Impact 1 2015

Tough questions on technology: Vice President Christophe Boulanger under the spotlight

Helping an Italian refinery to reinvent itself

How US growth in light tight oil is opening up opportunities

KEEPING THE PEDAL TO THE METAL ON INNOVATION

ISSUE 1, 2015

Shell Global Solutions

2 impact issue 1, 2015

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CONTENTS

IN THIS ISSUE

COMMENT 3 Christophe Boulanger discusses the importance of innovation

BUSINESS4 ASKING TOUGH QUESTIONS ON TECHNOLOGY Christophe Boulanger describes how Shell Global Solutions is helping customers to address their most pressing issues and enhance their competitiveness

8 REMAINING COMPETITIVE IN A VOLATILE MARKET Combat low oil prices with robust strategies for optimising and improving refinery economics

10 A WORLD OF OPPORTUNITY FOR REFINERS Dramatic growth in the production of light tight oil in the USA is opening up opportunities for other markets to access displaced volumes

12 PEOPLE MAKE PROJECTS Vice President of Integrated Gas Projects for Shell Hilary Mercer’s views on meeting the energy challenge

TECHNOLOGY INSIGHTS14 UNLOCKING THE WORLD’S COAL RESERVES How technology has opened the doors to the most widespread energy resource

PRODUCED BY MARKETING AND SOLUTIONS DEVELOPMENT

EDITORMergyla van Uytrecht Tel: +31 70 447 8007Email: [email protected]

CONTACTEmail: [email protected] Visit our website at www.shell.com/globalsolutions

16 FROM THE INSIDE OUT Choosing the right reactor internals can help refiners to improve catalyst utilisation and cycle life, and reduce maintenance activities

CASE STUDY18 HIGHLY TAILORED SOLUTION Co-operation helps IPLOM’s hydrocracking unit to exceed expectations

20 UNLOCKING POTENTIAL WITH HYDROGEN Bharat Petroleum’s Mumbai refinery adds to its bottom line by optimising its diesel hydrotreater with its own readily available hydrogen

www.shell.com/globalsolutions 3

COMMENT

These are undoubtedly tough times for refiners and petrochemical operators, which are facing eroding margins through intense competition. Many are desperately asking for new, innovative technologies – and looking at technology licensors to see how they can help.

In this regard, I believe that the outlook is good. Tough times provide a powerful stimulus for creativity and out-of-the-box thinking, and history shows that breakthrough innovations often come when the need is greatest.

At Shell Global Solutions, we recently intensified our research and development efforts to ensure that our technology offerings meet our customers’ future needs. As I discuss on page 4, we have established a strong track record of developing breakthrough new technologies and rigorously improving existing ones.

But, of course, innovation is about much more than research carried out in laboratories on molecules. We have also achieved success in working with customers to apply our technologies in highly tailored or innovative new process configurations that unlock extra value from their operations. The articles on the following pages demonstrate this.

Take Hyundai Oilbank, for example, which built a base oil manufacturing plant next to its Daesan refinery in South Korea to exploit this high-margin product stream, or Grupa LOTOS in Poland, which installed a hydrocracker at its Gdańsk refinery to upgrade extremely difficult-to-process deasphalted oil (page 4). Then there is IPLOM, which invested in a new hydrocracker at its Busalla refinery in Italy and has substantially enhanced its bottom line, despite having to overcome several technical constraints (page 18).

These are terrific reference projects because those customers displayed highly creative, innovative mindsets; in some cases, they completely rethought their business fundamentals.

There was another common denominator, too: an open, collaborative culture between our customer and us. We worked together to shape the project, an approach that is often particularly successful.

Now, perhaps more than ever, oil and gas companies need innovative new technologies to unlock margin improvements. Therefore, we are keeping our pedal to the metal and innovating both in our laboratories and on our customers’ sites. Experience shows that when our customers also have a highly innovative and creative attitude, together, we can push the boundaries of what their business can achieve.

CHRISTOPHE BOULANGERVICE PRESIDENT, STRATEGIC CUSTOMERSSHELL GLOBAL SOLUTIONS

TOUGH TIMES PROVIDE A POWERFUL STIMULUS FOR CREATIVITY AND OUT-OF-THE-BOX THINKING, AND HISTORY SHOWS THAT BREAKTHROUGH INNOVATIONS OFTEN COME WHEN THE NEED IS GREATEST.

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ASKING TOUGH QUESTIONS ON TECHNOLOGY{

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These are tough times for refiners and petrochemical operators. Many are experiencing profit challenges arising from industry overcapacity, crude price volatility and changes in feedstock availability or product specifications and legislation. In a special interview, Impact asked Christophe Boulanger, Vice President, Strategic Customers, Shell Global Solutions, what steps his

organisation is taking to ensure that it can continue to help customers to address their most pressing issues and enhance their competitiveness.

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Impact: With volatile oil prices, swinging refining margins and huge overcapacity in the sector, many refiners are finding things to be extraordinarily competitive. Is there a particular technology or process configuration that you would recommend?

If only it were that easy. Every operator’s circumstances are unique – in scale, complexity, crude diet, location and product demand, to name a few. They can also have a wide range of objectives.

For instance, although it is common for refiners to strive to maximise the yield of higher-value middle distillates and reduce bottoms, some of our customers have actually been going the other way. Last year, we worked with Hyundai Oilbank in South Korea to implement our base oil technology. That has been such a successful investment that we have gone on to help them to adjust their configuration to reduce middle distillates in favour of additional base oil production.

The point that I am trying to make is that the solution that will be most appropriate for a business will be a customised one. When developing customer-specific solutions, we believe that the skill lies in ensuring that we combine the customer’s experience and expertise with those of our technical consultants.

Impact: How do you do that though? How do you bring together distinctive viewpoints without compromising the design?

You are right, that interaction is a key area where value can be won or lost. We have our own approach to technical collaboration that sees both parties working together to identify and evaluate the widest possible set

of options. We call it co-creation. One of the reasons it adds value is that it ensures that the customer’s business objectives are carefully considered when building the solution.

Impact: Can you provide an example?

I would like to take a case from the gas sector because it illustrates the idea very nicely. We recently developed a sophisticated, integrated line-up of multiple licensed gas processing technologies for the Jambaran–Tiung Biru project in Central and East Java, which is a joint venture between PT Pertamina EP Cepu, Mobil Cepu Ltd and local government.

