Martin Quinlan, LONDON: QUADRISE, a small UK company, says it is on the point of commercialising a new fuel for ships’ engines, electricity generation and steam-raising in refineries. The company has developed a process for converting refinery residues into an oil-in-water emulsion, which it says can be used as a lower-cost replacement for heavy fuel oil (HFO). Trials of the new product, known as multiphase superfine atomised residue (MSAR), are due to start this year.
In August, chemicals company AkzoNobel – which will supply the emulsifying agents for the fuel – ordered a 6,000 barrels a day (b/d) MSAR manufacturing unit, to produce the fuel for initial commercial applications. Quadrise is developing projects for the use of MSAR as shipping fuel with Denmark’s Mærsk, as an electricity-generation fuel with PowerSeraya in Singapore, and as a refinery fuel with Mexico’s Pemex and an unspecified refinery in Saudi Arabia.
Economic benefits
Economic benefits centre on the fuel’s production at the refinery. When a refinery is making normal HFO, a proportion of a lighter distillate stream has to be blended into the heavy residue to meet viscosity specifications – but the resulting HFO sells at less than the price of crude, giving a poor return on the distillate part of the blend. When a refinery is making MSAR, the distillate stream is replaced by a 30% water content, freeing-up distillate that can then be used to make high-value diesel.
Accordingly, Quadrise says a refinery producing MSAR will give an overall yield of 70% of transport fuels and 30% of residue, sold as MSAR. For a refinery making normal HFO, transport fuels will account for 50% of the yield and HFO for 50%. Making MSAR could increase the overall refinery margin by $5 a barrel of crude processed when crude is priced at $80/b, after allowing for MSAR operating costs and consumables, the company estimates.
Low capital, high return
Ian Williams, the company’s chairman, says he has three business models in mind. Early ventures are likely to be structured as licensing agreements, with the MSAR-manufacturing facility being built within a refinery at the refiner’s expense and Quadrise receiving a licence fee and a fee per-barrel of MSAR produced. “Low capital, high return,” Williams says.
Under a toll-processing model, the manufacturing unit will be built within the refinery at Quadrise’s expense. The residue and MSAR will be owned by the refiner and Quadrise will receive a higher per-barrel fee.
Later, when MSAR has become a recognised product for trade finance, Williams envisages operating on a merchant basis. Quadrise will construct the plant within the refinery at its expense, buy residue from the refiner, pay the refiner for utilities and services, and sell the MSAR on its own account. Williams has in mind three or four such ventures, possibly in the Caribbean where electricity companies, buying HFO and diesel, will be the likely market for the product.
Quadrise says MSAR plants should be readily accommodated in a refinery, with a small footprint, short construction time and no requirement for a shut-down. They are designed as standard modules, each producing 6,000 b/d of MSAR and costing about $1 million. Four will be required for a refinery of 100,000 b/d crude capacity, to handle about 1 million tonnes a year (t/y) of residue.
Leading companies negotiating
Agreements with leading companies in Quadrise’s target markets are being negotiated. In February, Mærsk – the world’s largest operator of container vessels, which buys 10 million t/y of HFO – signed a royalty agreement and will carry out trials of MSAR in a container vessel before the end of the year. If successful, commercialisation is due to start next year.
Pemex has evaluated MSAR as a refinery fuel and is due to start a larger-scale trial this year, while the Saudi refiner is expected to sign a commercial agreement this year and conduct trials this year and next. PowerSeraya has signed an outline agreement and is to carry out trials.
One practical limitation of MSAR as a shipping fuel is that it cannot be mixed with HFO, so separate tanks and lines will be needed – but ships usually have several tanks, carrying HFO for most areas and marine diesel for emission-control areas. Because 30% of the product is water, its energy content is lower than HFO and more needs to be carried for the same journey.
MSAR contains all of the sulphur of the original residue, but more vessels are expected to be fitted with on-board exhaust-gas desulphurisation as emission-control areas are extended (PE 9/10 p6). For electricity generation, the market could grow with the uptake of flue-gas desulphurisation.
Emulsion fuels have been produced before. In the 1980s, BP and Venezuela’s PdV developed Orimulsion, made from Orinoco bitumen – the BP specialists on the project went on to set up Quadrise. Orimulsion was produced from 1990 to 2006, with sales building up to 6.5 million t/y and demand exceeding supply, until the Venezuelan government ended the project following a strike.