Nov-2022

Refinery decarbonisation. What, when, how, and at what cost?

The refining industry’s resolve to reduce CO2 emissions continues despite the current surge in energy prices. In fact, some of the measures may have become less expensive as green energy sources now cost less in comparison to their fossil equivalents than that before January 2022. At the same time, development of new technologies continues unabated with reductions in the cost of items such as windfarms and electrolysers.

Fred Baars and Samiya Parvez
Fluor B.V

Article Summary

The uncertainty with respect to how long energy prices will stay high and/or if they will ever return to e.g., 2019-2020 levels remains. The Paris Agreement set ambitious goals with respect to reducing global warming. At the same time and in concertation with the Paris agreement, governments have acted, as have major oil and petrochemical companies. The European Commission has launched its ‘Fit for 55’ programme which aims at a reduction in greenhouse gas emissions by 55% in 2030 relative to 1990 values. Most major oil and petrochemical companies have set similar goals with some aiming for net zero CO2 emissions by 2050.

Oil refineries are major consumers of energy and hence emitters of CO2, with complex refineries producing motor fuels emitting up to 0.2-0.3 ton of CO2 per ton of crude processed, only counting Scope 1 emissions. These emissions can double or triple if a refinery is associated with petrochemical units. When considering the total CO2 emissions of a fuels refinery (a refinery essentially producing motor fuels), Scope 1 emissions are only a fraction of total emissions while Scope 3 emissions — related to the sale (and combustion) of the refinery’s products — can be 95+% of total Scope 1+2+3 emissions. 

Determining which roadmap to adopt to decarbonise an existing oil refinery is a complex exercise. While it is technically possible to decarbonise an oil refinery by e.g., capturing all CO2 that is emitted or only using green hydrogen for firing or using electric heaters powered by renewable electricity, making a major dent in overall emissions is much harder. This can only be achieved by e.g., producing more petrochemicals or using biomass as feedstock. At the same time the cost of revamping the refinery needs to be considered with the only benefit being reduced CO2 taxes or other government grants, the monetary value of which is subject to changing/developing legislation. Uncertainties further reside in the price of alternative feedstocks, energy sources and/or green products.

Fluor has done a desktop study investigating the effects of a number of decarbonisation options including energy efficiency improvements, fuels substitution, feedstock substitution and CO2 capture and use. Fuel substitution entails the replacement of natural gas and grey electricity by green hydrogen and green electricity. It also includes e.g., changing steam turbines to e-motors.
Feedstock substitution is the (partial) replacement of crude oil by biomass and or mixed plastic waste from plastic recycling facilities.

CO2 capture and storage/use includes sequestering CO2 in remote locations as well as converting CO2 with green hydrogen to green methanol, e-fuels or others (polycarbonates, urea).
Our reference case is a typical European refinery processing 10 million ton per year of crude oil producing motor-fuels and having a delayed coker and hydrocracker as its main conversion units. The refinery will continue to produce motor fuels in the immediate future. 

Table 1 shows the impact of the various decarbonisation measures on Scope 1, 2 and 3 emissions.

Feedstock substitution and most of the CO2 utilisation measures have the greatest contribution to Scope 3 emission reduction. Feedstock substitution may increase Scope 1 and 2 emissions depending on the source of the supplemental utilities required, if any. 

Depending on feed, product, and utility prices, the programme maps the decarbonation measures in order of increasing cost of CO2 removal. An example is shown in Figure 1 below. In this example, the refinery Scope 1 and 2 emissions are reduced by 94%; overall CO2 emissions are reduced by 18%. 

The CO2 abatement curve as shown in Figure 1 is the basis for developing a decarbonisation roadmap. The roadmap considers the timeline for implementation of the technologies. CO2 sequestration and required infrastructure to transport the CO2 to the appropriate storage field or massive application of green hydrogen including the construction of windfarms and electrical grid reinforcement will require more time, planning, cross collaboration across the value chain, and investment than replacing an inefficient refinery heater, installing more efficient heat exchangers, or constructing a unit processing vegetable oil.

An example of a roadmap resulting in a 55% reduction in overall CO2 emission by 2030 is shown in Figure 2.

Compared to the previous Figure 1 it takes into account a 50% reduction in electrolyser cost, green electricity cost of 30 €/kWh, a 40% reduction in crude rate and 5.2 million ton-per-year of HVO processing capacity.

Each roadmap is particular to the various decarbonisation options being considered and the cost of feedstock, products and utilities. As part of scenario planning multiple roadmaps need to be developed and evaluated considering risk, inherent uncertainties and cost before convergence to a final roadmap.   

The details of the model including cost and CO2 reduction benefits of the individual measures and further examples including key takeaways, will be presented in an article to be published in the PTQ Q1 2023.