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Dutch IGCC pioneers chalk up pain and gain Emergency response is behind schedule in the European public sector A new refining industry in Europe's Asian Corridor Commission proposes milestone energy proposal Replace fuel oil with distillate? Cancelled projects will sustain margins “Marine distillate not fuel oil from 2010” Branson's biofuels megastore You heard it here first: refinery CO2 storage a reality in Norway Buncefield 2: Investigation critical Where now for Swedish Class 1 diesel My slow awakening to climate change The luckiest motorist alive Safety row goes on over Europe's largest LNG terminal New WHO guidelines on city air quality put focus on diesel Would LNG really 'evaporate harmlessly' in an accident? Another lesson in the thermobaric bomb Spare a thought for the oil-rich But will the good times keep on rolling? Carbon storage and the zero emissions refinery Everything just changed E85 and high octane gasolines The problem of small-minded young engineers New Permit Regulations Biodiesel newbuilds and a new green superfuel Spilled wine and our split industry Drilling down into the prospects for IGCC The beginning of the start of the end of oil | Cancelled projects will sustain refining margins as costs soar Five hundred announced projects. 66 new refineries. 180 upgrading projects and another 180 for clean fuels. The numbers were both stunning and somewhat implausible at this year’s European Refining Technology Conference in Paris. The speaker who quoted these in an impressive keynote speech was indeed quick to add a rider: “We are very confident that many of these projects will never see the light of day,” said Senior Vice-President Strategy and Development, Downstream Segment, Total, Jean-Jacques Mosconi. “But,” he added with sufficient irony, “we hope that those we are involved with will be completed.” Joking aside, Mr Mosconi said he does expect 8.5mbpd of an announced 13mbpd of new refining projects, to go ahead. New greenfield refinery capacity, he said, had a natural home in Asia, where costs were a third of European or US levels. At today’s prices a 200,000bpd grassroots development in Europe would cost $4bn: “To make that profitable, you’d need to count on 2005 margin levels for the next 25 years.” Instead, Asia and the Middle East will host new distillation capacity, while Europe would build diesel hydrocrackers, and the US cokers to increase gasoline and diesel. Mr Mosconi announced a new hydrodesulphurisation unit at Total’s Lindsay, UK refinery, “acknowledging the imminent end of light north sea crude” and said progress was going well with the start-up of Total’s $550m hydrocracker at Normandy refinery and its world-scale refining joint venture at Jubail in the Middle East. He said Total’s billion dollar coker and vacuum distillation unit project at its 100%-owned Port Arthur, Texas, refinery would get underway in 2007 for start-up in 2010. Happy conference Not surprisingly then, confidence was high at what the organisers described as “the happiest ever” ERTC. More than seven hundred attended, with contractors, oil companies, technology vendors and catalyst manufacturers alike blithely riding on a wave. The sentiment was dented only slightly when the gathering was told that there wasn’t the steel, aluminium, concrete, company personnel or contracting companies to carry out the projects. As a result, the cost of projects was 50% to 100% higher than just a few years ago. And only once did anyone question whether there was the 8.5mbpd of additional daily crude oil output necessary to supply them. Even the International Energy Agency was having a bumper year. Its Energy Outlook was “our best-selling publication of all time,” and its speaker set aside geopolitical considerations and the IEA’s role as arbiter of global environmental progress, to sing the praises of its new volume. Interestingly, the IEA did point out that 75% of oil industry investment in the coming decades will need to be made upstream in order to secure reserves for their downstream operations. While that upstream investment had doubled since 2000, the increase was almost entirely accounted for by the increased costs of hiring equipment and contracting suppliers. Elsewhere, biofuels dominated the programme. Yet again, second generation fuels – those based on non-food, non-hydrocarbon intensive agricultural crops – were said to be just around the corner. Since that’s where they’ve been for fifteen years now, the IEA, perhaps wisely, omitted second generation fuels from its demand picture for 2030, anticipating instead a 7% global market penetration for first generation biofuels. Speaking for the European Commission, Paul Hodson, said that member states progress on implementing biofuels policies was off-track. A recognition of this was feeding into the major review of energy, security and sustainability taking place as the current Green Paper is developed. This would be adopted by the Commission on 10 January 2007 and be a major policy element for the German EU Presidency (starting Jan 1) and Environment Council’s work over the course of the year. He said that 12 nations had adopted detaxation of biofuels, eight had introduced an obligation and some were doing very little indeed. Liquid fuels for transport have worse energy security than other energy sectors, and greenhouse gas emissions in this sector grew while others fell, Mr Hodson said. He said the Commission did not believe its present policies would be achieved, based on biofuels progress to date. He said that the transport fuels sector was currently at 1% renewable and that, while it would not have to go as far as the power sector’s 45% to 50% target for renewables by 2030, it was nevertheless faced with the most rapid rate of growth of all the sectors. “To go from 1% renewable element today to ten or even 15% in 2030 is a very rapid rate of growth indeed,” he said. Sustained margins At this year’s meeting there were a lot of steeply upward curves in the Powerpoint presentations and a feeling that the difficulty of the ascent was being underestimated. With the cost of projects soaring, it was suggested that the prospect of four-year waiting times for high pressure vessels would simply lead to the cancellation of many hydrocracker projects in the near future. By way of consolation, that would lead to a longer period of sustained conversion margins than otherwise expected, said a speaker from Purvin and Gertz. The question of whether consuming nations, indeed drivers of cars and trucks, would tolerate the implied high prices,was addressed only in so far as a suggestion that coal to liquids fuels would at some point emerge to compete with traditional fuels in many markets. Many of the projections of future diesel and gasoline demand in the coming decades supposed crude supply levels which executives in the upstream industry have said will not be realised. The consultants and agencies present answered this by saying that demand will simply be destroyed by rising prices and fall back into line with feasible supply levels. That’s one of those things which is easy to say, but not so easy in the execution. Policy makers in Europe will have to fret over how to make that transition from the current overheated market, a soft and controlled landing. There’s a reasonable fear that putting the brakes on global growth in this way could amount to a simultaneous US/Asian recession. But this conference didn’t have to solve that problem. It is after all a refining technology conference. | |||||||
Download Energy Industry Resumé with work samples Profile: Tim Lloyd Wright MA Here you'll find a brief profile of my work with international energy, transport and associated environmental issues. Energy trends articles You heard it here first: refinery CO2 storage a reality in Norway From the archive... Over-processed fuel leaves oil tankers adrift | ||||||||
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