After facing drastic curtailments to demand for finished petroleum products resulting from the coronavirus (COVID-19) pandemic in 2020, conventional crude oil refiners in 2021 accelerated adoption of business strategies aimed at adjusting operational configurations and processing capabilities to ensure long-term operational competitiveness. While fuel demand slowly began its recovery in the wake of COVID-19 vaccination rollouts in early 2021, heightened commitments by global economies and consumers to a low-carbon future also pressed the need for transformation.
While operators in the Asia-Pacific, India, Africa, and the FSU generally forged ahead with new and previously announced projects to increase conventional crude processing capacities, European and US refiners increased investments in works more closely aligned with the global energy transition. While many announced plans to add renewable fuels production via conversion-modification of existing manufacturing assets or construction of grassroots plants, some geared investments in unit upgrades to comply with increasingly stringent federal and state environmental regulations such as low-carbon fuel standards (LCFS). Still others opted to eliminate existing conventional crude processing activities altogether via divestments or permanent plant shutdowns.
Alongside addressing recently proposed and now-completed major refinery closures, this year’s worldwide refining report examines ongoing projects aimed at expanding capacity for renewable fuels production and decarbonizing current site operations as conventional crude processors begin long-term reconfigurations to support targets by governments and regulators for achieving net-zero carbon emissions by 2050 or sooner.
The latest OGJ annual worldwide refining survey, which will be available to online subscribers in December, shows a readjustment in anticipated global crude oil refining capacity as of Jan. 1, 2022, with year-on-year changes resulting largely from OGJ’s broadened data collection efforts to include capacity data disclosed publicly but not voluntarily reported to OGJ by the survey deadline.
While the current survey includes data captured via OGJ’s more expansive collection methods, these independent data-gathering procedures are evolving on a continual basis, particularly for regions such as the Asia Pacific, Eastern Europe, the Middle East, South America, and Africa, where obtaining capacity information on refinery processes downstream of crude distillation units remains difficult.
OGJ continues to evaluate additional approaches to enhanced, independent data discovery methods as part of an ongoing program to provide readers the latest operational data available on global refineries.
European refiners include CCS, hydrogen
With progressive regional targets for a net-zero future increasingly trending ahead of the broader 2050 global goal, European refiners announced myriad projects involving renewable fuel expansions that also incorporate components for renewable hydrogen production and carbon dioxide (CO2) capture and storage (CCS).
In early 2021, Neste Corp. awarded a contract to Technip Energies to provide engineering, procurement, and construction management (EPCM) for a project to modify the operator’s more than 1-million tonne/year (tpy) existing renewable diesel refinery at the Port of Rotterdam to enable optional production of up to 500,000 tpy of sustainable aviation fuel (SAF). First announced in 2020 and initially to add 450,000 tpy of SAF production at the refinery, the €190-million Rotterdam SAF project is scheduled to be completed second-half 2023. Neste also awarded a second, separate contract to Technip Energies to execute front-end engineering and design (FEED) for possible construction of another renewables refinery in Rotterdam that would be based on the operator’s proprietary NEXBTL technology, which allows conversion of waste and residue feedstock into products such as renewable diesel, SAF, and renewable materials for the polymers and chemical industries in Rotterdam. The FEED study comes as part of Neste’s preparations to enable a final investment decision (FID) on the project by its board in early 2022, the company told investors in late October.
Expansion of its renewable diesel and SAF production platform comes as part of Neste’s two strategic climate commitments: achieving carbon-neutral production by 2035 and reducing customers’ greenhouse gas (GHG) emissions by at least 20 million tpy by 2030. Once completed, the Rotterdam SAF addition—together with the company’s ongoing €1.4-billion, 1-million tpy SAF expansion at its 1.3-million tpy renewable diesel refinery in Singapore—by yearend 2023 will enable Neste to produce 1.5 million tpy of SAF, reducing GHG emissions by up to 80% compared to fossil-based jet fuel. If approved, the second Rotterdam renewables refinery could begin production in 2025.
In mid-November, Neste also confirmed it will receive €88-million in funding from the EU Innovation Fund to implement a renewable hydrogen and CO2 CCS project at its 206,000-b/d conventional crude refinery in the Kilpilahti industrial area of Porvoo, Finland. The project will use CCS and electrolysis solutions to reduce the refinery’s GHG emissions via decarbonization of production processes, laying the groundwork for Porvoo’s transformation into a European hub for production and use of renewable hydrogen and CO2 as well as supporting the operator’s goal of making Porvoo Europe’s most sustainable refinery by 2030. Now in its feasibility phase, the proposed Porvoo CCS and renewable hydrogen project will be able to reduce CO2 emissions at the site by more than 4 million tonnes during its first 10 years of operation.
Confirmation of the planned Porvoo CCS and renewable hydrogen project follows Neste’s late-2020 announcement that it would proceed with restructuring its Finnish refining operations, including the permanent shuttering of its 58,000-b/d Naantali refinery, which it will turn into a distribution terminal and upgrading the Porvoo refinery to coprocessing renewable and circular raw materials (Fig. 1).
Neste—which ceased refining operations at Naantali in March—said transformation of its traditional refining business comes amid its prediction that demand for fossil-based fuel products will continue to decline, requiring it to make fundamental changes to secure the competitiveness of its business. By 2030, Neste said it expects global renewable diesel demand to exceed 20 million tpy.
In the Netherlands, Royal Dutch Shell PLC in October let a contract to Worley Ltd. to provide engineering and procurement (EP) services for the operator’s September 2021-approved project to build an 820,000-tpy biofuels plant at the Shell Energy and Chemicals Park Rotterdam, formerly known as Pernis. While few details regarding specific components of the proposed complex have been revealed, Shell said work would include construction of a new hydroprocessed esters and fatty acids plant vital to both the site’s path to net zero and Shell’s transformation as part of the energy transition.
