News
BP halves dividend after record loss, but the future looks bright
Following a record $6.7bn quarterly loss, BP has halved its shareholder dividend after the coronavirus pandemic hit global demand for oil.
Future Fuel 11
Opinion
UKIFDA responds to government consultations
UKIFDA has submitted its views on the government’s ‘Future Support for Low Carbon Heat’ and ‘Energy Efficiency in Existing Homes’ consultations.
News
Senior industry figures launch energy transition advisory company
Leading oil and gas professionals Hamish Wilson, Bill Senior, Tony Smith, Martin Dru and Sarah Milne have launched BluEnergy, committed to enabling oil and gas companies to leverage their existing asset base to create low carbon energy streams, generating value whilst reducing carbon intensity. The team is made up of former oil & gas company professionals that bring a unique combination of low carbon and oil and gas industry expertise, as well as business transformation experience.
Hamish Wilson, co-founder of BluEnergy, says; “Our focus is to identify low carbon investment opportunities where companies already have a competitive advantage through in-country relationships and capital project capability. These can bring commercial advantage when deploying the following established low carbon technologies through early entry in emerging markets such as Solar and Wind”.
The challenge facing oil and gas companies has been thrown into sharp relief by the recent Covid-19 crisis, with companies fighting for survival, seeing cash flow, investor returns, supply chain, and the fundamental value proposition under threat with a highly volatile earnings stream and borrowing base. In contrast, companies with high proportions of renewable energy in their portfolios not only suffered less during the crash but have quickly returned to pre Covid-19 levels. The founders of BluEnergy, along with many other experienced industry professionals, feel that companies that do not embrace the opportunities presented by the energy transition and grow broader asset portfolios, may not survive long term. They do, however, believe that oil and gas companies are ideally placed to lead the transition, and that It’s time to move on from simply discussing the energy transition to actively design and implement strategies that protect and sustain both industry and the wider world.
“We are passionate about the energy transition and we know that oil & gas companies have the global reach, scale and skills to lead the energy transition” says Tony Smith, co-founder. “We recognise the cultural challenges in embracing this strategic move that starts the journey to the long-term transformation of the energy sector. BluEnergy is focused on delivering tangible low-carbon projects, and we believe we are well-positioned to support the oil and gas industry in moving towards a lower carbon intensity future and a more resilient share price”.
News
UKPIA welcomes FuelsEurope climate neutrality pathway
A FuelsEurope pathway describing how low-carbon liquid fuels could enable the transport sector to contribute to EU’s climate neutrality objective by 2050, has been welcomed by UKPIA. The ‘Clean Fuels for All’ pathway also shows that intermediate CO2 reductions of 100 million tonnes (Mt) are achievable by 2035.
John Cooper, director general of FuelsEurope, commented; “Today we are setting out an ambitious pathway for enabling transport to contribute to EU’s climate neutrality ambition by 2050, based on scale up of low-carbon-liquid fuels (LCLF) supply and use, across several transport sectors. With a clear societal and scientific case for far reaching climate action and taking into account the economic and social impacts of the coronavirus crisis, we respect that there will be no return to business as usual for the fuels industries.“
Partnerships for policy discussions
“With the focus increasingly turning to recovery and new investments, we believe now is the time to start policy discussions with EU and national policy makers, and customer stakeholders to design the enabling policy framework for the deployment of these essential low-carbon fuels.”
Low-carbon liquid fuels have a strategic role to play in the transition to a climate-neutral economy by 2050, particularly in sectors such as aviation, maritime and heavy-duty transport where no equivalent technological alternatives currently exist. These sustainable fuels are from non-petroleum origin with no or very limited, CO2 emissions during their production and use. First blended with conventional fuels, these low-carbon fuels will progressively replace fossil-based fuels.
John Cooper stressed; “Complementary to electrification and hydrogen technologies, low carbon liquid fuels will be essential throughout the energy transition and beyond 2050, ensuring security of supply, providing consumer choice and also building Europe’s industrial leadership.” He added; “We have worked very closely with our member companies over the last 3 years on the low carbon pathways for liquid fuels. This thinking has been the starting point for development of an extensive technology set by our industry which now has potential to be deployed across Europe to deliver low-carbon liquid fuels at substantial scale.”
A pathway aligned with the UKPIA vision
UKPIA voiced support for the FuelsEurope pathway which, it says, aligns closely with its own Future Vision Report, released in July 2019. The report outlined a belief that the downstream oil sector can be a force for positive change that can help all users of our products to reduce their carbon footprint.
