Refinery general manager Thomas Zengerly told EnergyReview.Net before Thursday's board meeting in Wellington that the Future Fuels project would be the biggest single item of capital expenditure undertaken by the company in several years. It would also result in New Zealand's diesel and motor gas being comparable with the best in Europe.
He said that without Future Fuels the Marsden Pt refinery would not be able to continue to compete with refineries in the Australia-Singapore region and would have to cease refining and convert to an import terminal only.
The New Zealand government is reducing the amounts of allowable sulphur in automotive diesel and reduced benzene, sulphur and aromatics on motor industry gas (mogas). The specifications required by August 2004 are 500ppm or less of sulphur in diesel and 3% benzene by volume in mogas. This can essentially be achieved by changing the raw materials the refinery uses, bringing in more expensive crudes that already have lower sulphur contents.
However, the more stringent specifications, due to come into force by January 2006, will not be possible without the New Zealand Future Fuels (NZFF) project. These ultra-low levels will be a sulphur content of diesel be less than 50ppm, with a future goal of 10-15ppm; and that the benzene content of mogas be less than 1% by volume.
The future goal of 10-15ppm of sulphur in diesel will allow the use of the latest car technologies, including catalytic converters, by New Zealand motorists.
The NZFF project will include:
* Reduction of the sulphur content of diesel by desulphurisation in a new hydrogen desulphurisation (HDS) plant; and
* Reduction of the benzene content of mogas by saturation of the benzene with hydrogen.
The project will incorporate these new processes within the existing refinery, including integrating the processes with those of the hydrogen network, sulphur removal plants, oil movement and utilities. Royal Dutch Shell technology will be used in the new HDS plant, while UOP technology will be used in the benzene plant.
The scope of the project will include: the installation and commissioning of the third hydrogen desulphurisation plant (HDS3), the benzene removal unit and the hydrogen separation unit; as well as the modification and integration of existing utilities, power supplies, storage and process control facilities and mechanisms.
The refinery is scheduled to be producing on-spec products from October 2005, with New Zealand's transport distribution network ready for the new specification transport fuels from January 2006.
Zengerly says NZRC has a Negotiated Greenhouse Agreement (NGA), which will exempt the refinery from any carbon taxes or levies from 2007, and that the refining company will continue its "best practice" energy efficiency targets. World authority Solomon Associates, of the United States, will be used to regularly benchmark NZRC against other refineries in the world.
"This refinery is already in the top 25% in terms of energy performance and we will be aiming to climb even further up this efficiency ladder."
The Shell, BP, ExxonMobil and Caltex oil companies together own about 73% of NZRC, which is listed on the New Zealand Stock Exchange. Emerald Capital owns another 14.2% and the remainder is held by private shareholders.
The refinery currently supplies over 80% of New Zealand's refined oil - about 70% of its petrol and over 90% of this country's diesel and jet fuel requirements.
New Zealand is about six months behind Australia in committing itself to reducing sulphur and benzene levels in automotive fuels and Singapore will have to do something similar if it wants to continue to export product to such regions as Australasia.
