Oil companies can wrest the initiative from the green lobby by making the clean fuels of the future from their own refineries, but they will need to act quickly if they are to stay ahead of the game, a Shell executive said on Friday.
Hydrogen was likely to be a vital clean source of energy, Michiel Boersma, the head of Shell’s Global Solutions consultancy, told an industry conference.
But he said producing it through the solar-powered electrolysis of water, as green groups would like, would remain costly and difficult for a long time.
”While some environmentalists are reluctant to admit it, the refining industry offers a number of very practical ways forward on hydrogen. Refineries can convert fossil fuels to usable hydrogen by gasification far cheaper than the solar model,” Boersma said.
”This would set the ball rolling on hydrogen, build public acceptance and attract investments into research.”
”Refiners must act now to spearhead the change and they can become the bridge towards a sustainable energy future,” he told Reuters on the sidelines of an industry conference.
”They should not wait for government legislation… they must be more pro-active,” he added.
”In the past green and refining sounded ironical together but in future we are going to find them much more closely associated.”
Environmentalists are increasingly touting alternative energy sources such as hydrogen fuel cells and biodiesel from non-fossil fuel sources and governments are under pressure to subsidise technologies that cut carbon dioxide emissions and reduce global warming.
”I think it is safe to assume increasing constraints on the use of hydrocarbon energy carriers in the years to come,” Boersma said.
He admitted refiners would face considerable difficulties in implementing the technology to produce the green fuel because large investments will have to be made at a time when the downstream sector is looking particularly dismal.
And there are oil majors who point to the huge obstacles in the way of making the technology work.
”In the end it all boils down to economics and so far hydrocarbons are the most effective source of energy,” said Ajit Sapre, manager of US major Exxon Mobil’s research and engineering division. ”At the moment the alternatives are only feasible with massive government subsidies.”
European refiners are also grappling with the issue of upgrading their plants to produce lower sulphur fuels in line with European Union directives.
Boersma refused to say how much investment would be needed to move refineries to hydrogen production but said inputs would bear fruit in the long run.
”If you see the environmental issue as an opportunity to improve your competitiveness, you can turn stay-in-business environmental projects into profitable investments,” he said citing Denmarks’s Frederica refinery which shaved nine percent off its annual energy bill by using eco-friendly technology.
INTEGRATION OUTSIDE THE REFINERY FENCE
Above all, Boersma said the new eco-friendly processes unlock potentially lucrative chances to work with other sectors.
”There are opportunities to integrate outside the refinery fence — with the petrochemicals, power and construction industries,” he said.
The role of the fluidised catalytic cracker for instance, a refinery unit used to produce gasoline, is likely to change in coming years as the transport industry moves increasingly towards diesel. Boersma said this unit could be modified to produce lower olefins for the petrochemical industry.
Similarly falling demand for fuel oil for power generation can also be turned to the refinery’s benefit.
By incorporating a deep thermal cracking process and a gasification plant, the refinery can convert the residue into syngas — steam and power with a high thermal efficiency.
”The syngas can be used as an extremely clean fuel for power generation or as feedstock for a gas-to-liquids plant,” Boersma said. – Reuters