The Rotterdam biofuels plant is scheduled to begin production—more than half of which will be SAF—in 2024. Shell said the plant will use a range of certified sustainable vegetable oils, such as rapeseed, to supplement waste feedstocks until even more sustainable advanced feedstocks become widely available. Additionally, Shell plans to capture carbon emissions from the plant’s manufacturing process and store them in the empty P18-2 gas field beneath the North Sea via the Port of Rotterdam CO2 Transport Hub and Offshore Storage (Porthos) project that—pending FID due next year—will include a roughly 30-km, 42-in. OD onshore pipeline through the port to be built by Denys NV.
The low-carbon fuels project comes as part of Shell’s broader Powering Progress strategy, under which it’s transforming its 14 refineries into five energy and chemicals parks. As part of the plan, the operator aims to reduce its conventional fuels production by 55% by 2030 and provide more low-carbon fuels such as biofuels for road and aviation use, as well as hydrogen. The Energy and Chemicals Park Rotterdam is Shell’s second park to be announced, following launch of its Energy and Chemicals Park Rhineland, Germany, in July.
In June, Dutch refiner Zeeland Refinery NV, a joint venture of TotalEnergies SE and PJSC Lukoil, let a contract to a division of Air Liquide SA to deliver carbon capture and liquefaction technology for a new plant to be built as part of a decarbonization project at the operator’s 148,000-b/d refinery in Vlissingen, the Netherlands. Air Liquide Engineering & Construction will license its proprietary Cryocap Flue Gas (FG) technology for a Cryocap FG plant that, once in operation, will capture more than 90% of emissions on the Vlissingen refinery’s existing hydrogen production units and have capacity to liquefy 2,400 tonnes/day of CO2. The new solvent-free Cryocap FG technology will enable the plant’s capture and liquefaction of CO2 contained in concentrated flue gases via a combination of adsorption and cryogenics.
Based on electricity rather than thermal energy, the Cryocap FG plant will allow Zeeland Refinery to further reduce its environmental footprint by providing flexibility to use a renewable-based energy source to power operation. Pure, liquefied CO2 captured as part of the decarbonization project—which aims to reduce total CO2 emissions from the Vlissingen site by more than 800,000 tpy—will be transported for storage in the Dutch North Sea. Application of CCS to reduce CO2 emissions at Vlissingen comes as part of Zeeland Refinery’s broader, long-term carbon-reduction and sustainability initiatives for the low-carbon future anticipated by the operator.
In September, INEOS Group announced it will invest more than £1 billion to further reduce GHG at its integrated refining and petrochemical site at Grangemouth, Scotland, which houses Grangemouth Petroineos Manufacturing Scotland Ltd.’s 210,000-b/d refinery, the country’s only. Launched to support the Scottish government’s goal of reaching net-zero emissions by 2045 as well as to ensure the long-term competitiveness and sustainability of its Grangemouth businesses in a decarbonized economy, the new GHG-reduction investment—which follows more than £500-million worth of projects already underway at the site—will cover initiatives to move all Grangemouth operations to production and use of hydrogen accompanied by CCS of at least 1-million tpy of CO2 by 2030.
Alongside construction of a new carbon capture-equipped hydrogen production plant, specific projects under the investment also include works to enable capturing CO2 from Grangemouth’s existing hydrogen production as part of a recently formed partnership between site operators Petroineos Refining Ltd., INEOS Chemicals Grangemouth Ltd., INEOS FPS Ltd. with the Acorn CCS and hydrogen project, the UK’s most advanced large-scale CCS program under development at St Fergus gas terminal, Peterhead, Scotland. Additional emission-reduction measures at Grangemouth will include projects aimed at energy reduction and optimization, electrification of key equipment, and shifting the site’s polymer production portfolio to involve higher levels of post-consumer recycled content.
Hydrogen will play an especially important role in decarbonization of the Grangemouth plants, the infrastructure buildout of which will include a network initially based on grey (fossil fuel-derived) hydrogen, before moving to blue (fossil fuel-derived + CO2 capture) hydrogen, and ultimately green (bio-derived + renewable energy + CO2 capture) hydrogen as technology and demand advances, Neste said.
Adding to the 37% (2-million tpy) reduction in net-CO2 emissions already achieved at Grangemouth since acquiring the site from bp in 2005, INEOS said its expanded Grangemouth net-zero roadmap and accompanying investments well position the company to slash overall site emissions to less than 2 million tpy—or 60% below 2005 levels—by 2030, and to zero by 2045.
Elsewhere in the UK, Prax Group (also known as State Oil Ltd.), a London-based global independent trading, storage, distribution, and retail firm, in March completed purchase of TotalEnergies’ UK downstream business, including subsidiary Total Lindsey Oil Refinery Ltd.’s 109,000-b/d refinery in North Killingholme, Immingham, Lincolnshire, and associated logistics assets. TotalEnergies’s divestment of the Lindsey refinery follows its 2015 investment to modernize and streamline operations at the site as part of broader plans to restructure its European refining businesses to ensure long-term survival. Completion of the first phase of the Lindsey restructuring program in 2016 involved reducing crude processing capacity by about half from its previous 200,000 b/d and work to simplify and improve overall efficiency and conversion ratios to safeguard Lindsey’s ongoing competitiveness.
