Rob Howard, AspenTech speaks about the impact of carbon costs on refiners and the use of technology to mitigate possible risks
Carbon capture technologies have progressed significantly in recent years in the quest to add commercial value to the process industries.
Pilot plants funded by government and private organisations across the world are playing their part in the development of operational excellence and regulatory compliance. The drive to reduce carbon emissions more economically is essential if manufacturers wish to lower plant operating costs and minimise impact on the environment.
Weighing up the options between meeting environmental needs and commercial goals is one of the dilemmas for many companies. However, the industry can progress low-carbon energy technologies and help reduce CO2 capture energy penalties imposed by regulatory authorities by working collaboratively.
Cooperation between owners and technology vendors leads to a clear commitment to promote competition among suppliers and this also strengthens the initiative to reduce energy and capital costs.
Organisations adopting innovative technology can improve their environmental footprint from a production viewpoint and use cleaner fossil fuel technologies like carbon capture and storage (CCS). With more projects dedicated to demonstration on an industrial scale, the more likely that CCS will become commercially viable.
Facing the challenge
While business leaders may worry that green taxes on pollution could drive companies to re-think their commercial strategy, it is worth reflecting that CCS can represent an opportunity.
If CCS technology is to become a standard, then there has to be an opportunity for businesses to generate profit. Just storing CO2 is a cost unless by storing it you can create value.
That is what Enhanced Oil Recovery (EOR) adds to the equation. EOR is a good option because large volumes can be used and the technology is proven. The Apache Weyburn-Midale Project and in the Permian basin in the Southwest USA has demonstrated for years.
One of the world’s first operating CCS projects, In Salah in Algeria, is located in the MENA region. The project has sequestered 1 Mtpa of CO2 annually since 2004. Except for this project, most of the region’s activity is in the United Arab Emirates, where the Abu Dhabi Future Energy Company (Masdar) is driving a number of projects in a staged approach.
However, the Kingdom of Bahrain does have one CCS project, but not an integrated one. The captured CO2 has been used for urea and methanol production.
This is crucial for the development of the industry and for its long-term future. If the CO2 is simply stored in the ground or dissolved in the ocean, there will be little incentive for companies to invest, other than avoiding the need to pay fines for non-compliance with government regulation.
The consensus of opinion across the process industries is that reducing CO2 is a positive move and there is growing interest around the world in the potential of carbon capture and storage (CCS).
Engineers can help reduce emissions in several ways: altering manufacturing processes, such that they require less energy to produce the materials we need; improving the efficiency of the entire supply chain, so that energy consumption over the manufacturing lifecycle of a product is reduced and, finally, the efficient removal of CO2 from industrial flue gases and its pipeline transportation to safe disposal locations.
Thus, reducing risk and minimising project costs. The tools for modelling these complex interactions, like process simulation and supply chain optimisation applications, are already in use today worldwide.
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The drivers of change
For any energy or carbon saving technology there has to be a financial benefit for companies operating in market economies.
Whilst reducing energy consumption and supply chain efficiency have an obvious commercial incentive, for CCS technology to become a standard, then there has to be an opportunity for businesses to generate profit.
Carbon related legislation is still at the development stage, but the consequences of industry and government policy will have economic impact on global oil markets for many years to come.
European refineries are facing the combined challenges of declining regional oil demand and the burden of carbon costs as part of their greenhouse gas (GHG) emissions. Many refineries are constantly under the threat of being sold or closed due to market forces.
Concerns could also increase regarding the issue of ‘carbon leakage’ if European refineries are subjected to international competition and the potential CO2 cost versus gross margin.
In the UAE, His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of UAE and Ruler of Dubai launched a long-term national initiative to build a green economy in the UAE under the slogan, “A green economy for sustainable development”.
This will cover a wide range of legislation areas, policies, programs and projects. One aspect of this initiative consists of a group of programmes and policies aimed to promote the production and use of renewable energy and related technologies.
Another aspect consists of means for dealing with the effects of climate change through policies and programs designed to reduce carbon emissions from industrial and commercial sites. There is also a focus on projects to recycle waste generated by commercial or individual use.
Economic viability
Uncertainty still remains about how carbon legislation will evolve and its impact on the oil markets around the globe, including the refining industries. Costs for manufacturers governed by carbon initiatives across the regions are likely to increase. The European Union and the United States have recognised the need to enforce higher efficiency standards without affecting competitiveness.
Compliance for companies could mean the implementation of new operational procedures leading to greater complexity. Software applications, therefore, can help define a company’s sustainability strategy and provide transparency into their carbon footprint.
The ability to now measure energy consumption and related carbon emissions means that firms can monitor the sustainability strategy in tangible terms. A prime example of a leading carbon capture project is Technology Centre Mongstad (TCM), which is using aspenONE software at the world’s largest industrial-scale facility for testing and improving CO2 capture technologies.
TCM uses Aspen Plus and Aspen IP.21 for planning, follow-up and verification of test programs and results. TCM’s use of the Aspen Plus and Aspen IP.21 product families shows that process manufacturers can reduce carbon emissions more economically, resulting in lower plant operating costs and reduced environmental impact.
TCM is owned by the Norwegian Government and leading global energy companies. TCM’s goals are to: 1) test, verify and demonstrate CO2 capture technology owned and marketed by vendors, 2) reduce costs, technical, environmental and financial risks, 3) encourage the development of the market for CO2 capture technology, and 4) aim at international deployment.
Organisations with a structured strategy to improve energy and carbon management across operations and the supply chain will optimise assets, reduce emissions and become government and industry compliant. With advanced technology, carbon capture initiatives play an integral role in demonstrating environmental benefits and economic viability in the process industries.
About the author
Rob Howard is AspenTech’s Senior Director of Business Consulting for the Middle East and North Africa (MENA) based in Bahrain and responsible for leading a team of technical consultants who work with Middle East clients to improve the profitability of their engineering, manufacturing and supply chain business processes and solutions. Here, Rob provides insights into the trends across the resource rich MENA region and the key issues affecting companies’ operational performance.
