Essay title - How can a refinery be more green yet remains more competitive?
Introduction
Refineries in petroleum help to separate crude oil into different array of oil products. It has been a profitable industry. It contributes significantly to a country in terms of its Gross Domestic Product (GDP) and in terms of being a manufacturing enterprise. The demands for oil have also increased due to the change in lifestyle. On the flip side of the coin, the focus in meeting market demands and generating higher profits margin by the refineries has led to environment pollution issue. Refineries thus faced challenges in meeting the environmental regulations imposed by the government. Therefore, it has become a main motivation for refineries to look for solutions to be green and yet remain competitive and profitable in the market.
The objective and scope of the project
The objective of this project is to find out the feasible solutions that can help petroleum refineries to be green and yet remain competitive. Firstly, we would like to discuss how the improvement in technologies used in refinery process such as controlling harmful air, water and waste emission, and waste recycling can help to manage the environment regulation easily and also to generate higher revenue. Secondly, we would also like to investigate how different process integration methodologies can optimize and improve the refinery unit operations. Lastly, we would analyze the effectiveness of venturing into alternative fuel products and partnership with other companies that can possibly enhance the competitiveness of the refineries. Our discussion will be based on how different companies or research institutes have successfully achieved the objective through the use of new and improved technologies, better management of refinery processes, the development of alternative fuel and partnership.
Meaning of being green and competitive
The meaning of being green is to design, commercialize, and use processes & products that are feasible and economical. It helps to decrease the emission and generation of pollutants, and also to minimize in the risk caused to environment and human health. At the economy level, competitiveness is defined to have a sustainable growth in productivity that results in the improvement of the standard of living of the average citizen of a country. Likewise, competitiveness is the implementation of strategies that generate sustainable increases in businesses’ productivity in the refinery industry. It results in the generation of increasing profits and higher ability to pay increasing wages. By reconciling the meaning of green and competitive is at the heart of sustainable development. It aspires to achieve economic development, securing higher standards of living for present and future generations, while seeking to protect and enhance living environment conditions for now and future.
Impact of refineries on environment
Generally, refineries are considered as a major source of pollutants. Every year, thousand pounds of pollutants such as nitrogen oxides, carbon dioxide and sulphur dioxide are released into the environment through normal waste emission, accidents, plant upsets and fugitive releases. Depletion of ozone layer is thus a result of the serious consequence of air pollution issue. Likewise, refineries are also a major source of water pollution. Wastewater from refineries processes such as desalting, distillation and cracking are often discharged without stringent waste treatment and proper disposal. Eventually, it results in contamination to ground water and surface water, causing hazardous effect to the ecosystem.
Environmental Regulations
Due to the negative impacts of refineries on environment as discussed in 1.3, many stringent regulations are proposed by the government.
Refineries are regulated by many environmental laws such as:
- the Clean Air Act
- the Clean Water Act
- the Safe Drinking Water Act, Emergency Planning and Community Right-to-Know (EPCRA)
- the OSHA (Occupational Safety & Health Administration)
- the CERCLA (i.e. Superfund: Comprehensive Environmental Response, Compensation, and Liability Act)
- the TSCA (Toxic Substances Control Act)
- the Oil Pollution Act and Spill Prevention Control and Countermeasure Plans
Challenges faced by refineries to be green and yet remain competitive
To comply with government regulation, many refineries are investing heavily to become greener. However, the cost of meeting environmental regulations has become one of the challenges faced by refineries. It is extremely high because refineries need to produce reformulated products such as gasoline that are cleaner burning. This requires refineries to either change or modify existing equipment with devices for controlling emissions. Some other larger refineries have also been spending large sum of money on researching on alternative fuel products and better management system for controlling the refinery process. This would help them to be more competitive. Yet, the costs of compliance are having a detrimental effect on refineries that are expanding or trying to keep pace with the country’s increasing demand.
Environmental technology and strategic management
Regardless of whether environmental regulations help or hurt oil refineries, they influence the competitive dynamics of industries and are already shape the strategic decisions such as source of raw materials and management of energy and wastes. One strategic variable that essentially varies the environmental impacts, risks and costs of refineries is the choice of technologies. Environmental technologies directly or indirectly affect the basic parameters of costs and environmental impacts such as production efficiencies, pollutants emitted from production processes, worker health and safety, public safety, and management of wastes.
