August 2022

100th Anniversary

History of the HPI: The 1990s: Clean fuels and emissions mitigation, M&A, GTL and the fieldbus wars

Much like several initiatives passed in the 1970s and 1980s, the 1990s were a decade heavily focused on environmental issues, with many new regulations being enacted to not only mitigate industrial and vehicle emissions but also to advance the production of clean fuels globally.

Nichols, Lee, Hydrocarbon Processing Staff

Much like several initiatives passed in the 1970s and 1980s, the 1990s were a decade heavily focused on environmental issues, with many new regulations being enacted to not only mitigate industrial and vehicle emissions but also to advance the production of clean fuels globally. As a result, refiners spent billions of dollars during the 1990s to install, modify, upgrade and reconfigure process units to adhere to new government regulations [e.g., the establishment of the reformulated gasoline program (Phases 1 and 2) in the U.S.].222 This trend is still progressing today. Additional greenhouse gas emissions reduction initiatives also emerged from the Kyoto Protocol in the late 1990s/early 2000s, a precursor to the Paris Agreement in 2016. Both agreements call upon nations to significantly mitigate carbon emissions.

New clean-fuels regulations led to additional refining capacity being built during the 1990s to reduce sulfur levels in transportation fuels. In conjunction with new secondary unit capacity builds, the refining industry increased total net crude distillation capacity by nearly 8 MMbpd, reaching more than 83 MMbpd by 2000.181 Although rocked by an economic crisis in the late 1990s, the Asia-Pacific region led refining capacity additions, adding more than 8 MMbpd (net) by 2000—China alone more than doubled domestic refining capacity to nearly 6 MMbpd within the decade.181

The 1990s also witnessed the increased usage of metallocene catalysts. Metallocene structures were first discovered simultaneously in the 1950s by Thomas Kealy and Peter Pauson at Duquesne University (U.S.), and by a different group comprised of Samuel Miller, John Tebboth and John Tremaine at British Oxygen (now part of Linde) in London, England—these groups worked with ferrocene, a type of metallocene.223, 224

A commercial use for metallocene was discovered in the 1970s by German chemist Walter Kaminsky while working at the University of Hamburg (Germany).225 According to literature, Kaminsky discovered that using metallocene with a methyl aluminoxane cocatalyst led to a novel pathway for olefin polymerization. This discovery led to many companies increasing their research and development budgets to produce new metallocene catalysts for polymer production (e.g., polyethylenes, polypropylenes, polystyrene). Many companies introduced proprietary metallocene catalysts in the 1990s, including ExxonMobil, Dow Chemical, BASF and Mitsui, among others.226

The 1990s also witnessed a surge in high-profile mergers and acquisitions, the advancement of gas-to-liquids (GTL) technologies and capital-intensive GTL plant builds, and the evolution of fieldbus technologies and the standards that govern them.

New fuel standards directives lead to a decline in sulfur content

One of the detrimental effects of modernizing societies is an increase in air pollution. Increased smog from fuel exhaust has been a challenge in many cities around the world for more than 70 yr. Many nations’ governments have enacted a host of regulations and standards to combat air pollution. For example, the U.S. began to enact new air pollution laws in the mid-1950s. These directives led to the Clean Air Act and various amendments, which gave more authoritative power to the U.S. Environmental Protection Agency (EPA) to mitigate air pollution. These acts/amendments also created federal standards for vehicle emissions (the history of the Clean Air Act and subsequent amendments are detailed in the June issue’s History of the HPI section).

The Clean Air Act of 1990 led to the creation of tiered emissions standards for vehicles in the U.S. The Tier 1 standard was introduced in 1991 and phased into the market between 1994 and 1997. Tier 2 was adopted in 1999 and phased-in from 2004–2009.227 The Tier 2 program marked the first time the U.S. EPA treated vehicles and fuels as a system.228 These standards applied to light-duty vehicles (i.e., vehicles ≤ 8,500 lb) and led to a significant decline in sulfur limits in transportation fuels (gasoline and diesel). Prior to these regulations, on-road diesel fuel sulfur content was more than 5,000 parts per million (ppm). To adhere to new emissions standards put forth in the Tier 1 program, new low-sulfur diesel fuel was introduced into the market in the early 1990s. This fuel met the new sulfur limit specification of 500 ppm, significantly decreasing total sulfur content in diesel fuel.229

The Tier 2 standard helped reduce sulfur content in gasoline by up to 90%. By early 2004, the corporate average gasoline sulfur standard was 120 ppm, with a cap of 300 ppm. This standard was reduced to 30 ppm with an 80-ppm cap in 2006.230 The Tier 2 standard also reduced sulfur content in diesel fuel to 15 ppm, which became known as ultra-low-sulfur diesel (ULSD). Subsequent regulations would further decrease sulfur content in fuels—the Tier 3 fuel regulation, adopted in 2017 with implementation to 2025, further reduced sulfur content in gasoline to 10 ppm.