Following divestment of the UK refinery, TotalEnergies in June 2021 let a contract to Maire Tecnimont SPA subsidiary NextChem SPA to produce all necessary process and engineering documentation for a new biorefinery to be built as part of the operator’s Project Galaxie repurposing of its 101,000-b/d Grandpuits refinery at Seine-et-Marne near Melun in northern France. The project will convert the site into a zero-crude industrial platform by 2024. NextChem will execute FEED for the Grandpuits biorefinery, which is scheduled to begin producing SAF in 2024 as part of TotalEnergies’ commitment to expand its presence in the renewable fuels market.
By 2030, TotalEnergies said it plans to produce close to 5 million tpy of renewable fuels to help France meet its objective of incrementally replacing fossil-based jet fuel under the country’s broader strategy of addressing climate change. Once in operation, the Grandpuits biorefinery will process 400,000 tpy of mostly animal fats from Europe and used cooking oil—supplemented with other vegetable oils like rapeseed but excluding palm oil—primarily from local suppliers to produce 170,000 tpy of SAF; 120,000 tpy of renewable diesel; and 50,000 tpy of renewable naphtha for production of bioplastics. TotalEnergies said production of biofuels—which reduce carbon emissions by at least 50% compared to their fossil equivalents—plays an important role in its broader net-zero strategy to meet carbon neutrality, as well as in France’s roadmap for incorporating 2% of SAF by 2025, 5% by 2030, and 50% by 2050.
In addition to the new biorefinery, TotalEnergies’ more than €500-million conversion of Grandpuits—which also includes operations at nearby Gargenville depot at Yvelines—will include construction of Europe’s first polylactic acid, or polylactide (PLA), manufacturing plant, as well as construction of two photovoltaic solar plants. TotalEnergies—which discontinued crude oil refining at Grandpuits in first-quarter 2021 and will cease storage of petroleum products at the site by late 2023—said local consumers and airports in the Greater Paris region will not be impacted, as they will remain supplied by the operator’s existing 219,000-b/d Donges refinery near Saint Nazaire (currently undergoing a €450 million modernization) and 253,000-b/d Normandy-Gonfreville ‘l Orcher refinery. The Grandpuits Project Galaxie conversion follows Total’s €275-million conversion of its former 153,000-b/d La Mède refinery on the French Riviera into France’s first biorefinery, which the operator commissioned in mid-2019.
In November, PJSC Rosneft subsidiary Rosneft Deutschland GMBH exercised its preemption right to purchase Royal Dutch Shell PLC subsidiary Shell Deutschland Oil GMBH’s 37.5% minority interest in PCK Raffinerie GMBH’s 220,000-b/d refinery in Schwedt, Germany, sited along the Druzhba pipeline about 120 km northeast of Berlin. Pending necessary government and regulatory approvals, the deal—once finalized—will increase Rosneft’s shareholding in the German refinery to 91.67% from its current 54.17% interest. Rosneft said it plans to implement low-carbon projects at the site.
Projects under development by PCK Rafinerie involve production of cleaner fuels, including SAF and green hydrogen, which Rosneft confirmed it intends to continue. Rosneft’s exercise of its preemption right for acquisition of additional interest in PCK Raffinerie effectively cancels Shell’s earlier plan to sell its shares of the Schwedt refinery to Vienna-based Alcmene GMBH, a subsidiary of privately owned Liwathon EOS of Estonia, in a deal that required approval by joint venture partners Rosneft and Eni SPA subsidiary Eni Deutschland GMBH (8.33%). Shell said sale of the PCK Raffinerie interest will support further development of Shell’s Rheinland energy and chemicals park, which includes Shell Deutschland’s 140,000-b/d refinery at Wesseling, Germany, that together with the former Godorf refinery near Cologne-Godorf, form the 325,000-b/d integrated Rheinland refinery, Germany’s largest.
In mid-September, Repsol SA said it will invest €8.9 million to build an electrolyzer for production of renewable hydrogen at its majority owned Petróleos del Norte SA’s (Petronor) 220,000-b/d Bilbao refinery in Múskiz, Abanto-Zierbena, in northern Spain’s autonomous Basque Country. Alongside providing renewable hydrogen for the refinery, the 2.5-Mw electrolyzer—which is scheduled for startup in second-half 2022—will supply other nearby businesses in the Ezkerraldea-Meatzaldea Technology Park (EMTP) of Abanto-Zierbena municipality as part of the first-phase development of the Basque Hydrogen Corridor (BH2C), a joint initiative launched by Petronor and Repsol to decarbonize the region’s energy, industrial, residential, and transportation sectors. To be engineered and built by SENER Engineering Group and John Cockerill, the Bilbao refinery’s planned electrolyzer will produce renewable hydrogen using renewable electricity to separate water molecules into hydrogen and oxygen based on a process and sources entirely free of carbon-dioxide emissions.
In addition to the Bilbao refinery electrolyzer, the BH2C will include two future hydrogen plants requiring electrolyzers. The second plant—to be developed by Petronor, the Basque Energy Agency (EVE), and Enagás for startup in 2024in the Port of Bilbao—will host a 10-Mw electrolyzer for supply of hydrogen to a synthetic fuel production plant to be built by Petronor, Repsol, Saudi Aramco, EVE, and Enagás. A third plant—due for commissioning in 2025—will host a 100-Mw electrolyzer to supply additional renewable hydrogen to help Petronor in the broader decarbonization of its operations. The third plant would also meet the growing needs of the BH2C, which consists of 80 organizations that have committed to invest €1.43 billion to 2026 on 40 projects across the hydrogen value chain to transform the region into an international renewable hydrogen hub, accelerate decarbonization, and promote economic recovery of Basque Country and Spain as a whole.
