The Future “Smart, Collaborative, Green” Refinery

Decarbonisation is the need of the decade.

For companies that have committed to the energy transition, it is vital to have technology in their roadmap to net zero. There are technologies available, but as today, no one has the entire monopoly of technology ready and available. As a result, collaboration is required across the whole ‘technology supply chain’.

Last October, in its inaugural edition, #ESFMENA, Energy & Sustainability Forum, welcomed an insightful panel of industry experts to discuss the pressing needs for a sustainable green refinery: Bilal Guliyev, General Manager of R&D and Innovation, SOCAR, Daniel Carter, Vice President, Decarbonisation & New Energies, Wood, Süleyman ?zmen, Senior Consultant, 3P18 Independent Consultants, John Murphy, CEO, The Catalyst Group and Dr. Halim Hamid Redhwi, Vice President, Dhahran Techno-Valley Company (DTVC) & Professor Chemical Engineering Department, King Fahd University of Petroleum and Minerals (KFUPM).

Here is what we have learnt:

R&D’s role in developing clean energy and efficient commercially proven technology is critical. Companies must increase their innovative capabilities to enhance their competitiveness in the market. To accelerate the energy transition, R&D can be seen as the main driver, committed, and working to develop more sustainable replacements for refinery and petrochemicals feedstocks and products.

Does the downstream industry have access to the technologies to successfully implement the mandated energy transition goals for 2035/2050? Within the decarbonisation of heavy industries, our panellists foresaw a whole range of solutions that can be employed. For example, operational and energy efficiency best practices can still have a significant impact on carbon footprint and start to make inroads into the decarbonisation challenge.

When it comes to the delivery of large-scale carbon reduction, operators need access to technology, at greater scale than what exists today. We’ve witnessed incentive schemes around the globe that help to develop technologies from bench scale to pilot, but much of that is funded from private equity finance, and from individuals who have a personal interest in this space and want to support the green economy. Government incentive schemes are helping to kickstart technologies from lab to first deployment however we also see a number of technologies begin to stall when they get to commercial operation, largely because the technology developers are small scale and don’t have the large balance sheets to sustain it any further. Gaining the appropriate finance to build a first of a kind plant at scale needs a contractor, or individual to underwrite performance guarantees and pricing to get access to funds. This provides a very significant challenge because of the difficulty for any contractor to guarantee a first of a kind plant in that way.

Delivering the technologies on “the bench” requires collaboration and speed. It can be risky and expensive to serve as a technology “first mover”, but there is also the ability to benefit substantially and financially from position and practise. “Fast second” movers often yield the benefits from earlier experiences by avoiding the mistakes. The industry needs to take a holistic approach towards technology scale up whereby the risk is shared appropriately across the technology and solutions providers, and the end-user to ensure no stalling at the very early stages of developments, for example circularity and recycling which are very much at the forefront today.

We are witnessing many of the big oil companies investing heavily in university and R&D start up programmes, or establishing venture capital programmes/subsidiaries. This requires ambition to be able to invest in the deployment of first of a kind technology, however, it gives operators the opportunity to be involved in technology development from an early stage which will expand their technology knowledge and potentially their product portfolio leading to differentiation in the future.

Another important point to note is the new metrics for defining success. In the past, the downstream industry often dealt with metrics such as return on capital employed or return on asset investments. Today’s success is measured through metrics such as the life cycle analysis, carbon footprint, circularity of the carbon molecule, both in and out. This presents both challenges and opportunities. Development of catalytic chemical recycling, plastic waste to feedstock, usage of concentrated solar technologies for process heat are just some of the R&D activities taking place today. Sustainable alternatives must be cost competitive to replace fossil fuels. Without proper support from policy and financial mechanisms, scale up of innovations will struggle to compete with fossil-based products. The current and future expected carbon prices appear to have a powerful effect on R&D spending for the development and diffusion of decarbonisation technologies. Industry leaders should prioritise plans for clean energy transition in the most advanced and innovate way and continue to invest in research and innovation activities.

Today’s success is measured through metrics such as the life cycle analysis, carbon footprint, circularity of the carbon molecule, both in and out

What are the main challenges facing the downstream industry in developing technologies to enhance the real vision of decarbonisation? First and foremost, policy. Many countries globally have policies focused domestically. As such, it is difficult for a technology developer to decide where to place all their efforts unless they plan to focus on one specific location. Policy also drives the role and future of that technology through funding. For example, carbon capture is already commercially available at scale with plans for plants to capture up to and above 1 million tonnes per annum of C02. However, there is still a lot of work to do to bring down the cost of a carbon capture facility to a level where it then becomes equitable to things like carbon pricing incentives and trading schemes so that rather than investing in carbon credits, the real inroad forward is investing in a solution to reduce the emissions.

Challenges are often defined by the environment in which they are faced. The importance of consistent, predictable, identifiable policy, either through guidance or mandates, can stabilise some of the assumptions that investors must make when it comes the time to making a commitment towards a technology pursuit.

To conclude the panel, the experts were asked ‘What technology areas still needs intensive R&D work to achieve their goals and objectives?’ Some examples shared included:

• Commercialised Recycling technologies are here, but still need improvements in terms of capacity and intermediate product modification to be ready for use at the existing steam crackers;
• Ethylene plants in petrochemicals are still a big energy consumer and delivering renewable heat resources to these crackers is also an area for development;
• Green hydrogen technology has a lot of room for improvement to be competitive;
• Utilisation of carbon dioxide to chemicals – many facilities do not have the storage solutions, so we need to simultaneously convert it to valuable chemicals;
• Additional R&D efforts are also needed in fuel cells, storage of renewable and power to x;

The panel concluded with the agreement that R&D is vital and possibly the unsung hero of the energy transition.

Poised to pick up the conversation from where we left it last year,?ESF MENA 2023?will once again assemble an influential group of refining and petrochemicals professionals to exchange knowledge, discuss the latest trends and provide valuable insights into the greatest challenges and the most promising opportunities facing the Downstream industry in the Middle East.

Want to know more? Here some interesting material for you:

?? ESF MENA 2021 Post-Show Report

?? ESF MENA 2023 Advisory Report

?? ESF MENA 2023 Webpage ?? Registration is now open!

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