‘Clean Fuels for All’ is the latest publication on the role of the downstream oil sector in a lower carbon world. The pathway follows on from FuelsEurope’s 2050 Vision and UKPIA’s own Future Vision, which sets out a potential blueprint for how proven and emerging technologies make the UK downstream oil sector a vital part of economic growth, while continuing to meet government net-zero ambitions.
UKPIA director general Stephen Marcos Jones, said; “Achieving the enormously challenging targets of reducing emissions to net-zero by 2050, will require a significant transformation of the UK and EU energy systems but the downstream oil sector and low carbon fuels can have a large part to play. FuelsEurope’s latest publication “Clean Fuels for All” and UKPIA’s Future Vision, continue to show the positive role in decarbonisation that our sector can have. However, it will require pragmatic and supportive policymaking to unlock this potential.”
Ambitious but achievable
The pathway could enable reducing emissions from transport in 2035 by up to 100Mt CO2/y and contributing to EU’s climate neutrality ambition by 2050 as John Cooper further outlined; “Evaluation of scenarios by Concawe describes first new plants to produce up to 30 MToe of low-carbon fuels by 2030, with an investment cost estimated at €30- €40 Billion. This would include several first-of-a-kind plants at industrial size for the newest technologies.
“By 2050, depending on the scenario and technology cost evolution, up to 150MToe of fuels could be produced with the cumulated investments in the range €400-€650 Billion.
“In the most ambitious scenario, climate neutrality could be achieved for all remaining liquid fuel in road transport, with a 50% reduction in carbon intensity for EU’s aviation and maritime sectors. All of these achievements would be fully consistent with the Clean Planet for All scenario.”
FuelsEurope is outlining a set of policy principles, which it believes is central to delivering the industry’s climate-neutral ambition, with these points serving as a start for discussion with policymakers, supply chain partners and customer groups.
John Cooper concluded; “This pathway is ambitious, but achievable with multi-stakeholder collaboration. These new technologies are exciting but capital-intensive and their development at scale will require investor confidence and political vision. Everyone must be on board. We call on EU policymakers to establish a high-level dialogue with all relevant stakeholders as soon as possible. For the fuels industry’s part, we are ready to take the lead.”
Click here to subscribe to Fuel Oil News, which next month features an in-depth analysis of the roles of alternative liquid fuels and hydrogen in relation to the UK government’s decarbonisation ambition.
News
UKIFDA challenges Irish government on biofuels
The trade association, UKIFDA, whose members supply not only heating oil for homes and businesses but also fuel for agriculture, construction, road transport, marine fuels and importantly fuel for back-up generators for hospitals, schools, care homes and data centres across Ireland, congratulates Fianna Fáil, Fine Gael and the Green Party on being elected to form the new government with Leo Varadkar and Micheál Martin sharing the Taoiseach over the 5 year period but urge consideration of alternative home heating solutions in the future energy plan.
UKIFDA chief executive Guy Pulham comments; “We want to work with ministers within government and newly elected Taoiseach Micheál Martin, who will hold the post until 2022 when Leo Varadkar takes over, in developing a pathway for off-grid heating in rural communities to help to achieve ambitions for a net-zero carbon economy. We are though, disappointed that there is not much detail in the published ‘Programme For Government – Our Shared Future’ with no specifics on numbers behind all the objectives. They say they are developing a new area-based and one-stop-shop approach to retrofitting, to upgrade at least 500,000 homes to a B2 by 2030 and provide €5 billion to part fund a socially progressive national retrofitting programme, targeting all homes but with a particular emphasis on the Midlands region and on social and low-income tenancies, but with the effects of COVID 19 on the economy how is this being done?”
Financial disadvantages must be avoided
“We will be emphasising to the government that we must not put the 686,000 oil heated homes across Ireland at a disadvantage. Our supply chain, for domestic liquid fuels (used for home heating and hot water) accepts the urgent need to decarbonise heating. Liquid fuel, more specifically a bio product, can be part of the solution to achieve net zero. We believe large scale electrification through the use of heat pumps is not the answer and government need to look at alternatives as this is not feasible, due to high installation and running costs of installing heat pumps for off grid homeowners.
“Importantly though, we are hopeful that statements such as – “As we set our society on a trajectory towards net zero emissions by 2050, it is vital that there is adequate time and effort devoted to working with communities and sectors in designing and delivering the pathway to achieve the goal in a fair way.” means the government are open to talking to our industry about biofuels.”