In Europe, research by French and German scientists into smog mitigation in major cities in the mid-1950s led to the origins of new emissions standards in the region. Their work led to Directive 70/220/EEC in 1970, which was the impetus to setting emissions standards for light- and heavy-duty vehicles in Europe (this research was detailed in the History of the HPI section of the June issue).145 This directive eventually led to the introduction of the Euro 1 standard in 1992 (implemented for passenger cars in 1993), the removal of leaded petrol from filling stations in Europe and the adoption of three-way catalytic converters.144,146,147 The Euro 1 standard was replaced by Euro 2 in 1996, which reduced sulfur limits in diesel from 2,000 ppm to 500 ppm; Euro 3, introduced in 1999 and implemented in 2000, further reduced sulfur content in diesel to 350 ppm and gasoline to 150 ppm. Subsequent standards (i.e., Euro 4–6 and Euro I–IV) would continuously reduce sulfur content in transportation fuels to near-zero levels.

The implementation of European emissions standards in the early 1990s would eventually become a global standard for many countries around the world to adhere to new clean fuels regulations. For example, more than a dozen Asian nations started using European emissions and fuel quality standards in the late 1990s/early 2000s. Many still use these standards as a benchmark for sulfur content in transportation fuels. The same initiatives apply in other regions, such as Africa, Central and South America, and the Middle East.231

These new sulfur cap limits in transportation fuels have had significant impacts on refiners globally. To produce fuels that adhere to these standards (e.g., Tier 3 in the U.S., Euro 6/VI in Europe and other parts of the world), refiners must invest a significant amount of capital in new secondary units. Since the adoption of emissions and sulfur content standards in the U.S., Europe and other nations, tens of millions of barrels per day in new secondary unit capacity have been built at a cost of hundreds of billions of dollars.

Consolidation in the oil industry: Mergers and acquisitions that created mega-companies

The 1990s witnessed several significant mergers and acquisitions that created some of the largest integrated companies in the world. Combined, these deals exceeded $220 B and included the following:

  • bp and Amoco: In 1998, bp merged with Amoco in a more than $48-B deal, which was the largest industrial merger ever up to that point in time.232 The merging of the two companies created an energy conglomerate with a market capitalization of $110 B. The deal was complementary for both sides. bp, through Amoco, strengthened its refining and chemicals production and products marketing—Lord Brown (bp’s chief executive 1995–2007) said that through the merger, bp gained 9,300 fuel stations and five refineries that produced a total of 1 MMbpd.233 By merging with bp, Amoco gained a foothold on the international market, a weak spot for the company at the time.
  • bp Amoco and ARCO: Not even 1 yr after bp and Amoco merged, bp Amoco acquired the Atlantic Richfield Co. (ARCO) for $27 B. The acquisition significantly increased bp Amoco’s foothold in Alaska’s North Slope (U.S.) oil exploration and production operations, as well as captured 20% of California’s (U.S.) fuels retail market—at the time, ARCO owned approximately 1,200 fuel service stations in the state.234
  • Total and Petrofina: In 1998, Total acquired Belgian oil company Petrofina for $12 B. The deal created the third-largest company (TotalFina) in Europe, and the sixth-largest company in the world. The acquisition helped Total gain a more international foothold, increased the company’s refining and products marketing operations, and provided the new organization (TotalFina) with a market capitalization of nearly $40 B.235
  • TotalFina and Elf Aquitaine: Approximately 8 mos after acquiring Petrofina, TotalFina acquired Elf Aquitaine (Elf) for approximately $54 B.236 At the time, Elf was a major integrated oil and gas company and one of the largest petrochemical companies in the world. TotalFina not only gained sizable exploration and production operations in West Africa and the North Sea from Elf, but also its petrochemicals and chemicals production capacity, five refineries and Elf’s 6,500 fuel stations throughout Europe and West Africa.237 After the merger was completed, TotalFina Elf became the world’s fourth-largest company.237
  • Exxon and Mobil: In 1998, Exxon announced an $81-B deal to merge with Mobil, which would create the third-largest company in the world behind General Electric and Microsoft.238 The U.S. Federal Trade Commission (FTC) unanimously approved the merger in late 1999 dependent on the two organizations agreement to divest a sizable amount of assets. For example, the FTC ordered the two companies to sell more than 2,400 fueling stations in the northeast U.S., California and Texas; Exxon had to sell its refinery in Benicia, California, and agreed to stop selling gasoline and diesel fuel under the Exxon name in the state for 12 yr; and other assets. These demands from the FTC were the largest divesture ever asked by the commission up to that time.239 The merger not only created a mega-company with a market capitalization value of nearly $240 B, but also reassembled two pieces of John D. Rockefeller’s Standard Oil empire that was broken up in 1911.
  • Shell and Texaco: In 1997–1998, Shell and Texaco agreed to a partial merger of downstream operations and fuel stations in the west and Midwest portions of the U.S. The JV, Equilon Enterprises, operated eight refineries, 10 lubricant plants, more than 70 oil and product terminals, and more than 11,200 fueling stations and convenience stores.240 Equilon soon joined Saudi Refining (now Saudi Aramco) to create Motiva Enterprises, which eventually would operate one of the largest refineries in the world, the 630,000-bpd Port Arthur refinery in Port Arthur, Texas (U.S.). Shell would eventually retain all Equilon Enterprises and Texaco’s share in Motiva to pave the way for Chevron and Texaco’s $39-B merger in 2001.