It was a technically demanding project because the feed gas has a highly complex composition but we were able to meet the required specification. In addition, by using Shell Sulfinol*-X technology, which uses a second-generation solvent that can lead to process line-up simplification, we helped to unlock capital cost reductions.

But what really demonstrates the concept of co-creation is the timeline that we achieved. During the initial discussions, it quickly became clear that schedule was the customer’s strategic priority, so we identified an opportunity for an alternative approach to sequencing the activities around the project critical path that helped to accelerate the schedule by some 15 weeks. It was a tremendous example of customer service.

Impact: The energy industry needs groundbreaking technologies more than ever. What game-changing technologies has Shell developed?

I could name so many! There is gas-to-liquids technology, for instance, that

enables us to produce high-quality liquid transport fuels from natural gas and is enabled by 3,500 Shell patents. In the exploration arena, our wide-azimuth surveys have led to the discovery of four major fields in the Gulf of Mexico and added hundreds of millions of barrels of oil to the resources in the region.

Impact: What about technologies for the refining and petrochemical industries?

Our reactor internals provide a good example because they have improved the performance of so many of our customers’ hydrotreaters and hydrocrackers. We have now delivered these in more than 500 units, most of which are in non-Shell facilities.

We see a lot of underperforming units at customers’ sites. Perhaps they have pressure drop or maldistribution issues, but, invariably, installing our internals helps to stabilise the unit and results in better yields, longer cycle lengths and reduced hydrogen consumption.

Impact: But Shell has been selling reactor internals for almost 30 years, are these not old technology?

Reactor internals are indeed a mature technology but we have been incredibly successful at making incremental improvements, year after year, in this arena. The cumulative effect of these is very significant, because the performance they provide now is on another level compared with what the first generation delivered. We are continuing to improve them.

Some companies rebrand their processes every few years, even though they are offering basically the same technology. But, at Shell Global Solutions, we have always aggressively



pursued performance improvements and implementing these into our existing technologies.

Impact: What is your approach to finding such improvements?

As well as licensing to non-Shell facilities, we also provide our technologies to Shell operating plants and that gives us invaluable operational feedback. Essentially, after designing and delivering a technology, we monitor its performance in these real-world situations and challenge ourselves to improve the design.

Impact: Can you provide any examples?

Let us take the high-dispersion trays that are a key part of the reactor internals package. We created these back in 1990 when Shell refineries were having difficulties in meeting the 500-ppm sulphur diesel specification – not the 10-ppm sulphur specification that is in play in many parts of the world now, but 500 ppm!

Our technologists did some reactor scans involving the old internals. They added radioisotopes to the liquid phase and saw that more than half of the catalyst was not being used. Essentially, this confirmed that the chimney tray technology that was the standard at that time was brutally inefficient in terms of liquid distribution to the catalyst bed. That led us to develop the high-

dispersion trays, which can achieve almost 100% utilisation of the catalyst, and immediately there was no problem meeting the sulphur specification. Soon after that, we began to license such technologies to businesses outside Shell.

The reactor internals were initially developed in response to the challenges that Shell was seeing in its own operating units and now non-Shell businesses also benefits from that innovation in our licensed unit designs. That is the origin of most of our technologies.

Impact: The performance of a reactor system is also a function of the catalysts. What improvements have you made there?

The innovations in catalysis made by our catalyst businesses Criterion Catalysts & Technologies (Criterion) and CRI Catalyst Company (CRI) have been staggering. For instance, in hydroprocessing in the last 10 years, Criterion’s scientists have unlocked catalyst activity increases that are some three times greater than those achieved over the previous 20 years. Similarly, CRI has improved

its ethylene oxide catalyst year on year; at one point, its selectivity had seemingly plateaued at about 70% but it is now a remarkable 90%.

Impact: Can you tell us about any of your current research and development programmes?

As you would expect, much of what we spend our innovation budget on is commercially sensitive, but one work stream I can tell you about is base oils. There is a global trend away from Group 1 towards Group 2 or 3 base oils. Consequently, in support of Shell’s own lubricants business, we are continuing to invest in our catalytic dewaxing and hydrofinishing technologies, as these are essential for the production of such base oils. Moreover, as I mentioned earlier, we have licensed this technology outside Shell, for example, to Hyundai Oilbank.

Another focus area is optimising integration in schemes that combine a hydrocracker, a high-vacuum unit and an advanced solvent deasphalting technology licensed by KBR called the Residuum Oil Supercritical Extraction process (ROSE®).

BUSINESS

WHEN DEVELOPING CUSTOMER-SPECIFIC SOLUTIONS, WE BELIEVE THAT THE SKILL LIES IN ENSURING THAT WE COMBINE THE CUSTOMER’S EXPERIENCE AND EXPERTISE WITH THOSE OF OUR TECHNICAL CONSULTANTS.

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Impact: That was the line-up Grupa LOTOS’s Gdańsk refinery used I believe.

Yes, that is right. We worked with Grupa LOTOS a few years ago on a residue upgrading project that broke new ground by sending deasphalted oil, which has traditionally been used as a fluidised catalytic cracker feed owing to its high metals content, to a newly installed Shell hydrocracker.

This has been attracting a lot of attention in the industry, especially because it is dispelling the misconception that hydrocracking deasphalted oil means low reliability. Grupa LOTOS’s hydrocracker is now running at above 90% conversion processing an extremely difficult feedstock and has passed its initial three-year cycle. It is a huge success story. We have been directing a lot of resources to improving the technology because it offers such a compelling residue conversion solution for customers.

Impact: Do you measure customer satisfaction?

Absolutely! We have been doing a lot of work recently to ensure that best practices and key lessons learned are shared across the business so that really good customer service like that at Grupa LOTOS, Jambaran and Hyundai is replicated. Likewise, if we score poorly, we have systems in place to


For more information contact:Katie BaverstockEmail: [email protected]

*Sulfinol is a trademark owned and used by the companies of the Shell Group.

ROSE is a trademark of KBR Inc.

resolve the issue with the customer, to share it widely internally and to prevent it from happening again.