News
Addition of GoldenRod expands CTS distributorships
Centre Tank Services Ltd (CTS) has added another reputable, quality, and well-known brand to its list of distributorships with the announcement that it is the new agent of GoldenRod fuel tank filters for the UK and Ireland.
Goldenrod has been a leading filter brand, particularly popular in the agricultural market thanks to their compatibility with gravity systems, for many years. Their range of filters, designed for the removal of either particles or water content from diesel, petrol, kerosene and biofuels, includes the 495 Fuel Tank Filter, 496 Water Block Fuel Tank Filter and 497 BIO-FLO Fuel Tank Filter.
GoldenRod filters from US based Dutton-Lainson group, are widely recognised in the fuel industry thanks to their distinctive amber coloured bowl. Dutton Lainson were established in 1886 and have gone from a manufacturer of agricultural goods, to a leading manufacturer of quality products for the agricultural, marine, industrial, and automotive markets all over the world. This includes their market leading GoldenRod fuel tank filter range, making them a perfect addition to the distributorships held by Centre Tank Services.
As the new agent for the UK and Ireland, CTS has heavily invested in stock levels to remain a reliable source to its network of distributors.
Buyers or resellers should contact CTS for trade and quantity-based pricing.
Opinion
Calls for investment in hydrogen
The man behind plans for 3,000 hydrogen buses across the UK says a report by think-tank Policy Exchange, calling for more capital investment in hydrogen, is exactly the kind of action the UK government should be taking.
News
BP to cut 10,000 jobs as virus hits demand for oil
BP has announced plans to cut 10,000 jobs worldwide following the global slump in demand for oil. Having paused redundancies during the peak of the pandemic the CEO of the oil giant told staff at the start of this week that the company is responding to the economic fallout of the Covid-19 pandemic.
Chief executive Bernard Looney laid the blame squarely at the door of the drop in oil prices and the global collapse in demand for oil owing to the coronavirus pandemic as he told staff; “You are already aware that, beyond the clear human tragedy, there has been widespread economic fallout, along with consequences for our industry and our company.
“The oil price has plunged well below the level we need to turn a profit. We are spending much, much more than we make – I am talking millions of dollars, every day. And as a result, our net debt rose by $6bn in the first quarter.”
An industry reducing costs
The job losses represent about 15% of the oil group’s 70,000 staff worldwide with the jobs due to go by the end of the year. The London-headquartered group has not said how many jobs will be lost in the UK but it is thought the figure could be close to 2,000. BP employs around 15,000 people in the UK with the firm’s office-based workers expected to bear the brunt of the redundancies which will not affect any of its retail staff.
The changes are expected to significantly impact its senior ranks, cutting the number of group leaders by a third with the company saying it will make the senior structure flatter. The CEO emphasised that BP must reinvent itself and emerge from the crisis a “leaner, faster-moving and lower carbon company”.
Looney, who took over as chief executive of 111-year-old BP in February, said: “We will now begin a process that will see close to 10,000 people leaving BP – most by the end of this year. The majority of people affected will be in office-based jobs. We are protecting the frontline of the company and, as always, prioritising safe and reliable operations.”
The Brent crude oil price started the year at about $64 (£50) a barrel but plunged as low as $19 in April as the pandemic took hold. It has since recovered to about $35 a barrel but the drop has taken its toll on the industry.
Professor David Elmes, energy expert from Warwick Business School, said; “The job losses at BP are symptomatic of the wider challenges facing the industry.
“Coronavirus has reduced oil demand and the price per barrel has plummeted, but that has happened in a wider context of short-term and long-term decline.”
“All firms in the sector will all be looking at how they can cut costs, shift their activities to the lowest cost field, trim investment, and thinking hard about what dividend they can pay.”
News
Crown Oil adds to its fleet
The latest addition to the Crown Oil tanker fleet is ready to deliver HVO across the UK.
The 8-wheeler DAF tanker joined Crown Oil’s fleet last week, and with the registration number BIO HVO, it is no secret as to what it will be carrying across the country.
A spokesperson for Bury based Crown Oil, said; “We’re excited to announce a brand new edition to our fleet! Our green tanker is ready to deliver our green diesel across the UK.”
Speedy Fuels and Lubricants, a member of the Crown Group established in 2012 to serve the London region, also added a 6-wheeler DAF tanker to its own fleet in March this year. The company, which has gone from strength to strength and now deliver to customers nationwide also uses its new tanker to transport HVO.
Find out more about Crown Oil’s journey into low carbon fuels in the next issue of Fuel Oil News out in July.
