Nov-2022

Pivoting to chemicals while decarbonising today (ERTC)

Despite many improvements in vehicle fuel economy, increasing adoption of hybrids and EVs, petroleum-based fuel demand continues to grow, at least in the short- to mid-term!

Marie Goret-Rana, Carl Keeley and Ken Chlapik
Johnson Matthey

Article Summary

However, in the future, we imagine demand for petroleum-based fuels will decline due to increasing global efforts to fight climate change, including the introduction of a carbon tax in many countries. Therefore, oil refineries need solutions to decarbonise fuels production. Further-more, as petroleum-based fuel demand decreases, chemical production is a route to stabilise and grow oil refining margins. In fact, highly profitable oil refineries already produce petrochemicals, and demand for chemicals is expected to increase.

Johnson Matthey and its partners are implementing solutions to improve oil refinery margins and, at the same time, reduce Scope 1, 2, and 3 greenhouse gas (GHG) emissions. Scope 1 solutions reduce direct GHG emissions from existing process units; Scope 2 solutions reduce indirect GHG emissions from imported electricity and steam; and Scope 3 solutions reduce other indirect GHG emissions and allow refiners to pivot to chemicals.

Scope 1: Reduce direct emissions from the process itself
GHG emissions from existing process units can be reduced by improving energy efficiency and employing improved process technologies and high-performance catalyst.

Hydrogen is an important feed, utility, and fuel used in most oil refineries and many petrochemical factories. Presently, the most popular route to make hydrogen is steam methane reforming (SMR). Significant CO₂ reductions can be made by improving the reformer operation. Johnson Matthey can help operators by offering reformer surveys and performance monitoring to minimise fuel consumption and CO₂ emissions and, at the same time, can improve reformer synthesis gas (syngas) production. Syngas is a flexible process stream used to make hydrogen, ammonia, and methanol, which are important building blocks for a wide range of useful everyday chemicals.

In addition to employing leading practices to improve existing process unit optimisation, Johnson Matthey’s Low Carbon Solution business is integrating its established ADVANCED REFORMING^TM technologies with leading pre-combustion CO₂ capture providers to deliver cost-effective decarbonisation solutions under the CLEANPACE^TM brand. CLEANPACE is a suite of ready-now technologies to retrofit existing grey hydrogen units and reduce carbon emissions by up to 95%.¹ Using Johnson Matthey’s customer survey data, there are c.150 hydrogen plants with potential for revamp in Europe and North America alone. Once captured, the CO₂ can be converted into useful chemicals or stored; some examples of this will be briefly mentioned in this article.
However, in some cases, significant additional hydrogen production is required, such as when oil refineries move towards petrochemicals production. Here, a better solution for the environment is to build new blue or green hydrogen/syngas production.

Scope 2: Reduce emissions associated with imported electricity and steam
Large factories, like oil refineries, can replace imported power with low-carbon hydrogen that is used to decarbonise factory-fired heaters and boilers. When neighbouring industries and markets need hydrogen, there can be considerable justification for investing in a blue hydrogen hub or installing electrolysers to produce green hydrogen.

An example of a hydrogen hub is HyNet North West in the UK. The heart of this project is Johnson Matthey’s LCH™ technology. This hydrogen hub will produce blue hydrogen. This blue hydrogen will be used to replace fossil fuels used by industry and transportation, and the hydrogen will also be used to heat nearby homes. The by-product CO₂ captured from the LCH process and the CO₂ captured from nearby factories will be safely stored in an existing offshore well. And CO₂ storage will achieve large-scale CO₂ emission reductions. The consortium includes Progressive Energy, Essar Oil (UK) Limited, ENI, Johnson Matthey, and many valued partners.²

Green hydrogen goes a step further. Hydrogen is produced via the electrolysis of water using renewable electricity (such as wind or solar). The water is split into oxygen and hydrogen without producing any CO₂. Although renewable energy output is variable, proton exchange membrane (PEM) electrolysers are engineered to cope with varying energy input. At the heart of every PEM electrolyser is a catalyst coated membrane (CCM) responsible for the production of hydrogen. These membranes consist of precisely engineered layers of structured catalysts, typically platinum and iridium oxide. The catalysts are applied to solid membranes in a way that maximises potential hydrogen production. At Johnson Matthey, we design and manufacture high-performance CCMs at scale, building on our decades of experience in fuel cells and PGMs and circularity.