In fact, customer satisfaction is a key focus area for me. A few years ago, I was involved in a major initiative that saw Shell’s Downstream organisation rise from a middle-of-the-pack benchmark in terms of customer satisfaction to best in class. It was an incredibly successful journey and I am keen to transfer the lessons learned from that into Shell Global Solutions.

We are now doing a lot of work to change our processes, including implementing a feedback loop to enable us to tap into the insights that we get from customers, and to continuously improve how we do business. We use any insights to improve our service and benefit our customers.

Impact: How will that benefit your customers?

In two ways. First, gaining these insights helps us to improve the service and the technologies that we offer. Second, and more directly, the completed customer satisfaction surveys have been facilitating useful discussions between customers and their account managers about more effective collaboration.

Impact: Finally then Christophe, what, in your opinion, differentiates Shell Global Solutions from other technology licensors?

Our approach to co-creation is key, as is our intense focus on customer service. We do not come with a catalogue of things that you can buy; substantial value can be captured in the up front collaborative piece of work that helps customers to identify and evaluate opportunities.

Our innovation track record is also extremely important. As I explained, the cumulative effect of continual, incremental performance improvements cannot be overestimated. Our position as an owner–operator is critical to this because our innovations are often actually the application of lessons learned through supporting Shell’s global downstream network.


REMAINING COMPETITIVE IN A VOLATILE MARKET

Crude prices remain volatile and feedstocks are becoming more difficult to process. Refinery

utilisation rates are also set to fall in the coming years to about 80% from a 20-year average of about 85%. This means refiners must be able to generate cash at these lower levels of utilisation.

To combat these market challenges, refiners should develop robust strategies to help them prosper and remain competitive. Across the globe, flexibility is the buzzword.

“The market is very volatile and refiners that are inflexible will lose out to the competition,” explains Hilde van der Pas, Principal Customer Account Manager, Shell Global Solutions, Asia Pacific. “It is important that refiners look at the flexibility they have in their assets and consider how to capture new market opportunities. For example, the drive has been to focus on middle distillates and volume gain, but in the current economic climate, there is also considerable margin to be gained from the bottom of the barrel if you are smart.”

Utilising bottom-of-the-barrel products is just one way refiners can look to improve their bottom line. Other so-called quick-win technical solutions that maximise the utilisation of existing assets are also available to combat economic uncertainty. For example, Criterion Catalysts & Technologies recently helped Bharat Petroleum to generate significant gains at its Mumbai refinery by utilising previously unused hydrogen to saturate the aromatics in its diesel hydrodesulphurisation unit. By changing the catalyst system and switching the operating mode of

the hydrodesulphurisation unit, Bharat Petroleum can now produce more higher-quality diesel (see page 20).

However, getting more out of a catalyst can be, in some cases, even simpler than altering the system to change the way a unit runs. More benefits are available by just optimising the existing catalyst. “If you monitor your catalyst’s performance properly and find that it has life remaining, you can develop strategies to utilise that remaining life fully before the next change-out. These are things refiners can do easily, but they require awareness of performance,” explains van der Pas.

Matching crude to capacityFlexibility is also necessary back at the feedstock level. Matching crude supply with cracking capacity appears to be key. “Installed cracking capacity in itself is not a guarantee of success. Refiners need to have the flexibility to optimise their crude and feedstock in changing markets to maximise their ability to create volume,” says van der Pas.

Processing high API crude in a complex refinery can lead to a low net cash margin. Blending or reconstituting crudes can unlock more value here. As there is no single golden rule for choosing a crude supply or cracking capacity, refiners need to take a flexible approach and to respond appropriately to whatever the market is doing.

Stock managementThis need for flexibility also goes through to the other end of the refining process,

where some refiners could look to free cash by optimising stock levels according to market demand.

“There is room for most refiners around the world to reduce their stocks,” says van der Pas. “For example, in Asia Pacific, the top-performing refineries are carrying between three and seven days less stock than average, which frees $60–120 million over the recent crude price cycles.”

However, it is important that refiners take a risk-based approach to stock

Combat low oil prices with robust strategies for optimising and improving refinery economics

BUSINESS

optimisation and consider costs of stock out, unit slow down, demurrage and working capital carrying before making any changes.

Refiners should also consider supply chain variability, demand forecast reliability, service level agreements and borrow-and-loan agreements when determining their ideal stock levels. “Refiners need to do all of this in concert with fine-tuning their entire supply chain,” adds van der Pas.

Against this, research suggests that some refineries still have a significant portion of available storage capacity, which could provide an opportunity to rationalise tankage to reduce maintenance costs, use the capacity for strategic storage or reallocate tankage for even lower stocks.

“It is important to remember that optimum and minimum stock levels are not the same thing and that optimum stock levels are seldom within a refinery’s control,” stresses van der Pas.

Selective cost cutting and investmentThe ultimate goal for pursuing any or all of the above measures is to generate more income for a refinery.

A refinery can also boost its bottom line by simply reducing the losses associated with downtime. “Losing a couple of days of operations due to unscheduled maintenance work costs an enormous amount of money, so asset reliability is of the utmost importance,” says van der Pas.

Cutting running costs is also key, as long as it is not to the detriment of production levels. Shell Global Solutions can help refiners to cut costs on one of their biggest bills – energy consumption.

“Reducing energy consumption is a top priority in several countries, and the energy bill is the largest in a refinery. Carrying out energy assessments to identify how refineries can reduce energy consumption is therefore a very helpful tool,” van der Pas explains.

Cutting running costs and losses through improved asset reliability, along with technical optimisation, can help to boost overall profitability. However, it is important that refiners are not afraid of spending money on bigger investments if they will pay off in the long term.

“Top-quartile refineries spend more than average on both energy and catalysts, but they spend money where it will make them money. Cost excellence is in the DNA of top-quartile refineries, but it does not mean cost minimisation,” says van der Pas.

With so many options available to refiners around the world, remaining flexible and open to change is vital to capitalising on opportunities and remaining competitive in a volatile market.


For more information contact:Stuart Cooney Email: [email protected]

IT IS IMPORTANT THAT REFINERS LOOK AT THE FLEXIBILITY THEY HAVE IN THEIR ASSETS AND CONSIDER HOW TO CAPTURE NEW MARKET OPPORTUNITIES.

