Fuel Oil Stock Draw Pressures ARA Product Inventories (Week 20 – 2023)

Independently-held oil product stocks at the Amsterdam-Rotterdam-Antwerp (ARA) trading hub shrunk in the week to 17 May, according to consultancy Insights Global. A near decline in fuel oil inventories drove the downturn, with levels dropping.

Tankers carrying fuel oil arrived at the hub from the US, Brazil, Finland and France, and departed the Mediterranean region and Norway.

Stocks could drop further next week with the eastbound arbitrage route opening after Singapore margins soared, according to market participants. European fuel oil supply then could dip further if these economics remain workable.

At the lighter end of the barrel, gasoline stocks fell. Demand for product up the Rhine river into Germany rose owing to refinery outages in the country.

Transatlantic arbitrage economics remain less workable, weighing on US-export demand. Gasoline arrived at ARA from Italy, Spain, Portugal and the UK, and larger amounts departed for west Africa, the US, Germany and France.

Naphtha stocks rose on the week. Less gasoline blending activity at the hub may have allowed inventories to build, while demand from the petrochemical sector remains relatively lax as propane remains the more economic feedstock for crackers, according to Insights Global. Naphtha arrived at ARA from Algeria, Germany, Saudi Arabia and the US, and cargoes left for France.

Reporter: Georgina McCartney

Nigeria To Finally Commission Huge 650,000 Bpd Oil Refinery

After years of delays and massive cost overruns, Nigeria is set to finally see a 650,000 barrels per day (bpd) oil refinery commissioned later this month.

The Dangote Refinery, built by the group of the same name of Africa’s richest person, Aliko Dangote, is expected to be inaugurated by Nigeria’s outgoing President Muhammadu Buhari on May 22, Nigerian outlet THISDAY reported on Sunday, quoting a source at the refinery.  

Construction at the refinery has been completed, and tests are being carried out, the source told THISDAY.

The Dangote Group has previously said that it aims to commission the refinery before President Buhari leaves office at the end of May after serving the maximum of two consecutive terms per the constitution.

It looks like this time the timeline will be kept, as a presidential spokesperson told Reuters on Sunday that the refinery near Lagos is set for inauguration on May 22.

The refinery has cost around $20 billion, up from initial cost estimates of between $12 billion and $14 billion.

The huge refinery will be able to meet domestic fuel demand and even have some part of the fuel left for exports.

The Dangote refinery expects to export diesel to customers in Europe, as well as gasoline to Latin American and African markets.

Nigeria, OPEC’s top crude oil producer in Africa, has had to rely on fuel imports due to a lack of enough capacity at its refineries, some of which had to undergo refurbishment in recent years.

At the end of last year, the then oil minister Timipre Sylva said that the country expects to stop importing petroleum products starting in the third quarter of 2023.

A refurbished refinery in Port Harcourt in the Niger Delta is expected to be producing 60,000 bpd of refined crude oil per day, and the new Dangote refinery is expected to come online in 2023, Sylva said at the end of November.

OilPrice.com by Tsvetana Paraskova, May 12, 2023

Marathon Reports on Conventional, Renewables Refining Projects

Marathon Petroleum dedicated the bulk of its first-quarter 2023 capex to advancing its balanced approach of optimizing traditional crude oil refining operations while furthering low-carbon projects.

Marathon Petroleum Corp. (MPC) dedicated the bulk of its first-quarter 2023 capex to advancing its balanced approach of optimizing traditional crude oil refining operations while furthering projects in preparation for a low-carbon future in line with the global energy transition.

Of the total $430 million in capital expenditures and investments during the first quarter, MPC dedicated $421 million—up $177 million compared with first-quarter 2022—to ongoing traditional and renewables refining projects, the operator said on May 2.

In its quarterly earnings report to investors, MPC confirmed that it has completed its South Texas Asset Repositioning (STAR) program at the 593,000-b/d Galveston Bay refinery in Texas City, Tex., which included works to further integrate the operator’s former Texas City refinery into the adjacent Galveston Bay refinery to improve the site’s efficiency and reliability by increasing residual oil processing capabilities, upgrading the crude unit, and integrating logistics (OGJ Online, Aug. 2, 2022).

