From January/February 2017 Edition
Nick Confuorto, President & COO, CR Ocean Engineering
Confuorto’s passion for success has helped make CR Ocean Engineering a global leader in scrubber technology.
By Jack O’Connell
Tell us about your background and education. Where are you from?
I was born in a suburb of Naples, Italy. I entered the U.S. at the age of 16 and completed high school in Jersey City followed by an engineering degree from Columbia University. Other postgraduate studies were completed at Penn State and Rutgers.
What did you do before joining CR Ocean?
I completed school during a very poor job market for young engineers. Rather than sit at home feeling sorry for myself I approached a local engineering office and offered my services free of charge to gain on-the-job experience while continuing to look for paying work. Several months later I got my first paying job. I have held various managing roles at four major companies, all of which were leaders in their field and very well-known worldwide.
What does the “CR” in CR Ocean Engineering stand for?
Croll Reynolds, the surnames of the two founding partners. Today there are three distinct entities – Croll Reynolds, CR CleanAir and CR Ocean Engineering – all under the same umbrella and all closely affiliated as engineering firms focused on complex processes. CR CleanAir and CR Ocean Engineering share a unique synergy in that both focus on the challenges involved in removing pollutants from process gas streams.
We understand the company’s origins go back 100 years to 1917.
Yes, I’ll give you a brief history. On November 15, 1917, the Liberty Equipment Corporation opened its offices in New York City. Shortly thereafter, with Philip E. Reynolds as Secretary, it entered into a contract with Samuel W. Croll and subsequently Mr. Croll was elected President. On April 2, 1918, the name of the corporation was changed to Croll Reynolds Company, Inc.
Croll Reynolds has focused on applications engineering as a growth vehicle for much of its history. The firm traditionally sought those applications where its proprietary vacuum technology provided the best technical solution for a process challenge. In the ensuing years Croll Reynolds developed a broad customer base in a variety of industries from chemical processing to pulp and paper and pharmaceuticals.
In the early 1960s Croll Reynolds developed its proprietary venturi and high-energy venturi scrubber design. This development was the precursor to CR CleanAir’s and CR Ocean Engineering’s current air pollution control expertise. CR Ocean Engineering was founded for the distinct purpose of bringing CR’s expertise in air pollution control to the maritime industry.
How many offices and employees are there?
Our headquarters are in Parsippany, New Jersey. We have offices in Spain, India, Thailand and Brazil. We also have representative offices in Italy, Finland, Greece, Turkey, China, Japan and Korea – and soon in Taiwan and the U.A.E. Our engineering, sales and office staffs total about 100, and each fabrication shop has a large list of hourly workers who come and go as needed.
Is the company privately owned?
Yes, the Croll and Reynolds families continue to own and direct the company.
Are exhaust gas cleaning systems (“scrubbers”) CR Ocean’s sole product?
How do scrubbers work?
For those of us in the pollution-control business the scrubbing of SO2 is a very simple process. To remove it from the gas, a scrubbing system first brings the gas to adiabatic saturation using an alkaline solution (the solution is seawater in the case of open loop scrubbers or fresh water with an alkaline buffer such as caustic or magnesium hydroxide in the case of closed loop scrubbers). In the saturated state the SO2 is easily absorbed by the alkaline water droplets in the scrubber. The droplets neutralize the collected acid on impact and discharge it back into the sea.
The more sophisticated aspects of scrubbing involve making the scrubber tower small enough to fit in the funnel, reliable enough to avoid concerns, easy enough to operate so it is not a burden on the crew, and flexible enough to adjust to the ever-changing conditions of onboard operations. Our CROE scrubbing systems meet all those requirements.
Is the cruise industry your biggest market?
The cruise and ferry industries have been the biggest users to date. However, we have installations on many types of vessels, and any vessel that burns heavy fuel can benefit from scrubbers. All industries like saving money, and that is what we are really selling. We are not just selling a way to environmental compliance. Any shipowner can be compliant by switching to more expensive low-sulfur fuel. What we are selling is a way to become more competitive and save money at the same time.
How many scrubbers does the average ship use?
That will vary based on the number and size of engines on a ship. I have seen ships with only one scrubber and others with four or six scrubbers. Some ships will install a scrubber for only the main engine while using distillates for the generators and boilers. Other ships will have scrubbers on all exhaust gas streams. Some scrubbers can be “individual” (applied to a single exhaust stream) while others can be “multi-streaming” (combining multiple sources of exhaust into a single scrubber). Our industry offers all kinds of options. Unfortunately, that has made the decision-making process more difficult. In the end, I believe in the old concept of keeping it simple.