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Dramatic growth in the production of light tight oil in the USA is opening up opportunities for other markets to access displaced volumes providing that they are flexible enough to handle a wider variety of crudes

The outlook for US refiners looks promising. The advent of hydraulic fracturing and horizontal directional

drilling has unlocked, according to US Energy Information Administration estimates, at least 55 billion barrels of recoverable tight oil reserves. The country’s long-standing oil export ban should ensure that domestic operators will reap the rewards of processing these sweeter crudes. The fallout of this stretches much further afield, however, with global volumes previously absorbed by the US market now needing new homes.

West African crudes have already been displaced and Latin American and Middle Eastern volumes could well follow suit. “As Middle Eastern grades tend to be

priced competitively against US Gulf Coast grades, it is not expected that these crudes will be pushed out to start with. Initially, attention is expected to be on Latin American imports,” explains Robert Trout, President, Criterion Catalysts & Technologies (Criterion).

“Once the US refiners upgrade their units to handle more naphtha and lighter ends and if the US oil export ban continues, more and more Latin American and Middle Eastern crudes will be replaced with light tight oil. And, effectively, the USA may process only light tight oil and heavy oil from Canada. This could mean surplus Latin American and Middle Eastern volumes that have to find new processing outlets.”

In short, increasing light tight oil production in the USA will have a ripple effect on the global crude trade flow. As with many challenging situations, this potential glut of heavier crudes on the world market brings with it great opportunities. Increased availability of varying crude oil grades to other markets, particularly in Asia, will “provide an opportunity for Asian refiners to broaden crude slates and adapt configurations to a more flexible operating strategy”, according to McKinsey & Company.

Criterion believes this gives refineries a chance to become independent of crude supply disruptions, increase product exports and improve margins. To cash in on these benefits, however, refineries will

BUSINESS

A WORLD OF OPPORTUNITY FOR REFINERS


have to be flexible enough to be able to process the heavier opportunity crudes.

“To start processing more difficult feeds, it is important for refinery operators to understand the particular contaminants that they are likely to come across and to look at their refinery as a whole and evaluate it unit by unit to determine the quantity of heavier feed they can handle,” says Diane Chamberlain, Global General Manager, Hydrocracking and Zeolyst, Criterion Catalysts & Technologies.

“Tackling crudes with less naphtha and many more contaminants is likely to result in a need to change out reactors and their catalysts more often. Picking the right mix of catalysts will also be crucial to successful operations. This will likely be very different to those that some sites are currently using.

For more information contact:Diane ChamberlainEmail: [email protected]

AS WITH MANY CHALLENGING SITUATIONS, THIS POTENTIAL GLUT OF HEAVIER CRUDES ON THE WORLD MARKET BRINGS WITH IT GREAT OPPORTUNITIES.

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*SENTRY is a trademark owned and used by the companies of the Shell Group.

Refineries will usually also need more hydrogen to enable them to crack heavier feeds into fuels,” she concludes.

Most European refineries have historically been supplied mainly by North Sea fields, which produce light and low-sulphur crude that is, overall, low in contaminants. However, with production from those fields in decline, there has already been a shift towards West African crude and Russian Urals imports. West African crudes are low in sulphur, but heavier than light tight oil and much higher in nitrogen. Urals crudes are higher in both sulphur and nitrogen. However, the resultant products must all be very low in sulphur to satisfy environmental regulations.

Refineries in Asia Pacific currently run a mix of Middle Eastern crudes, with about 40% of their crude being low sulphur, but the region has a high percentage of crude imports, which means some refineries are already set up to handle heavy crude.

So, some refineries in the main demand centres already have adapted or are in the course of adapting to process heavier crudes. “Asia Pacific refineries are getting access to more West African crude volumes. They are also moving to lower-sulphur products, so individual refineries are already making a lot of changes,” explains Chamberlain. “The general trend is that US refineries are learning to handle easier crudes and both European and Asia Pacific refineries are learning to handle more difficult crudes.”

Other refineries will have to follow quite closely behind if they also want to soak up some of these opportunity crudes. “Depending on the location of your refinery and whether you are tied to an

upstream field, the magic answer is to be flexible. If your refinery is going to do well in different economic conditions, the more flexible it is, the better you can handle changes in the market,” says Chamberlain. “Flexibility can, of course, be expensive to achieve, but that is why it is so important to make a full economic assessment based on your whole refinery not just on the cost of buying one extra piece of equipment.”

Criterion has a long history of working with refineries processing difficult crudes in high- and low-pressure units. Through its partnership with Shell Global Solutions, it can help refiners to make sense of economic assessments and to establish the best available options. For example, using stacked beds of NiMo and CoMo catalysts could provide the right combination of activity, volume swell and hydrogen usage. The MaxTrap catalysts in Criterion’s SENTRY* line are also specifically designed to remove contaminants such as silica, vanadium and arsenic.

“Individual refineries may be looking to buy some of these newly available crudes, but it is important to remember that they will act differently in their sites. Criterion has catalysts that can help refiners to be flexible and improve their refining margins,” concludes Chamberlain.


Why are people so important to the success of a project and how challenging is it to find good people with the right experience?Project design is all about creating value, but there is a huge potential for destroying value when executing a project. So, we need professionals who can protect and deliver the value set at the final investment decision. This is more and more important today because we are facing ever-increasing costs and the competition for the best manpower is fierce. Manpower is very important when you consider the scale of some of Shell’s big projects. The Prelude floating liquefied natural gas project in Australia, for example, took about 600 people worldwide and about 1.6 million work hours to get it to the point where we felt that it was deployable technology.

The places where we do these big projects are also becoming increasingly challenging, for example, in the sub-Arctic, deep water and “typhoon alley”. There is also more non-technical risk now through a lot more interest from local communities in how we will create value for them. Overall, the environment in which we undertake projects today is a lot more complex than when I started at Shell. Therefore, we clearly need to have processes and procedures in place to address the risk, but really, it is about people. It is about teaching our individuals how to deal with the risks that are going to arise. We also need to find ways for people to get the necessary experience to enable them to deliver on big projects.

PEOPLE MAKE PROJECTS Vice President of Integrated Gas Projects for Shell Hilary Mercer’s views on meeting the energy challenge

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The days of easy gas are gone, leaving in their wake a challenge to produce energy from ever more

difficult plays, for a rapidly expanding population of energy users and against a backdrop of economic cautiousness.

