How Will Climate Change and CCOO Mitigation Policy Affect ...e-metaventure.com/files/AM-10-129-FINAL.pdf · Vent Sources Process Vents FCC catalyst regeneration , H 2 plant, Fluid

How Will Climate Change and How Will Climate Change and COCO22 Mitigation Policy Affect Mitigation Policy Affect Your Refinery?Your Refinery?

NPRA Annual MeetingMarch 2010Phoenix, Arizona

All All All All Rights ReservedRights ReservedRights ReservedRights Reserved. CO2 Solutions LLC.. CO2 Solutions LLC.. CO2 Solutions LLC.. CO2 Solutions LLC.

Phoenix, Arizona

AM-10-129

Frank J. Elvin & Iraj Isaac Rahmim (speaker)CO2 Solutions LLCHouston, Texas

US COUS CO22 Mitigation & Refining Mitigation & Refining IndustryIndustry

� Significant recent and upcoming movement

In This PaperOverview of potential CO2 regulations,

likely impact on US refining, & what we can do to comply.


� EPA, legislation, international agreements, political climate

� Likely direction?� EU Energy Trading System (ETS) and other past experiences with

cap-and-trade� Contribution of refineries to greenhouse gas emissions and CO2

footprint� Impact of CO2 mitigation policy on refineries� Approaches to refinery CO2 mitigation and potential impacts

CO2 Solutions LLCCO2 Solutions LLCCO2 Solutions LLCCO2 Solutions LLC 2222

Greenhouse Gases PrimerGreenhouse Gases Primer

Atmospheric Levels

Contribution to Greenhouse Gas

Effect

Water vapor

1-2% 36-72%

Carbon dioxide

387 ppm 9-26%

Methane 1.7 ppm 4-9%

Impact (“Contribution to GHG Effect”) ~ f (abundancein atmosphere,

atmospheric lifetime, efficiencyas greenhouse gas)

Important


Methane 1.7 ppm 4-9%

Ozone 3-7%

Nitrous oxide

0.3 ppm Smaller impact

CFC’s 0.0005 ppm Smaller impact

Important impacts not additive—

presence of other compounds such as SOx affect levels and impact of greenhouse gases

From our (refiner) POV

CO2 will have most impact and is key issue in terms of regulation and mitigation

Key term:CO2e ~ “CO2 equivalent”

COCO22 & GHG Regulation in the US& GHG Regulation in the USVery active area in the past 5 yearsVery active area in the past 5 years

� EPA proposed Endangerment Finding & Rule for Mandatory Reporting of GHG Emissions (published in the Federal Register—April 2009)

� HR 2454 (American Clean Energy & Security Act) �� HR 2454 (American Clean Energy & Security Act) �

� AKA Waxman-Markey Bill

� Passed HR June 2009

� Cap-and-trade key element

� Impact of recent political shifts in Washington on energy policy?


More on HR 2454 More on HR 2454 CapCap--andand--trade would hit US refining particularly hardtrade would hit US refining particularly hard

� Earliest possible compliance mandates (2012 v. 2013/14 for other industries)

� Disproportionately low emission allowances (2.25%) while responsible for 4% of total emission (based on operations)

� According to API-sponsored report: � According to API-sponsored report:

� Another 35-40% responsibility to refiners based on consumer emissions of refinery products

� Cost cannot be passed on to consumer

� Imports from non-US refiners not subject to same responsibility � potential to move refining offshore, US refinery shut-downs and job losses

� Note: analysis and conclusions disputed by other entities


Projected COProjected CO 22e Allowance Cost & e Allowance Cost & Cap to US RefineriesCap to US RefineriesAPI/API/EnsysEnsys Study (2009) Study (2009)

National Cap (million ton

% to Refineries

No-Cost Allowance

to

Base Case (“Optimistic”)

$/ton CO e

No International/ Limited Case

(“Pessimistic”)(million ton CO2/Year)

Refineries to Refineries

$/ton CO2e Cost

(“Pessimistic”)$/ton CO2e

Cost

2015 5003 2.25 113 22.72 65.30

2020 5056 2.25 114 31.75 93.30

2030 3537 0 0 64.83 190.52


COCO22 & GHG Regulation in the US& GHG Regulation in the USHR 2454 (American Clean Energy & Security Act)HR 2454 (American Clean Energy & Security Act)

� Key questions: � When Act becomes Law: 4% or 40% responsibility to refineries?

