Oil Refining in a CO 2 Constrained World Implications for Gasoline & Diesel Fuels

Transcription

1 Oil Refining in a CO 2 Constrained World Implications for Gasoline & Diesel Fuels Amir F.N. Abdul-Manan & Hassan Babiker Strategic Transport Analysis Team (STAT), Saudi Aramco

2 Agenda 1. Global Mobility Dynamics Why was this study done? 2. Methodology How was it done? 3. Results What did we find? 4. Implications So what? 5. Final Thoughts Where do we go from here? 2

3 Agenda 1. Global Mobility Dynamics Why was this study done? 2. Methodology How was it done? 3. Results What did we find? 4. Implications So what? 5. Final Thoughts Where do we go from here? 3

4 Global Mobility Dynamics Demand Lock-In More than 50% of Oil Ends Up in Transport Sector Nuclear 5% Biomass/Waste 9% Hydro 2% Other Renewables 2% Residential/Com mercial 7% Coal 27% Oil 33% Transportation 55% Demand driven by Non-OECD Countries Mobility Drives Demand for Oil Oil Enables Mobility Gas 22% Data Source: Exxon Mobil 2016 Energy Outlook Industrial 32% Power Generation 6% 4

5 Global Mobility Dynamics Demand Lock-In Transport Will Continue to be More than 85% Reliant on Oil % Oil Share of Transport Energy / % 90% 80% 70% 60% 50% Demand driven by Non-OECD Countries Mobility Drives Demand for Oil Oil Enables Mobility 40% 30% 20% 10% 0% BP 2016 Exxon 2016 IEA IEO 2016 Data Sources: 1) Exxon Mobil 2016 Energy Outlook 2) BP 2016 Energy Outlook 3) IEA 2016 International Energy Outlook 5

6 Global Mobility Dynamics Policy Interventions Increasingly Stringent Fuel Economy Standards Worldwide Renewable Fuels Mandate. Fuel Economy Standards GHG Emissions Control. Criteria Air Pollutants Control Data Sources: ICCT ( ) 6

7 Global Mobility Dynamics Policy Interventions Obligatory Biofuels Blending Requirements Worldwide Renewable Fuels Mandate. Fuel Economy Standards GHG Emissions Control. Criteria Air Pollutants Control Data Sources: WBCSD 2015 Low Carbon Technology Partnerships Initiative 7

8 Global Mobility Dynamics Policy Interventions Government Inducements for Transport Electrification Renewable Fuels Mandate. Fuel Economy Standards GHG Emissions Control. Criteria Air Pollutants Control 8

9 Global Mobility Dynamics Policy Interventions IMO s New Low Sulphur Limit for Marine Fuels Demand for Global Marine Fuels with 2020 Full Enforcement Scenario Renewable Fuels Mandate. Fuel Economy Standards GHG Emissions Control. Criteria Air Pollutants Control Data Sources: WoodMackenzie 9

10 Global Mobility Dynamics Demand Lock-In Policy Interventions Implication: Demand Disparity for Refined Products Demand driven by Non-OECD Countries Mobility Drives Demand for Oil Oil Enables Mobility Renewable Fuels Mandate. Fuel Economy Standards GHG Emissions Control. Criteria Air Pollutants Control Data Source: Exxon Mobil 2016 Energy Outlook 10

11 Distillate to Gasoline Ratio - (J+D)/G Distillate to Gasoline Ratio - (J+D)/G Global Mobility Dynamics Demand Lock-In Policy Interventions Implication: Demand Disparity for Refined Products Historical Global Energy Consumption Trend 1.5 Demand driven by Non-OECD Countries Mobility Drives Demand for Oil Oil Enables Mobility Renewable Fuels Mandate. Fuel Economy Standards GHG Emissions Control. Criteria Air Pollutants Control Data Source: EIA 2016 (International Energy Statistics- Beta) Projected Product Demand Skew Data Source: OPEC

12 Global Mobility Dynamics GHG Concerns Supply Shift Refining Efficiency Petroleum Refining What are the Intrinsic Refinery CO 2 Values of Diesel & Gasoline Fuels in a World that is Constrained on CO 2? Profitability 12

13 Agenda 1. Global Mobility Dynamics Why was this study done? 2. Methodology How was it done? 3. Results What did we find? 4. Implications So what? 5. Final Thoughts Where do we go from here? 13

14 API Gravity Sulphur Content (%) Installed Capacity (Percentage relative to CDU) CDU Capacity in KBPD Methodology - 6 Regional Refining Systems Refinery LP Models 6 regions globally: North America South America Europe Middle East Asia (excl. China) China Calibrated against 2014 actual estimates by IHS Consultancy. ~ 98% of 2014 global refinery throughputs. 100% 80% 60% 40% 20% 0% Installed Capacities of Refinery Process Units VDU Reforming Cracking Hydrotreating Alkylation/Isomerization CDU Asia (Excl China) China Middle East Europe Latin America Weighted-Average Crude Oils Processed Globally API Gravity Sulphur Content (%) North America % 20% 40% 60% 80% 100% Cumulative Percentage (%)