So, how do we meet this energy challenge and ensure we keep the lights on when demand is expected to double by 2060 from what it was at the turn of the century? Mercer believes the answer largely lies with investing in the right people.

THE PRELUDE FLOATING LIQUEFIED NATURAL GAS PROJECT IN AUSTRALIA, FOR EXAMPLE, TOOK ABOUT 600 PEOPLE WORLDWIDE AND ABOUT 1.6 MILLION WORK HOURS TO GET IT TO THE POINT WHERE WE FELT THAT IT WAS DEPLOYABLE TECHNOLOGY.

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enable us to undertake these enormous projects in more and more challenging places, we will not succeed.

How do you hope to combat those challenges and ensure enough people get the training and experience they need to deliver a big project successfully? We have set up the Shell Project Academy. Through this externally certified programme, we are trying to grow the competencies of our project engineers from graduates through to Level 4 project directors. But, you cannot reach Level 4 unless you have delivered a mega-project and getting that sort of opportunity is quite a challenge. One of these projects would probably take about 10 years to come online, so we have to find ways to help people get that experience.

How can you ensure that those already working on these important projects maintain their focus and deliver consistently?Project managers are now responsible for seeing a project through to start-up and a performance test. Doing this creates a shift in mindset around quality, which is so important for production and the future safety of assets.

In 2010, Shell also decided to create a single global project organisation. Previously, we had an upstream projects organisation and a mid- and downstream projects group. Now, we have brought everyone together to do projects across Shell in the same way, to the same standards, with the same people. This increases efficiency and the quality of delivery. We have over 3,000 project professionals, such as engineers and managers, around the world; added to that are about 6,000 discipline engineers. You cannot build projects without both.

For more information contact:Wendy ReesEmail: [email protected]

Over the years, we have created a core group of people who have worked together for a long time and who know how to achieve success when delivering liquefied natural gas projects. We need to make sure that we maintain that same quality for the future and bring on the next generation, which is a challenge.

When it comes down to it, projects are about people. People develop projects. If we do not find the next cadre of project managers, discipline engineers, contracts and procurement specialists, and finance and human resources professionals to

Other than people, what are the other key elements to getting a mega-project right?Standardisation, replication and incremental change are very important to unlocking and sustaining projects, particularly in liquefied natural gas because its technology does not change a great deal. There is a huge amount of commonality in our liquefied natural gas projects and that can be very advantageous. Where you have commonality, people can learn how to do things better, quicker and cheaper.

We also need to move with the times. Incremental change enables us to make alterations without any significant risk. However, it will not solve the energy challenge and it will not lead to a step change in cost and schedules. For that, we need innovation, or “disruptive change”. That is what really moves things forward.

Alongside this, it is important to get the basics right when deciding on whether a project is viable. We recently launched a new initiative called 8 Project Principles. These are absolute common sense: things like “strong teams deliver” and “do not overpromise”. Having these very short, simple statements reminds us of the key things we need to get right; it is amazing how useful they are. Now we can see that if we do not match up against these principles on a new project, then we should not be moving forward.


Many developing countries depend on coal to provide affordable, reliable energy,

but the environmental impact of burning coal has previously cast a shadow over this resource1 and led to a stronger focus on “cleaner” fossil fuels.

The development of coal gasification technology has, however, enabled more environmentally friendly use of coal as a global feedstock by offering “one of the most versatile and clean ways to convert coal into electricity, hydrogen and other valuable energy products” according to the US Department of Energy.2 The synthesis gas (syngas) produced by coal gasification is being used in chemical and integrated gasification combined-cycle (IGCC) power plants worldwide.

With 28 licences sold worldwide, Shell is a leading global supplier of coal gasification technology. The company began gasification research in the 1950s and went on to build demonstration plants in the Netherlands, Germany and the USA in the 1970s and 1980s. One of the technologies to emerge from that work was the Shell Coal Gasification Process (SCGP), which uses solid feeds, including petroleum coke (petcoke), anthracite, bituminous coal, lignite (brown coal) and biomass, to produce syngas.

One SCGP-related line-up, the SCGP syngas cooler technology, is proving how coal can be used in a more environmentally friendly and efficient way. Independent assessments have shown that SCGP gasifiers have the highest exergetic efficiency of all coal gasification technologies3 and that the typical ranges for oxygen and coal consumption are low: 310–350 Nm3 oxygen per 1,000 Nm3 of syngas and 510–615 kg standard coal

per 1,000 Nm3 of syngas respectively. Indeed, SCGP gasifiers exceed the Chinese National Development and Reform Commission’s basic requirements for energy, coal and water consumption, and meet many of its advanced requirements.

In China alone, 23 SCGP gasifiers have come on stream since 2006 and six more are due to start up in the near future. In addition, the first of two plants in Vietnam, which Vietnam National Chemical Group operates, began commercial operations in 2012.

SCGP licences for IGCC plants have also been sold in Europe and Asia. Importantly in a power plant, an SCGP unit gives operational flexibility through the ability to follow load changes quickly.

In the Netherlands, the 2,000-t/d Willem-Alexander (formerly Nuon) power plant operated from 1993 to 2013.

Commissioned as a demonstration plant, it has proved SCGP technology’s reliability and low maintenance costs, which result from the robustness of the gasifier membrane wall and the long-life burners. The IGCC plant also demonstrated feedstock flexibility by processing more than 20 different coal types and blends, and running successfully with up to 30 wt% biomass.

South Korea is also building its first IGCC plant, Taean IGCC No. 1. Here, Korea Western Power Co. Ltd will be using SCGP and gas-treating technologies for the efficient generation of clean power for the country.

The development of SCGP technology has also boosted the amount of coal that can be processed worldwide. Feeds with 6–36% ash, up to 35% moisture content and ash-melting points (fluid temperatures) from 1,140°C to over 1,500°C have been processed using the technology. Commercial

UNLOCKING THE WORLD’S COAL RESERVES How technology has opened the doors to the most widespread energy resource

TECHNOLOGY INSIGHTS


operations have also successfully gasified low-quality coal types, including lignite.