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https://fuelondev.wpengine.com/subscribe/
News
Carbon capture project emerges from Humber refineries
Last week, in another significant industry step towards contributing to the UK Government’s Net zero objectives, Phillips 66, Uniper and VPI Immingham announced a memorandum of understanding to co-develop Humber Zero.
A multi-million pound carbon capture and hydrogen project on the South Humber Bank, Humber Zero will decarbonise eight million tonnes per annum of CO2 emissions, with the potential to target 30 million tonnes of CO2 emissions from the wider Humber cluster to the west of Immingham
News
Off grid homeowners benefit from low prices
UKIFDA says off grid homeowners across Great Britain are seeing prices of heating oil drop by up to 27% since the same time last year, according to the latest figures from Sutherland Tables, a provider of comparative home heating costs for the most common fuels in the UK and Republic of Ireland.
This drop has prompted UKIFDA to urge households who use oil to heat their home to reap the rewards of using liquid fuel as their heating source and to consider how they can benefit from these low prices and also consider their future energy options.
Guy Pulham, CEO of UKIFDA comments; “The Sutherland Tables data is fantastic news for everyone using heating oil as it confirms that this form of energy is the cheapest right now. The price of oil has continued to fall over the last quarter and the cost of home heating using oil is now cheaper than gas heating, regardless of the type of property you live in or whether you have a conventional or condensing boiler. The latest data shows that families in an average 3-bedroom house with an oil boiler in Great Britain are paying around £808 a year for heating and hot water, compared to £938 for those using a gas boiler, £1392 for those using air source heat pumps with underfloor heating, £1502 for wood pellets, £1551 for those using LPG, £1819 for those with air source heat pump with radiators and £2084 per annum for those on Electric.
“At the same time as enjoying low prices we do want to help domestic consumers of oil in the UK and Ireland understand how the decarbonisation of off-gas grid home heating could impact their home and impact the choices they need to make either now or in the future. As a result, we have over the last year been working with our Members and other trade associations on a pathway to decarbonising liquid fuel to help consumers find a personal pathway that fits the finances of the household but still contributes to lower carbon emissions in a timescale that meets net zero goals.”
News
UKIFDA supportive of Scottish energy consultation proposals
UKIFDA has urged the Scottish Government to consider the 135,000 households in Scotland who use oil to heat their homes when setting the energy policy in its response to the recent ‘Energy Efficient Scotland: Improving energy efficiency in owner occupied homes’ consultation.
Proposals outlined in the government consultation which closed earlier this month include the introduction of a legally binding standard to ensure all homes in Scotland meet Energy Performance Certificate (EPC) rating C, at point of sale or major renovation, from 2024.
UKIFDA chief executive, Guy Pulham comments; “In submitting our views to this consultation by the Scottish Government, we expressed our support for the proposals to improve the fabric of homes and improve energy efficiency and we agree EPC Band C is a realistic target. It is important though that this must be rolled out in a way which does not adversely affect owner occupiers who are already struggling with household costs. Energy efficiency improvements must not be pursued at the cost of making housing unaffordable for people and put added burden on those currently in fuel poverty. The focus must be on providing tailored support, including financial, and advice on the most suitable technology available to households.
“We agree that new homes should be first to adapt new technologies given the fabric of the building allows for a range of solutions but off gas grid homes are not the easy low hanging fruit that many seem to suggest. The very specific nature of the housing stock that our UKIFDA members serve – generally larger, older homes, in rural locations with poorer than average insulation means they are difficult to adapt to new technologies such as heat pumps and are perfectly suited to new drop in liquid biofuels.
“The design of these houses (and this includes a very high proportion of farmhouses and buildings) is such that retrofitting heat pumps will require a huge capital expenditure to improve the insulation of the properties. If this work is not carried out, the running costs of any form of heat pump would be prohibitive.
“A further challenge here is that the demographics mean that many of the owners are cash poor and asset rich (pensioners, farmers etc) and they will find it very difficult to raise the required capital to undertake major refurbishment of these homes. With the introduction of biofuels as a replacement to heating oil it would mean off grid households would not need such a large capital investment to improve the energy performance of their homes”.
In the run up to this consultation being published, UKIFDA has been lobbying the Scottish Government to consider liquid biofuels as part of any energy strategy and is currently working with other industry trade associations OFTEC and the Tank Storage Association on the introduction of a low carbon liquid fuel to replace heating oil.
Guy Pulham adds: “To ensure that the whole industry can invest and implement engineering advancements such as biofuels, we believe government should outline the energy efficiency plans in 2020 for implementation.”