15 Methodology - 2 Scenarios & 9 Pricing Levels Scenario 1: 2014 Estimate How will refineries meet today s products demands under different CO 2 pricing incentives? Product demands fixed at 2014 production levels and based on existing capacities in CO 2 price varied: $/t CO 2 Scenario 2: Optimised What is the optimal production for refineries under different CO 2 pricing incentives? Optimal production levels based on existing refinery capacities in CO 2 price varied: $/t CO 2 15

16 Agenda 1. Global Mobility Dynamics Why was this study done? 2. Methodology How was it done? 3. Results What did we find? 4. Implications So what? 5. Final Thoughts Where do we go from here? 16

17 CO2 Emissions Breakdown (% wt) LHV-based Refining System Efficiency (%) Results Overview of Regional Refining Systems CO 2 Emissions Sources & Efficiency Base Case Refinery CO2 Emissions (Scope 1 + 2) 100% 96.0% 80% 95.0% 60% 94.0% 93.0% 40% 92.0% 20% 91.0% 0% Asia (excl. China) China Europe + CIS Middle East North America South America Global Average 90.0% Catalytic Cracking (FCC & RFCC) H2 Plant Refinery Fuel Utility Generation Refining Systems Efficiency (%) 17

18 Well-to-Gate Emissions (gco2eq/mj) Results Overview of Regional Refining Systems Carbon Intensity of Gasoline & Diesel Fuels Well-to-Tank (WtT) Well-to-Refinery Gate Carbon Intensity Asia (excl. China) China Europe + CIS Middle East 24.0 North America South America Global Average Gasoline Diesel Refinery Overall Gasoline Diesel Jet Gasoline is more Carbon Intensive to Produce than Diesel Well Accepted Conclusion within Industry & Policymakers GREET 2014 EPA RFS 2 Well-Known Model Regulatory Value 18

19 Refinery CO2 Emissions (ktpd) LHV-based Refining System Efficiency (% ) Results Effects of Carbon Pricing Implications for Efficiency and Emissions Worldwide Refinery Efficiency & CO2 Emissions (Scope 1+2) Ref. Emissions - Optimised Ref Emissions Ref. Efficiency- Optimised Ref Efficiency % % 96.0% 94.0% 92.0% % CO2 Price ($/ton) What is the most profitable may not necessarily be the most efficient. Pricing levels that begin to affect refinery decisions Only complex refineries (such as in the US) can sustain productions under a very high CO 2 price without passing on the cost to consumers. 19

20 Share of regional refinery productions (% energy) % total refined products globally over 2014 demand Results Effects of Carbon Pricing Impacts on Operations & Profitability 100% Global Refined Products 100% 80% 80% 60% 60% 40% 40% 20% 20% 0% Carbon Price ($/ton) 0% Asia Europe North America % Global Production over 2014 Demand China Middle East South America 20

21 Results Re-optimizing Production Mix for Lower Refinery CO2 Faster drop in diesel production - Production starts to be impacted at ~$50/ton of CO 2. - Production of gasoline and diesel can still meet 2014 market demand upto ~ $100/ton CO 2. - Production of diesel drops at a much faster rate than gasoline, reversing the trend in (D+J)/G ratio shift. 21

22 Sources of Refinery Hydrogen (%) MT of H2 per KBPD Crude Intake Results Re-optimizing Gasoline/Diesel Production Ratio Refinery shifts towards cleaner hydrogen source Refinery Hydrogen Balance Reformer Hydrogen Plant Total H2 Requirements - Normalised 100% % % % % 0.2 0% Price of Carbon ($/ton CO2) 0.0 Drop diesel production: Reduce demand for hydrogen Shift to a Cleaner H2 Source for the Refinery 22

23 Median Change in Refinery CO 2 Emissions (%) Results Marginal CO 2 Values of Gasoline & Diesel. Diesel Worse than Gasoline Contrary to Popular Studies Regulatory Approach gco 2eq /MJ 20.6 Gasoline Diesel Directional Change in Refinery CO 2 Emissions as a Result of Marginal Change in Gasoline/Diesel Production 2% 1% 0% -1.0% 0.0% 1.0% -1% GREET 2014 EPA RFS 2-2% Change in Gasoline/Diesel Production (%) Gasoline Diesel Linear (Gasoline) Linear (Diesel) 23

24 Agenda 1. Global Mobility Dynamics Why was this study done? 2. Methodology How was it done? 3. Results What did we find? 4. Implications So what? 5. Final Thoughts Where do we go from here? 24

25 Miles per Gallon (MPG) Combined CO 2 Emissions from Diesel and Gasoline Cars (gco 2 /100 km) Implications Overall Transport Efficiency. Shifting the Burden Further Downstream to the Transport Sector BUT, Diesel Engines are More Efficient Road Transport Sector Optimised Refinery Production Scenario Aggregated MPG Carbon Price ($/ton) Aggregated CO2 Emissions Assumption: Average MPG for gasoline and diesel cars are 24.8 and 29.8, respectively Source: US EPA FuelEconomy reversing dieselization can worsen CO 2 emissions from road transport. 25

26 Final Thoughts Optimizing Transport Efficiency. Gasoline-like Fuel in a Diesel-like Compression Ignition Engine 26

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