October 2020

Special Focus: Plant Safety and Environment

FTO: An enabling emission control technology for petrochemical plant expansions

For the petrochemical industry, the U.S. Gulf Coast (USGC) has the locational advantage of proximity to cheap feedstock, and to an abundance of pipeline infrastructure and terminals for export markets.

Armstrong, P., Predatsch, E., Selas-Linde North America

For the petrochemical industry, the U.S. Gulf Coast (USGC) has the locational advantage of proximity to cheap feedstock, and to an abundance of pipeline infrastructure and terminals for export markets. However, this advantage has a downside—emissions-constrained air basins that serve to restrict further expansion.

The Houston Ship Channel is to the U.S. industrial sector what Wall Street is to the commercial sector. The area has one of the highest concentrations of heavy industry in the world, and, consequently, industrial pollution is a perpetual concern. Yet, expansion is still taking place in one of the most restrictive air basins in the U.S. How? Smart planning, balanced regulatory policy and technological innovation are all driving factors. If there is an impediment to growth, industry undoubtedly will find a technological solution to address the challenge. One solution is flameless thermal oxidation (FTO).

FTO is an established emissions control technology that has found a niche in the USGC region during the recent rapid expansion of the petrochemical sector. From a regulatory perspective, the environmental permitting process does what it is intended to do—manage and limit emissions within constrained air basins. This is especially the case on the USGC. FTO technology, with its near-zero emissions, enables petrochemical companies to expand capacity while still operating within grandfathered permits for emissions caps. FTO is a sustainability solution that balances economic growth with sound environmental policy.

Enabling plant expansion under grandfathered permits

This article discusses two polyethylene (PE) plant expansions in the USGC region. One is in the Houston-Galveston-Brazoria (HGB) air basin in Texas, which is currently designated by the U.S. Environmental Protection Agency (EPA) as a marginal non-attainment area. Based on extensive scientific evidence about ozone’s effects on public health and welfare, the U.S. EPA strengthened the National Ambient Air Quality Standards (NAAQS) for ground-level ozone to 70 parts per billion (ppb) on October 1, 2015. Note: As a recent reclassification, HGB is listed as a “serious non-attainment” area under the 2008 ozone standard. The 2008 NAAQS for ground-level ozone is 75 ppb.

The second example that will be discussed is a similar plant expansion in the Beaumont-Port Arthur (BPA) area of Texas, which is currently designated as an attainment area. EPA attainment areas comply with the ozone standard. Each of these projects have grandfathered emissions permits that are critical for assessing whether and how each plant could expand capacity. Grandfathered permits allow operators to operate below or at their stated emissions levels in perpetuity, regardless of their area attainment status. However, this and other factors can limit opportunities for capacity expansion.

Expansion in a non-attainment area

Economically, the Houston Ship Channel is one of the most attractive locations for new or expanded PE plants. Prior to expansion, the plant in the HGB air basin was operating close to its permitted limit of volatile organic compounds (VOCs) and nitrous oxides (NOx) emissions. To expand production, this plant would either need to reduce emissions for its existing capacity or purchase emission reduction credits (ERCs) for the incremental emissions that would exceed the plant’s permit. Purchasing ERCs can be easier said than done. First, offsets must be purchased from other operators within the same geographic air basin. Second, the offsets must be of the same type of pollutants that the plant will generate—i.e., a one-for-one trade.

For the HGB plant, the producer sought to expand capacity by 1.3 MMtpy. Purchasing ERCs for this expansion would have been dependent on both availability and cost. This was one option that was taken into consideration. A second option was reconfiguration of the plant’s emissions control technology—for the existing operation and for the proposed expansion—so that total emissions could be contained within the permit cap. This option required capital investment, which became the preferred choice. The plant already had one previously installed FTO, and it added three more in a reconfiguration that kept its total plant capacity under the maximum.