“We also believe it is also important that once an Energy Efficiency standard is in place it should be subject to periodic review, where it can change with improvements such as technology, innovation, fuel prices and carbon emissions. In the longer term where it can be assumed that energy efficiency will improve over time, improved EPC targets could be then introduced.
“Ultimately, we would like policy-makers to recognise the positive contribution that evolving liquid fuels can make to an economically and socially fair energy transition. It is crucial to maintain a varied energy mix and a free choice of technologies by consumers to alleviate fuel poverty. By focussing on the consumer and meeting their individual needs, we can meet both the net zero targets and do so in a realistic, supportive fashion.”
News
SEA call for regulation welcomed by UKIFDA
Following the publication of a report by the Sustainable Energy Association (SEA) UKIFDA is looking forward to “digesting the detail” and “working with SEA on lobbying government to engage on these plans”
Calling on the government to bring in a ‘carbon intensity standard’ for the UK to drive down emissions in heating, the SEA report ‘Off Grid, Off Carbon: Regulating the Decarbonisation of Heat in homes off the gas grid’ followed a consultation with industry stakeholders. It outlines the benefits of introducing a carbon intensity standard for heating within the Buildings Strategy allowing for carbon reduction to be achieved by a combination of means including insulation, installation of new technologies or replacement fuel solutions, depending on consumer choice and situation.
The proposed standard would be administered at industry level and encouraged through a range of enablers to facilitate its introduction including rebalancing fuel duties, customer incentives and a robust enforcement framework. SEA argues that, together, these would complement energy efficiency improvements and encourage greater uptake of insulation and low carbon heating systems in a way that guarantees lower carbon emissions while also maintaining consumer choice.
It is this focus on the customer that ties in with the approach of UKIFDA. Representing a distributor membership that delivers over 70% of the domestic heating oil in the UK and Ireland UKIFDA accepts the need to decarbonize but is also lobbying for a customer focused transition plan emphasizing the need to achieve significant carbon reduction without putting unseasonable measures and costs on off gas grid homeowners which could lead to fuel poverty for many.
Highlighting the SEA report, CEO of UKIDFA Guy Pulham stated; “We are currently digesting the detail but the idea of a customer focused transition plan for oil heating ties in with our own consumer focused blog and our commitment to ready our part of the supply chain for increasing percentages of biofuels in the 2020s.
Collaborations
A collaboration at the start of 2020 between trade associations OFTEC, the Tank Storage Association (TSA) and UKIFDA showcased a future vision for liquid fuels which detailed steps to be taken toward a transition to 100% biofuel to replace heating oil in 1.5m homes across the UK and 686,000 homes across Ireland, reflective of SEA’s vision for replacement fuel solutions as one contribution to carbon reduction.
In the light of the ongoing challenge of heat decarbonization Guy comments; “I look forward to working with Sustainable Energy Association on lobbying government to engage on these plans”
Jade Lewis, Chief Executive of the Sustainable Energy Association commented; “This report is a demonstration of how industry can collaborate to tackle some of the greatest challenges ahead of us, and there is no doubt that heat decarbonisation is one of those.
“At a time of great uncertainty is it paramount that regulation is introduced to provide confidence and stability so that investors and manufacturers of low carbon heating systems can scale up investment and production, encourage innovation, and upskill the workforce.”
She added: “The SEA is hopeful that the proposals put forward will influence Government plans to decarbonise the UK’s building stock and ensure that homes are fit for the generations to come.”
News
US oil price falls below zero for the first time in history
The leading representative body for the UK’s offshore oil and gas sector has warned the latest oil price developments could fundamentally undermine the ability of the industry to recover and serve the energy transition.
It comes as US crude oil prices continued to drop reaching the historic low on Monday evening, while the international benchmark Brent crude fared better with OPEC+ cuts due to take effect and storage constraints less pronounced, trading at just over $25 a barrel. While WTI is a localised trading market in the US, OGUK warned that it remains concerned about the continued low prices of Brent crude.
OGUK Chief Executive Deirdre Michie said; “While we have anticipated continued pressures on oil markets, there’s no getting away from the fact that this situation is a body blow for an industry already creaking under the strains of the impact of COVID-19 and sustained low commodity prices.
“The dynamics of this US market are different from those directly driving UK produced Brent, but we will not escape the impact. Ours is not just a trading market; every penny lost spells more uncertainty over jobs, our contribution to public services and to the just transition we all want to see. OGUK will be pressing the case for a COVID-19 resilience package to governments in the coming days which will focus on protecting the supply chain, jobs and our ability to continue to reposition ourselves for the future.”
