European downstream organisations are facing a dizzying array of challenges today. Typically, there is an ‘energy balancing act’ between energy security and the energy transition. This balancing act offers an unprecedented opportunity for European energy companies. However, the reason for the lack of consensus on future downstream strategy principally relates to the volatility of the market and the challenge of predicting future transition and growth patterns.

There is also uncertainty when gauging energy demand and prices, as well as risks related to which energy transition pathways will become winners in European markets, especially given the immaturity and rapid innovation in areas such as carbon capture and storage (CCS), hydrogen production and use, and new sustainable energy and fuel technologies.  

Beyond the short-term energy security concerns, brought to light by the ongoing conflict in Ukraine, there is a longer-term dilemma, which may be considered a dual challenge. Global population growth over the next 30 years is anticipated to be 1–2bn people (with associated energy and chemical demand) whilst the carbon emissions from downstream industry needs to approach net zero over the same period.  

Key questions  
Indeed, there are key questions that refining executives are asking their organisations to solve.

Net zero targets: What are the optimal strategies to meet the UK and European Commission’s (EC) aggressive net zero carbon targets for refineries? Can the short-term 2030 and 2035 strategies be met with digital solutions while designing more permanent capital expenditure (capex) approaches?  

Carbon exposure: How well can CO₂ emissions be measured? Can this be done more accurately, closer to real time, and with greater granularity to identify ‘bad actors’ and target those for our highest attention?

Bio-feedstocks: What are the technical challenges in incorporating bio-feedstocks into refining operations? Taking into account challenges such as increased reactor fouling, the variable reliability of solid feed handling systems and the need to characterise different feedstock sources.

Incorporating renewables: What are the challenges in extending the electrification of refinery units and incorporating renewable power sources? Challenges include segregating energy sources from regional grids into site-based microgrids and increasing site reliability. In addition, optimising capital investment in battery storage and renewables to smooth out the variability of solar and wind power with storage arrays.

Re-imagining refineries in the energy transition: What are the strengths of downstream organisations and sites, and how can those be brought to bear to evolve into leading players in the energy transition in Europe?

Shifting towards sustainability investment: How can capex be used to shift towards effective sustainability?

A unique opportunity  
The underlying trend towards sustainable growth presents a unique opportunity for downstream companies to change the public and political narrative towards their industry in a positive way.

There are several pathways whereby a downstream company can reduce its carbon footprint. Some have short-term payoffs (ie energy efficiency measures), while others are longer term (ie CCS). A common thread is that almost all of these approaches can be accelerated through the pervasive digitalisation of downstream assets and value chains.

A combination of six sustainability pathways, executed in concert, can get a downstream organisation close to net zero carbon (see Fig 1).

Fig 1: Moving towards net zero for refiners  
Source: AspenTech

The question that downstream operators must grapple with is: ‘To what extent can these pathways be accomplished while maintaining refining and petrochemical margins?’

Different organisations are taking several different strategic directions. ExxonMobil, for example, is doubling down on excellence, including energy efficiency and the value chain optimisation, while also making a huge strategic bet on scaling carbon capture. BP is focusing on energy transition pathways, such as wind, solar and other renewable opportunities. Interestingly, Occidental Petroleum is making an even larger bet than ExxonMobil on carbon capture, intending to run 70 direct air carbon capture (DAC) plants by 2035.  

High stakes  
The stakes are high. External pressures on the energy industry from the financial community, governments and the public are creating an imperative to operate with increasing transparency around the carbon footprint, in a drive to achieve net zero carbon targets. Fig 2 shows how this is currently driving strategic direction in energy companies worldwide. Some 77% of industry executives believe that CO₂ reduction strategies will lead to competitive advantage.

Fig 2: Survey of company attitude towards CO₂ reduction      
Source: AspenTech

Role of digitalisation  
The key for downstream oil and gas companies looking to drive efficiency and profitability, cut carbon emissions and be players in new energy is digitalisation. Digitalisation is a vital strategic tool that allows companies to progress towards their sustainability goals by making the most efficient use of their current resources and assets.

Higher efficiency means reduced emissions, improved waste and energy consumption in assets, and effective tracking and measurement. Companies simply cannot pivot their operations towards sustainability without a focus on renewables and improved emissions management.

Here are four examples of the benefits of digitalisation as companies address carbon reduction targets.

Boosting energy and production efficiency   
Heide refinery in northern Germany had a short-term goal to maximise production of a wide range of petroleum products with agile response to the northern German marketplace. Its longer-term aim is to produce environment-friendly synthetic kerosene as well as petrochemical products.  

Heide achieved its short-term goal and is moving towards the longer-term initiative with the adoption of ‘dynamic optimisation’. This is a breakthrough digital technology that has been used to orchestrate advanced control systems in the refinery and wring additional product yield, better energy efficiency and carbon reduction.

For example, in a typical 200,000 b/d refinery with 2mn t/d of CO₂ emissions, advanced process control can achieve about 60,000 t/y of CO₂ emission reduction. The addition of dynamic optimisation can double that figure by a further 60,000 t/y CO₂ emission reduction. In operating expenditure (opex) terms, at a carbon tax of $100/t of CO₂, the economic benefit is substantial.

Carbon emissions decision support   
Downstream companies currently calculate their greenhouse gas (GHG) emissions by tracking fossil fuel consumed in the refinery and petrochemical processes, and then applying European Union (EU) and country-approved methods to convert those fuel consumption numbers into ‘estimated’ GHG emissions.

This approach has three particular shortcomings. First, emission estimates are ‘gross’ and inexact rather than ‘granular’, which means that plant management and executives cannot see which particular units are the ‘bad actors’ from a carbon footprint viewpoint to target for improvement. Second, this approach misses certain aspects of carbon emissions and is subject to debate with other parties (such as NGOs) that may be collecting their own measurements. Third, the traditional approach is manual and slow, so it cannot be used for proactive decision-making.    

Today, AspenTech is working with several leading European refining organisations to put in place more insightful and granular solutions that will enable real-time decision support for assessing the carbon footprint profiles of assets.

Heat exchange fouling decision support   
At the heart of energy use in a downstream facility are heat exchanger networks. However, heat exchangers suffer from an ever-present tendency to scale and foul due to the temperatures and fluids passing through them.

Turkish refinery Tupras has been one of the first adopters of an innovative hybrid modelling approach, combining artificial intelligence (AI) with process digital twins to achieve a higher level of operating insight. Tupras has applied this AI-based hybrid model approach to improving insight into heat exchanger fouling and better maintenance scheduling, resulting in higher energy efficiency and lower carbon emissions.  

Integration of bio-feedstocks   
What’s more, most European refineries are integrating bio-feedstocks into their refining and petrochemical processes. This raises various plant performance and technical issues. Bio-feedstock may introduce solids handling and feed reliability challenges, as well as viscosity concerns within reactor units. The above-mentioned hybrid model technology has proved valuable in these bio-feedstock integration projects.  

Another key technology is the use of molecular modelling capabilities. Hindustan Petroleum has been using a molecular modelling tool developed by AspenTech, which enables the incorporation of the complicated chemical characteristics of biomaterials into normal refining models, to conduct the economic studies which will be leading to incorporation of used cooking oils into one of its India-based refining units.

Looking forward  
European and UK downstream players face many immediate and long-term challenges. There are several business and technical strategies to consider and decide upon.

None of these strategies will be possible without employing advanced digitalisation – to measure carbon footprint, understand ‘bad actors’, minimise the technical and economic risk of new technology and accelerate the execution and implementation of the selected capex and opex strategies. Digitalisation is key to success on the road to net zero.