Repsol said renewable hydrogen forms a core pillar of its broader strategy to decarbonize processes at all its industrial complexes as part of the company’s goal to achieve carbon neutrality by 2050 in accordance with the Paris Agreement. In addition to building a proposed renewable hydrogen plant with a 100-Mw electrolyzer at its 220,000-b/d Cartagena refinery in Spain’s southeastern province of Murcia, Repsol said it is working with partner Enagás to scale up development of the companies’ proprietary renewable hydrogen production technology. The technology, based on photoelectrocatalysis, would be used for proposed construction of a larger pilot plant at the operator’s 150,000-b/d Puertollano refinery in Ciudad Real province, Castile-La Mancha, Spain.
With the goal of leading the Iberian Peninsula’s renewable hydrogen market, Respol said it plans to install 557 Mw of capacity by 2025 and 1.9 Gw by 2030 via i new electrolyzers at its industrial complexes or conversion of conventional existing units to production of renewable hydrogen using a biogas feedstock.
Elsewhere in the region, Galp Energia SGPS SA announced in late-December 2020 that it was permanently ceasing crude oil refining operations in 2021 at subsidiary Petróleos de Portugal SA’s (Petrogal) 110,000-b/d refinery in Matosinhos e Leça da Palmeira, Porto, on Portugal’s northwest coast. The decision to shut down the Matosinhos refinery followed negative impacts to Galp’s downstream industrial activities precipitated by structural changes in demand for finished petroleum products resulting from the COVID-19 pandemic as well as the European regulatory environment, the operator said.
With the shuttering of the Matosinhos refinery, Galp confirmed plans to concentrate future developments on enhancing the resilience and competitiveness of its 220,000-b/d refinery at the Port of Sines, in Setúbal. Without disclosing specific details of proposed future projects at Sines, Galp said it is evaluating improvements to the refinery’s energy and process efficiency, as well as potential projects to integrate production of advanced biofuels and other cleaner products at the site.
In September, Swedish refiner Preem AB, a wholly owned subsidiary of Corral Petroleum Holdings AB, Stockholm, began producing renewable fuel from a feedstock of biomass-based pyrolysis oil using coprocessing technology from Honeywell UOP LLC at the operator’s 220,000-b/d refinery in Lysekil, Sweden. Preem’s coprocessing trial of the UOP technology to produce pyrolysis oil from sustainable solid biomass materials such as sawdust or agricultural residuals comes as part of the operator’s plan to reduce the carbon intensity of its transportation fuel production in line with Sweden’s Integrated Energy and Climate Plan and the European Union’s Renewable Energy Directive (RED), under which pyrolysis oil can qualify as an Annex IX Part A-approved feedstock.
Announcement of the completed trial follows Preem’s confirmation in June that it had initiated coprocessing 300 tonnes of pyrolysis oil produced from sawdust at the Lysekil FCC as part of the trial’s first phase. At the time, Preem said it would carry out a second phase of the trial involving the FCC’s coprocessing of up to 50,000 tonnes of pyrolysis oil for 2 years. Given that Sweden’s statutory mixing requirements for renewables in the gasoline pool will increase to 7.8% to help reduce the country’s fuel-related CO2 emissions 28% by 2030, Preem said its renewable fuels production would be an important piece of the puzzle in helping Sweden achieve its climate goals.
In March, Hungary’s MOL Group began producing renewable diesel at its 8.1-million tpy Duna refinery along the Danube River in Százhalombatta, near Budapest. Produced via coprocessing of biofeedstocks—including vegetable oils, used cooking oils, and animal fats—with conventional crude oil, biodiesel production from the refinery will result in up to a 200,000-tpy reduction in CO2 emissions, advancing MOL Group’s goal under its 2030+ Strategy to achieve net-zero CO2 emissions by 2050, the operator said.
Initiated as a research and development undertaking in 2012 and launched as a formal investment in 2018, the Duna coprocessing project required additional unidentified infrastructure and equipment for storage and processing of biofeedstocks. With commissioning of the new Danu project, MOL Group—which historically has purchased more than 500,000 tpy of biofuels such as bioethanol and biodiesel for blending into its conventional fuel production to meet EU standards—now plans to expand biofuel production capacity within its refining system to 100,000 tpy.
Within the next 5 years, the company said it will spend about $1 billon on projects aimed at transforming its traditional fossil-based operations into a low-carbon, sustainable business model in line with its 2030+ Strategy, a cornerstone of which includes investments in waste integration and utilization, recycling, and advanced biofuels production, as well as CCS and potential hydrogen-related opportunities. In the downstream, MOL Group’s plan entails a fuels-to-chemicals transformation that will involve converting 1.8 million tpy of fuels from its refining system into higher-value, sustainable petrochemical feedstock by 2030. Proposed within a framework of two investment cycles to be completed in 2027 and 2030, respectively, MOL Group said capital expenditures on the downstream transformation program could reach as much as $4.5 billion within the next 10 years.
US plans focus on renewable fuel expansions
US refiners in 2021 maintained an aggressive approach to adapting existing operations to evolving demand patterns and market conditions, announcing a host of new projects involving adding or modifying existing capacity to enable production of renewable fuels, as well as further refinery closures and planned divestitures.
As the year ended, Phillips 66 confirmed it will transform its 255,000-b/d Alliance refinery on the Mississippi River in Belle Chasse, Plaquemines Parish, La., about 25 miles southeast of New Orleans, into a terminal that the company will continue to operate as part of its midstream portfolio. The mid-November decision to advance the proposed refinery-to-terminal conversion followed the company’s evaluation of several options to save the site in consideration of the investment that otherwise would be required to repair refinery infrastructure from damage caused by Hurricane Ida. Though still in the process of determining costs associated with Alliance’s permanent shutdown of refining operations and conversion to terminaling, the company said it does not expect those costs will be material to its consolidated financial position, operational results, or cash flows. Phillips 66—which warned in late October the Alliance refinery would remain offline through fourth-quarter 2021 because of impacts sustained following Hurricane Ida—plans to begin the conversion project sometime in 2022.