Understanding how ERCs work

It is important to understand some of the history in the HGB air basin relative to the ERC market. In 2008/2009, the ERC market crashed with the economic downcycle. Many sellers were available at the time, but there were very few buyers. It was not a fluid market. With the onset of the shale boom and the subsequent wave of petrochemical plant expansions, the value for a VOC ERC/t skyrocketed from $4,500/t to $125,000/t in 2011. In 2013, Element Markets auctioned off the last registered VOC ERCs for $270,000/t as part of a package with NOx credits for $151,000 /t.1 The market had significantly swung in a positive direction, with many more buyers than sellers. For illustrative purposes, consider 2019 values, where 1 t of VOC was hypothetically priced at a conservative $65,000 as a one-time trading value—however, in actuality, there were only two trades below $65,000 for all of 2019.

For the expanded HGB plant, incremental VOC emissions were estimated at approximately 600 tpy. Using $65,000/t as the basis, the cost to purchase ERCs in 2019 would be $39 MM. Conversely, and again for illustrative purposes, the cost of the FTO installation (three units) was approximately $4 MM/FTO (equipment only) for a total of $12 MM. The addition of construction and other services totaled $24 MM, resulting in a total installed cost of $36 MM.

In the ERC cost illustration, a purposely conservative number was used to reflect VOC ERC values in the HGB air basin for 2019. Actual 2019 VOC ERC pricing included 23 trades (60%) above $100,000 at an annual high of $165,000, 13 trades (34%) between $50,000 and $100,000, and two trades (0.05%) below $50,000 at a low trading value of $10,000. Clearly, the average VOC ERC trading value for 2019 was well above the conservative $65,000.

Let us not forget NOx

An average FTO produces 40 times less NOx than an elevated flare. FTOs do not use a flame—hence, the significantly lower NOx. This is a significant difference, as NOx credits are generally priced at a greater value than VOCs in the HGB ERC market. The HGB plant avoided generating 20 t of NOx/yr (in VOC emissions destruction) from each of the FTO units for a total of 60 tpy for the HGB plant expansion. To clarify, FTOs do not destroy NOx; they simply generate minimal NOx as compared to flame-based thermal oxidizers or flares. From a total cost perspective, if the HGB plant chose to install only an elevated flare or a general (flame-based) thermal oxidizer, it would have needed to purchase ERCs for VOCs and for NOx. The NOx avoidance with an FTO vs. other technologies has significant financial value to the plant.a For more information on NOx emission trading values, refer to the Texas Commission on Environmental Quality (TCEQ) website, where ERC NOx trade values are recorded in the Trade Report covering 2018/2019 trades in the HGB air basin.2

To emphasize, purchasing ERCs to produce the incremental NOx from expanded production capacity can be costly in the already constrained HGB market. For the illustrative example of the HGB PE plant at the 2019 ERC NOx trading market high of $157,000/t, the total cost of purchasing NOx ERCs would have totaled $9.4 MM as incremental costs to the VOC credits. Even with a much more conservative number for the NOx at $100,000/t, the incremental cost of the NOx ERCs would have been $6 MM. For the plant, the choice of FTO was an obvious economic and environmental decision.

A more straightforward situation: FTOs in attainment areas with minimal ERC trading values

The prior example was for a non-attainment area. A PE producer at another site in the BPA area was similarly constrained by its emissions cap and sought to expand to capitalize on market economics. For this plant, it did not matter whether the air basin was designated as EPA attainment; the constraining factor was simply the permit, which did not allow for increased VOC and NOx emissions at the plant site. For this PE plant, the capacity expansion was projected at a volume of 650 tpy of PE, which would produce an estimated 400 tpy of VOCs and 20 tpy of NOx.

For the BPA air basin, which is designated as EPA attainment, there is no active market for ERCs, given that there is no regulatory driver for the ERC market. The driver is purely the state permitting process. Consequently, the PE plant cannot purchase credits to offset increased emissions. No fluid market exists for ERCs, and the plant had no choice but to install the appropriate emissions control technology (i.e., FTO) to keep the proposed expanded capacity under the plant emissions maximum.

Given the proposed size of the expansion (approximately 400 tpy of VOCs) and that the plant was already operating close to its permitted cap, nothing short of a near-zero-emissions solution was going to work. A conventional solution—such as flaring, with 98% destruction efficiency (DE) or even a conventional thermal oxidizer—was not going to suffice. A near-zero-emissions technology was required to allow the expansion project to move forward. The final decision was to add two FTOs at the site to enable expansion.

To expand or not to expand?