� Refiner cost & economic implications? (Can CO2 allowance purchase costs be passed to consumer?)

� If consumer emissions of refinery products not charged to refineries, how will the CO2e accounted for?

Our opinion: ultimately, unlikely that the full 40% is charged to � Our opinion: ultimately, unlikely that the full 40% is charged to refineries without ability to pass to consumers as the outcome would be catastrophic.

� Regardless: allowances will not nearly cover responsibility� Phase out over years

� Reduce CO2 footprint or purchase allowances

� Cost/impact of footprint reduction v. cost/impact of allowance purchase


� Alternatives for energy manufacture (e.g., ethanol,

Much Much Discussion Discussion and Workand Work


manufacture (e.g., ethanol, biofuels) and reduced use

� Oil and gas companies’ approaches

� Technical and technological angles

� Popular media and political conversation �


Estimates of C&T Impact on RefineriesEstimates of C&T Impact on Refineries

CO2Price

($/Ton)

100 KBD Refinery Cost

(Million $/Year)IncludingNo-Cost

Allowance

w/o No-Cost

Allowance

20 17 30

Complex

Refineries


40 33 5960 50 8980 67 119100 84 149

Simple

Refineries

EU CapEU Cap--andand--Trade ExperienceTrade Experience

� Emission Trading System (EU ETS) established 2003

� Phase/Trading Period 1: 2005-2007

� No emissions reductions due to over-allocation (CO2 price ~ 0)

� Phase 2: 2008-2012

� Some corrections and scope expanded (other countries and compounds)

� 2008 CO2e credit: €20-30/ton ($30-45)

� Mid 2009: €15/ton ($22)

� Late 2009: €10-30/ton ($15-45)

� Phase 3: 2013+

� Many corrections; still being defined

� To reduce CO2e emissions by 20% relative to 1990

� Once things settle, estimates of €30-45/ton ($45-70)


US Refining Emissions Profile (2005)US Refining Emissions Profile (2005)US EPA “Inventory of US Greenhouse Gas Emissions and Sinks: 1990US EPA “Inventory of US Greenhouse Gas Emissions and Sinks: 1990--2007”2007”

CO2e Emissions

(million metric

tons)

% total

Industrial (including

refining) 2081 29

Total US EmissionsPetroleum Well-to-Wheel Emissions

(million metric tons, % of Petroleum)


refining) 2081 29

Oil Refining 258 3.6

Transportation 2004 28

Agricultural 512 7

Residential 1237 17

Commercial 1215 17

US Territories 61 0.9

TOTAL 6109

Recall: Per HR 2454, no-cost allowance to US refineries ~ 113 million metric tons in 2015

Refinery CORefinery CO 22 Emission sourcesEmission sources


After Exponent (HP September 2009)

Emissions Vary for Different Emissions Vary for Different Crudes and RefineriesCrudes and RefineriesT.J. T.J. HochhalterHochhalter, ExxonMobil (2008), ExxonMobil (2008)

Energy use from 2 to 14% of crude energy content depending on:

� Feedstock quality

� Product slate

� Product specifications

� Refinery operations and energy efficiency

Refinery A Refinery B


Refinery A Refinery B

100 KBD Light crude 100 KBD Heavy crude

Simple refineryNo cracking or conversionNo sulfur reduction

Complex refineryProducts include LS gasoline, jet, chemical feedstocks

Natural gas fuel source Fuel oil fuel source

Fewer than a dozen heaters/boilers More than 50 heaters/boilers

No hydrogen production < 15% of CO2 from hydrogen production

GHG Emissions (million tons/year)

<1. 2 >4.8

US Refining Emission by US Refining Emission by Activity/Source (2005)Activity/Source (2005)Source: DOE/NETLSource: DOE/NETL--20092009--12461246

Source

Emissions

(Million Tons in Year 2005) Notes

CO2 CH4 N2O

Fuels Combustion 188.8 0.0047 0.0034 Furnaces, boilers, FCC.