Officially started up in April and scheduled to ramp up throughout second-quarter 2023, the Galveston Bay STAR project, upon reaching full operation, aims to add 40,000 b/d and 17,000 b/d of incremental crude and resid processing capacity, respectively, at the site, MPC said.

Alongside unidentified projects designed to help reduce future operating costs and improve the competitive position across the operator’s US refining assets, MPC said other first-quarter capex covered expenses related to an emissions-reduction program are under way at the 363,000-b/d Los Angeles refinery, as well as furthering second-phase works for the conversion of the former Martinez, Calif., conventional crude refinery into a renewable fuels production site (OGJ Online, Feb. 6, 2023).

Part of its Martinez Renewables LLC 50-50 joint venture with Neste Corp., MPC confirmed Phase 1 of the Martinez conversion project reached its full production capacity for renewable diesel of 260 million gal/year during the first quarter, as planned.

With construction activities currently on schedule for Phase 2 and pretreatment capabilities for renewable feedstocks at the site due online during second-half 2023, MPC said it expects Martinez Renewables to reach full nameplate production capacity of 730 million gal/year by yearend.

Oil&GasJournal by Robert Brelsford, May 12, 2023

German Leaders Promise That New Liquefied Gas Terminals Have a Green Future, but Clean Energy Experts Are Skeptical

The government says that proposed onshore terminals could one day be converted to produce clean hydrogen. But that technology is in the embryonic stage, stirring worry that the terminals will simply prolong the use of fossil fuels.

In the steel-gray North Sea waters of the port of Wilhelmshaven floats an impressively long tanker, the German government’s answer to the nation’s energy crisis.

The Höegh Esperanza, sprawling the length of three football fields, is what’s known as a Floating Storage and Regasification Unit. It’s a modified tanker ship that sails to different countries where it converts liquefied natural gas, or LNG, from transport ships back into a gaseous state. This gas can then be injected into natural gas pipelines. 

In an effort to get by without Russian pipeline gas, cut off after Russia’s invasion of Ukraine, Germany is turning to LNG imported from countries like the United States. To some climate advocates, however, this amounts to investing in fossil fuel infrastructure when Germany is trying to move toward a carbon-free future. 

The worry is that this could further bind Germany to fossil fuels and the greenhouse gas emissions that are accelerating climate change. Europe’s largest energy consumer, Germany has made a commitment to becoming greenhouse gas neutral by 2045.

German leaders have promised that the new infrastructure will eventually be used to import hydrogen fuel, which does not emit greenhouse gases, as part of a transition to a decarbonized energy sector. But some clean energy experts question the feasibility of such a conversion.

Germany plans to rent at least six floating terminals. The Esperanza, the first, arrived in Wilhelmshaven in December. The German government has leased it for 10 years, according to a statement from Höegh LNG, the company that owns the ship.

“Today we are making a very important step towards energy security in Germany,” Robert Habeck, the German vice chancellor and minister for economic affairs and climate action, declared when the Esperanza arrived. “This shows how much Germany can get done within only a few months when it is necessary.”

The leased terminals can sail elsewhere once they are no longer needed. The crux of concern is that Germany also plans to build several permanent onshore LNG terminals.

These could become prematurely obsolete if Germany stops using them in favor of renewable energy, said Rainer Quitzow, a political scientist at the Research Institute for Sustainability in Potsdam. 

The alternative, he said, is that “the powers that be put so much pressure on the government that rather than creating a stranded asset and devaluing that asset for the owners, they just continue using it [to process LNG] anyway,” Quitzow said.

If that happens, he warned, it could cause Germany to remain dependent on fossil fuel longer than planned, in a so-called “lock in” effect.

Katharina Grave, a spokeswoman for Germany’s Ministry for Economic Affairs and Climate Action, said the permanent terminals are necessary because the government believes the floating terminals alone will not make up for the cutoff of Russian gas.

“There are not endless amounts of them, and they are quite expensive to hire,” Grave said. “So for the future, those FSRU ships will be step by step replaced by LNG ships that feed into fixed terminals, and then these terminals will also be used to get hydrogen into the system.”

