Why You Might Be Losing Millions on Sludge Disposal, and How You Can Prevent It

This article explains the importance of sludge disposal surveys and why it is imperative that an independent and impartial surveyor is engaged during every sludge discharge operation to a shore- reception facility like a dedicated sludge barge. This is especially the case in countries like China where the ship-owner has entered into a contract for being paid per/ton for the amount of sludge landed ashore.

What is sludge

Sludge is essentially a waste product (oil residue) from the fuel oil after purification. Sludge deposits in fuel are caused by the presence of wax, asphalt, tars and water in the bunkered fuel.

The sludge created during the fuel processing by the purifiers (centrifugal separators) is a perfectly normal phenomenon and the sludge that builds up in the purifier bowl is normally automatically discharged after a set time to the sludge tank. There is also a large proportion of water discharged with the sludge. This is known as a 'shoot cycle', which ejects sludge which then drain to a sludge tank.

Without oil purification, the engine could get damaged by increasing the wear of the engine components and clog the system. The sludge is then disposed ashore to a shore reception facility or barge. Where fitted and possible the sludge could also be discharged to the incinerator but this is not recommended. This is because the sludge is abrasive and not very combustible, and there are lot of processes involved in this which is very time consuming and not very cost-effective.

Note: Sludge Tank is not to be confused with Oil Bilge Water/Waste Tanks. As explained above, sludge is the residual waste generated during the normal operation of a vessel mainly resulting from purification of oil (i.e. when the FO goes through purifiers) and Oily Bilge Water usually results from leakages, maintenance work and may frequently be contaminated by detergent / solvents etc.

Sludge Discharging

Conventional methods of sludge discharge/disposal involves incinerating the sludge on board, or disposing of it to a shore reception facility which could be a barge or truck or direct hook-up at the terminal. Incineration is an expensive process because the sludge has to be de- watered by evaporators and then mixed with diesel oil to generate a combustible fuel.

Disposal on land is also associated with considerable costs, as the sludge has to be transported to a waste disposal site, which in turn has to be paid for or depending on where you are – the ship-owner would get paid per ton (or cbm) of sludge discharged. This is where Petro Inspect plays its part ensuring the ship-owner is getting every penny's worth of sludge discharged ashore.

Sludge Discharge/Disposal Surveys 

When the sludge is disposed ashore our scope is to monitor the disposal of sludge from the vessel, witness the sampling, checking that each part of the process is being performed in the most cost effective manner, with maximum recovery of useable oil and where required also, take samples directly from the sludge tanks (as drip sampling will clog the sampling device) or from the barge.

Petro Inspect surveyors would physically measure the quantity of sludge in the tank and note the water interface. Once the sludge is de-watered, we would know the remaining quantity is pure sludge only. This is the most crucial step in any sludge disposal survey as otherwise the reception facility may declare the percentage of water contained in the sludge to be much higher than the actual and thus paying much less than the actual amount of pure sludge discharged.

For example, the actual amount of oil content could be as high as 70% but the disposal facility may report (self-declare) this to be only 30%. This could result in literally millions of dollars of loss revenue for a company with a large fleet per year!

Sludge Discharge/Disposal Cost

Sludge companies (sludge disposal vendors) in China would usually pay for the sludge disposal at no cost to the owner unless the sludge tank has 100% water in that case a fixed barge fee is charged in the region of USD $500-800. The sludge disposal company may pay anything between USD $50 - $70 per cbm for "Pure Sludge" and may charge the owners between USD $10 - $25 per cbm of water content.

Some companies may choose to give an incentive or 'preferred rate' of 'x dollars' to ship owners if the sludge volume to be discharge is above their minimum quantity for e.g. the sludge company may pay USD $75 per cbm if the sludge quantity is above 50 cbm and pay USD $60 if below 50 cbm.

One the other hand, some sludge disposal vendors may also choose to pay per ton once the density of sludge is known (density is required to convert cbm to metric tons) and of course deducting the water content stated in the laboratory report.

Gone are the days when price per ton offered was between USD $100 – 130 and even more. Different pricing models are considered which includes bidding process for sludge disposal vendors, sampling labs, independent third-party surveyors to represent the vessel and fleet price negotiation (volume based, content based or lump sum payment per "x" number of vessels).

MSA (China Maritime Safety Administration) regulations calls for all vessel's departing the last port in China to discharge 70% of the sludge volume. However, it is best to contact the local agency to get up to-date information as different ports have different regulations. Following is a working example regarding costing for sludge disposal in China.

For a company with a large fleet, the losses could run into millions of dollars per year!

It is not uncommon for the vessel crew to be actively involved by accepting kick-backs thus turning a blind eye to the whole sludge discharge operation or even going a step further by colluding with the reception facility and pumping "good fuel" either separately or co-mingled into the sludge itself. There have been instances where we have found MGO hidden in Bilge Holding Tank and FO concealed in Sludge Tanks transferred from the Service Tanks via a rubber hose.

One very important aspect of sludge disposal is that it has to be accounted for by the vessel carefully. A specific entry has to be made in the Oil Record Book (ORB) of when, where and how much sludge had been transferred, and to whom and ensure to collect the 'Certificate of Disposal of Pollutants', commonly called 'Sludge Discharge Certificate', otherwise, the vessel may be accused of pumping it over the side into the sea which, these days, is considered to be a serious crime that comes with serious fines and / or imprisonment.

ROB Surveys

As a value added service our sludge disposal survey program includes gauging of all vessel's fuel tanks by default thus accounting for all un-declared bunkers either through concealment or otherwise. This practice which more commonly falls under ROB (remaining onboard) Surveys are included in sludge disposal surveys at no additional cost to the client. Thus giving clients an overview / snap shot of the actual fuel condition onboard which is helpful in keeping tabs on the fuel consumption and ordering the correct amount of bunkers for the vessel.

We often find excess bunkers in the tune of 30-45 tons regularly which have been deliberately under- declared by way of overconsumption excuses. Even in today's fuel prices a vessel exaggerating bunker consumption by a mere 1.25 mt per day can easily translate to 'x $' amount of losses for the ship operator as show in the table below:

Imagine losses incurred by companies owning a fleet of 200 or 400+ vessels!!!!

Kaivan H. Chinoy is the Founder and Principal Marine Surveyor of AVA Marine Group, owners of Petro Inspect and The Bunker Detectives.