Itochu, Air Liquide eye hydrogen supply chain in Japan

Spanish Market: Emissions, Hydrogen, Oil products
26/02/21

Japanese trading house Itochu and its energy trading subsidiary Itochu Enex have agreed with French industrial gas supplier Air Liquide to develop a hydrogen supply chain near major Japanese cities and tap potential growth in demand to supply fuel cell electric vehicles (FCEVs).

The three firms are planning to jointly discuss the possibility of a project located in major Japanese cities to produce cost-competitive hydrogen for consumption in nearby areas and supply local hydrogen fuelling stations. They are also targeting to expand hydrogen supplies to the manufacturing sector and for industrial mobility use, such as trucks and buses.

Japan has pledged to ban sales of new gasoline-only cars and only sell electric vehicles by 2035 under its roadmap to achieve a decarbonised society by 2050. The policy is expected to increase demand for FCEVs, as well as fuel cell transport trucks for commercial use. Japan is projected to require 3mn t/yr of hydrogen in 2030.

Itochu, Itochu Enex and Air Liquide are targeting to jointly promote their hydrogen businesses in Japan and overseas, aiming to launch a global hydrogen value chain and explore opportunities to import hydrogen into Japan.

Itochu is planning a study into a hydrogen production and supply chain project in Japan's Kyushu region jointly with Japanese coke producer Nippon Coke & Engineering and French shipping firm CMB. The company and Itochu Enex are also jointly working on a project to develop an ammonia fuel supply chain in Japan and in Singapore.

Air Liquide began developing hydrogen infrastructure in Japan in 2015 and has since opened 13 hydrogen fuelling stations. Japan had a total of 137 hydrogen fuelling stations across the country at the end of 2020.

By Rieko Suda

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27/12/24

Viewpoint: California-Quebec carbon faces murky 2025

Houston, 27 December (Argus) — The joint California-Quebec climate market, known as the Western Climate Initiative (WCI), is on tenterhooks going into 2025, stymied by rulemaking delays but on the cusp of a more mature phase. Both California and Quebec are eyeing more-stringent future programs and have floated a series of changes over the past year and a half designed to achieve those goals. The California Air Resources Board (CARB) is considering moving its program's mandate from the present 2030 target of a 40pc reduction in greenhouse gas (GHG) emissions, compared with 1990 levels, to a 48pc reduction to keep the state on target to meet its 2045 goal of net-zero emissions. In line with this increased ambition, CARB will need to remove at least 180mn metric tonnes (t) of allowances from the 2026-2030 auction and allocation annual budgets to start with, and up to 265mn t in total from the program budgets from 2026-2045. CARB has floated other changes , including toughening corporate relationship disclosure requirements, increasing the program's cost-containment allowance price tiers and updating a portion of the program's carbon offset protocols. Quebec has considered removing 17.5mn t of allowances, which correspond to carbon offset uses for compliance in the province over 2013-2020. The Quebec Environmental Ministry proposed to address this by removing these allowances from the province's 2025-2030 auction budgets in a November 2023 workshop. Quebec is also mulling changing the current three-year compliance period to align with statutory 2030 and 2050 GHG targets. But this a move that California, which had discussed similar compliance period changes in April , has not revisited since. Quebec is considering tapering the limit for carbon offset use for compliance in the province by 2030 and transitioning over to a provincial reduction purchase mechanism in 2031, although regulators have not gone in-depth on how a replacement system would function. The WCI rulemakings have been marked by a series of delays over this year, pushing past projections from the end of last year that it would finalize program changes by the second half of 2024. Quebec, which was set to deliver a draft of program amendments in September, rescheduled to early 2025, with implementation expected in spring 2025. While the regulation was nearly complete in late September, the Quebec Environmental Ministry chose to postpone, since it cannot publish before California, said Jean-Yves Benoit, the agency's director general of carbon regulation and emissions data. CARB has signaled it intends to publish its package of rulemaking amendments in early 2025. The agency on 19 December confirmed it expects to "complete and release the regulatory package for a 45-day public comment period" in early 2025 but did not explain the delay. The agency may be waiting for a formal extension of the cap-and-trade program when the legislature resumes on 6 January. California lawmakers have given CARB explicit authority to utilize a cap-and-trade system to reduce GHG emissions out to 2030. CARB maintains it has authority to operate a cap-and-trade program past 2030, but program participants have stressed the need for formal certainty around the program to aid future planning. CARB will begin invoking the post-2030 budgets starting in 2028 for the program's advance auctions. The various delays have compressed the timelines California and Quebec must achieve their statutory target ambitions, making 2025 a potentially pivotal year. By Denise Cathey Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Viewpoint: Trump tariffs may inflate midcon fuel costs

