April 2021

Special Focus: Clean Fuels

Renewable diesel: The latest buzzword in the downstream sector

Renewable diesel: this greener, cleaner fuel has taken our industry by storm.

Renewable diesel: this greener, cleaner fuel has taken our industry by storm. However, those who have operated in the refinery space over the last decade know that this will not be the last innovation to rock our world. The industry continues to adjust to meet market needs and leverage new process innovations. So, what is so unique about this fuel, and why does the world need it now?

It is not enough to be economic—it must be green

Our industry is changing and evolving. Many shareholders of major oil and gas companies want to see companies investing in cleaner and greener ways to produce energy, but these projects must make economic sense.

In the U.S., California’s LCFS (Low-Carbon Fuel Standard) gives refiners economic credit for producing low-carbon fuels. The standard is designed to decrease the net carbon intensity of the transportation fuel pool and to provide a range of low-carbon and renewable alternatives that reduce petroleum dependency and achieve air quality benefits.1 California has been the most aggressive state in this regard. With a stated goal of replacing petroleum diesel with renewable diesel by 2030, California gives refineries and energy producers tax credits for producing renewable products. Other states such as Oregon and Washington have followed suit and several more states are predicted to adopt a similar standard.

What does this mean for refineries?

It is no secret that the refining industry has been heavily impacted by the shifting domestic fuels market. Demand growth for certain refined products was slow before the shutdowns associated with the COVID-19 pandemic. Smaller refineries have particularly struggled with the recent collapse in oil prices, shrinking growth and margins for gasoline and other refined products, and the discontinuation of waivers for renewable identification numbers (RINs) credit exceptions. We expect to see that approximately 1 MMbpd of refining capacity in North America will be gone permanently. Some of the capacity will be refurbished by using hydrocarbon plants to run renewable feedstock, such as vegetable oils, animal fat and used cooking oil, with an added bonus to open access to government credits by making renewable fuels.

A renewable diesel unit addition could provide just the boost needed for a refinery that has suffered in this volatile market. Many refineries are investigating spending their CAPEX budgets on renewable diesel and related projects. These projects can be in the form of a grassroot renewable facility, the revamp of an existing unit, or adjusting an existing plant to co-process both petroleum and renewable fuels.

What is the market for renewable diesel?

With only five renewable diesel plants now in operation in the U.S., the market is primed with opportunity for RDU production. According to the U.S. Department of Energy, these five plants have a combined capacity of nearly 400 MMgpy. Production is expected to grow in the coming years due to expansions at existing plants and the construction of new plants.

While the U.S. Energy Information Administration (EIA) does not report renewable diesel production, the U.S. Environmental Protection Agency (EPA) reports Renewable Fuel Standard (RFS) RIN data, which indicates that the U.S. consumed more than 900 MMgal in 2019. Nearly all domestically produced and imported renewable diesel is used in California due to economic benefits under the Low-Carbon Fuel Standard2; with states like Oregon, Washington, New York and even Canada following suit, now is the ideal time to adjust operations to follow the market need for renewable diesel. By 2025, Platts Analytics predicts that the total renewable diesel supply will reach 5 Bgal; however, demand is expected to be less than one third of the supply. As more renewable diesel plants come online in 2022 and beyond, this can overwhelm the demand and create a surplus of renewable fuels. Time is of the essence for the renewable projects.

What is the difference between renewable diesel and biodiesel?

Renewable diesel is defined as diesel that meets all specifications of typical petroleum diesel but is produced by hydrotreating non-petroleum materials, such as vegetable oils, animal fats or biomass. Renewable diesel is completely interchangeable with petroleum diesel and is completely compatible on a 100% basis in existing diesel engines.

Renewable diesel is different than “biodiesel.” Biodiesel is produced from many of the same animal and vegetable oils as renewable diesel, but by a different process called trans-esterification. This process adds oxygen to these oils, and when blended with petroleum diesel improves its emissions characteristics. It has certain properties that make it inconvenient to store and limits its content in diesel fuels to 5%–20% due to its incompatibility with existing diesel engines. Due to these disadvantages, its production in the U.S. has been limited.

Renewable diesel produced from vegetable oil, used cooking oil, distillers corn oil or tallow are generally more chemically homogeneous than petroleum diesel. Moreover, renewable diesel has a higher cetane number than petroleum diesel. This number is a measure of how efficiently a diesel engine can generate power with that fuel. As a result, more energy is derived from less fuel, reducing emissions per unit amount of energy. In addition, renewable diesel has essentially zero sulfur and other impurities found in petroleum diesel.

