Responsible for about 800 million tonnes of CO2 annually, some 4% of the global total, the refining sector is the third-largest stationary CO2 producer. With a potential for fugitive SO2, NOx, VOC and particulate emissions, it is not hard to see why pollution mitigation is fast becoming a growth area for specialist companies, technology vendors and consultants.
However, independent consultant Alec Pieterson says the industry has been dealing with the issue with great success.
“There have been lots of successes,” Pieterson says. “Fifteen years ago Petro-Canada implemented voluntary benzene controls that pretty much wrote the book for Canadian best practice.
“In Australia, the Altona refinery has halved greenhouse gases since the millennium and last year ConocoPhillips put in a wet gas scrubber at Los Angeles that cut particulates by three-quarters. Engen did the same sort of thing in Durban. There are plenty of examples. But there’s a difference now and I suppose it all comes down to what’s driving things.”
Control Driver
One of the obvious drivers on emissions control comes from the need to meet legislation. For example, in the US, Clean Air Act (CAA) – passed in 1970 and subsequently amended twice – provides clear limits for emissions from refinery complexes. In Europe, the strictures of the Emissions Trading Scheme (ETS) have established strict CO2 allowances for the sector. Revised in December 2008 as part of a package of new climate change legislation intended to slash 20% off EU greenhouse gas emissions by 2020, from 2013 the ETS will oblige operators to buy all emissions allowances auction.
In September, Reuters reported that the costs associated with this could damage the competitiveness of European refiners within the global market. It is something that Mark Gainsborough, executive vice-president of downstream strategy at Royal Dutch Shell, suggests might mean that “Europe is not the place to have an out-and-out merchant refinery”.
In a similar vein, the US Environmental Protection Agency (EPA) announced in October its intention to seek the removal of the residual risk and technology review parts of the air toxics regulations that date from the final days of the Bush administration. Currently in limbo under President Obama’s freeze on pending legislation, if the EPA gets its way greater emissions control will follow. Add to this the ‘cap-and-trade’ bill, which narrowly passed in June 2009 and establishes tough carbon trading terms for refiners, and it seems the industry faces searching times.
Phil Flynn, analyst at PFGBest Research in Chicago, US, puts it bluntly: “I think you’re going to see refiners close down.”
If so, it must surely be the smaller, independent plants that will be most at risk.
In Europe, there is talk that energy-intensive sectors such as refining, which might otherwise be at significant risk of carbon leakage (a euphemism for ‘highly likely to relocate’), could be in line to receive some concessions. The US might also follow suit as there is clearly sufficient incentive to avoid forcing ailing refiners to face a prolonged and crippling contraction.
Nevertheless, with the US east coast already described by Gainsborough as a “competitive battleground”, as Frontier Refining’s recent $128m settlement shows, the potential cost of compliance is not something to ignore.
Great Frontier Settlement
Amounting to a $1.23m penalty and approaching $127m in pollution-control upgrades, this agreement came early in 2009 after several years of negotiations with the US EPA over alleged CAA infringements.
The bulk of the work required to bring the Cheyenne and El Dorado refineries into compliance is scheduled to take place between 2012 and 2017, and will ultimately see a significant cut in emissions from the Wyoming and Kansas plants. According to EPA acting assistant administrator Catherine McCabe, it will slash annual NOx and SO2 levels by about 2,100t and 3,000t respectively, while cutting particulates and CO by roughly 600t apiece. In addition, a variety of other measures, including changes to leak detection and flaring regimes and the installation of dome covers to cut VOC emissions, are required.
The EPA is clearly taking its role seriously. The settlement with Frontier is simply one of the latest in a widening enforcement campaign that has affected a total of 24 companies – covering 99 refineries in 29 states – and led to $5bn in new pollution controls.
Elk Point – Ahead of the Curve
Achieving current compliance is one thing, but with emission standards likely to become more stringent, it is hardly surprising to see some refinery owners attempting to steal a march on the legislation by anticipating future requirements in new plant designs today.