As Coronavirus lockdowns continue around the world, the oil industry faces serious challenges to demand and supply chains resulting in the collapse of many prices and margins. With restrictions to travel and broader economic activity across the world, demand for transport fuels has dropped resulting in a twofold challenge, a drop in oil’s value and a consequential price war.
A deal announced last week between Opec and its peers to cut production by about 10 million barrels per day from May appears not to have been enough to convince markets that supply lines weren’t being flooded. The agreement was viewed as “too little and too late to avoid breaching storage capacity and to stop spot prices from falling”
Professor David Elmes, who leads the Global Energy Research Network at Warwick Business School and has more than 20 years’ experience in the energy and management consulting industries, said:
“The fact that oil prices have sunk to a level not seen since 2002 will set alarm bells ringing. It’s not just the price per barrel, it’s the wider challenges facing the industry.
“The battle to supply, whatever the price, is happening in a climate of both short-term and long-term decline in the demand for oil.
“We are starting to see how the coronavirus is reducing oil demand, but some industry forecasts were acknowledging a flattening off in long-term demand last year, before the pandemic began.
“All companies in the sector will be looking at how they can cut costs, shift their activities to the lowest cost field they can, trim investment, and thinking hard about what dividend they can pay.
“There will also be more serious conversations taking place.
“State-owned oil companies around the world will be having tense discussions with their governments about how long they can expect government sympathy for low prices. That will be made more difficult by governments needing to pump money into their economies to address the slowdown caused by coronavirus.
“The European-based large, international companies have started to say they will become less focused on oil and gas over time. There will be intense discussions on what can they do to move faster.”
News
UKIFDA submits its views on the Northern Ireland Energy Strategy
Liquid fuels trade association UK and Ireland Fuel Distributors Association (UKIFDA) has submitted its views on behalf of members on the Northern Irish Government’s Energy Strategy.
Designed to replace the existing Strategic Energy Framework in Northern Ireland, the Department for the Economy (DfE) is developing a new Energy Strategy and has called on industry, businesses and the public to submit their views and have their say on how the Government should best tackle climate change.
“UKIFDA is always supportive of climate change strategies and welcomes the development of the new Energy Strategy by the Department for the Economy in Northern Ireland,” says Guy Pulham, UKIFDA Chief Executive.
News
Calls for clarity on recent Budget announcements
Relief
Last week’s budget announcement brought relief to agriculture, rail, fish farming and non-commercial heating with all being exempt from the abolishment of the red diesel subsidy.
Whilst this news was well-received by UKIFDA, CEO Guy Pulham was ‘disappointed that the red diesel fuel duty relief freeze was not extended to the construction industry especially as a large amount of infrastructure projects were announced in the budget.’
News
Introducing E10 – ‘a welcome development’
UKPIA has welcomed the Department for Transport’s recent announcement that they are consulting on proposals to introduce petrol blended with 10% bioethanol, otherwise known as E10.
Whilst this is a recognition of the significant role that low-carbon liquid hydrocarbon fuels can play in combating carbon emissions, the downstream oil sector also urges the UK government to ensure that its introduction occurs in a pragmatic and consumer-focused way.
“Introducing E10 into the UK has been under discussion for a long time, and it is a welcome development that the government are now consulting with industry on how best to implement this evolution to the fuel landscape,” said UKPIA director-general Stephen Marcos Jones.
News
BP’s new ambition
Last month BP set out its new ambition to not only become net zero by 2050 or sooner, but also to help the world get to net zero. The ambition is supported by ten aims:
FIVE AIMS TO GET BP TO NET ZERO:
News
Ambitious low carbon investments
The UK Petroleum Industry Association (UKPIA) has welcomed the Department for Business, Energy and Industrial Strategy (BEIS) funding towards hydrogen projects at Essar’s Stanlow oil refinery and a renewable hydrogen Gigastack project which involves the Humber refinery.
ESSAR
Funding of £13 million has been awarded to the HyNet consortium, of which Essar Oil UK is a member. Plans include the development of a Low Carbon Hydrogen Plant at the Stanlow refinery. This will produce 3TWh of low carbon hydrogen whilst also pioneering carbon capture storage (CCS) technology to capture and store over 95% of carbon used in the process. The funding will also support a front-end engineering design (FEED) study for a new hydrogen-fired combined heat and power (CHP) at Stanlow.