Several SCGP technology users, including four in China, have implemented an effective strategy of blending high-ash coal with petcoke to promote stable gasification operations and high syngas output. These plants have shown the longest continuous runs and greatest uptime of all the SCGP plants. The ability to gasify low-quality coal with petcoke is likely to become increasingly advantageous as more coal-to-chemical facilities come online and coal quality generally deteriorates as high-grade reserves become exhausted.

Shell coal gasification technology line-ups Shell has developed two SCGP-related line-ups for users with different needs. SCGP syngas cooler technology has

been in commercial use for more than 20 years and can help to achieve carbon conversion rates of over 99% and a cold coal gas efficiency (the amount of energy in the coal converted to the energy in the combustible syngas) of 80–83%. The syngas cooler recovers most of the sensible heat in the syngas to produce high- or medium-pressure steam, which can help to reduce the operating costs of a facility.

An entrained-flow process uses an inert carrier gas to transport dry coal feedstock to the gasifier, where it contacts oxygen and steam. The gasifier has unique features, such as specially designed multiple burners and a membrane wall of high-pressure tubes, designed to enable the safe and low maintenance separation of syngas and slag.

The molten slag flows down into a water bath from where it can be extracted as a

solid, thereby reducing wastewater pollution. Dry-filtered and wet-washed syngas quenches the syngas to about 900°C before it leaves the top of the gasifier.

The syngas is cooled further in an external cooler to generate high- and medium-pressure steam as valuable by-products.

The use of multiple burners provides the potential for easy scaling up and, more importantly, efficient slag removal with only a small amount of a fine fly ash, which is removed downstream to less than 1 ppmv.

For operators that need to lower their capital expenditure and are looking for wider feedstock flexibility while retaining good efficiency levels, bottom-quench technology has been developed. This simplified line-up can help to reduce capital costs by up to 30%.

The bottom-quench line-up retains the membrane wall and burner technology of the first line-up but replaces the syngas cooler with proven water-quench technology. This means less steel and equipment and a shorter manufacturing time, which substantially reduce capital costs. Bottom-quench technology also helps to eliminate fouling risks to offer wider coal suitability.

In 2013, Shell and a Chinese partner successfully started up a 1,000-t/d bottom-quench technology demonstration plant in the Nanjing industrial park in China, which has 99% carbon conversion. In January 2014, Hulunbeier Jinxin, a subsidiary of the Yuntianhua Group, signed a licensing agreement for a bottom-quench gasifier to process lignite feedstock.

The future is looking bright for coal gasification technology.

References1World Energy Council: “World Energy Resources: 2013 Survey,” www.worldenergy.org/publications/2013/world-energy-resources-2013-survey/2Energy.gov. Office of Fossil Energy: “Gasification technology R&D,” http://energy.gov/fe/science-innovation/clean-coal-research/gasification 3Gräbner, M. and Meyer, B.: “Performance and exergy analysis of the current developments in coal gasification technology,” Fuel (2014) 116, 910–920

For more information contact:Sze-Hong ChuaEmail: [email protected]

FROM THE INSIDE OUT


The trend towards processing increasingly difficult feeds at refineries may be leading to a higher tendency

for fouling in hydroprocessing reactor catalyst beds. Problems such as thermal maldistribution, reduced cycle length and high pressure drop are indicators that a refinery or petrochemical plant may be failing to capture the maximum value from its hydroprocessing unit.

Poor feed distribution can cause hot or dry spots in the catalyst bed due to poor catalyst utilisation, which leads to part of the catalyst inventory being overutilised while the remainder is underutilised. Liquid maldistribution and catalyst underutilisation can have severe negative impacts on the overall unit performance, including a reduction in product quality or yield.

However, a low-cost revamp using Shell reactor internals can help to address these issues and capture additional value from the reactor. Shell’s hardware enhances the uniformity of the liquid–gas distribution and temperature under a wide range of operating conditions and helps to maximise the catalyst load in the reactor by up to 30% compared with the original loaded catalyst volume using conventional reactor hardware.

In addition, Shell reactor internals utilise the loaded catalyst better. Other designs typically use about 80% of the catalyst

How choosing the right reactor internals can help refiners to improve catalyst utilisation and cycle life, and reduce maintenance activities

TECHNOLOGY INSIGHTS


owing to poor feed distribution. Shell reactor internals enable close to 100% utilisation of the loaded catalyst by enhancing the uniformity of the gas–liquid distribution. They also help ensure the guaranteed catalyst cycle length is met by minimising radial temperature maldistribution and the associated risk of coke formation. The latest-generation Shell high-dispersion (Shell HD) trays incorporate proprietary nozzles that can provide enhanced vapour–liquid distribution. Using conventional bubble caps and sieve trays as feed distributors typically achieves only 85% effective utilisation of the catalyst.

“Enabling more catalyst to be loaded into the reactor, and using almost 100% of the loaded catalyst, provides refiners with options,” explains Pankaj Desai, Licensing Sales Manager Americas, Shell Global Solutions. “The increase in catalyst utilisation can be used to either extend the catalyst cycle life or to process heavier, less-expensive feeds, both of which can result in higher margins.”

Enhancing staff safety and reducing maintenance activities Because Shell is itself an operator, it has designed the reactor internals for easier and quicker catalyst loading, installation and maintenance. For instance, no cutting or welding is required during assembly and disassembly, and the time required for confined space entry can be just a quarter of the time generally taken when compared with non-Shell reactor internals. This is because they are quicker to open, clean, inspect and close.

In addition, they are designed to have the largest possible manways to enable people to move very quickly through the trays and quenches, which is particularly important in the case of a serious incident.


Some of the potential benefits of installing state-of-the-art Shell reactor internals are shown below:

■ $670,000: the potential savings if refiners can avoid an interim shutdown for a 100-t/h unit that has a total shutdown time of 14 days1

■ $96,000: the potential saving for a two-day reduction in turnaround time for a 100-t/h unit1

■ $2.2 million: the potential annual value of increasing the proportion of light cycle oil in a 100-t/h unit by just 5%.2

1Upgrade margin of $20/t in a typical diesel hydrotreater2Light cycle oil upgrade margin is $50/t more than the gas oil upgrade margin

For more information contact:Pankaj DesaiEmail: [email protected]

Shell reactor internals have over 20 years of operational experience and have been installed in more than 1,500 reactor vessels across the world: about 80% of which are in non-Shell-operated refineries.