27/12/24

Viewpoint: Trump tariffs may inflate midcon fuel costs

Houston, 27 December (Argus) — President-elect Donald Trump's threat to impose tariffs on all Canadian imports would increase costs for producing US midcontinent road fuels, which are largely refined from Western Canadian Select (WCS) crude. Trump said in November that he plans to impose a 25pc tariff on all imports from Mexico and Canada after he takes office on 20 January. Canadian crude is the top feedstock for Midwest refiners, accounting for 66pc of the region's crude runs in September, according to US Energy Information Administration (EIA) data. Parts of the Midwest — as well as California and the northeast US — lack sufficient pipeline capacity to process domestic crude or to receive refined products from elsewhere in the country, according to the American Fuel and Petrochemical Manufacturers (AFPM), which represents many US refiners. So AFPM wants Trump to exclude crude and refined products from his proposed tariffs. Most refiners in the US midcontinent depend on heavy sour crudes, with over 20 marketers and refiners importing crude from Canada in September, including BP's 435,000 b/d Whiting, Indiana, refinery; Cenovus' 151,000 b/d Toledo refinery in Ohio; Marathon Petroleum's 140,000 b/d Detroit, Michigan, refinery; and Phillips 66's 356,000 b/d Wood River refinery in Roxana, Illinois. Generally, heavier sour crudes are less expensive than lighter, sweeter crudes like WTI. The US in September imported 4mn b/d of crude from Canada, accounting for 62pc of total US crude imports and a record high for the month, according to EIA data. The US midcontinent imported 2.6mn b/d of Canadian crude in the month, also a record high for September. In 2023, the region imported 2.7mn b/d of Canadian crude, the highest annual imports recorded for the region, according to the EIA. Canada could move more of its crude through its 590,000 b/d Trans Mountain Expansion (TMX) pipeline to the Pacific coast, where it would head to international markets. US importers could also take more from countries like Saudi Arabia and Venezuela , which produce the heavy, sour crudes favored by refiners in the upper US midcontinent. Each supplied more than 200,000 b/d to the US in September, the largest exporters after Canada and Mexico, according to the EIA. Pipeline movements from the US Gulf coast to the US midcontinent would likely increase if the upper US midcontinent refiners try to replace Canadian heavy sour crude. The region received 23.5mn b/d of crude from the Gulf coast, as the southern US midcontinent processes WTI. But the region would probably face higher landed costs for crude originating from overseas. Refineries would have to be more disciplined with the increased feedstock costs that the threatened tariffs would impose, according to one market participant. The region would still have to rely on Canadian crude because US Gulf coast crude barrels would still cost more, and midcontinent refiners would have difficulty finding alternative sources. WCS Hardisty crude prices have averaged a discount of $17.08/bl to WTI Houston so far in the fourth quarter. For road fuel prices during the fourth quarter to date, Chicago gasoline prices averaged a 1.33¢/USG discount to the US Gulf coast and Chicago ultra low sulphur diesel averaged a 1.34¢/USG discount. But regional spreads between Chicago and the US Gulf coast could continue to narrow if midcontinent refiners reduce operating rates. By Hunter Fite Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Shell shuts oil unit at Singapore refinery