Bintulu and Mossel Bay: The world’s first GTL complexes

The first wide-scale use of synthetic fuels production from syngas was in Germany in the 1930s and early 1940s. These facilities utilized the Fischer-Tropsch (FT) process, a chemical reaction that converts carbon monoxide (CO) and hydrogen into liquid hydrocarbons (e.g., transportation fuels). According to literature, by the mid-1940s, Germany had nine plants in operation that used the FT process. Combined, these plants produced approximately 600,000 tpy of synthetic fuels.241

FT synthesis was the basis for several plants developed by Sasol in South Africa beginning in the mid-1950s. These included Sasol-1–3 plants, which used coal as the primary feedstock, later transitioning to natural gas in the early 2000s—Sasol developed and commercialized its Slurry Phase Distillate FT process at the Sasol-1 plant in Sasolburg, South Africa in the early 1990s.242 Sasol-2 and Sasol-3 plants were built in the early 1980s as a direct effect of the oil crises of the 1970s—these plants accounted for $6 B in capital investments and utilized proprietary GTL technology from Sasol (the global oil crises of the 1970s were detailed in the History of the HPI section of the June issue).241

Sasol’s FT technology was then utilized for the Mossgas GTL plant, which, upon completion in 1992, became the world’s first commercial-scale GTL plant using natural gas as a raw material for syngas production.241 The Mossgas GTL plant, located in Mossel Bay, eventually fell into the hands of The Petroleum, Oil and Gas Corp. of South Africa (PetroSA)—the national oil company of South Africa—after its formation in 2002 upon the merger of Soekor, Mossgas and parts of the Strategic Fuel Fund Association.243 The facility converts natural, methane-rich gas into high-value synthetic fuels. According to PetroSA, the technology uses a series of conversions starting with the reforming of methane to carbon dioxide (CO2), CO, hydrogen and water. The CO-to-hydrogen ratio is adjusted using the water-gas shift reaction and the removal of excess CO2 in an aqueous solution of alkanolamine. The synthesis gas is then chemically reacted over an iron or cobalt catalyst to produce liquid hydrocarbons (gasoline, kerosene, diesel) and other byproducts.244

The Mossel Bay GTL plant has been expanded over the past two decades, reaching a total installed capacity of 36,000 bpd—a crude oil equivalent of 45,000 bpd. Sasol has also improved its FT-GTL process, which was used for Sasol’s second large-scale GTL plant, Oryx GTL. The Oryx GTL facility—a JV between Sasol and Qatar Petroleum—in Ras Laffan City, Qatar started development in 2003 and began operations in 2007. The 34,000-bpd plant was built at a total cost of nearly $1 B. Sasol would later provide its FT technology to Chevron for the nearly $10-B, 33,000-bpd Escravos GTL plant in Escravos, Nigeria, and the $3.4-B, 1.5-MMtpy Oltin Yo’l GTL plant in Uzbekistan.

