By Shell Catalysts & Technologies on Nov 23, 2020
The refining industry is experiencing a time of unprecedented change. On November 17th and 18th, downstream refining leaders and technology providers discussed energy transition strategies at ERTC Virtual 2020. ERTC, the annual European Refining Technology Conference hosted by the World Refining Association, was held digitally this year to cover discussion topics including the impact of COVID-19 recovery, the European Green Deal and the future of refining.
Shell Catalysts & Technologies’ experts led three of ERTC’s events:
- Andy Gosse, President, Shell Catalysts & Technologies, gave a keynote presentation on “The next decade: Looking at potential scenarios and the impact on the energy transition”.
- Bart Suijkerbuijk, Global Licensing Development Manager, Downstream and New Energies, gave a biofuels keynote presentation titled “Key insights into complying with sustainable fuel mandates”.
- Simon Cackett, Licensing Technology Manager, led a refinery configuration presentation on “Revamp projects achieving above-average rates of return in bottom-of-the-barrel upgrading”.
Read our key takeaways from their presentations below.
1. European refiners are preparing for a reshaping of the global energy system
Andy Gosse’s presentation was based on the work of the Shell scenarios team on Rethinking the 2020s. Shell scenarios are not forecasts, but exploration exercises designed to challenge executives’ thinking on the future business environment. They have been used at Shell for almost 50 years.
Andy presented three potential COVID-19 recovery pathways that societies may take over the next 10 years, based on what nations prioritise.
- Wealth First – Nations’ focus on economic strength leads to a rapid return to economic status quo and strong, but delayed action for energy transitions.
- Security First – Nations’ focus on self-sufficiency leads to uneven pandemic recovery, stalled growth in energy demand and slowed global climate action.
- Health First – Nations’ focus on well-being, collaboration and recovery lead to a period of structural change and investments made to lower emissions and reshape the energy system.
Andy discussed how the three alternative pathways could impact societies by referencing the Shell scenario team’s analysis of potential energy demand.
Explore the energy evolution for future generations
2. The pace of energy transition can vary
While each of the pathways have different implications for energy, energy transition and climate, they all present a complicated business environment for refiners. The pathways include analysis on a percentage rate of change compared to 2019 in primary energy demand; all three pathways reflect slower growth overall in energy demand in the coming decade.
The pathways share other similarities. There is high growth for solar and wind due to their improved positions on the power generation cost curve. The energy system will still depend significantly on fossil fuels through 2030 with demand for gas continuing to grow in all pathways from 5–15%. Coal, however, will peak at varying times within the next ten years.
The pathways have a few notable differences, primarily in demand for oil. The Wealth First pathway shows about an 8% rise in oil demand by 2030, while remaining near 0% in the Security First and Health First pathways.
Another major difference is in regards to societies’ progress towards decarbonisation; the Wealth First pathway has about a 7% increase in CO2 emissions from energy, compared to a near 0% change in Security First and Health First pathways.
Andy summarised that an overall decline in demand for oil could accelerate the divestment and closure of weaker refineries. If the world prioritises the Health First pathway, the global energy system could be reshaped and the response to the 2020 crisis could trigger enough action to meet the Paris Agreement goals.
Forward-thinking refiners are considering what their future strategies are now by looking within their existing operations for efficiency and refinery revamp opportunities, developing decarbonisation roadmaps and looking at their position within a future energy system.
3. Biofuel production is an option for European refiners to protect their competitive position
Bart Suijkerbuijk, Global Licensing Development Manager, Downstream and New Energies, gave a biofuels keynote presentation titled “Key insights into complying with sustainable fuel mandates”.
Bart discussed the challenges European refiners are facing, including declining demand and exports for conventional fuels in the region, increased competition and the E.U.’s Renewable Energy Directive II (RED II) mandate. RED II has outlined increased 2030 targets for renewable energy to 32% and renewable energy in transport to 14%.
By investing in biofuel production, refiners can maintain their competitive advantage by generating additional revenue from a higher-value product. In addition, biofuels have lower carbon intensity compared to conventional fuels, which can help refiners to lower the carbon footprint of their products’ end use and achieve their carbon reduction ambitions.
4. Refiners can leverage Shell’s technologies and owner-operator experience in biofuels production
Bart shared a “Roadmap to 2030” which showed how a European refinery could strategically increase biofuel production with Shell’s hydroprocessing technologies.
- Co-processing is a low-cost way for refiners to process 10% biofeeds in their existing diesel hydrotreating units. Many refineries are currently running at reduced rates and below the severity they were designed for, which could be used to process renewable feeds.
- The Shell Renewable Refining Process (SRRP) is a dedicated unit for processing up to 100% biofeeds and has been recently made available by Shell for licensing. This is a hydrotreated vegetable oil (HVO)-type hydroprocessing technology that can process a wide range of Part B feeds outlined in Annex IX of Red II, as well as some Part A feeds.
Bart discussed the advantages of Shell Catalysts & Technologies’ owner-operator experience. Shell is one of the largest blenders, distributors and investors in biofuels and has gained value optimisation learnings on its technologies, which can be applied to customer sites.
By working with Shell Catalysts & Technologies as well as other partners, refiners may combine capabilities to share business and implementation risk while creating a lower carbon transportation fuel at scale, either through the hydroprocessing roadmaps or alternatives, such as gasification/Fischer-Tropsch or fibre conversion to cellulosic ethanol and corn oil.
5. Upgrading bottom-of-the-barrel residue is another strategy refiners can consider to quickly improve margin
In the “Shell revamp experience for residue conversion”, Simon Cackett, Licensing Technology Manager, shared how revamp projects offer refiners another strategy to remain competitive.
Simon discussed how the declining value of residue comes from many factors: the introduction of IMO 2020 marine fuel specifications, the desire to produce cleaner fuel for power plants around the world and a reduction in fuel oil demand due to the wider availability of natural gas and the expansion of the liquified natural gas (LNG) market. With a residue upgrading project, refiners can increase margins by making more valuable products.
Solvent Deasphalting (SDA) unit
Simon focused on how an SDA unit, in combination with revamping of existing assets, can often provide the best return on investment through enhanced production flexibility and volume gain.
Simon presented a case study in which Hyundai Oilbank implemented its residue conversion project in two phases. In Phase 1, the refinery utilised a new C5 SDA unit and revamped existing units to enable heavy crude processing. In Phase 2, the refinery built a new petrochemical complex and revamped several older units to unlock further capacity increases.
Read more about Shell Catalysts & Technologies’ work with Hyundai Oilbank.
Shell Hycon Moving Bed (MB) technology
Simon highlighted how the Shell Hycon MB technology provides further potential opportunity for the refinery to increase its production capacity. The technology allows fresh catalysts to be added on a semi-continuous basis, so the unit has consistent high activity with no real deactivation over time. It has been used at Shell’s Pernis refinery to contribute to a 35% reduction in fuel oil yield.
6. Refiners have many strategic options to evolve from a challenging year
The common theme at ERTC focused on the challenging and uncertain conditions ahead for European refiners. Through various strategies discussed in speaker presentations and panels, as well as the virtual discussions among participants, what is most certain is that the future of refinery operations will look very different than it does today.