that is currently our for balloting until December 17 • DIS has minimum viscosity of 2 for DMA (diesel) and 1.4 for DMX (gasoil) • American National Standards Institute (ANSI) is US voting body

13. ISO 8217 FUEL STANDARD Friday, October 23 Lloyd’s List “Revisions to fuel oil standards could put seafarers at risk” “DNV Petroleum Services has raised serious concerns that a proposed revision of the International Standards Organization/Draft International Standard 8217 marine fuel oil quality specification “may have a negative impact on ship operation and crew safety. DNV is…calling for re-evaluation of viscosity limits for gas oils. In a circular, DNV said: “If no precautions are taken, the actual injection viscosity will be below the lowest limit recommended by major engine makers.”

14. THANK YOU! WWW.INTERTANKO.COM