Home / COMMENT / Special Report: Editor's Comment: Sulphur management in refineries

Special Report: Editor's Comment: Sulphur management in refineries

by Martin Menachery on Feb 14, 2018

Martin Menachery, editor, Refining & Petrochemicals Middle East.
Martin Menachery, editor, Refining & Petrochemicals Middle East.

Governments world-wide, over the past several decades, have adopted increasingly strict clean air regulations on sulphur emissions from processing facilities, with a current industry benchmark of approximately 99.9% minimum recovery efficiency. This figure, however, is on the rise with a greater number of facilities designing for higher sulphur removal rates, as evidenced by the World Bank standard SO2 emission specification, which currently stays at 150 mg/Nm3 (equivalent to approximately 99.98% recovery efficiency).

Lower sulphur emissions do not come free of cost. The energy required to remove each additional kilogram of sulphur escalates as sulphur recovery efficiency increases. The CO2 footprint of the refining facility grows as energy consumption increases. This is an undesirable outcome in a time when carbon emissions reduction is among the top objectives for corporate environmental management programmes.

In an important development relevant to the sulphur industry, with effect from 1 January 2020, International Maritime Organization (IMO) has reduced the sulphur cap on marine fuels from the existing 3.5% to 0.5%. This IMO specification forces a significant investment on refiners. Worldwide, high sulphur fuel oil (HSFO) is 90% of the fuel in the bunkering now. HSFO will clearly drop in 2020 in terms of price because it is non-compliant with the IMO sulphur cap.

While the IMO regulation will have a detrimental effect on the profits of refineries producing HSFO, it will make a positive impact on the margins of the modern complex refineries. It is a fact that all the refineries in the Middle East are not modern.

There are many refineries with high HSFO yield and low desulphurisation capacity in the region. These refineries will clearly suffer in margins because of the IMO regulation of sulphur on marine fuels. At the same time, it is important to note here that a large part of the Middle Eastern refineries are new. As these refineries produce and export distillates, the region will be in a better position in the aftermath of the IMO sulphur cap.

While operators and technology providers are seriously focused on reducing capital and operating costs of sulphur management projects, the IMO sulphur cap for marine fuels is going to trigger major investments in the refining business. Running into many billions of dollars worldwide, these investments will be for desulphurisation, or additional conversion capacities. The most appropriate step for refiners against the backdrop of the IMO regulation is investing in desulphurisation capacity. Leading to investments in the level of many hundreds of millions of dollars, normally, this step is very expensive. Once faced with investments of hundreds of millions, some refinery players may also opt to upgrade the assets with hydrocracking capacity, or coker capacity, or both.

Currently, the sulphur supply globally is primarily from the involuntary production of elemental sulphur during the processing of oil and gas. As of now, the Middle East region is producing nearly 25% of the world’s sulphur. Within the next ten to 15 years, this figure may reach as much as 30%.

The aspiration for national energy security is the key driver for the development of sour gas projects in the Middle East, coupled with a trend toward switching from heavy fuels to cleaner natural gas for power generation. Sour gas demand is expected to continue increasing at a similar rate in the near future as near-term projections show fairly steady population growth rates for most Middle Eastern countries.

It is a known fact that national oil companies (NOCs) are not going to make decisions on whether to produce sour gas reservoirs, or not, based on the state of the sulphur market. The first priority of the NOCs will be to meet the region’s energy needs and the resulting sulphur product will be managed as a by-product of sour hydrocarbon field development.

It is interesting to note here that sulphur is the raw feedstock used to produce sulphuric acid – which is used in the production of phosphate fertilisers, thereby supporting the global food supply chain. Thus, sulphur becomes a vital commodity. It is also important to mention here that the sulphur recovery plant in a refinery is a net energy exporter, thereby providing the energy balance to the processing complex.


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