Hydrogen fuel can be used to store and transport energy. There are multiple ways of producing it, including by partially combusting fossil fuels. But under Germany’s National Hydrogen Strategy, adopted in 2020, the government regards only “green hydrogen,” generated with renewable energy, to be sustainable in the long term. 

Green hydrogen is created by using renewably generated electricity to split water molecules in a process known as electrolysis. This hydrogen can then be combined with oxygen in a fuel cell to generate electricity, which produces only harmless water vapor as a byproduct. 

Germany ultimately plans to use hydrogen to power industries that are otherwise difficult to decarbonize, including shipping, aviation and emission-intensive industrial processes. 

“Hydrogen is such a precious thing,” said Franziska Müller, a professor of political science at the University of Hamburg who studies the social and environmental risks of hydrogen production. “In Germany, it’s sometimes called the champagne of the energy transition because it’s so difficult to produce, and so expensive also.” 

The authors of the National Hydrogen Strategy note that Germany will likely have to import much of the hydrogen it will need from abroad.

Grave said the permanent LNG terminals would be constructed to be “hydrogen ready,” but when asked what percentage of the facilities’ components would need to be adjusted, she said she was unsure. She did not give a target date for the switch to hydrogen, saying that Germany was still working on that part of its strategy.

Simon den Haak, a spokesman for the Dutch energy company Gasunie, said that LNG terminals can easily be converted if they are built with hydrogen in mind. Gasunie is a partial owner of a planned onshore LNG terminal in Brunsbüttel, Germany. “Some valves may need to be replaced, but the basic construction of the terminal can be easily adapted,” den Haak said in an email.

But a study published last year by the Fraunhofer Institute for Systems and Innovation Research in Karlsruhe highlights several major barriers to converting LNG terminals to hydrogen terminals. 

Liquefied hydrogen is extremely difficult to transport. It must be kept at minus 253 degrees Celsius to remain a liquid, and to date only one prototype liquid hydrogen import terminal has been built, in Kobe, Japan.

The study found that many parts of an LNG terminal would have to be replaced for it to be capable of handling liquid hydrogen. Even if its storage tank, the most expensive part of the terminal, were built from hydrogen-compatible steel, the study found, components comprising only 50 percent of the initial investment in an LNG terminal could be reused in the conversion.

Another option is to import synthetic natural gas, or SNG, which is made by combining hydrogen with carbon dioxide. Because SNG is chemically identical to conventional natural gas, LNG terminals can be used to import it without any significant alterations.

The synthetic fuel can then be used the same way natural gas is or turned back into hydrogen. 

But to be carbon-neutral, the carbon dioxide used to produce the SNG must come from a non-fossil fuel source like organic waste or be captured from the air. The Fraunhofer study says that carbon-neutral SNG is currently “entirely hypothetical” because of the high costs associated with those processes.

A third option is to import a hydrogen derivative like ammonia, which is produced by adding nitrogen to hydrogen.

The ammonia can then be turned back into hydrogen, used to make fertilizer or burned as its own carbon-free source of power.

Inside Climate News by Christina van Waasbergen, May 12, 2023

ARA Gasoil Stocks at Nine-Week High (Week 19 – 2023)

Independently-held oil product stocks at the Amsterdam-Rotterdam-Antwerp (ARA) oil trading hub rose in the week to 10 May, according to consultancy Insights Global.

A rise in gasoil stocks drove the increase, with inventories reaching their highest since 9 March.

Diesel stocks rose on the week, probably in response to weakened gasoil values, according to Insights Global.

Gasoil inventories grew despite firm demand up the Rhine, with outages continuing to weigh on German supply and export opportunities on this flow facilitated by high water levels and low barge freight rates.

Cargoes carrying gasoil arrived at the hub from India, Saudi Arabia, the UAE, and Italy, while volumes departed for Germany, France, Spain and west Africa.

Gasoline stocks at ARA also rose on the week, probably increased as a result of limited export opportunities to the US, with the transatlantic arbitrage route seemingly unworkable, according to Insights Global.

