INDUSTRY ANALYSIS
How is the industry preparing for the future of fuel ?
WITH BP ’ S RECENT ANNOUNCEMENT THAT PEAK OIL MAY HAVE ALREADY BEEN REACHED IN 2019 , AND THAT THE INDUSTRY MAY HAVE ENTERED A PERIOD OF PRECIPITOUS DECLINE , WE TAKE A LOOK AT THE STEPS THAT PRODUCERS , REFINERS AND LOGISTICS PROVIDERS HAVE ALREADY TAKEN TO SECURE A FUTURE FOR FUELS AND HOW THIS IS AFFECTING THE BUYING HABITS OF THEIR CUSTOMERS AND END USERS .
Big shift in the way big oil thinks about renewable energy With the already intense pressure to decarbonise ramping up further this year , it is no surprise to see the big players evolving to ensure their place in the future of fuel .
Seemingly daily statements see oil companies repositioning themselves as energy players , as they increase their investment in low-carbon activities and reassure investors that their future lies in being part of the solution rather than the problem .
In one such recent development , both BP and Shell have formed a partnership with Microsoft , which sees them supplying renewable energy and receiving digitalisation solutions in return .
Lux Research analyst , Harshit Sharma commented on the partnership , highlighting that this displays a big shift in the way big oil thinks about renewable energy ;
“ Microsoft has partnered with both BP and Shell to help achieve its goal of using 100 % renewable energy by 2025 . As part of the agreement with BP , Microsoft will facilitate BP ’ s digital transformation and set up co-innovation efforts in smart cities and IIoT , while BP will supply Microsoft with renewable energy .
“ In the partnership with Shell , the energy major will supply Microsoft with renewable energy , while the duo will work on AI solutions to drive worker / on-site safety and higher efficiencies to reduce Shell ’ s emissions . Clients should view these partnerships as a sign of things to come from oil companies .
“ As the energy transition solidifies , more oil companies will transition to energy players , ramping up their low-carbon businesses .”
Energy providers , not just oil refiners Reflecting the reinvention of BP and Shell as energy players , refiners are also transitioning from oil refiners to energy providers in a journey that , for many , began a long time ago .
Valero , for example , is well known as the largest global independent refiner with 15 petroleum refineries in the UK , Canada and U . S ., but it is also the world ’ s second largest renewable diesel and corn ethanol producer .
Across the pond , Valero ’ s renewable diesel segment includes the operations of Diamond Green Diesel Holdings LLC ( DGD ) with an approximately 18,000-barrel-per-day plant next to the Valero St . Charles Refinery at Norco , Louisiana , that produces renewable diesel fuel from recycled animal fats , used cooking oil and inedible corn oil . The company is America ’ s largest renewable fuels producer , strengthening the company ’ s image as more than just a manufacturer and marketer of petroleum products .
Also in the States , Chevron recently announced a joint venture with Brightmark LLC to own projects across the U . S . to produce and market the renewable natural gas ( RNG ) dairy biomethane .
Andy Walz , president of Americas products for Chevron , commented ;
“ Chevron is committed to improving how affordable , reliable , ever-cleaner energy is developed and delivered , investing in companies addressing GHG emissions and progressing lower-carbon technologies … this investment builds on our other RNG initiatives ,
such as our joint venture with California Bioenergy and our Adopt-a-Port initiative with Clean Energy Fuels .”
In August , Phillips 66 became the latest in a string of U . S . refiners to announce the conversion of an oil refinery in California into a biofuel plant . Its 120,000 barrel-a-day Rodeo refinery near San Francisco will become the world ’ s biggest plant making renewable diesel , as well as gasoline and jet fuel , out of used cooking oil , fats , greases and soybean oils . The announcement came about a week after fuel giant Marathon Petroleum Corp . said that it may convert two refineries into renewable diesel plants and , in June , HollyFrontier Corp . said it would turn its Cheyenne , Wyoming , refinery into a renewable diesel plant by 2022 .
It ’ s often been said that where America leads , the world follows , and the changes being seen , particularly on the West coast , have a certain resonance for Europe where there is a significant surplus of refinery capacity , which isn ’ t going away and will probably increase . Conversion to a bio-refinery offers an alternative option to closure and substantial asset write-down but at a price . Total ’ s conversion of its Grandpuits , France refinery to a zero-crude platform is anticipated to cost
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