technology trend of fuels in the future

1NIPPON OIL

IEEJ: October 2005

Northeast Asia Petroleum Forum Session-6

Technology Trend of Fuels in the Future

September 22, 2005

Nippon Oil CorporationNobuyuki Osawa

IEEJ: October 2005

2NIPPON OIL

IEEJ: October 2005

3.Development of alternative energy sources

2.Efforts being made by oil industry to reduce CO2 emissions

Efforts to meet the Voluntary action program made by NIPPON KEIDANRENAdditional efforts by the industry

GTLBiomass Fuels (ETBE, BPF)

ContentsContents

1.BackgroundCO2-reduction goalForecast of Oil supply

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CO2 - Reduction goal in JapanCO2 - Reduction goal in JapanReduction goal of CO2 emissions generated by energy consumption in Japan

2010Fy

CO2 emissions(million tons CO2)

【BaU case 】

【Target set in the Kyoto Protocol】1,056million tons-CO2

Source : Agency for Natural Resource and Energy “Energy Demand and Supply Outlook for 2030”

1,174

1,048

1990Fy 2002Fy

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IEEJ: October 2005

Production Scenarios of Crude Production Scenarios of Crude

0

25

50

75

100

125

150

175

200

1900 1925 1950 1975 2000 2025 2050 2075 2100

millionBDLong-Term World Oil Supply Scenarios by EIA

USGS Estimates of Ultimate RecoveryProbability Ultimate Recovery, BBls LOW (95%)Mean (expected value)High (5%)

2,2483,0033,896

New FieldEORGTLBiomassShale OilTar Sand

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1.Background


CO2-reduction goalForecast of Oil supply




ContentsContents

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CO2 Reduction --- Voluntary Actions by PAJ (1) CO2 Reduction --- Voluntary Actions by PAJ (1)

Energy- saving at Refineries

FY 1990Base Year

FY 2010Target Year

FY 2003Achieved

Energy Consumption Ratio* 10.19 9.17 8.87

<TARGET>Energy consumption ratio -10%

* Energy consumption in KL (crude oil equivalent) /Crude oil processed in thousand KL

8.0

8.5

9.0

9.5

10.0

10.5

1990 1992 1994 1996 1998 2000 2002

<Countermeasures>Promotion of heat recovery

Heat exchangersFlare gas recovery

Optimization of equipmentsHeat management among equipmentsPromotion of computerization

FY

Ene

rgy

cons

umpt

ion

ratio

Target9.17

Target9.17

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Optimization of Transportation <TARGET>

Fuel consumption -9%

<Countermeasures>Lorry, Tanker

Large scale freightEfficient loadingProduct exchange

Oil terminalJoint management

Fueling stationLarge scale storageJoint transportation,Night/Holiday delivery

FY 1990Base Year

FY 2010Target Year

FY 2003Achieved

Fuel Saving<Fuel Consumption>

-<1,510Mkl>

-140Mkl<1,370Mkl>

-80Mkl<1,430Mkl>

1,300

1,350

1,400

1,450

1,500

1,550

1,600

1997 1998 1999 2000 2001 2002 2003FY

Tran

spor

tatio

n fu

el c

onsu

mpt

ion

Target1,370MklTarget

1,370Mkl

Mkl

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Consumers ----- diffusion of co-generation <TARGET>

Energy saving -1,400Mkl FY1990Base Year

FY2010Target Year

FY2003Achieved

Energy Saving<Co-generation diffusion>

-<1,140MkW>

-1,400Mkl<5,000MkW>

-850Mkl<3,250MkW>

-1,500

-1,000

-500

0

FY

Ene

rgy

Sav

ing

Target-1,400Mkl

Target-1,400Mkl

Mkl 1990 1997 1998 1999 2000 2001 2002 2003

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1953 1976 1992 1997 2005

1.2% 0.5% 0.2%

0.05%

0.005%（50 ppm)

1996 2005

0.01%（100 ppm)

0.005%（50 ppm)N/AGasoline

Diesel

2008

0.001%(10 ppm)

"Sulfur free"

2007

～～

0.001%（10 ppm)"Sulfur free"

～～

Voluntary introduction of “Sulfur- free” by Japanese oil industries in 2005 --- the top

runner in the world.

Voluntary introduction of “Sulfur- free” by Japanese oil industries in 2005 --- the top

runner in the world.

