TOTAL

US Refinery Database: CO2 intensity by facility?

This US refinery database covers 125 US refining facilities, with an average capacity of 150kbpd, and an average CO2 intensity of 33 kg/bbl. Upper quartile performers emitted less than 20 kg/bbl, while lower quartile performers emitted over 40 kg/bbl. The goal of this refinery database is to disaggregate US refining CO2 intensity by company and by facility.

Every year, the c125 core refineries in the US, with c18Mbpd of throughput capacity report granular emissions data to the US EPA. The individual disclosures are something of a minefield, and annoyingly lagged. But this refinery database is our best attempt to tabulate them, clean the data and draw meaningful conclusions.

Some of the larger companies assessed in the data-file include Aramco, BP, Chevron, Citgo, Delek, ExxonMobil, Koch, HF Sinclair, Marathon, Phillips66, PBF, Shell and Valero.

The average US refinery emits 33kg of direct CO2 per barrel of throughputs, we estimate, with a 10x range running from sub-10 kg/bbl to around 100 kg/bbl (chart below).

Breakdown of direct US refinery emissions? The 33 kg/bbl average CO2 intensity of US refineries comprises 20 kg/bbl of stationary combustion, 8 kg/bbl of other refining processes, 3 kg/bbl of on-site hydrogen generation, 1 kg/bbl of cogeneration, 0.2 kg/bbl associated with methane leaks.

Some care is needed in interpreting the data. Refineries that are more complex, make cleaner fuels, make their own hydrogen (rather than buying merchant hydrogen) and also make petrochemicals are clearly going to have higher CO2 intensities than simple topping refineries. There is a 50% correlation between different refineries’ CO2 intensity (in kg/bbl) and their Nelson Complexity Index.

Correlation between the CO2 intensity of US refiners and their Nelson Complexity Index

Which refiners make their own hydrogen versus purchasing merchant hydrogen from industrial gas companies? This question matters, as hydrogen value chains come into focus. Those who control the Steam Methane Reformers may be readily able to capture CO2 in order to earn $85/ton cash incentives under the IRA’s reformed 45Q program, as discussed in our recent research note into SMRs vs ATRs. One SuperMajor and two pure play refiners stand out as major hydrogen producers, each generating 250-300kTpa of H2.

How has the CO2 intensity of US refineries changed over the past 3-years? The overall CO2 intensity is unchanged. However, some of the most improved refineries have lowered their CO2 intensities by 2-10 kg/bbl (chart below). Conversely, some Majors have seen their CO2 intensities rise by 2-7 kg/bbl.

For further context and ideas, we have also published summaries of our key conclusions into downstream, vehicles and long-term oil demand. All of our hydrocarbon research is summarized here.

The full refinery database contains a granular breakdown, facility-by-facility, showing each refinery, its owner, its capacity, throughput, utilisation rate and CO2 emissions across six categories: combustion, refining, hydrogen, CoGen, methane emissions and NOx (chart below). The data-file was last updated in 2023 and covers the full US refinery landscape in 2018, 2019 and 2021, going facility by facility, and operator by operator.

Exploration capex: long-term spending from Oil Majors?

This data-file tabulates the Oil Majors’ exploration capex from the mid-1990s, in headline terms (in billions of dollars) and in per-barrel terms (in $/boe of production). Exploration spending quadrupled from $1/boe in 1995-2005 to $4/boe in 2005-19, and has since collapsed like a warm Easter Egg. One cannot help wondering about another cycle?

The peer group comprises ExxonMobil, Chevron, BP, Shell and TOTAL, which comprise c10% of the world’s oil production and 12% of the world’s gas production. As a good rule of thumb, this group can be thought of as c10% of global production.

This peer group quadrupled its exploration expenditures, from $5bn pa spent on exploration in 1995-2005 to an average of $20bn pa on exploration at the peak of the 30-year oil and gas cycle in 2010-2015. Exploration spend ramped from $1/boe to $4/boe over this timeframe. It has since fallen back to $1/boe, or around $1bn per company pa in 2022.

The US has always been the most favored destination, attracting c25% of all exploration investment, both offshore (e.g., Gulf of Mexico) and increasingly for short-cycle shale. During the last oil and gas cycle, the largest increases in exploration investment occurred in Africa, other Americas, Australasia; and to a lesser extent Europe and the Middle East.

One possible scenario for the future is that this peer group continues to limit its exploration expenditures to the bare minimum, below $1bn per company per year, or below $1/boe of production; under the watchwords of “capital discipline”, “value over volume” and “energy transition”.

However, it is somewhat terrifying to consider that the industry needed to spend an average of $2.5/boe on exploration from 2005-2019 in order to hold its organic production “flattish”.

Under-investment across the entire industry may foreshadow a sustained shortage of energy, especially if 50% lower-carbon gas is intended to replace coal as part of the energy transition, per our roadmap to net zero, or more pressingly as Europe faces sustained gas shortages. Hence one cannot help wondering if industry-wide exploration capex in the 2020s and 2030s is going to resemble the 2000s and 2010s?

This data-files aggregates the Oil Majors’ exploration capex, across ExxonMobil, Chevron, BP, Shell and TOTAL disclosures, apples-to-apples, back to 1995.

Tree database: forests to offset CO2?

CO2 uptake rates in forests by tree type

Nature-based solutions are among the most effective ways to abate CO2. Forest offsets will cost $2-50/ton, decarboning liquid fuels for <$0.5/gallon and natural gas for <$1/mcf (chart below).

