IEEJ: October 2005

Northeast Asia Petroleum Forum

Session-6

Technology Trend of Fuelsin the Future
September 22, 2005

Nippon Oil Corporation
Nobuyuki Osawa

NIPPON OIL

1IEEJ: October 2005

ContentsContents
1.Background
9CO2-reduction goal
9Forecast of Oil supply

2.Efforts being made by oil industry
to reduce CO2 emissions
9Efforts to meet the Voluntary action program
made by NIPPON KEIDANREN
9Additional efforts by the industry

3.Development of alternative energy sources
9GTL
9Biomass Fuels (ETBE, BPF)NIPPON OIL

2IEEJ: October 2005

CO2CO2 -- Reduction
Reduction goalgoal inin JapanJapan
Reduction goal of CO2 emissions generated by energy consumption in Japan
CO2 emissions

Source : Agency for Natural Resource and Energy “Energy Demand and Supply Outlook for 2030”(million tons CO2)

【BaU case 】
1,174

1,048
【Target set in the Kyoto Protocol】
1,056million tons-CO2

1990Fy2002Fy2010FyNIPPON OIL

3IEEJ: October 2005

Production
Production Scenarios
Scenarios ofof Crude
Crude
millionBD

Long-Term World Oil Supply Scenarios by EIA

200
175
150
125

USGS Estimates of Ultimate Recovery
New Field
EORGTL
Biomass
Shale OilTar SandProbability
Ultimate Recovery, BBls
LOW (95%)
2,248
Mean (expected value)
3,003High (5%)
3,896

100
75
502501900

1925

1950

1975

2000

2025

2050

2075

2100

NIPPON OIL

4IEEJ: October 2005

ContentsContents
1.Background
9CO2-reduction goal
9Forecast of Oil supply

2.Efforts being made by oil industry
to reduce CO2 emissions
9Efforts to meet the Voluntary action program
made by NIPPON KEIDANREN
9Additional efforts by the industry

3.Development of alternative energy sources
9GTL
9Biomass Fuels (ETBE, BPF)NIPPON OIL

5IEEJ: October 2005

CO2---Voluntary
VoluntaryActions
Actionsby
byPAJ
PAJ(1)(1)
CO2 Reduction
Reduction --Energy- saving at Refineries<TARGET>
Energy consumption ratio -10%

FY 1990
Base Year

FY 2010Target Year

FY 2003
Achieved

10.19

9.17

8.87

Energy Consumption Ratio*

Energy consumption ratio* Energy consumption in KL (crude oil equivalent) /Crude oil processed in thousand KL

10.5
10.0

<Countermeasures>

TargetTarget
9.17
9.17

9.5

Promotion of heat recovery
9Heat exchangers
9Flare gas recovery

9.0

Optimization of equipments
9Heat management among equipments
9Promotion of computerization

8.58.0
1990

1992

1994

1996

1998

2000

2002

FY
NIPPON OIL

6IEEJ: October 2005

CO2---Voluntary
VoluntaryActions
Actionsby
byPAJ
PAJ(2)(2)
CO2 Reduction
Reduction --Optimization of Transportation<TARGET>
Fuel consumption -9%

Transportation fuel consumption

Fuel Saving<Fuel Consumption>

FY 1990
Base Year

FY 2010Target Year

FY 2003
Achieved<1,510Mkl>-140Mkl<1,370Mkl>-80Mkl
<1,430Mkl>

Mkl
1,600

<Countermeasures>

1,550

Lorry, Tanker
9Large scale freight
9Efficient loading
9Product exchange

1,500
1,450
1,400

TargetTarget1,370Mkl
1,370Mkl

Oil terminal
9Joint management

Fueling station

1,350

9Large scale storage
9Joint transportation,
9Night/Holiday delivery

1,300
1997 1998 1999 2000 2001 2002 2003

FY
NIPPON OIL

7IEEJ: October 2005

CO2---Voluntary
VoluntaryActions
Actionsby
byPAJ
PAJ(3)(3)
CO2 Reduction
Reduction --Consumers ----- diffusion of co-generation<TARGET>
Energy saving -1,400Mkl
Energy Saving<Co-generation diffusion>
1990

Mkl

1997

1998

FY1990Base Year

FY2010Target Year

FY2003
Achieved<1,140MkW>-1,400Mkl<5,000MkW>-850Mkl<3,250MkW>

19992000200120022003

FY

Energy Saving

0-500-1,000TargetTarget-1,400Mkl-1,400Mkl-1,500NIPPON OIL

8IEEJ: October 2005

Sulfur“Theroadroadto
toSulfur-free”
Sulfur-free”
Sulfur Standards
Standards inin Japan
Japan “TheGasoline

〜〜

N/A

1.2%

〜
〜 0.5%

0.01%（100 ppm)

0.005%（50 ppm)

1996

2005

0.001%(10 ppm)"Sulfur free"

2008

0.2%

Voluntary introduction of“Sulfur- free” by Japanese oil
industries in 2005 --- the top
runner in the world.