Demand up the Rhine also weakened on the week, also allowing stocks to build. Gasoline arrived at the hub from France, Portugal the UK and Scandinavia, while smaller cargoes departed for the US, west Africa, Puerto Rico and Germany.

At the lighter end of the barrel, naphtha inventories also rose. Demand from the petrochemical sector up the Rhine was weak, according to Insights Global, as cheaper propane continues to displace naphtha for crackers.

Demand for naphtha into the gasoline blending pool remains firm, according to Insights Global, with stocks ample on weak petrochemical demand.

Georgina McCartney

ARA Fuel Oil Stocks Reach 22-Month High (Week 18 – 2023)

Independently-held oil product stocks at the Amsterdam-Rotterdam-Antwerp (ARA) trading hub gained in the week to 3 May, according to consultancy Insights Global. An uptick in fuel oil inventories drove the increase, with stocks growing on the week.

Fuel oil stocks at the hub have increased because of a lack of export opportunities, according to Insights Global. Cargoes arrived at the hub from France, Germany, Greece and Poland, while smaller volumes departed for Denmark.

Gasoil stocks rose on the week. Inventories may have grown on reduced French demand, as the country brings its refineries back online after strike-related closures.

If the contango on the gasoil futures forward curve steepen, market participants may opt to store product at ARA, potentially pushing stocks up higher in the coming weeks, but at the moment this is not a profitable option, traders said.

Gasoil imports into ARA were firm this week, according to Insights Global, with product arriving from India, Portugal, the US, Qatar and Spain, while volumes left for Argentina, France, Germany and the UK.

Gasoline inventories grew on the week, despite firm demand for product up the Rhine into Germany with local refineries currently offline for maintenance. There was also reports of demand for gasoline by barge into Berlin, according to Insights Global.

Vessels discharged product at the hub originating from Finland, Spain, Sweden Turkey and the UK while volumes departed for France, Germany Spain the US and west Africa.

Meanwhile, naphtha stocks shrunk on the week. Inventories at the hub decreased on strong blending demand for gasoline production.

And while naphtha demand from the petro-chemical sector in Germany was relatively firm, refiners are seemingly turning more to propane as a cheaper alternative, according to Insights Global.

Finally, jet stocks at ARA rose. Demand is expected to grow in the coming months as summer holidays begin.

How Falling Refining Margins Threaten Oil Industry Profits

The oil industry is currently experiencing a somber atmosphere due to falling refining margins, which are a significant indicator of profitability for refiners.

This is in contrast to the record boom seen last year when strong refining margins and high oil prices led to reports of refiners preparing massive performance bonuses to share profits with employees, prompting calls for a windfall tax on refiners.

In 2022, the four major refiners — SK Innovation Co., GS Caltex Corp., HD Hyundai Oilbank Co. and S-Oil Corp. — posted trillions of won in operating profits, with cumulative operating profits of between 2-4 trillion won (US$1.50-3.00 billion) by the third quarter.

However, the refining industry’s first-quarter earnings are expected to not only sharply decline from the same period last year, but also worsen in second quarter.

Refining margins have fallen to around $2 for the first time in about six months, standing at US$2.50 as of March 19, the lowest level in a year.

Last year, the refining margins soared to an average of $29.50 in the fourth week of June, following the onset of Russian aggression in Ukraine.

Refining margins are equal to the price of the final petroleum product minus the cost of raw materials, including crude oil, with between $4-5 generally considered as the threshold for profit.

However, at the current $2 refining margin, running a plant means losing money.

The industry is concerned as international oil prices and refining margins are moving in opposite directions.

The recent announcement of the Organization of the Petroleum Exporting Countries (OPEC) Plus’ production cuts resulted in an increase in oil prices, while refining margins decrease.

Industry insiders have attributed the decline in refining margins to the prolonged global economic downturn, which has decreased the demand for petroleum products.

The refining industry needs increased demand to raise refining margins, but with only supply decreasing, demand is not rising.

The current situation of production cuts and rising oil prices amid a recession is not favorable for the refining industry and could result in negative outcomes for both refiners and chemical companies, as they must pay for crude oil but earn nothing.