The data-file tabulates hundreds of data-points from technical papers and industry reports on different tree and grass types. It covers their growing conditions, survival rates, lifespans, rates of CO2 absorption (per tree and per acre) and their water requirements (examples below).

Ventures for an Energy Transition?

This database tabulates almost 300 venture investments made by 9 of the leading Oil Majors, as the energy industry advances and transitions.

The largest portion of activity is now aimed at incubating New Energy technologies (c50% of the investments), as might be expected. Conversely, when we first created the data-file, in early-2019, the lion’s share of historical investments were in upstream technologies (c40% of the total). The investments are also highly digital (c40% of the total).

Four Oil Majors are incubating capabilities in new energies, as the energy system evolves. We are impressed by the opportunities they have accessed. Venturing is likely the right model to create most value in this fast-evolving space.

The full database shows which topic areas are most actively targeted by the Majors’ venturing, broken down across 25 sub-categories, including by company. We also chart which companies have gained stakes in the most interesting start-ups.

Biofuel, green diesel, renewable diesel: where’s the IP?

This data-file tracks 5,000 patents filed into biofuels: by geography, by company and particularly in 2017-20. The pace of research activity into “biofuels” and “biodiesel” seems to have halved since 2014, suggesting industry interest is waning.

As usual, China has come to dominate the recent patent literature, accounting for 60% of recent filings. Out of the ‘Top 25’ patents filed into biofuels from 2017-20, 15 are Chinese companies.

Ranked by recent patent filings, technology leaders include Sinopec, BASF, Arkema, Neste, TOTAL, ExxonMobil and DuPont. It is interesting that some well known companies (e.g., Ryze) did not appear to have filed many patents recently. Full details on the patent trends and filings are in the data-file.

Our 3 key conclusions are spelled out in the green diesel article sent out to our distribution list.

Solar Energy: Where’s the IP?

This data-file tracks 110,000 solar patents filed by geography, by company, by year, since 2000; but particularly in 2019.

Solar patent filings peaked in 2012-13 at 11,500 patents per year. Many geographies have since slowed by 50-90%; except China, which hit a new peak off 3,500 patents in 2019, leading the industry.

A granular breakdown for 2019 tabulates 6,000 patents, including their descriptions, which you can interrogate fully. 14 out of the top 25 solar patent filers in that year were Chinese companies.

The largest US and European patent filers are also shown. So are the Majors, which have recently filed c30 patents per year (0.5% of the total), two thirds of which can be attributed to a single SuperMajor, looking to scale up in solar.

In 2022, we have updated the analysis, in particular, tabulating more parameters of solar cell efficiency improvements, and the industry’s latest push into TOPCon cells.

Northern Lights CCS: the economics?

We have modeled out simple economics for Northern Lights, the most elaborate carbon capture and storage (CCS) scheme ever proposed by the energy industry (Equinor, Shell, TOTAL).

The project involves capturing industrial CO2, liquefying it, transporting it in ships, receiving it onshore in Norway, piping it 110km offshore, then injecting it 3,000m below the seabed. Phase 1 will likely sequester 1.3-1.5MTpa, with potential expansion to 5MTpa.

Our conclusion is that Phase 1 will be expensive. However, much of the infrastructure “scales”. So phase 2 could cost 35% less, bringing the “carbon storage” component to below Europe’s carbon price. This could be promising if combined with next-generation carbon separation or decarbonised gas technologies, to lower the “carbon capture” component.

Our economic estimates can be flexed in the ‘simple model’ tab. Underlying cost calculations are substantiated in the ‘Notes’ tab.

Solar Use within the Oil Industry?

This data-file tabulates 20 solar projects being undertaken within the oil industry, in order to clean up production and reduce emissions. More projects are needed, as the total inventory will obviate <1% of oil industry CO2 by 2025.

For each project, we estimate total TWH of power generation per annum, the CO2 emissions avoided, the timeline; and we also summarize the project details.

Leading examples include the use of concentrated solar for steam-EOR in Oman and California, Solar PV in the Permian, and leading efforts from specific companies: such as Occidental, Shell, Eni and other Majors.

At the cutting edge of EOR?

This data-file summarises 120 patents into Enhanced Oil Recovery, filed by the leading Oil Majors in 2018. Based on the data, we identify the “top five companies” and what they are doing at the cutting edge of EOR.

We find clear leaders for water-flooding both carbonate and sandstone reservoirs. At mature fields, we think these operators may be able to derive >10pp higher recovery factors; and by extension, lower decline rates, higher cash flows and higher margins.

As more of the world’s oilfields age, having an “edge” in EOR technology will make particular Oil Majors more desirable operators and partners, to avoid the higher costs and CO2 intensities of developing new fields to replace them.

Lubricant Leaders: our top five conclusions

This data-file presents our “top five” conclusions on the lubricants industry, after reviewing 240 patents, filed by the Oil Majors in 2018. The underlying data on each of the 240 patents is also shown in the ‘LubricantPatents’ tab.

We are most impressed by the intense pace of activity to improve engine efficiencies (chart above), across over 20 different categories. As usual, we think technology leadership will drive margins and market shares. ‘Major 1’ stands out, striving hardest to gain an edge, by a factor of 2x. ‘ Major 2 has the ‘greenest’ lubricant patents, across EVs and bio-additives. Major 4 has the single most intriguing new technology in the space.

The relative number of patents into Electric Vehicle Lubricants is also revealing. It shows the Majors’ true attitudes on electrification, in a context where they are incentivised to sell new products into the EV sector. Our lubricant demand forecasts to 2050 are also noted.

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