Fuels Acquisition Emissions associated with

BreakdownNext Page


Fuels Acquisition Emissions associated with

power, steam, NG, coal

purchased. Emissions

associated with production

fuels at refinery that are used

at refinery.

Indirect Energy Inputs 34.1 0.0415 0.0004

Purchased Fuels 5.2 0.0615 0.0001

Flare Emissions 27.8 0.0404 0.0001

H2 Production Emissions 1.9 0.0009 0.00002Emissions associated with off-

site H2 production or with on-

site SMR.

CH4 Vented/Fugitive Emissions 0 0.0165 0

TOTAL 257.9 0.1656 0.0040

US Refining Fuels Combustion GHG US Refining Fuels Combustion GHG Profile (2005) Profile (2005) Source: DOE/NETLSource: DOE/NETL--20092009--12461246

Refinery FuelEmissions (Million

Tons in Year 2005)

% Fuel

Combustion CO2

Emissions

% Total Refining

Activity CO2

Emissions

LPG 0.9 0.5 0.4

Distillate Fuel Oil 0.3 0.2 0.1Distillate Fuel Oil 0.3 0.2 0.1

Resid Fuel Oil 1.1 0.6 0.4

Still Gas 91.8 48.6 35.6

Petroleum Coke (>97% from FCC) 55.1 29.2 21.4

Other Petroleum Products 2.2 1.2 0.9

Natural Gas 37.2 19.7 14.4

Coal 0.1 0.1 0.0

TOTAL 188.8 100.0 73.2


Refinery CORefinery CO 22 Emission sources Emission sources “re“re--summary”summary”

Category Representative Sources

Combustion Devices

Stationary Sources

Boilers, Heaters, Engines, Turbines, Incinerators, Flares

Mobile Sources Vehicles, Barges, Ships, Railcars

Vent Sources Process Vents FCC catalyst regeneration, H2 plant, Fluid coking unit


After Exponent (HP September 2009)

Other Vents Storage tanks, Loading racks

Area Sources Fugitive Emissions

Fuel gas system and other equipment leaks

Other Non-Point Sources

Wastewater collection and treating equipment

Non-Routine Activities

Maintenance/Turnaround

Equipment blow-down, Heater/boiler tube decoking

Other Releases Pressure relief valves, Emergency shutdown devices

Indirect Sources Offsite production of electricity, steam, and H2

Reducing Refinery COReducing Refinery CO 22e Footprinte FootprintObjectives & ApproachesObjectives & Approaches

� Objectives:� Reduce emissions—beand be seenas a good

neighbor/citizen

� Obtain economic gains due to improved energy efficiency and/or GHG capture, utilization, conversion

NOTEC in feed ~

C in products + C in emissions

� Non-technical approaches:� Purchase CO2 credits

� Reduce refinery throughput (“nuclear option”)

� Technical approaches:� Improve refinery fuel/energy efficiency

� Use lower GHG-producing fuels in refinery

� Capture GHG and sell/re-use/sequester


Not all options equally effective for every refinery

Review for specific case & move forward based on cost-effectiveness & potential

impact

Some Specifics for Efficiency Some Specifics for Efficiency Improvement (1)Improvement (1)After A. Kumar, IOC (2008)After A. Kumar, IOC (2008)

� Furnace/boiler design improvements (92+% efficiency)– More efficient Advanced Process Heater (“APH”) systems and burners

– Improved stack and stack metallurgy (higher heat recovery from flue gas)

� Furnace/boiler operations improvements� Furnace/boiler operations improvements– Regular operation of soot blowers

– Regular chemical cleaning

– Use of right type of filters and heaters

– Good fuel atomization

� Heat exchanger system design improvement– Pinch technology & better heat integration

– Low-level heat recovery


Most refinery fuelsused in

Furnaces & boilers

Some Specifics for Efficiency Some Specifics for Efficiency Improvement (2) Improvement (2)

� Heat exchanger system operations improvement– Periodic performance monitoring

– Periodic chemical cleaning of exchangers

– Isolating and cleaning of fouled exchangers

– Maintaining water velocities in condensers and coolers– Maintaining water velocities in condensers and coolers

