Sustainable Refineries Imperative For Accelerating India’s Development

By Ashish Gaikwad November 26, 2022

Although refining crude oil remains rooted in the production of fuels, by branching out into petrochemicals, forward-looking refiners are unlocking new value and also ensuring sustained profitable growth

Sustainable Refineries Imperative For Accelerating India’s Development
Ashish Gaikwad, Managing Director at Honeywell Automation India Ltd. .

The past few months have been particularly volatile for nations dependent on fossil fuels to power their economies. Geopolitical conflicts such as the Russia-Ukraine war and other flashpoints have highlighted the hazards of depending solely on fossil fuels from a few sources. Also, at the same time, the demand for fossil fuels is expected to be significantly impacted due to alternative renewable energy sources and a strong desire for environmental protection to decelerate global warming. 

In this context, the sagacity of developing sustainable future-ready refineries by transitioning from fuels to petrochemicals is apparent. Although refining crude oil remains rooted in the production of fuels, by branching out into petrochemicals, forward-looking refiners are unlocking new value and also ensuring sustained profitable growth. 

Challenges and demand drivers 

Meanwhile, present-day refiners confront a slew of novel challenges, including high investments to produce more clean-burning fuels, market disruptions and an anticipated decline in transportation fuel demand. In future, such challenges will impact the product mix and investment strategies of refiners. For instance, stringent rules barring the use of high-sulphur fuel are one pressing challenge. Therefore, even when domestic fuel consumption is rising at a robust rate in some markets, refiners prefer to diversify into petrochemicals, where there is higher demand and profitability.  

Dozens of nations, including China, India and Indonesia, are driving the increasing demand for petrochemicals where almost three billion people will enter the middle-class category by 2050.  

Besides projected growth in demand for petrochemicals, new technologies drive huge increases both in scale economies and lower production costs. World-scale refineries deploying the new technologies are being set up in geographies with growing demand for fuels, balancing imports and entering into petrochemicals to augment their IRR (internal rate of return). The new, integrated plants are more resilient to declining petrol and diesel margins, retaining better competitiveness than others.  

Additionally, refineries of the future will foster flexibility in dealing with unexpected short-term changes in market conditions while cost-effectively embracing the long-term transition. For any existing refinery to emerge as a refinery of the future while maintaining its viability, a calibrated investment pathway is necessary for moving from fuels to petrochemicals. Such a transition will use six core components to retain viability – carbon, hydrogen, utilities, emissions, water and capital.  

With carbon, the objective is maximising the transformation of crude oil and allied inputs into high-value items. This requires placing the right molecules in the correct processes while undertaking the least work required to transform them into high-value products.  

Hydrogen calls for optimising the integration between sources and hydrogen uses. In essence, putting it on and off as less as possible to use hydrogen sparingly. With utilities, the aim is to limit net usage, ascertaining the best energy use to convert feedstocks into high-value items.

Regarding emissions, the objective is to minimise carbon footprints through measurable releases such as greenhouse gases, leaving the lowest possible environmental impact. Coming to water, since it is a scarce resource nationally and globally, the aim is to restrict usage and finally move towards zero discharge. As for capital, the perennial goal is maximising return on investments while simultaneously meeting all project objectives.  

Since petrochemical integration remains capital-intensive and complex, it needs a strategy quantified to enhance value at every step. Nonetheless, optimisation is the key, not maximisation. Optimisation denotes improved configurations and better management of molecules. This is only possible with the right domain expertise and modern cutting-edge technology that can be retrofitted.

Emphasis on sustainability 

For an emerging economy such as India, sustainable future-ready refineries are imperative to meet its continued GDP and population growth. These elements will act as a catalyst, accelerating demand for transportation fuels and even higher demand for olefins, biodegradable detergents and aromatics.  As population numbers and purchasing power keep growing, greater demand for these products will nudge Indian refiners to expand more rapidly into the production of petrochemicals. Significantly, modern industrial economies depend heavily on petrochemicals since it serves as a propellant for agriculture, infrastructure, healthcare, textiles and other segments.

In such a scenario, sustainability is a vital issue for the country’s oil and gas industry. Although much has been stated about electric vehicles (EVs), during the ongoing decade they will play a limited role in the country as India’s energy infrastructure still has some way to go in generating or distributing the additional electricity needed to fuel the increasing numbers of EVs. Consequently, petrol and diesel will continue fuelling the nation’s transportation system for some time.  

Embarking on the path to emerge as sustainable refineries of the future will need a seamless transition to cleaner-combustion fuels and decarbonisation as well as effective integration with petrochemicals production by using a broad range of feedstocks, including renewables such as hydrogen, solar and wind power plus bio-crops.

In this scheme of things, digitalisation will be crucial since refineries of the future must be monitored 24x7 for underperformance to remedy the same speedily and accurately, thereby facilitating optimal environmental performance. Apart from enhancing operational efficiencies, cloud-based connected plants (with Digital Twins) will curb energy consumption and emissions, manage water usage better and eliminate waste products. What is more, gaps in experience due to attrition and retirements will be bridged by providing guidance and insights to plant operators.

Ultimately, as India seeks to emerge as a $5 trillion economy, efficient, future-ready refineries will play a pivotal role in boosting productivity across all industries, something especially imperative in the fast-evolving global energy landscape.

The writer is Vice President & General Manager, Honeywell UOP India & Managing Director, Honeywell Automation India Limited.