Higher oil prices can be a “boomerang” effect that further depresses demand.

It is unclear how long weaker refining margins will last in the face of a prolonged recession.

The move to replenish the U.S. Strategic Petroleum Reserve and the arrival of the summer vacation “driving season” could be positive factors for the recovery of oil demand.

By The Korea Bizwire, May 4, 2023

How to Leverage E&P Expertise for the New Energy Economy

The technology and knowledge base of the E&P sector is poised to play a major role in the newer, lower-carbon energy economy.

The term “new energy economy” broadly refers to the transition to a low-carbon future for sustaining human development while reducing CO2 emissions.

Such a shift is considered to be the third energy transition of the modern era, after the shift from biomass to coal as the primary source of energy in the early 1900s, followed by oil overtaking coal’s dominant position in the 1960s–1970s.

This trend towards decarbonization (i.e., diversification from carbon-intensive fossil fuels to sustainable greener energy feedstocks and carriers) is motivated by the understanding that emissions need to be reduced to moderate the potential impacts of global temperature rise on future climatic changes.

Strategies common to proposed decarbonization pathways include

  • Improving energy efficiency (i.e., slower increase in energy demand compared to GDP/population increase).
  • Increasing energy supply from renewable sources (i.e., wind, solar, geothermal, nuclear) coupled with hydrogen underground storage (HUS) as a way of storing surplus electrical energy.
  • Switching to low-carbon energy carriers (i.e., hydrogen) for end‑use applications in transportation, buildings, and industry.
  • Removing carbon emissions, via carbon capture, utilization, and storage (CCUS), from fossil-fuel-fired power plants and hard-to-abate industrial sources.

The key takeaway for readers is how the two subsurface-oriented decarbonization strategies—CCUS and HUS—are relevant for application/adaptation of expertise from the exploration and production (E&P) sector of the oil and gas industry.

Their rise will be built upon decades of experience with CO2-EOR, gas injection, produced-water disposal, and underground natural gas storage (NGS).

Carbon Capture, Utilization and Storage (CCUS)

As shown in Fig. 1, CCUS involves capturing CO2 from a fossil-fuel-fired power plant or industrial facility and processing it to a practically pure form, transporting it to a nearby geologic storage site using pipelines, and injecting it into saline aquifers for long-term sequestration or depleted oil/gas fields for enhanced oil recovery (EOR) and associated storage.

Research and field demonstration projects over the past few decades have demonstrated that CCUS is a viable technology for curtailing atmospheric CO2 emissions buildup.

Some of the key elements of CCUS projects and their overlap with corresponding E&P expertise are summarized below.

Storage resource assessment. This step involves an estimation, especially during the pre-injection appraisal and permitting phases, of the quantity of CO2 that can be stored in the target formation. It is important to distinguish between (a) volumetrics-type approaches appropriate for deep saline aquifers which can be regionally extensive and hence, akin to infinite-acting reservoirs, and (b) voidage-replacement type approaches appropriate for depleted oil/gas fields which are essentially closed reservoirs.

Also, SPE has recently developed the CO2 Storage Resources Management System (SRMS), analogous to the Petroleum Resources Management System (PRMS), to provide an accepted and recognized system for quantifying, categorizing, and classifying storage resources.

Reservoir characterization. The goal is to understand the spatial extent, boundaries, flow barriers, and rock/fluid properties of the target storage formation. In addition, geotechnical properties of the caprock and overlying seals, location of underground sources of drinking water (USDW), and presence of conductive fractures and faults that could act as leakage pathways or trigger injection-induced seismicity are also important for CCUS projects.

The challenge of data sparsity is generally a concern for saline aquifers, as projects will typically have data only from one dedicated site‑characterization well and perhaps a handful of legacy wells (from oil and gas exploration and/or subsurface waste injection).

Pressure propagation and CO2 plume modeling. As with E&P projects, static and dynamic reservoir modeling are fundamental to operational management of CCUS projects. The metrics of interest are (a) pressure buildup in the injection well, caprock, and storage formation, (b) CO2 plume migration extent, and (c) delineation of the Area of Review, i.e., a region surrounding the injection well where USDW may be endangered because of injection-induced excess pressure buildup.