Green hydrogen is available, and oil refineries are starting to explore its use. One example is Shell’s Energy and Chemicals Park Rheinland, Germany, where green hydrogen is produced using a PEM electrolyser powered by renewable electricity from offshore wind.³

Although green hydrogen is presently more expensive to produce than grey or blue hydrogen, the key input – renewable electricity – is both increasing in capacity and reducing in cost. What is beyond doubt is that green hydrogen will play an increasing role in the transition to net zero as the cost of renewable electricity continues to fall and the cost of electrolysers reduces.

Scope 3: Decarbonise fuels and chemicals production to reduce product use emissions
Oil refineries are increasingly using bio- and waste streams to decarbonise their fuels and chemicals production. Blending components used to decarbonise transportation fuels include bioethanol, fatty acid methyl esters (FAME), and renewable diesel. For example, Valero Corporation produces bioethanol on a large scale in the US, which can be blended into the gasoline pool.⁴ Globally, bioethanol is produced from corn, wheat, sugarcane, beetroot, or similar and is a popular choice for decarbonising gasoline production. Different solutions are available for diesel. For example, Johnson Matthey’s biodiesel process uses fatty acids, obtained from the hydrolysis of bio-based oils, and converts them to FAME, which can be blended into the diesel pool. So far, we have licensed eight plants globally. Renewable diesel – a hydrocarbon diesel fuel produced by the hydroprocessing of fats, vegetable oils, or waste cooking oils can be used as a blending component or as a direct substitute for conventional diesel fuel. Several units have been built in the US.

As an alternative to green blending components, bio- and waste streams can be used as a feedstock to produce gasoline and diesel. A low capital option involves using existing hydrotreaters to co-process bio- and waste streams to make fuels and olefins, which are partially green. Leading-edge oil refiners have been exploring this opportunity for some time and have discovered it is possible to co-process up to 10-20% bio- and waste component. For example, Parkland Corporation’s Burnaby refinery has successfully converted canola oil and oil derived from animal fats to fuels.⁵ In addition, a growing number of fluid catalytic cracking (FCC) units are exploring co-processing. For example, Preem AB Lysekil refinery has successfully converted biomass-based pyrolysis oil to fuels and olefins.⁶

Another way to decarbonise fuels and chemicals is to convert municipal solid waste and other renewable biomass to low-carbon fuels. For example, the FT CANS^TM Fischer-Tropsch technology developed by Johnson Matthey in collaboration with bp converts synthesis gas into long-chain hydrocarbons. The resulting FT products need upgrading, which can be done by an oil refinery, to produce low-carbon gasoline, diesel, and jet fuels. Fulcrum BioEnergy is employing the FT CANS technology in its new Sierra BioFuels plant in Nevada, USA. The Sierra plant is the first commercial-scale plant in the US to convert municipal waste, that would otherwise be sent to landfill, into a low-carbon synthetic crude oil (syncrude). Fulcrum plans to sell the syncrude to nearby oil refineries. The syncrude is used to reduce the carbon intensity of transportation fuels.

Furthermore, Johnson Matthey and MyReChemical have formed an alliance to offer a single licence for their waste-to-methanol technology. The methanol derived from this process is an important intermediate product used to produce many goods that play a vital role in everyday life, such as resins, plastics, insulation, and fibres. Besides, the methanol can be used to decarbonise fuels too; for example, methanol as a gasoline blending component or methanol to power ships.

Another option to reduce factory Scope 3 emissions is to use existing FCC process units to convert ‘gasoline-range molecules’ into propylene, C4s, and higher olefins which are then used to produce a wide range of chemicals. Johnson Matthey is a leading supplier of unique additives used to maximise FCC olefin production.

In addition, we license a wide range of DAVY^TM process technologies employing our high-performance catalysts to produce a wide range of essential chemicals from a variety of feed materials, including propylene, butylenes, higher olefin, and waste streams.

Conclusion
To fight climate change and make the world cleaner and healthier today and for future generations, oil refineries must adapt. Carbon taxes are being implemented, and these will significantly erode refinery margins. This creates urgency for action. An obvious first step is to use available expertise, catalysts, technologies, and services to decarbonise the existing processes and utilities. In addition, increasing the capability to use bio- and waste feeds and green blending components will further decarbonise fuels production. Finally, increasing the percentage of chemicals production will significantly increase refinery margin and reduce Scope 3 emissions associated with how products are used. Consequently, decarbonisation has the potential to be a strong value driver for the oil refining industry.

This short article originally appeared in the 2022 ERTC Newspapers, which you can view HERE