Environmental technologies are defined as a set of techniques (technologies, equipment, and operating procedures) that are used for pollution minimization, waste management, conservation of energy, water and material, and for improving technological efficiency of production. On top of that, environmental technologies are evolving as a management orientation, as they engender environmentally responsible approaches towards manufacturing and design of products, environmental management, and technology choices.
Environmental technologies that will be discussed below include:
- Process management
- Waste management
- Process integration
- Alternative fuel products
- Partnership
Process management
Process management is found to play a very important role in controlling pollution, for instance, identification and control of VOC and other pollutant emission can be done through good process management. This stage is essential to meet environmental regulations by government and it also allow further measurements to be taken to reduce negative impacts on environment caused by oil refinery. This is because how refining activities cause pollution to our environment and its severity can be clearly identified through excellent process management. There are many advantages for doing so such as cost saving and extensive experience of process management companies in this field. Expertise from process management firms can be hired for this purpose. Project manager from these firms are better trained and kept current with the best practices in project management. They also have significant experience in understanding the needs of their customer and necessary resource from around the world can be mobilized with the help of these firms if necessary.
Case study: Emerson Process Management
One of the firms that fulfill the need of refining company in this area is Emerson Process Management. This firm is rich of experience in major processing unit in refinery such hydrocracking & alkalization, sulfur recovery and off-gas treating, catalytic cracking and crude distillation. Any of these processing units may have negative impacts on our environmental and therefore need to be monitored.
One of the systems used by Emerson and able to monitor refinery process in more efficient way is Plant Web. Plant Web is digital plant architecture that able to use predictive intelligence to further improve plant performance. Compared to traditional DCS-centered architectures, its capital and engineering cost are lowered, at the same time it provide more operational benefits, such as sustain performance gain, quality, throughput, reduce conversion cost. It also allows customer to detect potential problems that may arise and solves them before they become serious. Another amazing job the system can do is that it enables customer to know what happen during refinery process and the condition of equipment which run the process. By having better process management, the cause and extent of pollution due to refinery process are well identified. Therefore, actions can be taken to reduce the negative impacts more effectively.
Monitoring of VOCs emission using Smart Wireless self organizing network from Emerson Process Management
A refining company in North America was fined $350000 for zero emissions by Environmental Protection Agency due to the company failure to track the release of VOCs accurately. The company do not have device that can monitor the pressure relief valve on the coking unit. However, this problem can be solved easily by Emerson Process management using their Smart Wireless self organizing network. 27 Rosemount 3051S wireless pressure transmitters can be placed on the stacks in the coking unit which allow the device to monitor pressure relief valve automatically. The device reading is integrated into existing OSIsoft® PI System™ through the 1420 Wireless Gateway. Analysis and calculation of VOC release rate in addition to automatic reporting any problems will enable refining company to detect and control the VOCs emission. Therefore, pollution caused by VOCs emissions can be further controlled and reduced to minimum. The most significant benefit is undoubtedly it prevents refining companies from being fined by Environmental Agency as a result of inability to prove environmental compliances. Besides, the cost of the wired network was found to be 90% below of the traditional one. This gives refining companies competitive advantages besides able to meet the environmental regulation and monitor pollution caused by oil refinery [1].
Waste management
Sulfur Capture and Recycling
Under pressure of stringent SO2 emissions regulations, high efficiencies of desulphurization technologies are now widely implemented in order to remove sulphur from crude oils. However, the refineries from all over the world are facing problem in handling sulphur in more environmental friendly and yet competitive ways.