Conventional geologic modeling and simulation workflows/tools from the oil and gas industry have been adapted and applied for CCUS projects, along with simplified approaches such as sharp-interface models and fractional-flow models, which may be more appropriate for project developers and/or regulators. However, the impact of data sparsity is an important constraint, especially for history matching of models to observational data collected from a limited number of monitoring wells.

Monitoring of reservoir performance. Regulatory guidance for geologic sequestration wells generally stipulates more involved monitoring of system evolution and storage integrity compared to E&P injection wells. Required detailed surveillance involves geophysical surveys, geochemical sampling, geomechanical measurements, and dynamic pressure and temperature sensing in the storage reservoir and caprock. Also, detailed documentation of monitoring, verification, and accounting is needed for receiving tax credits or trading carbon permits.

Hydrogen Underground Storage (HUS)

Fig. 2 depicts the hydrogen value chain, which includes (a) production of green hydrogen from renewable sources or blue hydrogen from fossil-fuel-based sources in conjunction with CCUS, (b) storage in physical containers or underground geologic formations, and (c) end use in industry, transportation, and energy sectors. HUS is particularly attractive for managing the intermittency of renewable power generation and is similar in concept and execution to active underground NGS storage projects in aquifers, depleted oil/gas fields, and salt caverns.

Some of the key elements of HUS projects and their overlap with corresponding E&P expertise are summarized below.

Reservoir characterization/development. The characterization needs for saline aquifers is the same as was discussed earlier, whereas depleted oil/gas fields will have a pre-established database for reservoir characterization. The construction of salt caverns via brine circulation for HUS would be similar to that for NGS, albeit with the needs for better geomechanical characterization and modeling of salt creep, cavern integrity, and fluid leakage.

Well deliverability. The productivity of a hydrogen well can be evaluated using standard NGS well-deliverability equations that include both Darcy and non-Darcy flow components—adjusted for hydrogen properties. Similarly, the common equations for wellbore pressure and temperature changes during injection/production need to be adapted for hydrogen-specific conditions. HUS projects can also benefit from the application of standard workflows from inflow performance and nodal analysis for integrating surface, wellbore, and subsurface elements.

Dynamics of fluid withdrawal. Dynamic modeling of HUS can build on NGS and CCUS tools and experience, but complications caused by high mobility of hydrogen (i.e., gravity segregation, viscous fingering) need to be addressed in simulation design and operational planning. Another challenge is the modeling and management of water up-coning (from aquifers) and hydrocarbon recovery (from depleted oil/gas fields) during hydrogen production. Also, the high levels of hydrogen diffusivity and reactivity (with rock, in situ fluids and bacteria) require assessment of reservoir and caprock integrity using coupled compositional flow and bio‑geo-chemical reactive transport models.

What Skills Need Updating?

We believe that the foundational preparation for the subsurface science and engineering aspects of both CCUS and HUS should come from traditional petroleum engineering and geoscience curricula via core courses in reservoir characterization, wellbore hydraulics, and reservoir engineering. In addition, several specialized courses would be required to address the CCUS and HUS industry-specific needs, as follows.

Foundations of CCUS. CCUS rationale, CO2 capture, pipeline transport, geological storage basics, aquifers vs. depleted oil/gas fields, monitoring, risk analysis, permitting, and global status/outlook.

Foundations of HUS. Hydrogen usage rationale, pipeline transport, geological storage options (salt caverns, depleted gas/oil fields, aquifers), cavern engineering, geological characterization, well deliverability, reservoir mechanics, and risk analysis.

Advanced reservoir science and engineering for CCUS and HUS. Storage resource estimation, source-sink matching, monitoring, verification, and accounting (MVA), well deliverability, injectivity and plume migration models, and pressure and rate transient analysis.

Risk analysis and permitting for CCUS. Risk source identification, consequence analysis, risk management and mitigation, regulatory framework (EPA class VI permitting, EU CCS directive), regulatory compliance, and MVA documentation.

These courses can be incorporated into existing petroleum engineering and/or geoscience curricula as specializations and/or certificate programs.