“The HyNet project is one of the most ambitious low-carbon industrial cluster initiatives in Europe,” said Stephen Marcos Jones, UKPIA’s director-general.
“As well as showing more broadly how the downstream oil sector is vital to the UK’s ambitions to reach ‘Net Zero’ emissions by 2050, this really demonstrates just how critical the refinery is to the success of these efforts to decarbonise the economy of the north west of England.
PHILLIPS 66
Working in partnership with offshore wind company Ørsted, hydrogen producers ITM Power and with funding from BEIS, the Gigastack project will allow the Phillips 66 refinery site to utilise ‘green hydrogen’ produced from renewable energy in its operations and processes.
“This project illustrates the potential outlined in UKPIA’s recently published ‘Future Vision’ report,” said Stephen Marcos Jones.
“The project demonstrates the major role the UK’s downstream oil sector can play in the low-carbon energy transition. Working with renewable energy companies and in cooperation with government, this investment in ‘green hydrogen’ is an indication of how UK refineries can be world-leaders in decarbonising their manufacturing operations.
“Downstream oil companies such as Essar Oil UK and Phillips 66 have the experience, engineering expertise and business acumen necessary to make the transition to a low-carbon future a reality for the benefit of both industry and wider society.”
News
Downstream chief executive Tufan Erginbilgic to leave BP
BP has announced that Tufan Erginbilgic, chief executive of BP’s Downstream segment, has decided to leave the company at the end of March 2020.
Tufan Erginbilgic has been BP’s Downstream chief executive and a member of its executive team since 2014. In his time leading the segment – which includes BP’s global fuels, lubricants and petrochemicals businesses – it has delivered over $5 billion in underlying annual earnings growth and expanded in fast-growing markets, retail partnerships, electric vehicle charging and use of bioproducts.
“Under Tufan’s leadership, BP’s Downstream has been at the heart of our return to growth; what he has achieved in this time is extraordinary,” said Bernard Looney, BP chief executive.
“He has transformed the business, leading a team that has delivered impressive results time and again. I have always appreciated his strategic thinking, expertise and understanding of the business and will miss having him on the team.”
“I am very proud of what we have achieved together in the Downstream,” added Tufan Erginbilgic.
“We have gone through an incredible transformation, delivered against our clear strategy and built a strong platform for continued growth. I truly feel privileged to have led this business – we have talented, dedicated people with great capability throughout the organisation and I am confident they have what it will take to compete and lead through the energy transition.”
An engineer by training, Erginbilgic joined Mobil in 1990, transferring to BP in 1997, and has held a wide variety of roles in refining and marketing in Turkey, various European countries and the UK. He became head of BP’s European fuels business in 2004 and of its global lubricants business in 2006, before moving to head the group chief executive’s office. From 2009 he was chief operating officer for the eastern hemisphere fuels value chains and lubricants businesses. Before his current role Erginbilgic had been chief operating officer of BP’s fuels business globally, accountable for all BP’s fuels, refining and marketing activities.
Erginbilgic’s successor will be announced separately.
News
OFTEC supports installer transition to decarbonised world
OFTEC, which has been a leading voice in the oil heating industry for more than 25 years, is helping to equip installers with the training, skills and qualifications needed to thrive in a net zero energy market.
News
Creating a Taskforce for Liquid Biofuels
Trade Associations OFTEC, TSA and UKIFDA have kicked off 2020 with the launch of a future vision for liquid fuels ‘Supply Chain Strategy for Liquid Fuels’, which details the steps to be taken towards a transition to 100% biofuel to replace heating oil in 1.5m homes across the UK and 686,000 homes across Ireland.
The three trade associations will be joined by other trade bodies and industry representatives in a new ‘Taskforce for Liquid Biofuels’, which will use the policy proposals contained in this future vision document to support a transformational effect on the UK’s off grid heating market and enable Government to maintain a technology-neutral approach, as well as encourage all industries to find solutions.
UKIFDA
“Liquid fuel, more specifically a bio product, can be part of the solution to achieve net zero,” said Guy Pulham CEO of UKIFDA.
“Government talk about large scale electrification through the use of heat pumps, but we believe they need to look at alternatives as this is not feasible due to the high installation and running costs of heat pumps for off grid homeowners; the requirement for additional National Grid generation and infrastructure costs.
Recognising the Government’s targets on reducing fuel poverty, it is important any regulation around heat policy takes this into account. We can’t stress enough that electrification through the widespread use of heat pumps is not the only conclusion, especially for vulnerable consumers who might be adversely impacted if they install solutions which reduce emissions and carbon targets but lead to higher bills.”