27/12/24

Shell shuts oil unit at Singapore refinery

Singapore, 27 December (Argus) — Shell has shut an oil unit at the 237,000 b/d Pulau Bukom refinery in Singapore to investigate a "suspected leak", said the Maritime and Port Authority of Singapore (MPA) and National Environment Agency (NEA) today. Shell informed the government agencies that they will have to shut one of its "oil processing units" at Pulau Bukom to facilitate investigations into a suspected leak. The exact oil processing unit cannot be confirmed, but it is a unit "used to produce refined oil products such as diesel". This means it is likely a crude distillation unit or a hydrocracking unit. Shell's initial estimates show that a few tonnes of oil products were leaked, together with cooling water discharge. Sea water is typically drawn to aid in the cooling process, according to the media release. This came after the 20 October leak at a pipeline at Pulau Bukom, when 30-40t of "slop" — or a mixture of oil and water — leaked into the sea, according to Shell. The gasoline market has shown little reaction so far with spreads being "stagnant" and "range bound", said a Singapore-based gasoline broker. But this could be because of a lack of market activity, with many traders away for holidays at the end of the year. The gasoil January-February spread last traded at $0.58/bl in backwardation at around 6:30pm Singapore time on 27 December, according to a Singapore-based gasoil broker. This marks a slight increase from an assessment of $0.55/bl in backwardation on 26 December, according to Argus pricing data. By Aldric Chew Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Viewpoint: US naphtha market poised for change

26/12/24

Viewpoint: US naphtha market poised for change

Houston, 26 December (Argus) — US Gulf coast naphtha supplies accumulated in the last half of 2024 amid faltering demand, with gasoline blenders representing a higher profile buying sector, but a pending refinery closure is set to tighten the market. Demand for all naphtha grades was much weaker coming into December because of a bearish gasoline outlook and as elevated octane prices dampened naphtha demand. Poor refinery margins encouraged refiners to run minimally, cutting back on refiner demand as well. Gasoline blenders' demand for naphtha dominated in 2024, which highlighted stronger naphtha prices in visible trades. Prices for good quality, low sulphur N+A naphtha into the gasoline blend pool averaged about 10-15¢/USG above generic reformer feedstock naphtha. Naphtha sellers were also keen to export, which moved larger volumes without engaging in volatile domestic spot markets. US naphtha exports this year through mid-December were up by over 50pc to average 272,730 b/d from a year prior, according to Vortexa data. From November to mid-December, naphtha departures from the US were up on the year by 66pc to 312,800 b/d. Despite overall increased exports in 2024, weakened Asia Pacific and European naphtha markets in the latter half of December diminished arbitrage opportunities. Heavy virgin naphtha (HVN) differentials to Nymex RBOB hovered in the mid-to-stronger 30s¢/USG discounts in the first half of December, compared with upper Nymex RBOB -40s¢/USG observed in the same period last year. However, these higher differentials were attributed more to the lower Nymex RBOB pricing basis than market strength. Comparative cash prices hovered around 160¢/USG year on year, despite a 10¢/bl hike in differentials in 2024. Supply, demand changes in store A major supply change in the Gulf coast naphtha market should tighten the ample supply of naphtha by February. LyondellBasell is on schedule to begin a staggered shutdown of its 264,000 b/d refinery in Houston, Texas, in January. The last crude distillation unit (CDU) at the site is expected to shut by February. The refiner is a steady supplier of premium quality HVN with very low sulphur, which is typically sold into the gasoline blending market. Depending on production rates, LyondellBasell, also known as Houston Refining (HRC) in naphtha circles, can load 10-15 barges of the premium quality HVN a month. However, Gulf coast naphtha remains well-supplied. ExxonMobil's third CDU at its 609,000 b/d Beaumont, Texas, refinery started operations in 2023, adding more naphtha production to the region. Naphtha exports were also significant on the demand front in 2024, despite Gulf coast naphtha export opportunities to Venezuela being curbed again on 18 April. US sanctions on oil trades to Venezuela were eased in October 2023, but reimposed by April this year due to fresh political conflict. Naphtha exports to Venezuela are currently restricted to joint-venture partners such as Chevron and Reliance. Some participants hope the incoming administration of president-elect Donald Trump will re-address oil trading with Venezuela, keeping this an item to watch in 2025. US naphtha exports to Venezuela averaged 57,600 b/d in 2024, up from 11,100 b/d during 2023, according to Vortexa, on relaxation of Venezuela sanctions from October 2023 through May 2024. Meanwhile, naphtha exports out of the Gulf coast were still focused on shipments to South America, led by Brazil and Colombia. Exports to Brazil averaged 48,600 b/d in 2024, up by 68pc from 2023 while naphtha arrivals in Colombia averaged 36,600 b/d in 2024, up by 36pc from 2023. Colombia buys light naphtha from the US for use as diluent and sells full-range naphtha out of Mamonal port to the US. By Daphne Tan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Viewpoint: Unified CO2 market remains in distance

