Recently-arrived general manager Thomas Zengerly hopes the NZRC board will approve the scheme, the biggest single capital expenditure undertaken by the company in several years, next April and that the project will result in this country's diesel and motor gasoline being comparable to the best in Europe.
Though not large by international standards, the project comes at a critical time for this country, as it contemplates ratifying the Kyoto Protocol on global greenhouse gas emissions and looks ahead to a "post-Maui" energy age.
Zengerly, a German national and former integration manager at the Shell and DEA Oil joint venture refinery near Hamburg, says the refinery is facing a lot of challenges, the biggest of which is the complex Future Fuels project.
He says having five major shareholders in the refining company is a little unusual and means there is quite a large and diverse board of directors. 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.
But, he adds, all major shareholders are behind this project because they know how important it is to the future viability of NZRC. Without Future Fuels the refinery will not be able to continue to compete with refineries in the Australia-Singapore region and have to cease refining and convert to an import terminal only.
The New Zealand Future Fuels (NZFF) project is essentially following what is already happening in much of the western world. Germany has already moved to 50ppm of sulphur, with a lower level of 10ppm to be introduced from 2003. New Zealand is about six months behind Australia in committing itself to reducing sulphur and benzene levels in automotive fuels.
The Marsden Point refinery presently supplies about 90% of New Zealand's diesel needs and about 60% of the petrol requirements, with the rest being imported from around the Asia-Pacific region, but primarily from Australia and to a lesser extent Singapore.
The project will require the reduction of the sulphur content of diesel by desulphurisation in a new hydrogen desulphurisation plant; and the reduction of the benzene content of mogas by saturation of the benzene with hydrogen.
There will be the installation and commissioning of a 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.
There will be no dedicated major shutdowns at Marsden Point during the tight 32-month timetable proposed for the project, as all work will be done on a "live" refinery with some tie-ins prepared during statutory shutdowns.
Another of the challenges facing NZRC is having to meet government-imposed emission standards in the light of this government's stated intention of signing the Kyoto Protocol, while at the same time staying competitive with Australian or Singaporean refineries, whose governments have indicated they will not be signing Kyoto in its present form.
Zengerly says the New Zealand government has clearly stated industries can apply for an exemption to paying carbon taxes, if they can prove they have already implemented a sophisticated energy management system and are exposed to international competition. So, Future Fuels is part of that package.
The New Zealand government is requiring all fuels sold in this country to meet the requirements of 500ppm or less of sulphur in diesel and 3% benzene by volume in motor gasoline (mogas) by 2004.
The planned specifications to come into force by January 2006 are more stringent - the sulphur content of diesel to be less than 50ppm, with a future goal of 10-15ppm; and the benzene content of mogas to 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.
To achieve these dates the NZFF project must be completed and operational by August 2005, which means NZRC board approval of the $NZ150 million project by next April, with implementation starting after that and civil works commencing by early 2004.
New Plymouth-headquartered engineering firm Transfield Worley is one of the companies helping NZRC in the definition pre-feasibility stage of Future Fuels, with the aim of completing the detailed project proposal by next March.
NZFF project manager Tony Hale says Future Fuels will not be a money spinner. "It is a stay in business decision for the refinery."
NZRC aims to maximise New Zealand labour and construction content, as long as they are competitive, while modular construction will be seriously considered for the Future Fuels project.