Announcement of Alliance’s proposed conversion followed Phillips 66’s August confirmation that it had started the first leg of renewable diesel production under its ongoing Rodeo Renewed project to convert the 120,000-b/d portion of its San Francisco refining complex in Rodeo, Calif. into a renewable fuels refinery as part of an investment strategy in the company’s energy transition to ensure long-term viability and competitiveness of its operations. After initiating unit commissioning in April, Phillips 66 in July reached full production rates of 8,000 b/d of renewable diesel from an existing hydrocracking unit at the refinery that was repurposed to enable production of renewable fuels using Haldor Topsoe AS’ proprietary HydroFlex technology. Brought online more than 2 months ahead of the operator’s originally planned schedule, the newly reconfigured hydrotreater is equipped to process a feedstock of 9,000 b/d of soybean and other vegetable oils to produce renewable diesel.
First announced in 2020, Phillip 66’s $750-800-million Rodeo Renewed project will involve construction of new pretreatment units as well as repurposing of two existing hydrocracking units to enable production of renewable diesel, renewable gasoline, and SAF, all of which qualify for generation of credits under the California LCFS. Once fully completed, Rodeo Renewed is slated to produce more than 50,000 b/d of renewable fuels from a mix of renewable feedstocks—including soybean and cooking oils, fats, greases, and tallow—sourced from domestic and international suppliers. As part of the project, Phillips 66 also plans to shut down the Rodeo carbon plant and 44,500-b/d Santa Maria refining site in Arroyo Grande, Calif.—which converts heavy crude oil into high-quality feedstock for further processing into gasoline, diesel, and jet fuel at the Rodeo refinery—in 2023, with associated crude pipelines also to be taken out of service in phases starting in 2023. Following targeted completion of the reconfiguration project by first-quarter 2024, Phillips 66’s San Francisco refining complex—which consists of the Rodeo plant in the San Francisco Bay area and the Santa Maria refinery in Arroyo Grande, linked by a 200-mile pipeline—would no longer produce fuels from crude oil, resulting in anticipated 50% and 75% reductions in greenhouse gas and sulfur dioxide emissions, respectively, from the site. In its latest presentation to investors, Phillips 66 said it expects to complete full conversion of the refinery to renewable service by first-quarter 2024.
In October, bp said it will invest a series of new projects to improve efficiency, reduce emissions, and expand renewable diesel production at its 238,450-b/d Cherry Point refinery in Blaine, Wash., in line with the company’s goals of achieving net zero emissions across its operations and reducing the carbon intensity of products it sells by 2050 or sooner. The nearly $270-million trio of investment projects will reduce the refinery’s operational CO2 emissions by about 7%, from existing levels and double the site’s current output of renewable diesel, according to the operator. Aimed at improving the refinery’s efficiency and reducing periods of planned maintenance to result in fewer unit shutdowns and associated flaring events, a proposed $169-million hydrocracker improvement project (HIP), upon completion, will enable the unit to consume less hydrogen—which Cherry Point produces by conversion of natural gas in process that yields CO2 emissions—as well as reduce its current heat input requirement from the consumption of gaseous fuel in refinery process heaters. With work on the project scheduled to begin by yearend 2021, bp said it expects to complete the HIP in 2023.
As part of its proposed cooling water infrastructure (CWI) project—which is also slated to begin by yearend for targeted commissioning in 2023—bp will invest $55 million to upgrade the refinery’s cooling water infrastructure, allowing for increased utilization, better energy efficiency, and a related reduction in CO2 emissions. Alongside improving reliability by enabling the refinery to maintain a year-round optimum cooling water temperature, increased efficiency of the site’s cooling towers upon the CWI project’s completion will result in reduced production of light hydrocarbons—such as methane and ethane—combusted in process heaters and utility boilers. The combined CO2-emissions reductions from the HIP and CWI projects—estimated at about 160,000 tpy—will be the equivalent of removing more than 32,000 passenger vehicles from the road annually, bp said.
bp’s third major investment at Cherry Point includes the $45-million renewable diesel optimization (RDO) project, which aims to expand the refinery’s current renewable diesel production capacity to an estimated 2.6 million bbl/year, according to the operator. Scheduled to be available in 2022, bp said it expects increased renewable diesel production enabled by the RDO project will reduce CO2 emissions resulting from diesel produced at Cherry Point by about 400,000-600,000 tpy. While bp disclosed no further details regarding the HIP, CWI, or RDO investments, the operator confirmed the three projects were enabled by the 2018 startup of renewable diesel production at the refinery, which became the first and only in the US Pacific Northwest equipped to coprocess biomass-based feedstocks alongside conventional feedstocks like crude oils.
The Cherry Point refinery began producing renewable diesel in 2018 following a less than 12-month modification of an existing low-sulfur diesel unit that equipped it to coprocess tallow, an agricultural byproduct from rendered animal fat, according to the operator. The refinery—which currently can produce between 120,000-122,000 gal/day of renewable diesel—has since added soybean oil to its renewable feedstock slate, with bp also securing agreements for reliable and cost-advantaged supplies of used cooking oil from fast food restaurants in the Asia Pacific to ensure a cost-advantaged renewable feedstock supply that can be incorporated into the company’s overall portfolio, Carol Howle, bp’s executive vice-president of trading and shipping said in a September 2020 presentation to investors.