Sulfur Standards in Japan “The road to Sulfur-free”Sulfur Standards in Japan “The road to Sulfur-free”

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IEEJ: October 2005

CO2 Reduction --- Additional efforts by the industryCO2 Reduction --- Additional efforts by the industry

2 2 million ton of CO2 reduction is achievable inmillion ton of CO2 reduction is achievable infive years after the introduction of sulfurfive years after the introduction of sulfur--free fuel.free fuel.

CO2 Increase at Refinery(2 million ton per year)

Automotive CO2 reduction The rate of reduction will increase year by year along with the introduction of high performance vehicles.Sulfur-free is necessary for high performance vehicles.

Year

CO

2 em

issi

on

Decrease-600

-400

-200

1(2006)

5(2010)

8(2013)(2005)

Introduction of Sulfur-free gasoline and diesel

400Increase

200

0

2(2007)

3(2008)

4(2009)

6(2011)

7(2012)

Sulfur-free completed

Reference:JCAP2

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“Sulfur-free” to “Diesel Shift”“Sulfur-free” to “Diesel Shift”

Reference: METI

WTW Energy Efficiency %

10

12

14

16

18

Gasoline Diesel ＣＮＧThe popularization of diesel vehicle

with excellent fuel economy““Diesel ShiftDiesel Shift””

Introduction of““SulfurSulfur--freefree”” diesel fuel

Development of ““Clean DieselClean Diesel””with advanced technology

-1,800

-1,600

-1,400

-1,200

-1,000

-800

-600

-400

-200

0(Thousand ton – CO2)

Gasoline:61million klDiesel:40million kl

Gasoline:57million klDiesel:44million kl

Gasoline decreaseDiesel increase

Reference: PAJ

CO2 emission from refinery

Clean up the image “Diesel is dirty”

CO2 Reduction estimation by JARI and PAJVehicle: 2 million ton reduction with 10% enhancement of diesel passenger vehicle ratioRefinery: 1.7 million ton reduction with 10% increase of diesel fuel production to replace gasoline

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ContentsContents

1.BackgroundCO2-reduction goalForecast of Oil supply

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Development of New GTL Technology Development of New GTL Technology

SyngasSyngas　　ProductionProduction

FTFTSynthesisSynthesis

HydrocrackingHydrocrackingSulfurSulfurRemovalRemoval

SyngasSyngas Production Production CO2/Steam ReformingCO2/Steam ReformingNo need for :No need for :

--CO2 RemovalCO2 Removal--O2 GeneratorO2 Generator--SyngasSyngas ConditioningConditioning

CapexCapex: 85% of ATR

Natural Gas（CO2　20％）

: 85% of ATR CO2 Reduction: 5%(Symgas section)

FT Synthesis FT Synthesis Own Technology Own Technology

Syngas ProductionNatural Gas

（containing CO2 ）

AirSyngas

Conditioning　

OxygenGenerator

CO2Removal

HydrocrackingHydrocracking

FTFTSynthesisSynthesis

SyngasSyngas　　ProductionProduction

SulfurSulfurRemovalRemoval

Hydrocracking Hydrocracking Existing ProcessExisting ProcessOwn Technology Own Technology

ATR ATR ((AutothermalAutothermal Reforming)Reforming)Partial Partial OxydationOxydation

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GTL, ATL and CTL “Liquefaction”GTL, ATL and CTL “Liquefaction”

Reformulation

CO

HLiquid Fuel

NaphthaKerosene

Diesel Fuel

Gasification

Hydrocracking

Fisher-Tropsch

Wax

Asphalt to Liquid “ATL”

Natural Gas

CH

Coal

Synthetic Gas

Gasification

Asphalt

Coal to Liquid “CTL”

Gas to Liquid“GTL”

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“GTL Plant Construction and Operation Plans”

Shell - Malaysia12.5MBD

Sasol – South Africa105MBD

PetroSA - South Africa30.2MBD

Sasol - Qatar34MBD

Sasol - Nigeria34MBD

Sasol - Qatar 66MBDShell – Qatar 70MBD

Conoco – Qatar 80MBD

2004 2005 2006 2007 2008 2009 2010 2011

Blue: ConstructedRed: Plan

The capacity in total will reach 450MBD in 2010, equivalent to 18 million kl as diesel fuel--- only 3% of OECD demand.Products will be supplied to EU ---- very small amount of products left for Asia?

