World needs cleaner conversion of oil
The FQD “aims to reduce greenhouse gas emissions from transport by 6 percent by 2020”. The baseline is understood to be 2010. If the oil price remains low then perhaps the tar sands issue looks after itself but there is no getting away from the usefulness of ranking the petroleum feedstocks that are used to manufacture transport fuels and to devise a mechanism that drives the economics of feedstock selection towards the cleaner crude oils that are low in sulphur. to likewise move away from the use of “dirty” crude oil. Development of the FQD methodology to rank the refined fuels according to their “life-cycle” continues and will rely on a carbon trading system as part of the mechanism to incentivise the required shift. Here the question might be asked as to what can be done inside the oil refineries to reduce the carbon dioxide footprint of the transport fuels we use.
The heavier crude oils with their high proportions of residue are relatively bad actors. The heavy fractions of a crude oil require conversion and further treating to meet the quality specifications of the road transport fuels we use, while the “bottom” residue, high in its content of carbon and other impurities, mostly gets burned as heavy fuel oil (HFO) on land, as heavy bunker fuel at sea, or on land in the form of coke if the refineries upgrade the residue.
Now, at its 70th session in October this year, the Marine Environment Protection Committee of the International Maritime Organisation (IMO) has confirmed, in a landmark decision for both the environment and human health, that January 1, 2020 is the implementation date for a significant reduction in the sulphur content of the fuel oil used by ships.
The decision to implement a global sulphur cap of 0.5percent mass/mass in 2020 represents a significant cut from the 3.5 percent mass/mass global limit currently in place and demonstrates a clear commitment by the IMO to ensuring that the shipping industry meets its environmental obligations. The likely consequence of this is that HFO for ships will be done away with. The residue component of this fuel will back into the oil refineries and will have to be converted to lighter fractions, most likely by the delayed coking process. South Africa’s coastal refineries will be severely impacted by this development. Imagine a set of rules and a carbon trading system that will give an incentive not to burn the coke produced (to carbon dioxide) but to dispose of it in ever more creative ways. This same regime could drive the maximisation of coke production rather than its minimisation.
Imagine further a cessation of the building of new conversion capacity by decree or by economic incentive in order to reduce the amount of residue in the world’s average refinery feed, this reduction being achieved by shifting towards the lighter and cleaner crude oils.
Imagine the development of much cleaner conversion technology in the oil refinery. Hopefully this is part of what those chief executives are promising with their Oil and Gas Climate Initiative?