The world’s sulphur supply is primarily determined by involuntary production of elemental sulphur during the processing of oil and gas, as we endeavour to meet the world’s growing energy needs, while continually reducing SOx emissions. As a result, sulphur supply is decoupled from demand, resulting in an imbalance between the two.
Over the past several decades, sulphur supply has generally exceeded demand, with the exception of a few brief periods during which supply and demand were nearly balanced, or there was a slight deficit. Although sufficient sulphur stockpiles, in block form, were available to cover the deficit during this period, liquidating sulphur stores in accordance with demand can be difficult on short notice.
“Without a means to regulate supply to meet demand, the industry faces sulphur price volatility. It is this challenge that might lead one to conclude that sulphur is a low-value commodity. However, to the contrary, sulphur is actually the raw feedstock used to produce the world’s most widely used chemical – sulphuric acid. Most of the sulphuric acid is used in the production of phosphate fertilisers, meaning that it is directly linked to supporting the global food supply chain. Thus, although sulphur is a by-product of oil and gas processing, it is actually a vital commodity.” remarked Angie Slavens, managing director, UniverSUL Consulting, Abu Dhabi, UAE.
“In addition to the value of the sulphur product itself, the sulphur recovery plant is a net energy exporter, providing a frequently overlooked benefit for the energy balance of the processing complex. This is because the Claus reaction, which is employed to convert H2S to elemental sulphur, is exothermic, and the waste heat from the process can be recovered as high-pressure (HP) and low-pressure (LP) steam. HP steam is often used for power generation and LP steam is used in various processing units throughout the facility,” added Slavens.
The Middle East is currently producing nearly 25 per cent of the world’s elemental sulphur and this figure may reach as much as 30 percent within the next ten to 15 years. Because of the huge quantities of sour gas currently being produced in the Middle East, along with expected increases in the future, the region is becoming the new epicentre for sulphur knowledge-sharing and expertise. This represents a geographical shift from the previous sulphur industry focus on Western Canada and the US, where sulphur production is currently in decline due to the depletion of sour gas fields in Canada and the rise of sweet shale gas and shale oil production in the US.
Refineries do not usually have the ability to store sulphur in block form due to limited space, resulting from their close proximity to industrial areas. Conversely, many gas plants are located in remote locations, where adequate land is available for emergency block storage, in the event that sulphur transport to market is interrupted. Refinery or gas plant operation will eventually be halted if sulphur products cannot be transferred from the production facility to market or long-term storage facilities.
Regulatory frameworks
Over the past several decades, governments world-wide have adopted increasingly strict clean air regulations on sulphur emissions from processing facilities, with a current industry benchmark of approximately 99.9 percent minimum recovery efficiency. This figure is on the rise with a greater number of facilities designing for higher sulphur removal rates, as evidenced by the World Bank SO2 emission specification, which currently is 150 mg/Nm3 (equivalent to approximately 99.98 percent recovery efficiency).
“While striving for increasingly lower sulphur emissions may be beneficial, it does not come free of cost. As sulphur recovery efficiency increases, the energy required to remove each additional kilogram of sulphur escalates. As energy consumption increases, the CO2 footprint of the facility grows, which is an undesirable outcome in a time when carbon emissions reduction is among the top objectives for corporate environmental management programmes. Not only is the environmental impact of CO2 familiar and visible to the public, but also carries a high potential for future regulations,” commented Slavens.
UniverSUL Consulting has performed several studies aimed at exploring the relationship between SO2 and CO2 emissions in sulphur recovery facilities. The results show that there is a point at which further increases in sulphur recovery efficiency lead to diminishing returns in terms of energy consumption and associated CO2 footprint.
Demand-supply scenario
According to the World Bank, the population of the Middle Eastern countries grew by approximately 55 percent from 1995 to 2015, versus a total world growth rate of less than half this figure. The UAE and Qatar grew by around 400 percent during this period, Kuwait and Oman grew by approximately 200 percent and Saudi Arabia grew by more than 150 percent.
“The main driver for the development of sour gas projects in the Middle East is a desire for national energy security to meet growing industrial and domestic energy demands, coupled with a trend toward switching from heavy fuels to cleaner natural gas for power generation. Near-term projections show fairly steady population growth rates for most Middle Eastern countries and therefore sour gas demand is expected to continue increasing at a similar rate in the near future,” observed Slavens.
Many of the non-associated sour gas fields in the region have acid gas (H2S + CO2) concentrations in the range of 30 volume percent or more. Gas production from such fields comes at a higher price than sweet gas production due to increased capital and operating costs associated with the removal of these impurities, combined with lower resulting sales gas volumes.
In many cases, associated gas from oil fields may be somewhat lower in H2S content but the rate at which associated gas can be produced is completely dependent on oil production rates. In order to meet the country’s energy needs independent from oil export demand, non-associated gas fields must be developed.
Sulphur demand is not expected to decrease in the near future because it is indirectly linked to the population growth. However, there is a possibility that the rate of demand growth will slow due to advances in fertiliser products, technologies and application efficiencies.
According to Slavens, “It is difficult to predict whether there will be a long-term sulphur oversupply, as there are many trends that could actually reduce sulphur production from oil and gas, including production of sweet shale gas and the rise of renewable energy. The future of nuclear energy is uncertain; however, should it re-emerge and experience a strong renaissance, this would also reduce sulphur production from oil and gas.”