There are at least three ways to meet the MARPOL Annex VI requirements of 0.1% sulfur in ECAs and 0.5% sulfur globally in 2020: converting to LNG, buying expensive, low-sulfur fuel, or investing in scrubbers. Explain for our readers how the economics of such a decision work.
Most shipowners know what fuel costs much better than I do. The differential between high and low-sulfur fuel has been in the $130-$250 range for the past year. I believe by 2020 the fuel differential will be a multiple of what we see today and will reach the $600-$800 range. That differential will be needed to pay for the investments being made by oil refiners to produce the lower sulfur fuel by 2020. So it’s easy to see that the savings achieved by using high-sulfur fuel instead of low-sulfur fuel will amount to many millions of dollars per year.
I talked with a shipowner the other day who calculated a potential saving of almost two million dollars a year for each of his many vessels. Another had estimates well above $3-4 million per year. That is what will pay for the scrubber projects. Once an investment is made in scrubbers, it can be paid off by the savings. After that the savings can be applied toward the success of the business. I know that many shipowners are skeptics, but I believe they will soon realize the great benefit we have placed at their fingertips.
Organizations like BIMCO are worried that there won’t be enough low-sulfur fuel to go around by 2020. How do you see the situation? Are there enough scrubber manufacturers to satisfy demand?
Reports published for both IMO and BIMCO indicated there will be low-sulfur fuel available in 2020 even though the BIMCO report focused more on its higher cost and impact on the industry. Remember that not every ship will get scrubbers. Both reports indicated that only about 20 percent of the global fleet will install scrubbers. The other 80 percent will require the much more expensive low-sulfur fuel. That will cause high-sulfur fuel to drop in price even more, thus making the differential of $600-$800 per ton realistic. Scrubbers are now and will remain the best and lowest cost option to comply. They are also the more environmentally friendly option compared to low-sulfur fuel in terms of both particulate/soot and CO2.
The number of scrubber manufacturers that are part of the London-based Exhaust Gas Cleaning Systems Association (EGCSA), which I currently chair, has greatly increased in the past year. I expect further increases as we approach 2020 and believe there will be plenty of scrubber capacity available. Of course, if everyone waits until October 2019 to decide on installing scrubbers to meet the January 2020 mandate, then we will have a bottleneck. I have been suggesting to all my contacts to plan ahead and start installing scrubbers now. Avoid the last-minute rush and potential price increases.
Has the prolonged slump in many shipping sectors affected your business?
Unfortunately that has been the case as it has been for all scrubber companies. 2016 was a perfect storm for our industry with low oil prices, the shipping market in bad shape and the uncertainty about 2020. Now all that has changed after MEPC 70 last October decided to implement the global sulfur cap of 0.5% on January 1, 2020. Once IMO provided that certainty, we have seen our proposal requests skyrocket and the start of new orders. We are prepared and look forward to a hectic but rewarding next few years.
What is the biggest challenge facing the company – and the industry – right now?
The biggest challenge facing our company and the industry is getting shipowners to act as soon as possible and not wait until the last minute. As I stated earlier, an orderly implementation will allow more shipowners to take advantage of this low-cost alternative. We need to avoid the last-minute panic. To prepare for this we are expanding our network of fabrication shops, installation contractors and service suppliers. In the end, however, it will be up to the individual shipping company to make the right decision.
As an engineer and recognized expert on air pollution technology, how do you view the twin issues of climate change and global warming?
That is the million-dollar question that borders more on religion than engineering. We all know that global warming is real and that our earth has seen it before. The bigger question is what causes it and is it manmade? I lean toward the conclusion that it is a natural occurrence, but I also know I am not smart enough to know the real answer. Meanwhile, waiting until we know for sure may be too late. The engineer in me would like to think that we can do something about it. Therefore, since it is reported that greenhouse gases such as CO2 and methane contribute to global warming, I plan on doing my part and will, in my personal life, reduce them as much as I can “just in case.” I have grandkids and would very much like to see them enjoy our beautiful earth as much as I have.
What drives you? What is your passion?
Success in business is what drives me. It is my driver, my hobby and my passion. I have grown up wanting it and have pursued it my whole life. I have been lucky to achieve it at every stage of my career. I’ve reached most of the goals I set for myself and each day I find myself moving them higher. To some it may seem like too much pressure. To me it has been fun, exciting and rewarding. – MarEx