- Refiners using offsets from renewable fuels.
- The switch to renewables using carbon capture programs comes from companies like Valero, ExxonMobil, Chevron
- Emissions per barrel of crude processed to drop further
- Increased use of solar, wind and cogeneration power
Now refiners are making the big switch towards renewable energy in order to reduce their carbon footprint, says a Platts report.
What happened?
U.S. refiners have started to release plans to lower their carbon footprints, with a focus on reducing greenhouse gas (GHG) emissions by boosting renewables output, and through carbon capture programs.
- Not all refiners have formulated public documents outlining their plans.
- But big players like Valero, Phillips 66, and Marathon have released comprehensive documents which drill down on their operations, their environmental impact and the steps they are taking to address climate change and mitigate GHG emissions and GHG intensity across their operations.
Emerging Energy
Phillips 66’s CEO Greg Garland on Jan. 8 told attendees at the Goldman Sachs Global Energy conference the company would create a separate “Emerging Energy” business unit to address “the dual challenge of providing energy and deploying the technologies and products to continue to reduce greenhouse emissions.”
Integrated U.S. majors like Chevron and ExxonMobil also have comprehensive plans in place to address both upstream and downstream operations. But oil and gas production is a larger GHG producer than their downstream operations.
Oil is here to stay?
International Energy Agency data shows that oil as a transportation fuel is not going away anytime soon, with oil and gas still expected to supply about 50% of total energy demand in 2040. According to the IEA’s 2017 data, the U.S. accounted for 15% of global CO2 emissions, with transportation fuels accounting for 34% of all U.S. CO2 emissions.
This heavy skewing toward transportation fuels as a cause of climate change have US refiners taking a multi-pronged approach to meet their emissions goals.
How will they do it?
Refiners are looking to lower their carbon intensity by reducing GHG emissions on a per barrel of crude refined basis. This reduction of direct emissions – known as Scope 1 – is also offset by increasing production of renewable fuels like renewable diesel (RD), sustainable aviation fuel (SAF) and renewable naphtha (RN).
Scope 2 emissions – indirect emissions from outside energy sources like power generation – are also being reduced through the use of renewable energy like solar and wind to power refining facilities, pipeline pumping stations and terminal operations.
Refinery closures reduce GHG
A reduction in U.S. refining capacity resulting from lower demand will also lower GHG emissions.
Marathon Petroleum shut down two of its least efficient refineries – in Gallup, New Mexico, and Martinez, California – as the company evaluates repurposing the 161,000 b/d Martinez refinery into a 48,000 b/d RD plant.
Including Marathon’s 14,000 b/d Dickinson, North Dakota, RD plant expected online at the end of 2020, Marathon estimates it reduced lifecycle emissions by just over 30 million metric tons of CO2 equivalent annually.
Valero Energy was the first mover among US refiners in the renewable transportation fuel space with its foray into ethanol production. The company has allocated 40% of its growth capital spending in 2021 towards renewable energy projects.
Valero is the world’s second-largest corn ethanol producer, with 14 US plants capable of producing 1.73 billion gallons per year. It is also the second-largest US renewable diesel producer through its joint-venture Diamond Green Diesel with Darling Ingredients, provider of renewable feedstocks. Currently, Diamond Green produces 275 million gallons per year of RD, with plans to expand production to 675 million gallons by the end of 2021.
Valero said in 2019 combined renewable diesel, ethanol, blending and renewable credits offset Scope 1 and Scope 2 GHG emissions by 10 million metric tons. Of that, more than 6.1 million metric tons were reduced just by replacing hydrocarbon-based gasoline and ULSD with ethanol and renewable diesel.
Valero calculates using renewable diesel in lieu of ULSD reduces lifecycle GHG emissions by up to 80% while ethanol reduces lifecycle GHG emissions by up to 28%.
Valero has also reduced GHG emissions at its plants. Between 2008 and 2018, Valero cut GHG emissions at its traditional oil refineries by 32% while increasing throughput by 32%, according to Valero’s June 2020 “Stewardship and Responsibility report”.
In 2008, Valero processed 1.902 million b/d of crude and hydrocarbon feedstocks through its system, resulting in GHG emissions of 31.6 million metric tons. By 2018, throughput had risen to 2.52 million b/d while GHG emissions dropped to 21.5 million metric tons.
Using natural gas-fueled cogeneration power at four plants cuts GHG emissions, Valero said, as steam produced by power generation is recycled back to the plant as a power source. Combined with tweaking refinery operations by using devices like expanders – installed at six of Valero’s refineries – can displace 600,000 metric tons of CO2 a year.
Pulling all the levers
Phillips 66 is repurposing its whole Rodeo, California, oil refinery to produce 50,000 b/d of RD by 2024 with its Rodeo Renewed Project, one of the biggest RD projects underway in the U.S. A project begun prior to the Rodeo Renewed announcement will process 9,000 b/d of soybean oil and is expected to start-up in 2021.
Phillips 66 also has an RD project underway at its Humber refinery in the UK.
The company is also involved in sponsoring Ryze Renewables and will take the 150 million gallons/year of RD once Ryze’s two Nevada plants come online.
ExxonMobil is also using third party renewable fuels, inking a deal with Global Clean Energy to buy 2.5 million barrels/year from Global Clean Energy Holdings from 2022 to 2026. ExxonMobil has also completed a pilot trial using its own bio-based bunker fuel, which has about 40% lower CO2 emissions than regular bunker fuel.
Virtually all refiners have included in their GHG reduction plans a carbon capture component, which basically captures waste CO2 and stores it so it can’t enter the atmosphere.
Chevron is using money from its Future Energy Fund to invest in Blue Planet Systems, a start-up company that uses proprietary carbon capture to repurpose industrial emissions like refinery flue gases into building materials.
“Carbon capture, utilization, and storage or CCUS, is viewed to be essential to advancing progress toward global net zero ambition of the Paris Agreement,” said Barbara Burger, Chevron’s vice president of innovation and president of Technology Ventures in a Jan. 14 statement.
