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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 | Maiden voyage into refining yields renewables megaproject When Sir Richard Branson, the UK billionaire businessman, first said he wanted to build oil refineries, a friend of mine – a well-known consultant — got on the phone to Virgin Group headquarters and offered his services. “It’s just Richard being Richard,” they said. “We’re not about to start building oil refineries.” I guess he’s surprised everyone, including his own staff, these last few months. Even at the time, before the launch in September of Virgin Fuels, his ideas about refining got a lot of attention. He hardly kept them to himself. Far from it. He called publicly for a US $20 Bn fund to get 20 new refineries built as quickly as possible. He said that governments should not stand by and let their key industries be stunted by runaway commodity prices. He said tightness in the refining market could do untold harm to the global community, referring as well to the prospect of $100bbl crude oil. He didn’t particularly want to, he said, but if needs be he’d put up the first $100 million himself to get a $2 Bn refinery built. You could almost hear the chorus of “Be my guest” from oil industry analysts. There’s no-one senior enough to be making investment decisions in the downstream industry who doesn’t remember long decades of threadbare refining margins. One of Europe’s most senior refiners told me the other day, Asia’s the natural home for new refineries. “There’s definitely no room for greenfield construction in Europe.” Some oil refineries are being built, but not in Europe, and not by oil companies. Interestingly, Sir Richard fits the profile of a greenfield builder rather well. “There are actually only three groups building refineries at the moment: major resource holders like Saudi Arabia, the Chinese, who want to remain distillate import neutral, and then you have the entrepreneurs like Essar and Reliance,” says an oil analyst friend. “The traditional investors have a very low appetite for the industry right now.” But while you can understand the cyclical logic of oil industry planning, the call for an expansion of refining capacity in the US and Europe can be heard far and wide. Apart from Richard Branson, there’s the International Energy Agency. From its Executive Director we hear that the refining industry’s first urgency is to invest in capacity and particularly in conversion capacity. Then, as I write this, House Committees in Washington are due to consider a controversial bill introduced by Republican Joe Barton designed to accelerate downstream expansion in the US. Sir Richard looks from a consumer perspective and when his fuel bill goes up by half a billion dollars, as it has done for two of his airlines over the last two years, he feels like he’s being screwed. Lots of customers feeling very unhappy is classic territory for Virgin. Listen to how he characterised just that issue in a fascinating interview with the magazine Business Week. “If Virgin can tackle the problem of a lack of refining capacity, there might be some consumer recognition for that. We like to think of ourselves as a consumer's champion.” His pronouncements on refining mean that without ever shifting a dollar into conventional hydrocarbon processing, over the summer people all over the world reinforced their image of Virgin as the daring consumer champion. Just as they did back in the days of Virgin versus British Airways. His plans for a refinery would in any case, he says, dovetail nicely with another venture on the drawing board – Virgin Oil. His new upstream hedge against high oil prices would be prospecting within months, he announced. But getting into the oil industry because you need a stable jet fuel price strains the economics quite hard. Even if Virgin could do what others have failed to, and get a refinery built in the US, perhaps only 10% of the output would be the jet fuel Virgin Atlantic needs. And then there’s a rather unclear demand scenario on the radar screen for anyone investing in refining. My oil analyst friend again: “Biofuels projects can satisfy 5% of demand here and 10% of demand there and they’re everywhere. If you build an oil refinery then it might come onstream in 2010 and it will then have to operate profitably until perhaps 2035. By the time it is commissioned SUVs are fading away, more economic drive trains are coming in, biofuels are growing and the demand picture is changing,” he said. But as it turns out, this biofuels threat to his investment ideas, seems to have gone into a challenge/opportunity brain and come out as part of the solution instead. By running his ideas and frustrations up the flagpole he elicited various invitations to build refineries here and there, but also a call from an unexpected quarter. Ted Turner rang him up and suggested “why not build a refinery for clean, rather than dirty fuel?” Suddenly Richard Branson’s refining quest took him to the United Nations Foundation, founded with Turner’s one billion dollar donation, and onto the steering committee of the Energy Future Coalition. What started as a quest to build a refinery has led to the creation of a fuels company with $400m of funding over three years from Virgin and Sir Richard’s remarkable pledge to put all proceeds from his transport groups for the next ten years into climate change-oriented renewable energy projects within those companies, or emissions reduction and bio-energy research and development – an estimated value over ten years of $3 Bn. Virgin Fuels has made its first refining investment, in seven biofuels projects in the US mid-west, and is planning its entry into the UK biofuels market. He says he wants to build an alternative fuels industry and be part of the breakthrough to put cellulosic butanol on the forecourt. Maybe we’ll even see a renewable Jet A1 from this research programme. Perhaps Virgin Atlantic and Express will become the world’s only airlines to have a positive word to say about climate change. | |||||||
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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