Shell was another company that devoted significant resources to the development of a GTL technology and subsequent capital-intensive investments in new GTL processing capacity. In 1993, Shell commissioned its first GTL plant in Bintulu, Malaysia; however, research on this processing technology took decades to complete. Shell started conducting research on FT processes in 1973 at its labs in Amsterdam, Netherlands. The company first focused on coal-to-liquids conversion but later switched to natural gas as the primary feedstock.245 Within these tests, the company was able to create new catalysts to produce a few grams/d of hydrocarbon liquids from natural gas. By 1983, production increased to a few bpd at Shell’s pilot plant facility in Amsterdam.246

Less than a decade later, Shell opened the Bintulu GTL facility. The $850-MM, 12,500-bpd plant utilized Shell’s Middle Distillate Synthesis (MDS) process. According to literature,247 the MDS process is comprised of three basic stages. These stages include:

  • Stage 1: The production of syngas from the partial oxidation process of natural gas with pure oxygen via Shell’s Gasification Process.
  • Stage 2: The syngas passes through paraffin synthesis reactors equipped with proprietary Shell catalyst. These catalyst and reactors favor the formation of long-chained liquid molecules (wax), simultaneously minimizing the formation of gaseous compounds.
  • Stage 3: The intermediate and waxy synthetic crude oil molecules are converted and fractionated
    into high-quality products. The waxes are purified via a hydrogenation unit followed by advanced fractionation. Clean middle distillates and waxy raffinate are produced by a selective hydrocracking process (i.e., heavy paraffin conversion), followed by distillation.

The Bintulu GTL plant was later expanded to 14,700 bpd in the mid-2000s. Several years later, Shell and Qatar Petroleum commissioned the largest commercial GTL plant in the world, the $18-B, 140,000-bpd Pearl GTL complex in Ras Laffan Industrial City, Qatar (FIG. 1).

FIG. 1. View of the Pearl GTL plant. Photo courtesy of Shell.
FIG. 1. View of the Pearl GTL plant. Photo courtesy of Shell.

The fieldbus wars lead to a new standard in process automation. In the mid-1970s, the introduction of the distributed control system (DCS) by Honeywell and Yokogawa revolutionized process automation in the refining and petrochemical industries (the history of the DCS is detailed in the History of the HPI section of the June issue). This advancement in automation led to several new technologies to optimize plant operations, including the creation of fieldbus.

According to literature, fieldbus is the technology that provides a digital link between intelligent, microprocessor-based field instrumentation and the host DCS.248 Prior to fieldbus, field instruments had to be wired in a point-to-point configuration; fieldbus enabled these instruments to communicate with the DCS using a single wire.

The origins of fieldbus technology date to the mid-1970s with the creation of the general-purpose interface bus, a precursor to Intel Corp.’s Bitbus in the early 1980s. Throughout the 1980s, several companies developed fieldbus technologies for use in several different industrial applications, including process automation for the refining and petrochemical sectors. The proliferation of fieldbus technologies in the late 1980s–mid-1990s led to many different systems that were not compatible with competing technologies, and several international standards organizations fought for their fieldbus standard to be accepted by industry. This predicament—known as the fieldbus wars—led to many users trying to seek a unified standard that enabled them to utilize different/competing technologies (i.e., a plug-and-play solution).248 The fieldbus wars included competing standards in Europe (e.g., the French FIP vs. the German PROFIBUS, which the two later tried to combine) in the late 1980s/early 1990s and within the U.S. in the mid-1990s.249

In 1999, the leading fieldbus manufacturers at the time—ControlNet, Fieldbus Foundation [developed by the International Society of Automation (ISA) and purchased by the FieldComm Group in 2015], Fisher Rosemount (now part of Emerson), the PROFIBUS user organization, Rockwell Automation and Siemens—signed an agreement that put an end to the fieldbus wars.249 This agreement became the basis for the International Electrotechnical Commission’s (IEC’s) IEC 61158 standard. According to literature, the IEC 61158 standard grouped the different fieldbuses into types, but created common physical, data link and application layers.248 The standard enabled competing technologies to work with each other. Fieldbus is still in use today; however, it is being challenged by industrial Ethernet, a technology that has gained prominence since the 2010s. HP

LITERATURE CITED

222  Staff editors, “1999 HPI Market Data,” Hydrocarbon Processing, 1999.

223  Lowe, D., “The Nobel price that got binned,” Chemistry World, October 12, 2020, online: https://www.chemistryworld.com/opinion/the-nobel-prize-that-got-binned/4012568.article

224  Wikipedia, “Metallocene,” online: https://en.wikipedia.org/wiki/Metallocene#History

225  Bhagat, S., “Past and future perspective of metallocene catalyst: A review,” European Journal of Molecular and Clinical Medicine,” 2020, online: https://ejmcm.com/pdf_3246_7618147a47a174bbbae78af1ef473bb9.html

226  Thayer, A., “Metallocene catalysts initiate new era in polymer synthesis,” C&EN, September 11, 1995.

227  Transport Policy, “U.S. light duty emissions,” online: https://www.transportpolicy.net/standard/us-light-duty-emissions/#:~:text=The%20Tier%201%20final%20rule,summarized%20on%20the%20EPA’s%20website