Maxed-out permits constrained both of these discussed plant sites. The HGB location was also constrained by the EPA non-attainment designation in which purchasing ERCs was an option. The ERC market can enable expansion for a price, but when there is no ERC market (e.g., the BPA site), the only option is to employ appropriate emissions control technologies to adhere to existing permit maximums.

With near-zero emissions, there is a strong case for the use of FTO technology in both constrained geographic areas (non-attainment) and constrained plants (maxed-out permits). In either situation, the cost of the emissions control technology barely factors into the economic analysis justifying expansion. However, with projects that are not similarly constrained, competitive choice and preference of emissions control technologies are at the forefront of the expansion decision process. Is 98% DE enough? Or is 99.999+% DE needed? The same logic also prevails for retrofits and greenfield projects. FIG. 1 shows geographic areas that are designated as “non-attainment” by the EPA, reflecting the 2015 NAAQS 8-Hour Ozone Non-Attainment Standard. Note: The HGB air basin is visually represented as “marginal non-attainment” for this standard.

FIG. 1. NAAQS 8-hr ozone non-attainment map. Source: U.S. EPA.

When a region is designated as “non-attainment” by the EPA, states are then obligated to get the region (air basin) back under attainment. States have the responsibility to lower emissions, which is typically accomplished through a state implementation plan (SIP). A SIP is a collection of regulations and documents used by a state, territory or local air district to reduce air pollution in areas that do not meet NAAQS regulations. The HGB region is an example of a non-attainment area that is operating under a SIP to achieve attainment status. Operators pay close attention to SIPs, as tightened regulations are often the result of a SIP.

FIG. 2 is a SIP map from the TCEQ website. As an example, the BPA air basin was formerly under a SIP for ozone attainment, but was able to gain attainment status through SIP remediation action.

FIG. 2. SIP map. Source: U.S. EPA.

Is there a broader market for FTOs going forward?

The key driver for FTO technology selection is regulatory (i.e., EPA designations and grandfathered permits), but this can easily change if market forces drive toward more longer-term sustainability solutions. The EPA mandates 98% DE in attainment areas. For many plant operators, 98% is enough; however, that still allows 2% of VOCs to be emitted into the atmosphere. For companies pursuing environmental sustainability strategies, 2% may not be acceptable. As the industry increasingly focuses on air quality and climate change across society, industry will ultimately turn to technology to close the gap between 98% DE to near-zero emissions.

FTO technology has existed for more than 30 yr. It is a proven technology validated through rigorous “stack test” verification. However, FTO technology comes at a greater capital expenditure (CAPEX) vs. conventional technologies (flares and thermal oxidizers). Plant operators have typically not been inclined to invest additional CAPEX unless required to do so. It is a business decision based on current regulatory requirements. This can easily change, however. If a societal cost is applied to the 2% incremental emissions, such as with cap-and-trade schemes across the U.S., then broader justification for the incremental CAPEX investment may be seen.

A view of the future may be in the state of Texas, which is historically a pro-business state. However, strong and clear regulatory policy can be good for business, as it provides market certainty for technological innovation, such as with FTO. The TCEQ supports several programs—Emissions Banking and Trading (EBT) programs—that are designed to balance economics with the environment. The EBT programs consist of three cap-and-trade programs and two credit-generating programs. These programs provide participants with compliance flexibility in meeting air regulations while reducing emissions in Texas.

These proven programs are designed to create an economically viable approach to managing air emissions. As we look to the future, the industry is within reach of closing the 2% gap as regulators, plant operators and technology providers work to develop a sustainable solution for a clean air future. HP


        a In 2019, the market high price [Mass Emission Cap & Trade Program (MECT)] was $110,000/t of NOx. This is double the VOC/t price as quoted in this article.


  1. Taylor, M., “All I need is the air that you cleaned and to pay you—Will emissions costs choke petchem expansions?,” RBN Energy, June 19, 2013, https://rbnenergy.com/all-i-need-is-the-air-that-you-cleaned-and-to-pay-you-part-2
  2. TCEQ 2018–2019 HGB Trade Report, https://www.tceq.texas.gov/assets/public/implementation/air/banking/reports/ectradereport.pdf

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