Uchenna Izundu
International Editor
LONDON, Feb. 19 -- Swedish refiner Preem Petroleum AB is seeking envrionmental permits to build a new 4 million tonnes/year coker unit near its 220,000 b/d Lysekil reinery on Sweden's west coast.
The expansion will propel the company's move from fuel oil into transportation fuels, according to Michael Low, Preem president and chief executive, who spoke at International Petroleum Week in London. Preem hopes to make a final investment decision on the project by yearend, although if the project proves uneconomical, the company will examine other options. Low declined to comment on what these other options would be, however.
The coker would have high feedstock flexibility and utilize spare hydotreating capacity. Low said it was unclear how much it would cost, but high costs, exacerbated by a shortage of contractors and materials, are impacting upon timely delivery of projects and whether refiners should progress with upgrades.
"Supply bottlenecks faced by the refining sector will not go away until at least 2009-10," Low said.
However, tightening environmental standards are also increasing costs and workloads for companies in the petroleum sector to ensure they produce cleaner fuels. Utilizing a coker unit would produce more carbon emissions and Preem is investigating methods of carbon capture and sequestration with research insitutions.
Europe's surplus of gasoline in the near future will be a major challenge as it has lost an export market to the US where the preference is to use diesel run cars instead. Attractive incentives have also encouraged a boost in diesel production. "The car industry needs to come up with ways to make efficient gasoline cars; it's not a problem that we can solve by ourselves," Low said.
Low was also doubtful that the European Union will reach its target of having 5.75% of its transportation fuels coming from renewable sources by 2010 as members are at different levels in boosting their share of alternative fuels in the energy mix. "In Germany the government stopped subsidizing grapeseed oil and that has left many companies bankrupt," Low said.
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