They can also be introduced in the continuing education marketplace through providers such as training consortia or university extension programs. Some key aspects of CCUS and HUS as compared to typical E&P operations are summarized in Table 1.

Future Prognosis

The pace of the current energy transition will depend on (a) availability of low-carbon technologies deployable at scale, and (b) societal demands linked to cost-benefit considerations.

Given the magnitude of capital inflows required and the complex restructuring of the supply chain, existing oil and gas companies can play a major role from both techno-economic and human capital perspectives.

To that end, we have discussed how relevant E&P expertise can be leveraged to meet the needs of the nascent CCUS and HUS marketplace.

We strongly believe that the capabilities of oil and gas professionals are readily adaptable for such projects with appropriate re-education and training, and our industry can contribute not just with technology but also with skilled manpower.

On a related note, petroleum engineering skills are already being applied to geothermal energy, another emission-free and fully dispatchable power and heat source that will also play a critical role in the energy transition.

In closing, we recognize that the aspirational goals set forth in most decarbonization plans and net-zero scenarios would require a significant switch from fossil fuel to low-carbon sources.

However, with the continued increase in energy demand to improve quality of life (especially in developing countries), energy transition in the near term will most likely reduce to energy diversification as a pragmatic solution.

A variety of energy sources including renewables and fossil fuel (primarily natural gas) will most probably be utilized in conjunction with CCUS and HUS, with CO2-EOR used as a bridge technology in the interim.

As such, the technology and human resource base from the E&P sector is poised to play a vital role in the new energy economy—regardless of the trajectory of low‑carbon pathway adoption.

JPT Journal of Petroleum Technology by Srikanta Mishra, May 2, 2023

Gasoil Stocks at ARA Hit 13-Week Low (Week 17 – 2023)

Independently-held oil product stocks at the Amsterdam-Rotterdam-Antwerp (ARA) trading hub fell fractionally in the week to 26 April, according to consultancy Insights Global. Gasoil stocks fell for a third consecutive week to their lowest since 26 January, driving the downturn.

Gasoil inventories at the hub were down on the week. Shipments of gasoil departed ARA for Argentina, northwest Europe, the US and west Africa while cargoes arrived from Saudi Arabia, Italy and the US. French demand for diesel remains relatively firm, according to Insights Global, reducing European diesel supply.

French gasoil demand has also risen seasonally with agricultural consumption, according to Insights Global.

Gasoline inventories at ARA also fell on the week.

The drawdown was partly because of an increase in German demand with refinery turnarounds reducing domestic road fuel supply.

Ongoing maintenance has hampered production of gasoline and gasoil at BP’s Lingen refinery in Emsland, Shell’s Godorf refinery, and PCK’s Schwedt refinery.

Gasoline arrived at ARA from Estonia, France, Romania and the UK, while volumes left for France, the US and west Africa.

Lower freight rates may have facilitated exports to the US, with clean rates from the UK continent to the US Atlantic coast falling on 27 April, a week earlier.

Naphtha stocks at the hub grew, gaining almost a third.

Imports were firm on the week, with cargoes arriving at ARA from Algeria, the US and Norway while none were exported. Gasoline blending activity at the hub is low, according to Insights Global, allowing stocks to build.

At the heavier end of the barrel, fuel oil inventories at ARA also fell on the week. Bunkering demand has assisted some flows, according to Insights Global.

The Singapore arbitrage route for low-sulphur fuel oil was open last week, according to Insights Global, resulting in a surge of fixtures.

Bucking the trend, jet fuel stocks rose on the week.

Cargoes arrived from Kuwait, while smaller volumes departed for the UK and Finland.

Reporter: Georgina McCartney

Atomic Breakthrough Could Have Huge Implications For Petroleum Refining

University of Wisconsin-Madison chemical engineers have developed a model of how catalytic reactions work at the atomic scale. It should be an advance considered a breakthrough in computational chemistry research. The understanding could allow engineers and chemists to develop more efficient catalysts and tune industrial processes – potentially with enormous energy savings, given that 90% of the products we encounter in our lives are produced, at least partially, via catalysis.

