Chinese petrochemical firms see technological upgrading as the best way to reduce costs and protect the environment
By Wang Jiping
As sustainable development initiatives and alternative energy projects have boomed in recent years, fossil fuels have assumed a less prominent role in our daily lives. In line with this trend, Chinese petrochemical firms find themselves under intense pressure to implement green energy projects in the face of growing public awareness of pollution caused by fossil fuels, as well as fluctuating oil prices.
Impact of Energy Structure Adjustment
The world’s energy sector finds itself in a period of profound adjustment. The energy supply system is emphasizing environmental sustainability. Many national governments take it as their own responsibility to actively develop and utilize renewable energy, and therefore have introduced a series of policies and development goals to support companies in the development of renewable energy.
In 2014, China’s State Council issued the Strategic Action Plan for Energy Development 2014-2020.
“The mix of energy sources should be optimized, with the development of clean low-carbon energy as the major goal of energy structure adjustment,” the Action Plan read. “Both the development of non-fossil energy and the efficient and clean utilization of fossil fuels-based energy should be stressed, in an effort to gradually decrease coal consumption and increase natural gas consumption. The consumption of renewable energy sources such as wind, solar and geothermal energy, as well as nuclear energy, should be increased substantially.”
“It’s not hard to understand why in recent years, renewable energy sources such as wind, electricity and solar energy have become deeply integrated into people’s lives,” explained Liu Yijun, a professor at the China University of Petroleum. “What’s more, China and a number of other countries have gradually raised the bar of environmental protection for such enterprises, which has had an impact on the production confidence of traditional petrochemical enterprises, especially those with limited strength.”
Zhuang Guiyang, a researcher at the Institute for Urban and Environmental Studies under the Chinese Academy of Social Sciences, told this reporter that most oil explorers are “vintage” enterprises, who use outdated and inefficient equipment. Eventually, using such equipment will become prohibitively expensive as more efficient equipment becomes available, incentivizing firms to update the gear they use.
Zhuang added that oil prices have been fluctuating in recent years, which has not only impacted petrochemical firms across the world, but has also disoriented small and medium petrochemical enterprises and investors, exacerbating the panic felt throughout the industry.
Optimizing Technology and Products
Faced with such pressure, how will traditional petrochemical companies continue to survive, and what efforts have been made by such Chinese companies in this regard?
“First of all, what’s noteworthy is that although clean energy has rapidly developed, there has been no direct evidence so far that fossil energy will be replaced by non-fossil energy completely,” Zhuang said. “That is to say, there’s still room for development for the traditional petrochemical industry.”
However, the industry must adjust in several ways, Zhuang added.
First, the industry’s largest firms should conduct mergers and acquisitions of small and medium enterprises. Reasonable, moderate market competition will result in “survival of the fittest”, optimizing the industry chain.
Second, enterprises should conscientiously modernize their aging equipment and invest in research and development to make full use of raw materials and improve the quality and purity of their products.
“Quality products are always popular and competitive,” Zhuang explained. “Take low-price petroleum products for example. These products usually contain petroleum acids or nitrogen. Although some petroleum acids have special purposes, in petroleum products, they are often harmful. The use of such petroleum products does not meet the requirements of environmental protection. It is not conducive to safe production either. ”
Han Zengping, chief engineer at the technology center of Jereh Oil & Gas Equipment in Yantai, Shandong Province, said that it is indeed a path of sustainable development for both Chinese and foreign traditional petrochemical firms to explore ways to reduce production costs while improving product quality. Therefore, Jereh has successively launched the “smart oilfield” and “green oilfield” programs, aiming at the rational use of existing equipment and materials as well as the reduction of pollution.
For example, in petroleum production and processing, storage tank cleaning has long been a difficult task for companies. After years of usage, crude oil begins to deposit its impurities on the bottom and walls of the tank, reducing the tank’s capacity. This harms the purity of crude oil, and the conventional cleaning method is scrubbing by hand. This leads to problems including low recovery rates of crude oil and pollution.
To solve this problem, Jereh has specially developed automated equipment to clean storage tanks. Compared with manual cleaning, Jereh’s automated cleaning greatly improves both safety and efficiency. Meanwhile, the rate of recovery of hydrocarbons in sediments on tank bottoms can be as high as 95 percent. At present, this set of equipment has drawn the attention of not only Chinese petrochemical enterprises such as Sinopec, but also enterprises in major international markets, such as ASEAN.
Liu Ping, director of the research center of the Sinopec Oilfield Equipment Corporation, said that Sinopec makes reasonable assessments regarding the value of its aging equipment and pipelines.
“By conducting assessments, our engineers determine whether the equipment is still valuable,” Liu said. “If such equipment can still be used cost effectively, we will recover and reconstruct related mechanical equipment as well as the cables and valves.”
China Report ASEAN 