OFTEC
“Our ‘Supply Chain Strategy for Liquid Fuels’ is a clarion call to Government to respond to the huge environmental challenges we face with practical and inspiring policies that could help the 2.2m oil heated homes in the UK and Ireland switch to a low carbon liquid fuel,” comments OFTEC chief executive Paul Rose.
Following detailed independent research that suggests that the cost of decarbonising liquid fuel for heating gives the best value to the consumer when compared with other low carbon solutions, we need policies to be ambitious enough for net zero but which also reflect the practical challenges and financial constraints of many households. Low carbon liquid fuels offer the highest carbon reduction impact for the lowest cost (Based on existing SAP 10.1 figures). Analysis also shows that sustainable, low carbon liquid fuels could be produced in sufficient volume in the UK, with the additional benefit of generating investment opportunities and creating new green jobs.”
TSA
“Together, we have developed an ambitious and realistic pathway, one which reduces risk, achieves short- and medium-term reduction in carbon emissions, puts the needs of the consumer first and encourages business to plan ahead in order to meet those needs,” adds TSA’s chief executive, Peter Davidson.
“The ‘Supply Chain Strategy for Liquid Fuels’ pathway sets five key challenges to the Government to:
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Oil-fired heating – time to back the most cost-effective option
Offering the best decarbonisation solution for oil heated homes, OFTEC says it’s time for government to back low carbon liquid fuels as the most practical, cost-effective solution.
OFTEC’s recently released ‘Industrial Strategy for decarbonising oil heated homes’ underlines the unique challenge of reducing heat emissions from off-grid properties presents, due to the diverse character, age, design, construction and sparse distribution of these homes.
Analysis of oil–heated properties in England alone reveals almost half were built before 1919 with hard to insulate, single-skinned walls, while 51% are detached and typically larger than average. These factors greatly contribute to their poor energy efficiency, with 97% falling into EPC Bands D-G¹.
Rural households also face additional challenges including lower disposable incomes² and significantly deeper levels of fuel poverty³. This means those least able to fund carbon reduction measures are living in the hardest and most expensive homes to treat.
OFTEC says it’s difficult to understand why current decarbonisation policy favours pushing oil heated households towards these expensive, disruptive solutions when a simpler, more affordable option can be developed which is less reliant on extensive retrofit work.
“Climate change is the biggest and most urgent challenge facing the world today and decisive action from all sectors of the economy is needed, including heat, explains Paul Rose, OFTEC CEO.
“Gaining consumer support for the necessary changes will be crucial to the success of any strategy. Without this vital part of the jigsaw, there is a risk that decarbonisation targets simply won’t be met.”
“Our strategy is based on in-depth, independent research which shows that for oil heated properties, low carbon liquid fuels offer the highest carbon reduction impact for the lowest cost⁴. Analysis also shows that sustainable, low carbon liquid fuels could be produced in sufficient volume in the UK, with the additional benefit of generating investment opportunities and creating new green jobs.
“Our industry is committed to delivering a 100% liquid biofuel by 2035, starting with a 30% biofuel and 70% kerosene blend from 2027, providing a fit-for-purpose solution which will command the confidence of consumers.
“OFTEC continues to work closely with the Department of Business, Energy and Industrial Strategy (BEIS) and other key stakeholders to gain support for low carbon liquid fuels but to achieve the wholesale changes required and successfully deploy this solution, full government backing will be required.”
http://bit.ly/OFTECStrategy
¹ BEIS Minister Written Answer, 29/10/2018 based on Analysis of National Housing Model input data, drawing from English Housing Survey 2014, Scottish Housing Condition Survey 2014, Welsh Housing Conditions Survey 2014
² DEFRA Statistical digest of rural England, June 2019
³ Renewable Energy Association Phase 3: Delivering the UK’s Bioenergy Potential
⁴ Based on existing SAP 10.1 figures
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UKPIA calls for action in energy manifesto
The UK Petroleum Industry Association (UKPIA) has launched an energy manifesto ahead of the December general election, calling on the next Government to take the actions needed to strengthen the UK’s economically vital downstream oil sector whilst supporting the industry’s evolution to contribute to ‘Net Zero’ carbon emissions goals by 2050.
UKPIA’s energy manifesto, Action Not Words, highlights three key areas that need to be addressed in the next parliamentary term to ensure the continued success of the downstream oil sector – an industry that currently supports 300,000 jobs and £21.2 billion to GDP – whilst laying the policy framework that will enable companies to pursue the development of low-carbon energy solutions.