Finding oil is one thing but when it comes to getting it to the market, the big challenges stem from the demand for cleaner and greener fuel. Refiners and distributors worldwide are facing new regulations to reduce the sulphur content of fuels and tighter government targets to cut carbon dioxide emissions.

In the “downstream” sector (the business of refining, production and distribution), gas-to-liquids technology that converts natural gas into diesel and other liquid fuels is “on the verge of commercialisation,” according to Al Troner, president of Asia Pacific Energy Consulting in Houston, Texas. “It could make a big difference.

“It gives us extremely clean and high-quality products and would be a bridge between conventional fuels and alternative sources — such as sustainable electric power and hydrogen fuel cells — that will not be available in quantity for many years. The one thing it can’t produce is gasoline for cars, but it does produce high-quality diesel fuel with a negligible sulphur content.”

Troner believes another development that will help in this area is the increased use of biodiesel, which can be made from plant oils. “If biofuels can be made in quantity from crops that don’t conflict with food needs, and so don’t force up the cost of bread and animal feed,” he says, “then in blends with conventional fuels they can make a big contribution to meeting the targets for reduced emissions set by the EU and others.”

However, a warning was sounded last week that the creation of a global biofuels industry could prove more difficult than originally predicted. A study by the management consultancy Accenture suggested that the food versus fuel debate would slow development and require government action to overcome the environmental challenges. Companies would find it difficult to justify the necessary investment in biofuel infrastructure until the size of the market became clearer. The report concluded that biofuels would take 10%-15% of the fuel market over the next two decades and that the first generation of fuels would rapidly be followed by more environmentally friendly variations such as butanol and other products made from waste.

Philip New, vice-president of BP Biofuels, says the company concluded after a review that biofuels were the only practical alternative to fossil fuels for the next couple of decades. “In part this was due to cost, in part to the need to use existing infrastructure and in part because of the technological challenges of hydrogen or battery power. Our task now is to build a large business sustainable not only in terms of profits but from the social and environmental point of view.”

New sees biofuels as having three great attractions: they can stimulate development in rural areas, help to reduce emissions and provide energy security in resource-poor countries that rely on imported fuels. He acknowledges concerns about biofuel crops competing with food sources and about the amount of carbon generated in the provision of fertiliser and the processing of the biomass from which fuel is distilled. But he believes these concerns apply largely to the first generation of biofuels and that recent legislation will stimulate the move to more advanced forms. Production facilities under development in Brazil, California and Britain will show how these concerns can be overcome.

“We believe the required technology either exists today or is within our grasp. There are two challenges: how we implement the technology to break through any barriers of scale and how we can create lots of fuel without impacting on biodiversity or food production.”

In Hull, in partnership with DuPont and British Sugar, BP is constructing a plant to produce 420m litres of biofuel a year from locally grown wheat. This will first produce ethanol, the most commonly used biofuel. But the site will also house a demonstration plant for the production of biobutanol, which is seen as an answer to several problems posed by existing forms. Unlike ethanol, biobutanol is resistant to water contamination and can use existing pipelines, pumps and storage tanks. It also burns more efficiently than ethanol and can be blended with traditional fuel in greater quantities. If the demonstration proves successful, the main plant could eventually be converted to biobutanol production.

In central Brazil, the latest plant to produce biofuel from sugar cane, a joint venture between BP and local companies in Edeia, burns discarded by-products to provide energy for the processing and composts the rest for fertiliser. “In terms of CO2 emissions, we estimate this plant is producing fuel at an 80%-90% reduction over fossil fuels,” says New.

Chris Skrebowski, consulting editor of Petroleum Review, says: “In the area of refining, the basic techniques haven’t changed much in 30 years, but now a lot of effort is going into cleaning up the fuel we use, especially in reducing sulphur content.

“The other feature is the progressive automation of refineries. The places are almost deserted these days and everything is done from a central control room. People no longer wander around turning taps. So engineers with computer and automation skills are required as well as fuel scientists.”

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