In early November, independent refiner HollyFrontier Corp. confirmed completion of its $614-million purchase of Shell subsidiary Equilon Enterprises LLC (dba Shell Oil Products US)’s 149,000-b/d Puget Sound refinery and related logistics assets—including an on-site cogeneration plant and related logistics assets—near Anacortes, Wash., about 80 miles north of Seattle. HollyFrontier said purchase of the Puget Sound refining and logistics assets complements its existing refining business given the refinery’s proximity to the Pacific Northwest premium product markets—including Washington, Oregon, and British Columbia—and its access to cost-advantaged Canadian and Alaskan North Slope crudes. For Shell, divestment of the Puget Sound assets forms another part of its broader program of reducing its global refinery footprint to focus investments on a core set of integrated manufacturing sites strategically positioned for the transition to a low-carbon future, the company said.
Acquisition of the Puget Sound assets follows HollyFrontier’s August announcement that it entered a definitive agreement to acquire privately owned Sinclair Cos.’ Sinclair Oil Corp. in a deal that would result in creation of newly proposed parent company HF Sinclair Corp., which would operate 678,000-b/sd of combined crude oil processing capacity across seven refineries, as well as produce an overall 380 million gal/year of renewable diesel. As part of the proposed transaction, HollyFrontier will purchase and combine Sinclair Oil’s downstream businesses—including two Rocky Mountains-based refineries, a renewable diesel production unit, and logistics assets—with the former’s own assets to create HF Sinclair, which would replace HollyFrontier as the publicly traded entity on the NYSE. Upon the deal’s scheduled closing in mid-2022, the proposed HF Sinclair would own and operate the combined HollyFrontier-Sinclair Oil downstream assets, the most notable of which include:
- HollyFrontier’s existing 135,000-b/sd El Dorado refinery in El Dorado, Kan.
- HollyFrontier’s existing 125,000-b/sd integrated Tulsa West and Tulsa East refinery system in Tulsa, Okla.
- HollyFrontier’s existing 100,000-b/sd Navajo refinery in Artesia, NM.
- HollyFrontier’s existing 45,000-b/sd refinery in Woods Cross, Utah.
- HollyFrontier’s 149,000-b/sd Puget Sound refinery and related logistics assets near Anacortes, Wash.
- HollyFrontier Corp. subsidiary Cheyenne Renewable Diesel Co. LLC’s renewable diesel production unit currently under construction as part of the operator’s conversion of its 2020-decomissioned 52,000-b/sd refinery in Cheyenne, Wyo. The converted Cheyenne refinery will be equipped to produce about 90 million gal/year of renewable diesel.
- HollyFrontier Corp. subsidiary Artesia Renewable Diesel Co. LLC’s grassroots renewable diesel production and pretreatment units now under construction at the operator’s existing Navajo refinery in Artesia, NM. The new renewable diesel unit will have a production capacity of about 120 million gal/year. Designed to increase flexibility and upgrading of renewable feedstock by treating degummed and unrefined soybean oil, bleachable fancy tallow, and distillers corn oil, the proposed PTU will cover about 80% of HollyFrontier’s total feedstock requirements for both the Artesia and Cheyenne renewable diesel plants.
- Sinclair Oil’s existing 94,000-b/sd refinery in Sinclair, Wyo.
- Sinclair Oil’s existing renewable diesel production unit collocated at the Sinclair refinery, which processes soybean oil and tallow to produce 10,000-b/sd of renewable diesel sold into the California market. HollyFrontier said its purchase also includes a new pretreatment unit for distillers corn oil, tallow, and degummed soybean oil that is currently under construction at the site (Fig. 3).
- Sinclair Oil’s existing 30,000-b/sd refinery in Casper, Wyo.
In its November, HollyFrontier confirmed trimming its 2021 spending plans for renewables projects by $75 million to $550-600 million, pushing more investments into 2022. Of the three renewables project currently under way—including renewable diesel units in Wyoming and New Mexico and a feedstock pretreatment unit in New Mexico, which will require a combined investment of $800-900 million—the company said the Wyoming work is running ahead of schedule and should be able to run its first batch of feed by yearend. The timeline of work on the New Mexico pretreatment unit also has been advanced, with the unit now anticipated to be up and running in first-quarter 2022, about 3 months ahead of its previous schedule. The New Mexico renewable diesel unit currently is due to be completed in second-quarter 2022. HollyFrontier said it plans to spend $175-225 million on renewables projects in 2022.
In September, Calumet Specialty Products Partners LP let a contract to Burns & McDonnell to deliver EPC services for a fast-tracked project currently under way by subsidiary Montana Renewables LLC to reconfigure an existing conventional hydrocracking plant for production of renewable diesel at fellow subsidiary Calumet Montana Refining LLC’s 30,000-b/d refinery in Great Falls, Mont. First announced in February, Calumet’s Great Falls renewable diesel project involves reconfiguration of the refinery’s oversized 18,000-b/d mild hydrotreater—added in 2016 as part of an expansion project—to process 10,000-12,000 b/d of renewable feedstock into diesel at the lowest capital cost per barrel of any currently proposed industry project of this type. A debottlenecking project in 2024 would further expand throughput of the renewable diesel plant to 18,000 b/d. Scheduled to be completed and operational following the Great Falls plant-wide turnaround in April 2022, the renewable diesel plant will have an initial production capacity of 5,000 b/d based on a feedstock of technical tallow and some soybean oil. Calumet said it plans to eventually process a mix of renewable feedstocks sourced from local farms and ranches—including camelina, canola, mustard, and other non-soybean oils—following the late-2022 commissioning of a feedstock pretreating unit at the site. Alongside reconfiguration of the hydrotreater and addition of the pretreater, the Great Falls renewables project also will include construction of a renewable green hydrogen plant. Calumet—which previously confirmed securing a fixed-cost engineering and procurement contract with an unidentified service provider for the proposed renewable hydrogen plant—said it plans to begin renewable hydrogen production in fall 2022. The Great Falls refining site—which currently processes western Canadian heavy and light sour crudes it receives through the Front Range pipeline system via the Bow River pipeline—will ultimately function as a dual-train refinery, continuing to supply conventional gasoline, diesel, jet fuel, naphtha, and asphalt to local markets in Montana, Idaho, and Canada, as well as renewable diesel, jet, LPG, and naphtha to US West Coast and Canadian clean product markets.