As well as licensing to non-Shell facilities, Shell Global Solutions also provides its technologies to Shell refineries and petrochemical plants. This provides invaluable operational feedback that it can leverage for the continuous improvement of its reactor internals. After designing, delivering and installing reactor internals, Shell Global Solutions monitors their performance in these real-world situations and challenges its technologists to improve their design. Shell has been enhancing its reactor internals in this way since designing the first generation in 1988, and continues to invest in research and development programmes designed to enhance their performance further. Consequently, new clients are accessing reactor internals that have been subject to continuous improvement and ongoing innovation for over a quarter of a century.

Shell’s reactor internals take up less space than conventional hardware; provide enhanced vapour–liquid and thermal distribution under a wide range of operating conditions; and have a boltless, weldless and ergonomic design that facilitates fast installation, easy maintenance and a shorter turnaround.

These features can help refiners to improve the performance of their hydroprocessing units and, ultimately, to increase margins. Shell Global Solutions works with customers to establish the best option to satisfy their needs and, in some cases, can redefine the unit yields for better economics.

“Because every operator’s business objectives are unique, we firmly believe

that there can never be one single solution that fits every situation. The customers that we work with have a wide range of objectives: some are keen to maximise plant capacity; others are striving to enhance reliability or to unlock margin improvements by processing an exceptionally heavy or sour feed, or generating higher-margin products such as winter diesel,” says Desai.

“Consequently, we do not just sell steel; we draw on our operating experience to provide our customers with customised working solutions. This adds substantially more value than a hardware-only solution because it is tailored to a company’s specific situation and is designed to help achieve its objectives.”


HIGHLY TAILORED SOLUTION

IPLOM’s refinery in Busalla, Italy, serves niche markets, including that for low-sulphur fuel oil for electricity generation.

However, a regional move from oil to gas power stations prompted the company to reinvent itself, something it has excelled at during its 80-year history. The company recognised that it had an opportunity to take advantage of its good access to Italy’s large northern cities, the Po Valley and Switzerland and their growing demand for ultra-low-sulphur diesel. Building a new hydrocracker to add to the diesel production from the refinery’s existing atmospheric distillation and hydrotreating units was a vital part of its plan.

“IPLOM is not a typical refinery,” says Valter Mantelli, IPLOM Technical Director. “We needed a highly tailored hydrocracker unit capable of processing crude oils with high nitrogen levels and within our physical constraints. Our proximity to a highway, even though it gives us excellent market access, and a village physically constrains expansion and puts an 80-bar pressure safety limit

on new units. With no conversion unit following the new hydrocracker unit, we needed it to achieve a 60–70% conversion capacity. The diesel also had to have very low sulphur levels.

“Not all the technology suppliers we talked to could meet these requirements. Some told us that the high conversion capacity was not possible within our space velocity and pressure limits and with the planned crude composition. However, Shell Global Solutions and Criterion Catalysts & Technologies (Criterion) said they could help, so, in 2006, we signed a licensing agreement for a mild hydrocracker that would help us to meet Italy’s growing demand for ultra-low-sulphur diesel. Going with an alternative technology and accepting limited conversion capacity would have been problematic, as fuel oil is increasingly difficult to market in Europe,” he concludes.

Desirée de Haan, Technical Process Engineer, Hydrocracking, Criterion Catalysts & Technologies, takes up the story: “This was a challenging project,

but we were confident that, with close co-operation between IPLOM, Criterion and Shell Global Solutions, we would be able to deliver a unit that performed to the tough specifications. As with all such projects, we had to tackle new challenges along the way. For example, with a year to go and the reactor vessel on order, the already demanding crude specification became even tougher. In addition to high nitrogen levels, we now had to deal with more arsenic than originally anticipated. We were able to manage this change with the addition of an arsenic trapping catalyst. Although this had to be accommodated at the expense of hydrocracking catalyst, we were still confident we could achieve cycle lengths of 14 months.”

Successful start-up and first cycleWith the refinery’s proximity to the village and a highway, there was pressure to achieve a quick, smooth start-up without external impacts. The unit was started up in 2012 and reached full performance levels within a few months. Mantelli

Co-operation helps IPLOM’s hydrocracking unit to exceed expectations

CASE STUDY


says, “Shell Global Solutions was able to provide training in Italy in our native language, which gave us confidence when starting up the new unit. This was very important to us. We had no hydrocracking experience but were able to send operating, technical and maintenance people to talk directly to their counterparts in another Italian refinery with a similar Shell licensed unit. This undoubtedly helped us to bring the new unit online quickly and smoothly.”

Initially, more light ends were created than predicted. Analysis demonstrated a combination of feed and operating conditions as the cause. Shell Global Solutions and Criterion were able to draw on a vast operational database to identify and resolve the issue quickly, and then worked closely with IPLOM to help the company learn how to process its opportunity crudes confidently for economic advantage.

“A quick and trouble-free start-up was important, as was improving the cycle length,” Mantelli says. “With our storage tank limits, it is not easy for us to shut down one unit without shutting down the whole refinery. For this reason, achieving a longer hydrocracker cycle length was important. We are very happy to have exceeded the expected change-out time of 14 months with a 19-month first cycle. Even correcting for the refinery running slightly below capacity, the first cycle still surpassed our expectations.

“An added bonus was that, during the entire cycle, the sulphur levels remained below 10 ppm. The unit was designed to deliver diesel with less than 50-ppm sulphur, which we would then reduce to less than 10 ppm in our hydrotreater unit. Achieving the desired product quality without needing additional processing gives us two major benefits: lower hydrogen consumption and extra hydrotreating capacity, both of which translate into economic advantage.”

De Haan agrees. “The first cycle exceeded all expectations in terms of diesel yield and sulphur content, but we are always looking for higher performance levels. We have tailored the catalysts running in the second cycle based on what we learned during the first run and have provided a pretreatment system to help deal with crude swings. The result is an even longer cycle length of 24 months with 10-ppmw sulphur in the diesel.”

Co-operation delivers value“We have a very good relationship with Shell Global Solutions and Criterion,” Claudio Bonafini, IPLOM Technical Manager, says. “As a relatively small refinery, being on such friendly terms is important for us. We do not have expertise at other sites within our company, so being able to interact honestly and directly with our partners in Shell has been very useful.