The team published the news of their advance in the journal Science.

Catalyst materials accelerate chemical reactions without undergoing changes themselves. They are critical for refining petroleum products and for manufacturing pharmaceuticals, plastics, food additives, fertilizers, green fuels, industrial chemicals and much more. There are two brief motion videos available in a zip file at this link on the Science abstract page.

Scientists and engineers have spent decades fine-tuning catalytic reactions – yet because it’s currently impossible to directly observe those reactions at the extreme temperatures and pressures often involved in industrial-scale catalysis, they haven’t known exactly what is taking place on the nano and atomic scales. This new research helps unravel that mystery with potentially major ramifications for industry.

In fact, just three catalytic reactions – steam-methane reforming to produce hydrogen, ammonia synthesis to produce fertilizer, and methanol synthesis – use close to 10% of the world’s energy.

Manos Mavrikakis, a professor of chemical and biological engineering at UW-Madison who led the research said, “If you decrease the temperatures at which you have to run these reactions by only a few degrees, there will be an enormous decrease in the energy demand that we face as humanity today. By decreasing the energy needs to run all these processes, you are also decreasing their environmental footprint.”

Mavrikakis and postdoctoral researchers Lang Xu and Konstantinos G. Papanikolaou along with graduate student Lisa Je developed and used powerful modeling techniques to simulate catalytic reactions at the atomic scale.

For this study, they looked at reactions involving transition metal catalysts in nanoparticle form, which include elements like platinum, palladium, rhodium, copper, nickel, and others important in industry and green energy.

According to the current rigid-surface model of catalysis, the tightly packed atoms of transition metal catalysts provide a 2D surface that chemical reactants adhere to and participate in reactions.

When enough pressure and heat or electricity is applied, the bonds between atoms in the chemical reactants break, allowing the fragments to recombine into new chemical products.

Mavrikakis explained, “The prevailing assumption is that these metal atoms are strongly bonded to each other and simply provide ‘landing spots’ for reactants.

What everybody has assumed is that metal-metal bonds remain intact during the reactions they catalyze. So here, for the first time, we asked the question, ‘Could the energy to break bonds in reactants be of similar amounts to the energy needed to disrupt bonds within the catalyst?’”

According to Mavrikakis’s modeling, the answer is yes. The energy provided for many catalytic processes to take place is enough to break bonds and allow single metal atoms (known as adatoms) to pop loose and start traveling on the surface of the catalyst.

These adatoms combine into clusters, which serve as sites on the catalyst where chemical reactions can take place much easier than the original rigid surface of the catalyst.

Using a set of special calculations, the team looked at industrially important interactions of eight transition metal catalysts and 18 reactants, identifying energy levels and temperatures likely to form such small metal clusters, as well as the number of atoms in each cluster, which can also dramatically affect reaction rates.

Their experimental collaborators at the University of California, Berkeley, used atomically-resolved scanning tunneling microscopy to look at carbon monoxide adsorption on nickel (111), a stable, crystalline form of nickel useful in catalysis. Their experiments confirmed models that showed various defects in the structure of the catalyst can also influence how single metal atoms pop loose, as well as how reaction sites form.

Mavrikakis says the new framework is challenging the foundation of how researchers understand catalysis and how it takes place. It may apply to other non-metal catalysts as well, which he will investigate in future work. It is also relevant to understanding other important phenomena, including corrosion and tribology, or the interaction of surfaces in motion.

“We’re revisiting some very well-established assumptions in understanding how catalysts work and, more generally, how molecules interact with solids,” Mavrikakis said.


Its well worth a read of the press release as there are 6 paragraphs of credits for collaborators, and support of funding and resources. It looks like this is a much bigger project than a press release can describe in a few paragraphs.

This work looks like something that time will prove to be very significant. Eight metals were tested in the work and collaboration was running experiments for model confirmation. It looks like a very well thought through program of research.

When this level of importance comes along there is one thing that seems is always missing in the press releases. One does wonder about the hypothesis mentioned above, was that what set this program in motion? If it was, the team got very far along, indeed.

OilPrice.com by Brian Westenhaus, April 25, 2023