As Big Oil worries about the looming threat of renewable alternatives, with governments and international organizations pressuring countries and companies to curb fossil fuel production, petrochemicals will become increasingly important. As oil majors continue to invest in oil and gas projects, they want to ensure that their new exploration and production operations will be profitable in the long term, a question that is becoming increasingly uncertain. However, as demand for petrochemicals grows around the world, energy companies can be confident that if demand for oil in certain sectors declines, there will still be a use for their “black gold.”
When we think of oil, we often think of it as a source of energy, giving little importance to the other ways it is used. But much of the world’s oil is actually used to produce everyday products such as clothing, tires, digital devices, packaging, detergents and fertilizers. In 2018, petrochemical raw materials accounted for approximately 12% of global oil demand. This is a figure that is expected to increase significantly over the next few decades, as experts expect 10 million metric tons to grow in the petrochemical industry each year by 2050.
Big Oil is investing in petrochemical projects, with a particular focus on plastics, as demand is expected to increase significantly in the coming years. The International Energy Agency (IEA) predicted that plastics derived from fossil fuels will drive almost half of oil demand by 2050, as one of the last sectors to decarbonise. Judith Enck, founder and president of the non-profit organization Beyond Plastics, believes “Plastic is the plan B of the fossil fuel industry.”
Plastics are commonplace in the developed world, with governments now planning to limit the use of certain products such as single-use plastics. But as energy companies invest in expanding their petrochemical businesses, many are targeting their products in Asian and African markets, where they expect demand to continue to rise. Most of these plastics are currently produced in the United States and the Middle East, with China being the largest importer.
But many are worried about the increased production of plastics. Estimates suggest that only 9% of plastics ever created have been recycled, with most products ending up in landfills. A growing number of respondents around the world say they support banning single-use plastics as environmental organizations point out growing impact plastic waste on nature and wildlife.
But now engineers at West Virginia University think they may have the answer. Working alongside the US Department of Energy in a public-private partnership, engineers are trying to increase the recycling rate of single-use plastics and convert them into valuable aromatics used in the production of petrochemicals .
The main problem with recycling plastics through this process is that it usually releases large amounts of greenhouse gases into the atmosphere. The researchers aim to use a simple, one-step microwave catalytic process to recycle single-use plastics into high-value benzene, toluene and xylene (BTX) for use as petrochemical materials.
Braskem, Wang, research assistant on the project, Explain, “Ethylene and BTX aromatics produced from plastic recycling can be used as feedstocks to remake plastics.” Additionally, “it will reduce the demand for fossil fuel-derived ethylene and BTX aromatics from conventional petroleum refineries, resulting in reduced greenhouse gas emissions,” he said.
As uncertainty around sustained demand for oil over the next few decades grows, with much dependent on the development of renewable alternatives, Big Oil wants to ensure that its new investments will still see a return even if demand declines. Many energy companies got a glimpse of what falling demand could mean for them as the 2020 pandemic restrictions took effect, sending oil demand and prices plummeting. By expanding their portfolio of petrochemicals and converting oil into other high-demand products, companies can ensure that even in the face of uncertainty, they keep their business profitable.
While researchers are working hard to develop more sustainable petrochemical alternatives, such as bio-based plastics and specialty chemicals, these products are still significantly more expensive than fossil fuel-derived products. Despite a huge recent effort to develop renewable energy alternatives, alternative petrochemical production is still in its infancy, meaning oil and gas companies stand to benefit from the market gap beyond the time living from energy generated by fossil fuels.
But not all governments agree with Big Oil’s idea of focusing on petrochemicals, as they fight to decarbonize national economies. In Antwerp, Belgium, British company Ineos is facing opposition over the construction of a giant plastics factory. Ineos owner Sir Jim Ratcliffe has announced a $3.4 billion investment in the plant in 2019, with the intention of expanding the company’s petrochemical activities in Europe.
The plant would mark the biggest petrochemical investment in Europe, and Ineos expects it to create 450 jobs on site and 2,250 in associated businesses. Construction is expected to start later this year, but several NGOs and the Dutch province of Zeeland question whether the new ethylene ‘cracker’ will lead to increased production of single-use plastics as well as releasing more nitrogen into the environment. the atmosphere. . Seeing whether this project goes ahead or not could determine the development of similar projects by other oil and gas companies in the future.
Big Oil is betting big on petrochemicals as an alternative to oil used solely as a source of energy, as the growth of the renewable energy sector threatens to dethrone some of the world’s energy giants. However, many oil and gas companies are likely to face strong opposition from governments and climate activists in the process, which could prompt some to seek innovative technologies to establish low-carbon practices. without giving up oil.
By Felicity Bradstock for Oilprice.com
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