The competitive nature of the chemicals, oil and gas markets requires that facility owners and operators continue to find ways to improve their current margins and establish resilience regarding long-term and financially relevant environmental, social and governance (ESG) risks.
Doing so may mean a significant investment in renewable feedstocks. It may also mean the optimization of base operations and investment in new greenfield and/or brownfield technology upgrades, both new units and retrofits. For companies that plan to remain engaged in the energy and transportation fuels markets for the foreseeable future, though, this means looking toward a more sustainable future.
Today, investors are inserting their capital into projects that promise improved energy efficiency and reduced carbon intensity as part of a low-carbon economy. For heavy industrial facilities, securing this investment means focusing on projects that deliver sustainability throughout the process, from securing the feedstock to delivering the end product. Because the world is so heavily dependent upon plastics and fossil fuels, delivering these products by sourcing renewable feedstocks and shifting a facility’s power mix from fossil-based fuels to renewable-based electricity can mean continued success.
A Road Map to Sustainability
For many, leveraging renewable-based feedstocks plays a significant role in securing a sustainable future. To incorporate sustainability into a new or existing facility, an owner’s low-carbon strategy may benefit from understanding the baseline of expected or current carbon intensity. From here, an investment road map can be built using a robust set of carbon dioxide (CO2) reduction solutions that consider an owner’s key decision parameters like capital cost, operating cost, schedule and reliability.
Heavy industry will need a full menu of decarbonization options to meet emission reduction goals. A robust investment road map considers commercially available technologies as well as technologies in both research and development phases. The investment road map should, therefore, consider the scaling up of carbon storage infrastructure, biomass resources, low-cost renewable electricity and green hydrogen production, as well as the extension of the electricity grid to garner timely connection to sites with newly developed decarbonized production facilities.
Present-Day Sustainability Options
Owners can consider several contemporary options to taking on sustainability and CO2 reduction.
- Optimizing Renewables: A grassroots renewable diesel plant represents a substantial capital investment. Over time, as the value of current incentives — including the Low Carbon Fuel Standard (LCFS), Renewable Identification Numbers (RINs) and Blenders Tax Credits (BTC) — potentially diminish, this renewable diesel plant must continue to provide value to the owner.
Long-term viability requires insight into the long-term performance of the plant from a financial and technical perspective, with consideration for the full array of feedstock options. Owners need to balance the proper amount of capital investment for pre- and post-treatment versus the expected variable margin from each identified renewable feedstock source, such as tallow, soybean oil, used cooking oil, etc.
Each feedstock source can be ranked in terms of its contribution to plant profitability, considering overall yield, hydrogen consumption, carbon intensity and more. This approach provides clarity for a fully informed decision to identify an optimized feed basis for the plant design and improve the likelihood for long-term, profitable operation of the facility.
- Optimizing Base Operations: A No-/Low-Cost Option: Identifying and implementing energy efficiency improvements can reduce carbon emissions. While this option cannot lead to deep decarbonization on its own, implementing a campaign to reduce energy intensity can readily identify low-cost — and in many instances no-cost — improvements. Pursuing energy efficiency opportunities in the short term is a great way to kick-start the decarbonization of a refinery or facility.
Despite historically low natural gas prices, fired heat, steam production and hydrogen production are major cost factors and offer important opportunities for cost reduction. End-of-pipe solutions can be expensive and inefficient, while investing in energy efficiency as part of a comprehensive environmental strategy is a sound business approach in today's manufacturing environment.
- Reconfiguring a Refinery: Although refinery reconfigurations are often capital intensive, reconfiguring assets to process an advantage feedstock or produce a more valuable product slate may be essential to remaining relevant in the market. Beginning with a road map provides a clear understanding of which reconfigurations make sense with respect to long-term profitability and CO2 reduction.
- Generating Electricity Behind the Meter: Distributed Generation Option: With deregulation of the power industry, heavy industrial facilities have opportunities to purchase power that has been directly derived from wind, solar and other forms of renewable generation. Determining the solutions available in an organization’s location and how those solutions measure up to its risk tolerance allows owners to understand what percentage of its power can be sourced from renewable generation.
Additionally, many owners who are paying a lot for electricity have the potential to produce some or most of their own power. Renewable generation placed at a facility can offset energy costs and CO2, thus allowing owners to secure cheaper electrons from an owned asset.
- Electrifying Plant Assets: The rapid cost reduction in renewable power generation can be a significant driver for considering the electrification of plant assets. Switching to electric furnaces, electric boilers and electrically driven compressors that run on carbon-free electricity may offer refiners and other heavy industrial facilities a tangible option to significantly reduce the CO2 emissions from their facilities.
The hurdles to understanding the full range of electrification options can be readily managed. Refineries, like other heavy industrial facilities, are highly integrated, so changes to a single process unit may need to consider changes to the entire plant, like fuel gas and steam balances, for example. Furthermore, capital costs can be minimized with knowledge that certain electrification options are cost effective for use at existing, brownfield facilities while others are more economical for newly built or greenfield facilities.
As more renewable electricity becomes available, process technologies and equipment that are more electricity-intensive and less dependent on fired heaters and steam reboilers are expected to be more attractive. By identifying opportunities to leverage more electricity over fossil fuels, operators can readily transition to using more electricity throughout a refinery.
Tomorrow’s Chemicals, Oil and Gas Facilities
To stay competitive and continue to procure investment for upgrades and new facilities, operators of heavy industrial facilities will need to shift away from how they traditionally think about their operations. Today, for example, somewhere around 10% of the fuel and crude oil that goes into a refining operation is used to run the plant. By electrifying systems and processes, operators not only reduce CO2 output, but save money and become more sustainable as an organization.
Making that significant investment to produce less carbon and move to a more sustainable future is a big step, and each facility will find it has different challenges. But doing so will allow these organizations to prepare for tomorrow’s market and continue to provide products to customers and returns to stakeholders.
Finding new ways to reduce carbon and become a more sustainable organization can be an overwhelming task. Understanding the lay of the land can help.