Conversion of gaseous hydrogen sulphide into usable products, elemental sulphur in Claus plant is highly recommended. In a typical Claus process, the acid gas feed is combusted and oxidized to produce sulphur dioxide which then reacts with hydrogen sulphide to produce elemental sulphur under presence of catalyst. In order to increase sulphur recovery ability, the ordinary Claus plant is coupled with an amine-based tail gas clean up unit (TGCU). With this extra unit, the sulphur compounds in the tail gas can be prevented from leaving and thus able to be recovered in the Claus plant, resulting in achieving sulphur recovery performance up to 99.9%. Since the Claus processes is highly exothermic and then able to release a great amount of heat energy which can be recovered by generating steam in heat exchangers following the conversions stages. As a consequence, the SO2 can be captured and successfully converted into useful elemental sulphur, energy recovery also can be achieved simultaneously. In this case, the implementation cost of Claus plant can be traded off. Moreover, most of the refineries earn alternative income by selling the elemental sulphur for paper manufacturing and rubber vulcanizing.
Figure 1: configuration of modified Claus plant with TCGU designed by Ortloff Engineers, Ltd.
Beside elemental sulphur, sulphuric acid also becomes major components in producing unleaded gasoline in alkylation plants. It is used as catalyst in boosting the conversion of C4 hydrocarbon into branched C8 components, which is ideal for gasoline blending, due to having high octane number and containing neither sulphur nor aromatics. In this case, this has created a driving force for refineries to implement sulphuric acid plants with the purposes of reducing importing sulphuric acid from outsourcers. At the same time, they can optimize the sulphur recovery and follow by decreasing sulphur emissions. Refineries can also earn extra income by selling sulphuric acid to many manufacturing industries such as fertilizer production industry and metals processing sectors. Sulphuric acid can be sold to chemical manufactured industries which involve in producing hydrochloric acid, nitric acid, synthetic detergents, dyes, pigments and drugs etc. With this technology, refineries would be able to handle sulphur emissions in more greenly way and yet competitive.
Case study: Implementation of sulphuric acid plant in Western Refining's East-Central El Paso oil refinery.
Western Refining's East-Central El Paso oil refinery cannot operate without sulphuric acid as they are essential component in producing clean gasoline in alkylation plants. Traditionally, they purchased from other sulphuric acid suppliers. However, they have to afford high cost of purchasing when the price of sulphuric acid increased. In order to solve this problem, the western hired DuPont Chemical Solutions Enterprise (DCSE) to design and implement a sulphuric acid plant. With this plant, western will be allowed to stop receiving sulphuric acid from suppliers, and they able to process less expensive sour crude oil, and remove approximate 74% sulphur emissions to air.
Waste water treatment and recycle
Optimization in water usage becomes essential issue for refineries due to stringent regulations on wastewater disposal and shortage of clean water. Most of the processes in refineries involve large amount utility of water, to combat water shortage, wastewater recycling becomes the most economical and environmental friendly methods.
Generally, the cooling tower involves a large amount of water usage. Consequently, using recycling water in cooling tower can save a lot of money, can achieve 50% less cost compare in using potable water. The volume of water discharged increase while the number of cycles of concentration has to be reduced after replacing with recycling water and thus the efficiency of cooling tower has to be increased. However, the combined cost of water purchasing plus water discharging can still be reduced. Optimization the cycles of concentration of recycled water can further decrease the cost as well. Apart of recycling water discharged from cooling tower, there is possible to reuse the water from other processes. This can further saves unused water sewers and optimize the usage of wastewater. Instead of recycling the water, minimizing usage of water in cooling water can be achieved by replacing part of water with air.
The wastewater from petroleum refineries are usually containing oily sludge, variety of treatment methods are implemented in order to separate them with water. For example, Dissolved Air Flotation (DAF), flotation pile oil water separator, biological wastewater treatment etc are commonly used. Instead of “land farming”, the petroleum sludge is recycled back into feedstock before the quenching cycle, and the mixture of sludge and feed is then subjected to a delayed coking, one of the process unit in oil refineries. Subsequently, conversion either to coke or to cracked hydrocarbon products can be taken place by subjecting combustible oily sludge to the high coking temperatures. It is an energy-consuming process as it has to operate at high temperature, but it can effectively and economically handle excess oily sludge.
Carbon Dioxide management
From the refinery flow process chart, the main CO2 emission comes from the furnace. Figure 2 shows the main CO2 emission in hydrocracking-based and fluidized catalytic cracking-based refinery. Figure 3 shows that the largest CO2 emission source in both kinds of refinery are the process heaters and utilities. Thus if CO2 from process heater was captured; the CO2 emission in refinery plant would be reduced to half of it.