228  U.S. EPA, “Gasoline sulfur,” February 22, 2022, online: https://www.epa.gov/gasoline-standards/gasoline-sulfur

229  DieselNet, “United States: Diesel Fuel,” online: https://dieselnet.com/standards/us/fuel.php

230  DieselNet, “United States: Cars and Light-Duty Trucks: Tier 2,” online: https://dieselnet.com/standards/us/ld_t2.php

231  European Environment Agency, “Adoption of the EU Euro emissions standards for road vehicles in Asian countries,” August 11, 2016, online: https://www.eea.europa.eu/data-and-maps/figures/number-of-international-environmental-agreements-adopted-1

232  Moore, J. F., “BP to acquire Amoco,” CNN Money, August 11, 1998, online: https://money.cnn.com/1998/08/11/deals/bp/

233  bp, “BP and Amoco’s mega-merger two decades on,” August 11, 2018, online: https://www.bp.com/en/global/corporate/news-and-insights/reimagining-energy/20-year-anniversary-bp-amoco-merger.html

234  Brooks, N. R., “BP Amoco will acquire Arco for $27 B,” Los Angeles Times, April 1, 1999, online: https://www.latimes.com/archives/la-xpm-1999-apr-01-mn-23311-story.html

235  CNN Money, “Petrofina, Total seal deal,” December 1, 1998, online: https://money.cnn.com/1998/12/01/europe/total/

236  Patton, S., “Total Fina, Elf agree to merge,” Associated Press, September 13, 1999, online: https://apnews.com/article/4f3f1dc9718b2de1cf55978899fae132

237  Company-Histories, “Total Fina Elf,” online: https://www.company-histories.com/Total-Fina-Elf-SA-Company-History.html

238  Kumar, B. R., “ExxonMobil merger,” Management for Professionals, November 2018, online: https://link.springer.com/chapter/10.1007/978-3-030-02363-8_9#:~:text=On%20December%201%2C%201998%2C%20Exxon,both%20Exxon%20and%20Mobil%20brands.

239  Staff writer, “Exxon-Mobil merger done,” CNN Money, November 30, 1999, online: https://money.cnn.com/1999/11/30/deals/exxonmobil/

240  Hamilton, M., “Shell, Texaco agree to partial merger,” The Washington Post, March 19, 1997, online: https://www.washingtonpost.com/archive/business/1997/03/19/shell-texaco-agree-to-partial-merger/39f7d2d1-97d0-443a-9a85-81bbea6896ea/

241  Glebova, O., “Gas-to-liquids: Historical development and future prospects,” The Oxford Institute for Energy Studies, November 2013, online: https://a9w7k6q9.stackpathcdn.com/wpcms/wp-content/uploads/2013/12/NG-80.pdf

242  D. Klerk, A., “Fischer-Tropsch refining,” PhD thesis, University of Pretoria, 2008.

243  PetroSA, “Our Company,” online: http://www.petrosa.co.za/discover_petroSA/Pages/Our-Company.aspx#:~:text=PetroSA%20was%20formed%20in%202002,Fund%2C%20another%20subsidiary%20of%20CEF.&text=The%20marketing%20and%20trading%20of,Oribi%20and%20Oryx%20oil%20fields

244  PetroSA, “GTL technology,” online: http://www.petrosa.co.za/innovation_in_action/Pages/GTL-TECHNOLOGY.aspx

245  Smith, R. and M. Asaro, Fuels for the future: Technology intelligence for gas-to-liquids strategies, SRI Consulting, 2005.

246  Shell, “Gas-to-liquids,” online: https://www.shell.us/business-customers/lubricants-for-business/sector-expertise/power-industry/turbines/gas-to-liquids.html

247  Carlsson, L. and N. Fabricius, “From Bintulu Shell MDS to Pearl GTL in Qatar: Applying the lessons of eleven years of commercial GTL experience to develop a world-scale plant,” Gastech, Bilbao, Spain, 2005, online: http://www.ivt.ntnu.no/ept/fag/tep4215/innhold/LNG%20Conferences/2005/SDS_TIF/050139.pdf

248  Miller, P., D. Hill and D. Woll, “Process control in the HPI: A not-so-sentimental journey,” Hydrocarbon Processing, July 2012.

249  Felser, M. and T. Sauter, “The fieldbus war: History or short break between battles?” IEEE International Workshop on Factory Communication Systems, 2022, online: http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.598.4977&rep=rep1&type=pdf

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