For Shell, divestment of the Puget Sound assets forms another part of its broader program of reducing its global refinery footprint to focus investments on a core set of integrated manufacturing sites strategically positioned for the transition to a low-carbon future.
In early August, Marathon Petroleum Corp. (MPC) achieved full commissioning of a grassroots renewable diesel production unit built as part of the operator’s conversion of its former conventional crude oil refinery in Dickinson, ND, into a renewables manufacturing site. Following operational startup in late-2020 and based on Haldor Topsoe proprietary HydroFlex technology, the new Dickinson unit is now producing 100% renewable diesel from soy and corn oil at its full design capacity of 12,000 b/d. Commissioning of the Dickinson refinery’s HydroFlex unit follows MPC’s late-2019 decision to convert the refining site into a renewable diesel production plant as part of the operator’s plan to increase output of fuels that align with objectives of California’s LCFS as well as MPC’s own GHG-reduction targets. MPC also selected Haldor Topsoe’s HydroFlex technology to be implemented as part of the operator’s conversion of its now permanently idled 161,000-b/d refinery in Martinez, Calif., into a renewable fuels production site. With final engineering on the project now underway, the reconfigured Martinez renewables refinery is scheduled to achieve first-phase production rates of 17,000 b/d of renewable diesel by second-half 2022 before ramping up to its full production capacity of 47,000 b/d by 2023 (Fig. 4).
In August, Slate Energy Marketing LLC subsidiary Slate Refining LLC entered an agreement with Starwood Energy Group Global Inc. to convert a 3,800-b/d mothballed refinery in Douglas, Wyo., in the heart of the Powder River basin, into a renewable fuels production plant. Starwood Energy said the refinery, once reconfigured, will be able to produce a mix of more than 100 million gal/year of renewable fuels, including renewable diesel, SAF, and arctic diesel for both US and Canadian markets. Production of high-grade, low-carbon fuels from the repurposed refinery comes as part of commitments by Starwood Energy and Slate to deliver viable renewable fuel options to conform with increased demand from consumers for industry efforts to accelerate decarbonization initiatives to help achieve carbon neutrality, according to the companies. Slate said the project to convert the former conventional-crude processing plant into a renewables production site is now under way.
Further south, Renewable Energy Group Inc. (REG) let a contract to John Wood Group PLC in November to provide EPCM services to support a 250-million gal/year capacity expansion and improvement project now under way at its existing 90-million gal/year renewable diesel refinery in Geismar, Ascension Parish, La. Combined with an original plant improvement project, the Geismar expansion project, which broke ground mid-October, will involve upgrades to the existing site as well as construction of an existing site to accommodate Geismar’s aggregate finished renewable diesel production capacity increase to 340 million gal/year. REG said the Geismar improvement and expansion project comes as part of a strategy to grow its renewable fuels production to meet rising consumer, investor, and regulatory demand for reduced-carbon fuel options. Previously estimated to require a minimum $825-million capital investment, REG in early August estimated overall cost of its revised Geismar project at about $950 million. The Geismar improvement and expansion project remains on schedule to reach mechanical completion by 2023, with full commissioning of the expanded plant to follow in 2024.
In August, PBF Energy Inc. let a preliminary contract to Honeywell UOP to license its Eni SPA-codeveloped proprietary Ecofining technology to retrofit an existing hydrocracking unit idled since 2010 to enable 20,000-b/d of renewable diesel production at subsidiary Chalmette Refining LLC’s 185,000-b/d dual-train coking refinery in Chalmette, St. Bernard Parish, La., outside of New Orleans. If realized, implementation of the single-stage Ecofining technology would enable the Chalmette refinery to begin renewable diesel production before competitors are able to get their units online, PBF Energy said. First announced in June, the proposed $550-million hydrocracker retrofitting project would include construction of a pretreatment unit at the manufacturing site to allow Chalmette Refining to process renewable materials such as soybean oil, corn oil, and other biogenically derived fats and oils into feedstocks for the revamped unit. In addition to helping the Chalmette refinery meet the US Environmental Protection Agency’s Renewable Fuel Standard mandates for blending of renewable fuels into the diesel pool to reduce GHG emissions, PBF Energy said the proposed unit conversion forms part of its recovery efforts from economic impacts sustained because of the COVID-19 pandemic, as well as the company’s plan to prepare the refinery for a green energy transition. The Chalmette refinery—which PBF Energy acquired from ExxonMobil Corp. and Petroleos de Venezuela SA (PDVSA) in 2015—is equipped with flexibility to source and process a mix of light and heavy crudes to produce mostly gasoline, distillates, and specialty chemicals for distribution locally and abroad via connecting pipeline and maritime assets.