“In any case, it is not expected that national oil companies will make decisions on whether to produce sour gas reservoirs due to the state of the sulphur market. Their first priority will be to meet the nation’s energy needs and the resulting sulphur product will be managed accordingly,” clarified Slavens.
Interestingly, if sulphur production decreased substantially in the future, for the reasons described above, it is possible that the development of sour gas fields could be targeted for the primary purpose of producing sulphur, rather than oil or gas.
The price factor
Oil and sulphur prices are not directly linked. However, when oil prices are low, producers may focus on producing sweeter crudes with lower sulphur content, ultimately decreasing sulphur production from refining. Additionally, many of the sour gas projects in the Middle East are heavily subsidised by oil revenues; so, low oil prices for a significantly long period of time could eventually impact the feasibility of such developments, decreasing the sulphur production from future sour gas projects.
Should low oil prices result in an increased focus on sweet crude and the delay of sour gas projects, this could slow the growth of sulphur supply, possibly resulting in an eventual deficit and price increase. However, it is important to point out that such responses depend upon many interactive and dynamic factors and therefore may be delayed by several years, making it nearly impossible to make a true connection between oil and sulphur prices.
The technological advances
Some of the key challenges related to sour gas processing include the high levels of contaminants such as H2S and CO2, as well as the presence of organic sulphur and BTEX. Additionally, fields which do not contain significant liquids (condensate and / or oil) can face challenges related to elemental sulphur precipitation leading to plugging of wells, gas gathering systems and/or processing facilities.
Many of the technologies used in the Middle East to address these challenges are also employed elsewhere around the world; but the mega-scale of Middle Eastern facilities makes them unique. Having said that, every gas plant is different and requires a tailor-made approach for its specific composition. With the current low oil price situation, technologies which can achieve superior technical performance, while also minimising cost (CapEx and OpEx), are of the highest interest.
Some examples include hybrid solvents and integrated acid gas removal / tail gas treating designs. Some operators are even considering converting a portion of their H2S to sulphuric acid, due to the energy benefits provided when increasing the oxidation state to H2SO4. However, the logistics of getting sulphuric acid to market requires careful consideration.
There are opportunities for CO2 capture from sour gas for enhanced oil recovery, and oxygen enrichment to increase the capacity of the existing SRUs.
“From the sulphur handling perspective, there have been advancements in sulphur pipeline heating systems to ensure robust, reliable operation, based on operational lessons learned in the region,” revealed Slavens.
Operators and technology providers are acutely focused on reducing capital and operating costs of sour gas and sulphur management projects, in order to improve the economic viability of these developments. The focus on value engineering has increased, not only for new projects, but also to improve operating efficiency of existing facilities. All capital and operating costs are being scrutinised to avoid unnecessary expenditure, while also ensuring safety and robustness of design.
The UAE position
The UAE is currently the world’s 4th largest sulphur producer and 1st largest exporter. Within the next five years, ADNOC’s sulphur production is expected to increase by approximately 30 percent.
Although it is a by-product of oil and gas production, ADNOC believes that sulphur is a valuable commodity that offers opportunities to create added value. Speaking at a conference in the UAE on 13 February 2017, Omar Suwaina Al Suwaidi, gas management director, ADNOC, stated: “In the lower-for-longer oil price environment, it is imperative to effectively manage costs and seize value opportunities where they arise.”
“It is about unlocking the full potential of every single asset and maximising returns for Abu Dhabi, ADNOC and the nation. Our increased focus on maximising the value of our sulphur resources will not only generate additional revenue, it will also contribute to the UAE’s strategic objective of diversifying the nation’s economy,” added Al Suwaidi.
ADNOC intends to support the development of a local sulphur product industry, including advanced fertilisers. Internationally, the company plans to enter into partnerships in markets that manufacture phosphate-based fertilisers in Africa, Asia, South America and / or Australia.
Since its inception in 2014, UniverSUL Consulting has functioned as owner’s engineer for ADNOC, performing technology evaluation, value engineering and technology implementation / coordination on all new sour gas projects. There are also several ongoing projects related to improving efficiency and reliability in existing sour gas plants and refineries in the Middle East.
During 2013-2015, ADNOC started up two major sour gas plant projects – Habshan 5 and Shah – operated by GASCO and Al Hosn Gas, respectively. Combined sulphur production capacity of the two projects is over 15,000 MTPD (5.5 MMTPA), which comprises approximately nine percent of the world’s total elemental sulphur production.
“Due to the nearly quadrupling of sulphur production capacity in Abu Dhabi from these two projects, ADNOC implemented two new sulphur granulation plants adjacent to the sulphur production facilities, the purpose of which were to eliminate transportation of liquid sulphur by truck to Ruwais as per the previous practice,” stated Slavens.
“Today, Etihad Rail is operating world-class rail infrastructure to transport around 16,000 MTPD of granulated sulphur from Habshan and Shah to the port at Ruwais. Within the next five years, the sulphur facilities at Shah are expected to be expanded by another 5,000 MTPD, bringing the total sulphur production in the UAE to over 20,000 MTPD (7.3 MMTPA), making it one of the top three sulphur producing nations in the world,” concluded Slavens.