Diesel

0.05%

1953

1976

1992

1997

0.001%（10 ppm)

0.005%（50 ppm)"Sulfur free"

2005

2007
NIPPON OIL

9IEEJ: October 2005

CO2---Additional
Additionalefforts
effortsby
bythe
theindustry
industry
CO2 Reduction
Reduction --Introduction of Sulfur-free gasoline and diesel
2 million ton of CO2 reduction is achievable infive years after the introduction of sulfur-free fuel.
Increase

400

CO2 Increase atRefinery(2 million ton per year)

CO2 emission

200

Decrease

0
Automotive CO2 reduction
The rate of reduction will
increase year by year along with
the introduction of highperformance vehicles.
Sulfur-free is necessary for highperformance vehicles.

-200-400-600
Year

12345678(2005) (2006) (2007) (2008) (2009) (2010) (2011) (2012) (2013)
Sulfur-freecompleted

Reference:JCAP2NIPPON OIL

10IEEJ: October 2005

“Sulfur-free”“Sulfur-free” toto “Diesel“Diesel Shift”
Shift”WTW Energy Efficiency%Introduction of“Sulfur-free” diesel fuel18

CO2 emission from refinery(Thousand ton – CO2)0-200

Development of “Clean Diesel”
with advanced technology

16

Gasoline:61million kl
Diesel:40million kl-400-600

14-800Clean up the image“Diesel is dirty”

12-1,000-1,200-1,400

10GasolineDiesel

Reference: METI

ＣＮＧ

The popularization of diesel vehicle
with excellent fuel economy“Diesel Shift”

Gasoline:57million kl
Diesel:44million kl-1,600-1,800

Reference: PAJ
Gasoline decrease
Diesel increase

CO2 Reduction estimation by JARI and PAJ
Vehicle: 2 million ton reduction with 10% enhancement of diesel passenger vehicle ratio
Refinery: 1.7 million ton reduction with 10% increase of diesel fuel production to replace gasoline
NIPPON OIL

11IEEJ: October 2005

Contents
Contents
1.Background
9CO2-reduction goal
9Forecast of Oil supply

2.Efforts being made by oil industry
to reduce CO2 emissions
9Efforts to meet the Voluntary action program
made by NIPPON KEIDANREN
9Additional efforts by the industry

3.Development of alternative energy sources
9GTL
9Biomass Fuels (ETBE, BPF)NIPPON OIL

12IEEJ: October 2005

Development of New GTL Technology
Syngas Production
Natural Gas（CO2 20％）

SulfurRemovalHydrocracking
SyngasProduction

FTSynthesis

CO2 Reduction: 5%(Symgas section)

CO2/Steam Reforming
No need for :-CO2 Removal-O2 Generator-Syngas Conditioning
Capex: 85% of ATR

FT Synthesis
Own TechnologyHydrocracking

Existing Process
Natural Gas（containing CO2 ）Own Technology

CO2Removal
SulfurRemovalHydrocracking
Syngas

OxygenAir Generator

Production

FTSynthesis

SyngasConditioning

Syngas Production
ATR (Autothermal Reforming)
Partial Oxydation
NIPPON OIL

13IEEJ: October 2005

GTL,
“Liquefaction”
GTL, ATLATL andand CTL
CTL “Liquefaction”
Asphalt to Liquid “ATL”

Asphalt
Gasification

Gas to Liquid“GTL”

Natural Gas

Hydrocracking

Synthetic Gas

CHC

Wax

H

Fisher-TropschO

Reformulation

Liquid Fuel
NaphthaKerosene
Diesel Fuel

Gasification

Coal

Coal to Liquid “CTL”
NIPPON OIL

14IEEJ: October 2005GTL
GTL Plant
Plant Construction
Construction Plans
Plans“GTL Plant Construction and Operation Plans”
2004

2005

Shell - Malaysia
12.5MBD
Sasol – South Africa
105MBD
PetroSA - South Africa
30.2MBD

2006

2007

Sasol - Qatar
34MBD
Sasol - Nigeria
34MBD

2008

2009

2010

2011

Sasol - Qatar 66MBD
Shell – Qatar 70MBD
Conoco – Qatar 80MBD
Blue: Constructed
Red: Plan

The capacity in total will reach 450MBD in 2010,equivalent to 18 million kl as diesel fuel--- only 3% of OECD demand.
Products will be supplied to EU ---- very small amount of products left for Asia?
Automotive fuels are “Sulfur-Free” in Japan.
GTL has little advantage in view of low sulfur property.