GTL is the candidate of automotive fuel diversity in a longGTL is the candidate of automotive fuel diversity in a long--term.term.------Meaningless as the countermeasure for environmental concerns in Meaningless as the countermeasure for environmental concerns in nearnear--termterm

Automotive fuels are “Sulfur-Free” in Japan.GTL has little advantage in view of low sulfur property.

GTL Plant Construction PlansGTL Plant Construction Plans

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Biomass, Why? Biomass, Why?

Why in the US, EU and BrazilWhy in the US, EU and Brazil

Own energy supply source

CO2 reduction

For agriculture industriesEconomic revitalization

Why in Japan?Why in Japan?

Own energy supply source?

CO2 reduction?

For agriculture industries ?Economic revitalization? The reason The reason

in the US, EU in the US, EU and Brazil etc.and Brazil etc.

Why in Japan? Why in Japan?

≠

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Concerns with Ethanol-contained Gasoline Concerns with Ethanol-contained Gasoline

The effect of CO2 reductionThe effect of CO2 reduction55-87% “WTW” CO2 reduction　(100% as the Kyoto protocol rule)CO2 reduction cost : over 10,000¥/t-CO2

---CO2 market: 1,300¥/t-CO2

Energy Security, CostEnergy Security, CostImport = Brazil is the only one candidate

---- Lack of confidence in energy security30-50¥/L @CIF --- High cost

Domestic Production = Under developmentIn the case of production from waste of buildings= the cheapest way Cost: over 100¥/L

Raw material availability: 0.9million kl/Y as ethanol

Product QualityProduct QualityVapor Pressure : 5-7 kPa increase

= Increase of Evaporative emissionAluminum corrosion with over 3% ethanol blendExhaust emission: Increase of NOx and aldehyde

DistributionDistributionEthanol must be blended at the very end of distribution

= To prevent water contamination, phase separationEthanol corrodes certain kind of materials.----- Cost of new facility construction: over ¥330 billion　 Very difficult to observe “Fuel quality maintenance low”

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ETBE Production

Com

posi

tion Ethanol

C2H5OHETBE

C2H5OC4H9＋Iso-butene

C4H8

Butane 50%

n-Butene　34%

iso-butene　13%

FCC C4 fraction

Butane(C4H10)Isomerize

de-hydrogeniso-butene

4 3 7

CO2 Reduction: Almost the same using the same amount of ethanol, ethanol 3% = ETBE 7% Energy security, cost : Concerns of raw ethanol are the same. ETBE production facilities are necessary. Distribution: No problemProduct quality： No vapor pressure increase

The same with the effect on exhaust emissionThe influence on ground water has to be proven. (US-problem, EU-No problem)

Comparison of ETBE with Ethanol

ETBE ETBE

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Bio-diesel Trend in the world Bio-diesel Trend in the world <EU>

- 0 .5 7

- 0 .4 0- 0 .4 9

- 0 .3 8- 0 .2 6

- 0 .8

- 0 .6

- 0 .4

- 0 .2

0 .0

Raw material: SoybeanProduction:103 thousand ton (2004)1,100 thousand ton (2005 estimation)BDF Price: 0.7$/L

BDF Price:0.6$/L

<US>

Raw material: Soybean, PalmProduction:720 thousand ton (2005 estimation)

<Brazil>

Reference: METI

Germany France Italy Austria US

$/L

Prod

uctio

n, th

ousa

nd to

n

Germany France Italy

Austria

Denmark UK Spain

Sweden

2004 Production Capacity

2004 Production

Rapeseed,83%

Sunflower,13%

others, 2%Soybean, 2%

BDF Tax incentives

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BDF Concerns Raw material availability, Cost BDF Concerns Raw material availability, Cost

Malaysia12.0

Indonesia7 .7

US 8.5

Brazil 4 .5

China 3 .5

China 4 .5

Others 11.5

Others 6.1

Nigeria 0.8

Germany1.8

India 1 .6

Others 3.0

0

5

10

15

20

25

30

Prod

uctio

n, m

illio

n to

n/ye

ar

Palm oil Soybean oil Rapeseed oil

Raw materials production Production per area

0.0

1.0

2.0

3.0

4.0

t/ha

パーム油綿実油菜種油ひまわり油大豆油落花生油

Palm oil has the biggest production/area ratio.

Reference: PEC

Palm Cotton Rapeseed Sunflower Soybean Peanut

Cost of Palm BDF: ¥60-70/L CIF Japan（PEC estimation）

Reference：Oil World Annual 2002

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IEEJ: October 2005

Contact: [email protected]

technology trend of fuels in the future

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