26/12/24

Viewpoint: Unified CO2 market remains in distance

Houston, 26 December (Argus) — Washington state's carbon market enters 2025 on steadier ground than it stood on for much of the past year, but still faces hurdles before it is part of a larger North American market. Washington's cap-and-invest program has weathered a year of highs and lows between advancing its ambitions to link with the Western Climate Initiative and operating through much of the year under threat of repeal in the November state elections. The state Department of Ecology director Laura Watson began the state's quest to link with the WCI last year , as regulators looked to the larger, more liquid market to potentially temper the higher-than-expected prices over the first year of the market in 2023. Washington Carbon Allowances (WCAs) for December 2023 delivery surged as high as $70/t last year, according to Argus assessments. But the state has clinched several wins for its program this year. State lawmakers were able to pass a bill to smooth out several areas of potential incompatibility with the WCI earlier this year, along with California and Quebec agreeing to move forward into formal linkage talks in March . But a repeal effort, initiative 2117, seeking to remove the state's cap-and-invest program dampened prices and forward movement on linkage since January. WCAs for December 2024 delivery fell to the lowest price to date for the program at $30.25/t on 4 March, according to Argus assessments, as uncertainty over the future of the program quieted market participation. State voters backed the cap-and-invest program in November with 62pc against the repeal effort, but months of uncertainty has cost the state time and linkage progress as the WCI awaited the November results. Additionally, while Washington started its own linkage rulemaking in April to align the program with changes planned for the WCI, finishing it requires the joint market first finalize its own changes. The linkage logjam has left market participants feeling that the state's momentum is stalled for the moment, even as perception of the state's eventual joining remains a question of "when" not "if." Ecology says it remains in communication with the WCI members and is evaluating the impact of California's new rulemaking timeline. California has indicated over this year that it does not intend to focus fully on linkage until its current rulemaking is complete. Ecology estimates it will adopt its new rules in fall 2025, with the earliest the state could expect a linkage agreement in late 2025. Washington must still complete further steps required by state law before any linkage agreement can proceed, including an environmental justice assessment and a final evaluation of a potential joint market under criteria set by its Climate Commitment Act, along with public comment. California and Quebec must also conduct their own evaluations to comply with respective state and provincial laws. If this timing works out, Ecology would be part of joint auctions starting in 2026. Compounding the process is the potential threat posed by incoming president-elect Donald Trump, who is likely to try to reverse major environmental regulations and commitments. Trump sought ultimately unsuccessful litigation in his first administration to sever the link between Quebec and California in 2019. The administration pursued the case on the grounds that California's participation violated federal authority to establish trade and other agreements with foreign entities under Article I of the US Constitution, which sets out the role of the federal and state powers in commerce and agreements with foreign powers. Both California and Washington have undergone preparations in recent months to gird themselves for a legal fight with the incoming administration, and that may add further scrutiny to linkage for both states going forward, said Justin Johnson, a market expert with the International Emissions Trading Association. "I think that it will require them to be more vigilant about the process they use and making sure they dot their i's and cross their t's because I think that there will be some folks in the federal administration who would like to see that not happen," Johnson said. By Denise Cathey Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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