Renewable diesel is considered “low carbon” because the feedstocks used to make renewable diesel, such as distillers corn oil, tallow and used cooking oil, are byproducts from other processes. As such, renewable diesel produced from these feedstocks has a low-carbon intensity. Carbon intensity (CI) is a measure of lifecycle emissions from extraction or growth, refinement, distribution, storage and combustion, and is reported as grams of carbon dioxide (CO2) equivalent per megajoule (MJ) of energy. Renewable diesel made from the above byproduct feedstocks can be in the range of 22 gCO2/MJ–25 gCO2/MJ depending on the specific byproduct feedstock.2,3 By comparison, petroleum diesel has a CI of 102. Renewable diesel produced from soybean oil, for example, has a CI of 53, as the CO2 emitted from growing soybeans must be included in the CI calculation.

What does the renewable diesel process look like?

In a conventional petroleum refinery, certain crude fractions are hydrotreated to remove sulfur species so the diesel fuel will meet the specifications for ultra-low sulfur diesel (ULSD). The diesel fuel produced by the renewable diesel process is identical to the ULSD produced in a conventional petroleum refinery. However, the process used to produce renewable diesel has some differences from the conventional refinery hydrotreating process.

Renewable diesel is made from non-petroleum renewable feedstocks, such as vegetable oils and animal fats. The glycerides in these feedstocks are converted to straight-chain hydrocarbons by reactions with hydrogen over a fixed catalyst bed. This is followed by an isomerization reaction to improve the cold flow properties of the diesel fuel product. The amount of hydrogen required to produce renewable diesel from tallow, corn oil, used cooking oil and vegetable oils is greater than the typical petroleum refinery hydrotreater.

Therefore, a renewable diesel project often includes additional hydrogen capacity. This leads us to expect a boost in hydrogen production in upcoming years as more renewable diesel plants are built.

What is involved in a renewable diesel project?

A renewable diesel project involves more than the renewable diesel process unit. In addition to the RDU, the overall project must consider infrastructure such as the logistics of feedstock supplies and diesel product distribution, feed pretreatment, hydrogen supply and utilities. FIG. 1 shows a facility in Artesia, New Mexico, where a grassroots RDU is planned.

FIG. 1. A site in Artesia, New Mexico where a grassroots RDU is planned.

In the case of a refinery conversion, the existing petroleum refinery will likely have significant infrastructure available, such as rail access, truck loading and unloading, as well as existing tankage and utilities. The existing facilities may require some modifications to accommodate some of the feedstocks. For example, animal fats such as tallow will require tank heating, as tallow will solidify at ambient temperatures. An existing refinery will have existing utility systems available such as steam, cooling water, electric power, flare, wastewater treatment and instrument air.

A project planned for a greenfield site must plan for the logistics of feedstocks and products, tankage and the utilities required for the overall project.

Renewable diesel feedstocks will likely require pretreatment before being charged to the RDU. The various pretreatment steps will vary depending on the specific application and the planned RDU feedstocks. As noted earlier, renewable diesel can be produced from a variety of feedstocks: vegetable oils, used cooking oil, distillers corn oil, animal fats, etc. The specific feedstocks planned for the RDU will determine the required pretreatments steps, which may include polyethylene removal, degumming and bleaching to remove metals, chlorides, phosphates and other contaminants that are deleterious to the hydroprocessing catalysts.

In addition to logistics, utilities and pretreatment, an RDU project requires hydrogen. An RDU generally requires more hydrogen supply than a traditional refinery hydrotreater designed to remove sulfur species from petroleum diesel. The hydrogen required will vary depending on the specific feedstock and increase over the run length of the RDU catalyst. An existing refinery will most likely have a source of hydrogen. The hydrogen may be from an industrial gas supplier of a refinery-owned hydrogen production unit. A greenfield RDU project will need to include a source of hydrogen.

Getting started

These basic steps can help owner-operators get started:

  1. Begin with a study: Conducting a feasibility study identifies the opportunity before beginning the project.
  2. Lay out the plan: Whether a unit needs to be repurposed to process a variety of renewable feedstocks or the entire refinery needs to be overhauled, engineering and technology will be of the utmost importance to ensure the project is completed safely, efficiently and cost-effectively. Partnering with the right EPC company will bring relevant experience to these types of projects.
  3. Build into reality: If a grassroot approach is chosen or the plant needs to be revamped as an RDU, milestones and associated costs must be managed to ensure deadlines are met at competitive prices that keep the bottom line intact. HP

LITERATURE CITED

  1. California Air Resources Board, “Low Carbon Fuel Standard,” online: https://ww2.arb.ca.gov/our-work/programs/low-carbon-fuel-standard
  2. U.S. Department of Energy Alternative Fuels Data Center, “Renewable hydrocarbon biofuels,” online https://afdc.energy.gov/fuels/emerging_hydrocarbon.html
  3. S&P Global Platts, “Evolve or die: U.S. refiners grasp renewables lifeline to stay viable,” December 2020, online: https://www.spglobal.com/platts/en/market-insights/latest-news/oil/110420-evolve-or-die-us-refiners-grasp-renewables-lifeline-to-stay-viable

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