HCK: Hydro-cracking based refinery
FCC: Fluidized catalytic cracking based refinery
In order to reduce the cost of CO2 capture, the low value residues from refinery was used as the energy sources of the process heater. However there are many process heaters within the refinery, which make the CO2 capture impractical and too costly. Thus a new solution is required to solve this problem. Among all the techniques, gasification offers the best solution. [2] One gasification unit can be used in one refinery, during gasification, CO2 and H2 will be released out, which are able to be separated later. The H2 can then be used in hydrogen plant, and the CO2 can be easily captured. During the gasification process, large amount of heat produced can then be used to heat up the unit operations or the pipes in the refinery. Consequently, gasification of the low value residues within the refinery can help reduce around half of the CO2 emission.
The applicable of gasification plant is mainly due to its comparable low capital cost, which is $1000 /kW. The gasification plant also makes the production of more variable products possible within the refinery (see Figure 4).
Figure 4: Gasification plant flow chart with potential feed and products.
Process Integration
In addition to pollution control and waste management, process integration is another approach to reduce hazardous pollutants and conserve resources and at the same time enhance the refinery profitability. Process integration refers to the improvements made to process systems, their constituent unit operations, and their interactions to optimize the use of energy, water and raw materials. It allows refineries to enhance their profitability by means of resource consumptions reduction and waste minimization. Until now, pinch analysis and energy integration are the most widely used methods among various process integration methodologies due to their simpler underlying concepts.
Case study: Hydrogen Pinch
The declination in quality of crude oil as well as strictness of environmental regulations lead to the growing demand for hydrogen to upgrade heavier and higher sulfur crude slates. As a result, the refinery throughput and operating margins would be limited by its hydroprocessing capacity. Refineries invest for new hydrogen plants and hydrogen recovery units since traditional hydrogen sources such as catalytic reformer are not sufficient to meet the demand.
To maintain feedstock and product flexibility while avoiding unnecessary capital investment, hydrogen management would be a better alternative. An example is the HydrogenPinchTM techniques introduced by Linnhoff March. This approach constructs hydrogen composite curves showing the current supply and demand of hydrogen in terms of stream purities and flow rate (Figure 5a). This is then used to construct hydrogen surplus diagram (Figure 5b), allowing engineers to find out “hydrogen pinch” which indicates the existence of bottlenecks and accordingly set targets for hydrogen recovery, hydrogen plant production and/ or imports without the need of any process design.
(a)(b)
The track record below has shown that the use of this approach has successfully reduce the demand for hydrogen, thus cutting down the cost required to regenerate hydrogen, and at the same time minimize the carbon dioxide emission.
| Hydrogen demand reduction | up to 20% |
| Operating cost reduction for hydrogen system | up to 15% |
| Capital avoidance for hydrogen capacity scale-up | up to 15% |
| CO2 emissions reduction | 160 kg per 1000 barrels of crude oil |
Alternative Fuel Products
Alternative fuel source is another viable solution to alleviate the current environmental condition. This is especially a great concern for the oil refinery to develop and improve the industry to be more green yet competitive, in lieu of the increasing demand and supply of oil in the future,
Bio-fuel as an alternative
Today, oil refinery has poured millions of dollars in search of the alternative fuel source to power the oil refinery, so as to be environmentally responsible, yet remain competitive. One of the highly researched fuel sources to power the oil refinery plant is biofuel. Biofuel is generated by bio-refinery using renewable agricultural crops. Currently, agricultural crops, such as sugar cane in Brazil and palm oil in South-East Asia, are being utilized for such purposes and have proven to be technically feasible, economically viable and environmentally safe.
Essentially, biofuels are made up of organic compounds, which are made of high carbon and hydrogen components. Therefore, the sulfur and heavy metal content present in petroleum, which can pollute the three medium, when oil products burn will not be a problem with combustion of biofuel, while giving sufficient energy to power the plant.