Hyperion Energy’s planned $10bn, 400,000 bbl /day Elk Point oil refinery is one example. In September, the company made it known that this facility would be one of the first of its kind in North America to have thermal oxidisers fitted to its hydrocarbon holding tanks – not a legal requirement at present – adding a further $50m to the project cost. A complex system of pipework will collect the vapours that form during storage and convey them to the oxidisers, where they will be burnt off, preventing them from escaping into the atmosphere.
Announcing the move, Hyperion’s vice president Preston Phillips reiterated the company’s intention to build the cleanest, most environmentally sound refinery possible, adding that “incorporating these capture systems and thermal oxidisers raises the bar even higher”.
Industry observers suggest that taking pre-emptive measures of this kind could turn out to be an increasingly common trend in coming years, especially with regulatory attitudes beginning to harden.
Antwerp – Embracing Cogeneration
Reducing fuel consumption and using what is required more efficiently has obvious benefits when it comes to emissions control – not to mention operating costs – and many petroleum refiners have adopted cogeneration technology to achieve this. Sherman Glass, president of ExxonMobil Refining & Supply, said at the recent inauguration of the new cogeneration facility at the company’s Antwerp refinery that “energy efficiency is one of the most effective tools available for reducing greenhouse gas emissions”.
This is no exercise in mere ‘green-wash’: there is a real commitment backing up the rhetoric. Over the last five years ExxonMobil has invested in over 1,500MW of cogeneration capacity, bringing the company’s total interest to 4,600MW around the world. Facilities under construction in Singapore and China will push this beyond 5,000MW by 2012.
ExxonMobil’s Antwerp facility makes a compelling case for cogeneration. In addition to generating 125MW of power – enough to power the refinery, as well as the needs of most of ExxonMobil’s other Belgian manufacturing operations – it promises to cut CO2 emissions by 200,000 tonnes annually.
Cogeneration is all about generating power while capturing the otherwise waste heat and putting it to beneficial use. What sets the Antwerp plant apart is the way in which this is done.
Typically the heat is reclaimed as high-pressure steam, but since the need for steam is limited here, the excess is used to heat the refinery’s crude oil directly, slashing the amount of energy required to convert it into refined products.
This approach to heat recovery makes the facility at the 305,000bbl / day plant more efficient than many traditional cogeneration systems and, to quote refinery manager Gilbert Asselman, the bottom line is “lower operating costs and significantly less greenhouse gas emissions”.
Carbon Capture
The idea of collecting CO2 and thus preventing it from escaping to the atmosphere in the first place has a simple and direct appeal, especially to legislators and the general public. So it is no surprise that carbon capture and storage (CCS) technology has received its fair share of serious consideration.
A study by Shell, published in Energy Procedia in February 2009, showed it was technically feasible to apply post-combustion capture to real-world refineries, possibly allowing up to 40% of their overall emissions to be collected. It also evaluated the cost, based on presently available amine technology, as between three and four times higher than current carbon trading values, though up to a fifth of the concentrated CO2 associated with hydrogen manufacturing could be captured for less.
The team went on to conclude that to justify “the implementation of post-combustion capture at refineries, either a significant increase in carbon trading values, mandatory regulations or a major technological breakthrough is required”.
It is a point echoed a few months later by Jon Arnt Jacobsen, executive vice president of StatoilHydro, Norway’s largest oil and gas producer and one of the world’s most active players in CCS.
“We don’t know what the regulatory environment will be, going forward,” he told journalists visiting the company’s Mongstad refinery in June. “That is why nobody in the industry is doing CCS on their own. Governments have to take the lead to get this going and get a framework to make CCS realistic over time.”
Clearly, there is an evident willingness within the industry to address the whole issue of emissions, but from what Gainsborough, Flynn, Jacobsen and others have to say, it seems that what happens next may have more to do with the regulators than the refiners themselves.
Key Dates
2012: ExxonMobil to exceed 5,000MW cogeneration capacity
2012 to 2017: Cheyenne and El Dorado refineries compliance upgrades made
2013: Emissions allowance auctions under the European Trading Scheme come into force