GTL is the candidate of automotive fuel diversity in a long-term.
---Meaningless as the countermeasure for environmental concerns in near-term
NIPPON OIL

15IEEJ: October 2005

Biomass,Biomass, Why?
Why?

For agriculture industries
Economic revitalization

Own energy supply
sourceWhy in the US, EU and Brazil
CO2 reduction
For agriculture industries ?
Economic revitalization?

Own energy supplysource?

CO2 reduction?

≠Why in Japan?

The reason
in the US, EUand Brazil etc.
Why in Japan?
NIPPON OIL

16IEEJ: October 2005

Concerns
Concerns withwith Ethanol-contained
Ethanol-contained Gasoline
Gasoline
Energy Security, Cost
Import = Brazil is the only one candidate---- Lack of confidence in energy security
30-50¥/L @CIF --- High cost
Domestic Production = Under development
In the case of production from waste of buildings= the cheapest way Cost: over 100¥/L
Raw material availability: 0.9million kl/Y as ethanol

Distribution
Ethanol must be blended at the very end of distribution= To prevent water contamination, phase separation
Ethanol corrodes certain kind of materials.
----- Cost of new facility construction: over ¥330 billion
Very difficult to observe “Fuel quality maintenance low”

The effect of CO2 reduction
55-87% “WTW” CO2 reduction(100% as the Kyoto protocol rule)
CO2 reduction cost : over 10,000¥/t-CO2---CO2 market: 1,300¥/t-CO2

Product Quality
Vapor Pressure : 5-7 kPa increase= Increase of Evaporative emission
Aluminum corrosion with over 3%ethanol blend
Exhaust emission: Increase of NOxand aldehyde
NIPPON OIL17IEEJ: October 2005

ETBEETBEFCC C4 fraction

ETBE Production

Composition

iso-butene 13%

Iso-butene
C4H8n-Butene 34%4＋Ethanol

ETBE

C2H5OHC2H5OC4H973

Butane 50%

Butane(C4H10)

Isomerize
de-hydrogen

iso-butene

Comparison of ETBE with Ethanol
CO2 Reduction: Almost the same using the same amount of ethanol, ethanol 3% = ETBE 7%
Energy security, cost : Concerns of raw ethanol are the same. ETBE production facilities are necessary.
Distribution: No problem
Product quality： No vapor pressure increase
The same with the effect on exhaust emission
The influence on ground water has to be proven. (US-problem, EU-No problem)
NIPPON OIL

18

IEEJ: October 2005

Bio-diesel
Bio-diesel Trend
Trend inin thethe world
world
<EU>
Production, thousand ton<US>2004 Production Capacity

BDF Price:0.6$/L

Soybean, 2%
others, 2%
Sunflower,13%
Rapeseed,83%

2004 Production

Austria
Germany France Italy

Raw material: Soybean
Production:103 thousand ton (2004)
1,100 thousand ton (2005 estimation)
BDF Price: 0.7$/L

SwedenDenmark UK

Reference: METISpain

BDF Tax incentives0 .0

Germany

FranceItaly

AustriaUS<Brazil>$/L- 0 .2- 0 .2 6- 0 .4- 0 .6- 0 .8- 0 .4 0- 0 .5 7- 0 .3 8- 0 .4 9

Raw material: Soybean, Palm
Production:
720 thousand ton (2005 estimation)
NIPPON OIL

19IEEJ: October 2005

BDF
Rawmaterialmaterialavailability,availability,CostCost
BDF Concerns
Concerns Raw
Raw materials production

Production per area

Production, million ton/year

30

4.025
Others 3.020

Nige ria 0.815

In don e sia
7 .7t/ha 3.02.0

Ch ina 3 .5
Brazil 4.5

105

Others 11.5

Palm oil has the biggest
production/area ratio.

Others 6.1

1.0
Malaysia
1 2 .0

US 8 .5

In dia 1 .6
Ge rman y1 .8
Ch in a 4 .50.0

パーム油 Cotton
綿実油 Rapeseed
菜種油 Sunflower
ひまわり油 大豆油 落花Peanut
生油
PalmSoybean0Palm oilSoybean oil

Reference: PEC

Rapeseed oil

Reference：Oil World Annual 2002

Cost of Palm BDF: ¥60-70/L CIF Japan（PEC estimation）

NIPPON OIL

20IEEJ: October 2005

Contact: report@tky.ieej.or.jp

NIPPON OIL21