– Maintaining cooling water quality through effective CW management

– Back-flushing coolers and condensers as required

� Steam generation efficiency improvement– Use waste heat recovery

– Power cogeneration

– Condensate recovery


Organization-WideEnergy Management Program

Some Specifics for Efficiency Some Specifics for Efficiency Improvement (3)Improvement (3)� Flare reduction

� Reduced fugitive emissions– Light HC service double mechanical seal pumps

– Floating roof tank double seals– Floating roof tank double seals

� Proper insulation� Improved hydrogen management� Catalyst and refrigerant selection in processes� Start-up/shut-down loss minimization� …


Fuel Replacement & GHG CaptureFuel Replacement & GHG Capture

� Reduce fuel MW– NG v. fuel oil: 0.0531 v. 0.0762 Tons/MMBtu (HHV)

– Complicated

� GHG/CO2 capture– Options include sequestration, sale, re-conversion

– Examples:

� H2 plant CO2 capture using PSA

� CO2 use in Enhanced Oil Recovery


CO2 Solutions LLC ActivitiesCO2 Solutions LLC Activities� Evaluation of strategic options for reducing GHG refinery footprint

� Technical and economic feasibility studies

� Development and participation in Energy Management Programs

� XTF Technology

� Reduced refinery CO2e emissions

� Increased refinery liquid products of superior quality

� Flexible design depending on operating objectives and capital availability

� Proven individual process elements

� 2-4 year simple payout depending on design


US COUS CO22 Mitigation & Refining Mitigation & Refining IndustryIndustry


In This PaperOverview of potential CO2 regulations,

likely impact on US refining, & what we can do to comply.


� EPA, legislation, international agreements, political climate

� Likely direction?� EU Energy Trading System (ETS) and other past experiences with

cap-and-trade� Contribution of refineries to greenhouse gas emissions and CO2

footprint� Impact of CO2 mitigation policy on refineries� Approaches to refinery CO2 mitigation and potential impacts


About the AuthorsAbout the Authors

– Frank J. Elvin is the president of CO2 Solutions LLC. He holds a PhD from Sweden’s Chalmers University and has 40 years or refinery and refining technology experience including management positions with BP, Goodhope Refineries, KBC, ChemCat, and Coastal Corporation. Dr. Elvin has written numerous technical articles and papers, holds 11 patents, and has consulted for refining, engineering, catalyst manufacturing, and venture capital companies.

– Iraj Isaac Rahmim holds a PhD in chemical engineering from Columbia University and – Iraj Isaac Rahmim holds a PhD in chemical engineering from Columbia University and has 19 years industrial experience including employment with Mobil and Coastal corporations and consulting and design for clients in the Middle East, South America, Europe, and East Asia, and the US. Currently the Vice President for Technology at CO2 Solutions LLC, Dr. Rahmim is a past Director of the AIChE Fuels and Petrochemicals Division, a past President if the International Association for Energy Economics—Houston, and an Associate Member of the State Bar of Texas (Oil, Gas, and Energy Resource Law Section). Quoted by the Wall Street Journal Europe, the IEA, Chemical Market Reporter and consulted by a number of firms with interest in refining, gas processing, and clean fuels manufacture, his recent articles have been published in the Oil and Gas Journal and presented at the NPRA Annual Meetings.


About CO2 Solutions LLCAbout CO2 Solutions LLC

– CO2 Solutions LLC was founded by a group of world-class refining technology and economics experts with practical experience in developing and implementing new processes in the refinery environment. The significant CO2 Solutions LLC know-how includes approaches for reducing refinery CO2 footprint while improving efficiency and profitability. This includes an innovative, patent-pending approach for a unique combination of commercial processes to reduce carbon footprint and increase the combination of commercial processes to reduce carbon footprint and increase the production of clean, high-value fuels. See www.co2solve.comfor more information.

– Contact:– Dr. Frank J. Elvin, President

– CO2 Solutions LLC

– 2 Pin Oak Estates Drive

– Bellaire, Texas 77401

– [email protected]


Documents

How Will Climate Change and CCOO Mitigation Policy Affect ...e-metaventure.com/files/AM-10-129-FINAL.pdf · Vent Sources Process Vents FCC catalyst regeneration , H 2 plant, Fluid