Elsewhere at the US Gulf Coast (USGC), Shell announced in May that it entered agreements to sell its full ownership interest in two regional refineries in line with a series of divestment initiatives by the global operator during the last several years to concentrate its downstream footprint on a smaller number of integrated assets and markets where it can be most competitive. Subsidiary Shell Oil Co. inked a deal to sell the entirety of its 50.005% interest in Shell Deer Park Refining LP to 50-50 joint venture partner Petróleos Mexicanos (Pemex) subsidiary Pemex Transformación Industrial (PTI) Norteamérica SA de CV for $596 million, plus hydrocarbon inventory to be valued at closing with an estimated current value in the range of $250-350 million. Shell—which was not seeking to shed its stake in the 340,000-b/d refinery given its integration with subsidiary Shell Chemical LP’s collocated chemical complex at Deer Park—said the proposed divestment follows an unsolicited offer by Pemex to acquire full ownership and operation of the JV. Shell’s decision to sell simply came as an opportunity to further focus its refining footprint while also maintaining integration optionality value through its chemicals and trading activities, the company said.
As part of the transaction—which was scheduled to close by yearend pending US regulatory approvals—Shell and Pemex have agreed to maintain integration and close collaboration between the refinery and Shell Chemical’s 100%-owned Deer Park plant to capture synergies and economies of scale for both sites. Pemex—which has held 49.995% in Shell Deer Park Refining since 1993—said the move to take full ownership of the refinery comes as part of its new business policy under Mexican President Andrés Manuel López Obrador to advance Mexico’s national oil industry and enable the country to achieve complete energy independence and security. Following startup of its grassroots 340,000-b/d Dos Bocas refinery currently under construction at Paraíso, Tabasco, and completion of ongoing rehabilitation programs at its existing six refineries by yearend 2023, Pemex said addition of the Deer Park refinery to its refining portfolio will enable the operator to supply nearly 1.4 million b/d of gasoline, diesel, jet fuel, and other petroleum products to meet Mexico’s total demand for transportation fuels. Pemex—which plans to purchase the Deer Park assets, including inventories, via a combination of cash and elimination of Shell’s debt obligation in the JV—said the debt-free acquisition will be fully funded by Mexico’s federal government. Located about 20 miles east of downtown Houston along the Houston Ship Channel, the Deer Park refinery—which receives more than half its crude feedstock from Mexico—has flexibility to process a mix of heavy and light sour crudes from Canada, the US, Africa, and South America to produce 110,000-b/d of gasoline; 90,000 b/d of diesel; 25,000 b/d of jet fuel, and other products such as petroleum.
Less than 48 hr following announcement of the planned Deer Park sale, Shell confirmed a separate deal under which subsidiaries Equilon Enterprises LLC (dba Shell Oil Products US), Shell Oil, and Shell Chemical have agreed to sell 100% of Shell’s interest in the 90,000-b/d Saraland refining and petrochemical site in Mobile, Ala. to Houston-based Vertex Energy Inc., a specialty refiner of alternative feedstocks. Also scheduled to close by yearend pending regulatory approvals, the transaction covers sale of the Mobile refinery and associated, collocated logistics infrastructure, including product racks, an associated dock, and the Blakeley Island Terminal for a consideration of $75 million in cash, plus the value of hydrocarbon inventory, which currently ranges from $65-85 million. Vertex said it expects to source renewable feedstock through a multiyear agreement with Bunker Holding Group subsidiary Synergy Supply and Trading, as well as potentially from a proposed pretreatment plant Vertex plans to build at its existing Myrtle Grove industrial complex in Belle Chasse, La.
Concurrent to announcing its planned purchase of the Alabama refinery, Vertex said it plans to immediately begin an $85-million project to convert Saraland’s existing olefin-feed hydrocracker for production of renewable diesel based on primary feedstocks that could include soybean oil, distiller corn oil, tallow, yellow wax, grease, and used cooking oil. Scheduled for completion by yearend 2022, the hydrocracker conversion project—which will require about 9 months to complete—will enable the refinery to produce 10 000 b/d of renewable diesel, propane, and naphtha, with production increasing to 14,000 b/d by mid-2023. Vertex said the hydrocracker will remain operational during its conversion for 5 of the estimated 9 construction months while engineering and procurement activities are underway. Upon closing the purchase, Vertex said the Mobile refinery—which currently processes 10-15 light sweet crudes delivered by pipeline and barge—will become its core refining asset, with potential to generate at least $3 billion in annual revenue and $400 million in annual gross profits for full-year 2023 based on current project economics. Located near the USGC at the north end of Mobile Bay, the Saraland site—which has the optionality to run as a stand-alone refinery to produce base oils or chemicals feedstock—includes about 3.2 million bbl of combined feedstock and product storage, a high-capacity truck rack equipped to accommodate 175 trucks/day, together with deep and shallow-water distribution points capable of supplying waterborne vessels.
Despite announcing liquidation of two of its three current USGC refining assets, Shell reassured the US will remain a key global manufacturing hub, noting that—in addition to retaining its Deer Park chemical plant—it will continue to operate its integrated refining and chemical sites at Norco and Geismar, La., its Permian basin midstream infrastructure assets, branded retail presence, US Gulf of Mexico offshore deepwater operations, and offices in Houston and New Orleans. The USGC refinery sell-off follows a series of recent US and global refining divestments and closures by the operator that alongside sale of AS Dansk Shell’s 68,000-b/d Fredericia in Denmark, also includes the recent shuttering of its 239,000-b/d refinery in Convent, St. James Parish, La., as well as sale of its 149,000-b/d Puget Sound refinery and related logistics assets near Anacortes, Wash., all as part of the company’s broader global program to focus investments on a core set of integrated manufacturing sites more strategically positioned for the transition to a low-carbon future.