“Our relationship continues to be very good. By working closely with our partners during the second cycle, we have improved the unit’s performance. Of course, there are always new issues, but we are able to solve them quickly with Shell Global Solutions and Criterion. This project demonstrates that, through close co-operation, we can overcome challenges, exceed expectations and deliver value.”

For more information contact:Desirée de HaanEmail: [email protected]

SHELL GLOBAL SOLUTIONS WAS ABLE TO PROVIDE TRAINING IN ITALY IN OUR NATIVE LANGUAGE, WHICH GAVE US CONFIDENCE WHEN STARTING UP THE NEW UNIT. THIS WAS VERY IMPORTANT TO US.

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Bharat Petroleum’s Mumbai refinery adds to its bottom line by optimising its diesel hydrodesulphurisation unit with its own readily available hydrogen

Demand for high-quality diesel is rising worldwide while environmental restrictions on

its sulphur content are tightening. Meanwhile, falling and volatile crude oil prices are squeezing refiners’ pockets, which makes large investments in new equipment that could help to satisfy the growth in demand much more difficult to justify. Utilising existing refinery assets, such as excess hydrogen, is therefore an excellent option for refiners looking to optimise production to meet the changing downstream demands.

Bharat Petroleum in India is already reaping big financial and environmental rewards from doing just that at its Mumbai refinery, one of its four sites. With the help of Criterion Catalysts & Technologies (Criterion), Bharat Petroleum switched the operating mode of its diesel hydrodesulphurisation unit to hydrodearomatisation to provide an economic outlet for previously unused hydrogen. The unit had previously been running in conventional hydrodesulphurisation mode with a stacked catalyst system of CoMo and NiMo catalysts designed by Criterion.

This switch has enabled the refiner to achieve its main goal of generating value out of its hydrogen by improving diesel quantity and quality through reducing its density and sulphur content, and raising its cetane level. The diesel product from the diesel hydrodesulphurisation unit now has

a sulphur content <10 ppm; previously, it was 5 ppm. At minimal cost, switching the diesel hydrodesulphurisation unit to a more hydrogen-intensive operating mode has put Mumbai refinery ahead of the curve in India and is expected to add $1.5–2 million to its bottom line for 2015.

Making the switchSwitching to the hydrodearomatisation mode of operation meant optimising the diesel hydrodesulphurisation unit. Before the switch, the catalyst cycle was operating with a 100% CoMo catalyst. To optimise hydrodearomatisation, Criterion changed the catalyst loading to a sandwich system comprising top and bottom layers of CoMo catalyst with a middle layer of NiMo catalyst. Putting a small layer of NiMo catalyst in the middle helps to enhance aromatic saturation.

“The second step was optimising the operating conditions,” says Saurabh Dhir. “We looked at how the unit was behaving and saw there was room for improvement. We then carried out simulations to test the benefits of those measures before conducting full trials.”

Running in hydrodearomatisation mode requires a unit to be at an ideal temperature that depends on the pressure of the unit, the feed type and space velocity of the unit. Bharat Petroleum trialled various temperatures to establish the most viable option.

20

UNLOCKING POTENTIAL WITH HYDROGEN

CASE STUDY


Where the idea came fromThe idea of using excess hydrogen to saturate the aromatics in the diesel hydrodesulphurisation unit sprang from a technical workshop hosted by Criterion and Shell Global Solutions for Bharat Petroleum in 2014. Here, representatives from all four Bharat Petroleum refineries were sharing information on their operations when it emerged that the Mumbai refinery had previously shut down one of its hydrogen units because it had no economic outlets for it.

Criterion carried out detailed modelling and simulation work to establish whether switching the refinery’s diesel hydrodesulphurisation unit’s mode of operation would be an economic way of utilising the hydrogen before presenting the findings to Bharat Petroleum’s director of refineries. His approval then kicked off a detailed test run in September 2014 to ascertain the viability of the plan. The results of the test run showed that simply switching from the hydrodesulphurisation mode to the hydrodearomatisation mode could add up to $2 million to the refinery’s bottom line for 2015.

“We found that just changing some of the operating conditions without having to spend money would give the refinery significant benefits,” explains Dhir, Technical Service Engineer for Criterion, India. “However, running a hydrotreater in hydrodearomatisation mode had not been done in India, so it was not such a simple proposal.”

The results of the test run showed that saturating additional aromatics in the diesel could reduce its density and, ultimately, generate more product with a 0.42% boost in volumetric yield. It could also reduce the sulphur content from 35 to 10 ppm.

“This refinery is already making Euro 4 diesel and Euro 3 diesel, but with the hydrodearomatisation mode of operation it can enhance the share of Euro 4 diesel. In a world that is trying to become cleaner, this is a significant added benefit for the refinery,” says Dhir.

An added benefit of making higher quality diesel than is currently required is that the refinery now has the option to blend some of its high-sulphur streams back into its diesel pool, which creates further savings.

“Close co-operation between operators and technology suppliers is key to unlocking the full potential of the existing assets in a refinery,” says Suresh V, Dy. General Manager for Technical Services, Bharat Petroleum. “Switching to aromatic saturation has satisfied our primary goal of finding an economic outlet for our excess hydrogen but has also given us other benefits at minimal cost.”

For more information contact:Saurabh DhirEmail: [email protected]

CLOSE CO-OPERATION BETWEEN OPERATORS AND TECHNOLOGY SUPPLIERS IS KEY TO UNLOCKING THE FULL POTENTIAL OF THE EXISTING ASSETS IN A REFINERY. SWITCHING TO AROMATIC SATURATION HAS SATISFIED OUR PRIMARY GOAL OF FINDING AN ECONOMIC OUTLET FOR OUR EXCESS HYDROGEN BUT HAS ALSO GIVEN US OTHER BENEFITS AT MINIMAL COST.

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Hydrodearomatisation versus hydrodesulphurisationAromatic saturation, also known as hydrodearomatisation, requires more hydrogen than hydrodesulphurisation to saturate the double-bonded aromatic compounds and enable sulphur removal. The process is more comprehensive than hydrodesulphurisation and reduces the product density owing to the saturation of the heavy aromatics. This can mean a greater volume of product with a lower sulphur content, thus providing both financial and environmental benefits to the operator.

The process is particularly attractive for refiners with access to excess hydrogen.


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Impact 1 2015

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