Natural gases as an alternative
Natural gas is also another possible candidate. Natural gas comprises of mainly propane and butane, which are in great abundance in countries like Indonesia. The gases are converted into viable fuel sources to fuel the oil refinery by the Fischer-Tropsch process. There have been successful examples of commercialization of Fischer-Tropsch, such as, Shell in Bintulu, Malaysia, which uses natural gas as a feedstock, and produces primarily low-sulfur diesel fuels and food-grade wax, while Sasol a major producer of South Africa diesel fuels, uses coal and natural gas as a feedstock, and produces a variety of synthetic petroleum products.
Challenges, economic benefits and competitiveness
Due to the present technology, the replacement of fossil fuel with natural gas and biofuel is still a long way to go. This is because, at present, no other fuel can match the affordability and energy efficiency of fossil fuels. Therefore, there is no way a refinery company can use and produce alternative fuels, while remain the same competitive. However, the expected tightening of environmental regulations in the coming years will force the oil refineries to make a decision between the affordability and efficiency of conventional fuel source or paying an expensive price of not adhering to the rules. Thus, the oil refinery, which can move into using the alternative source zone quickly, will be able to gain a competitive edge over their competitors. Hence, these alternative fuel sources to power the oil refinery plant are worth consideration for investment.
In addition, due to government efforts and the push for requirement of cleaner environment, biofuel and natural gases may become a reality as replacement to fossil fuel or perhaps even cheaper and better than fossil fuels as technology evolve.
Partnership
Partnership between refining companies and automobile companies or research institutes in developing green technology in refinery industry can also be carried out. This kind of symbiosis relationship offers a lot of benefits to both parties, such as share of research facilities, technical knowledge, financial support and also lowered cost in developing green technology. This will put refining companies at competitive position and yet able to be more green. For example, development of fuel that can reduce its negatives impacts on environment when it is used by vehicles required engines in vehicles to be able to accommodate the changes in properties of improved fuel. In this case, collaboration between automobile companies and refining companies is necessary to work toward achieving the goal. In addition, refining companies can work together with research institutes for the same purpose. Through partnership, research institutes will able to commercialize the technology which they have developed with the help of their partnership. This will also allow exchange of knowledge and idea between refining companies and research institutes.
Partnership with automobile company to increase the competitive advantage of the refinery
As we know, the policy turns more stringent nowadays for the oils. Ultra low sulfur products are required. At this moment, partnership with automobile company would increase the competitive advantage of the refinery. In the cars, the catalyst costs a lot due to the use of noble metal. If the petroleum produced can be free of sulfur, then the catalyst used in the automobile can be more sensitive metals which cost much less than the noble metal. An agreement can be made between two parties; the automobile company produces the cars that can only use the free sulfur petroleum. In short term, it increases the production cost. But in long term, the refinery company would gain very loyal customers, which may properly increase the sales benefit of the refinery company.
Case study: Partnership in commercialization of On-Vehicle Hydrogen Fuel System for Lift Truck Application
Through partnership, Plug Power will able to commercialize an on-vehicle hydrogen production system for fuel cell-powered lift truck. On the other hand, ExxonMobil, QuestAir Technologies and Ben Gurion University play the role of developing the technologies. They work together to develop individual components of the on-vehicle hydrogen fuel system and further improve the performance of the system before it is commercialized. On-vehicle hydrogen fuel system is able to convert liquid into hydrogen onboard the vehicle when it is used in fuel cell power train. It is believe to be 80% more efficient than the internal combustion engines technologies we use nowadays. Besides, it will also help to reduce CO2 emissions by up to 45%. Besides, they have also found a way to scale down traditional hydrogen steam reforming process to enable it to be fitted in vehicle and connected to fuel cell. The system may not be developed successfully by Exxon Mobil alone without partnership with Plug Power, QuestAir Technologies Ben Gurion University
Conclusion
The experiences of companies illustrated in case studies suggested that integrating environmental technologies into strategic management offers many competitive advantages by cost reductions and revenue improvements. Firstly, environmental technologies offer opportunity to reduce costs by reducing waste, reusing materials, and conserving energy or earn extra income by selling recycled useful material. Secondly, due to stricter environmental regulations and product specifications, development of alternative sources will be able to help the refiners to gain a competitive edge over rivals. Thirdly, through inter-organizational cooperation, in long term, the impacts on environment can be minimized and all the partners will become more cost effective and competitive.
References
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