Reuse may drive new water spending in refining market
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The refining and petrochemical industries are known for their conservatism with regard to capital expenditure and new technologies. Demand for wastewater recycling may drive spending on equipment.
Water scarcity and environmental concerns are driving the petrochemical and refining industries – typically among the slowest to adopt new technologies related to water treatment – to embrace new methods for recycling and reusing wastewater. Although the Clean Water Act records of those industries have been relatively admirable in recent years, refineries and chemical plants are under constant pressure from the communities in which they operate to be responsible “neighbors.” According to research conducted by AWI and GWI, capital expenditure on water and wastewater equipment in the refining industry is projected to remain relatively flat over the next five years, growing by about 8 percent to $68.1 million in 2016 (see chart above). Greater demand for technologies that allow operators to reuse treated wastewater for boiler feed, cooling towers and utility operation however, could drive higher growth.
The availability of water has become a critical issue in Texas, which is still in the grip of what may be prove to be one of the most severe droughts in its history. The vast majority of America’s refining and petrochemical plants operate in the corridor between Southeast Texas and South Louisiana. While scarcity is not a pressing issue in Louisiana, facilities in Texas have gone on record in recent months expressing their fears about the practicality of operating in the Lone Star State in light of its water predicament.
It appears that operators in the United States have not prioritized reuse and recycling as urgently as their counterparts in emerging markets like China and India, but treatment providers believe that is changing. Arun Mittal, director of wastewater treatment applications for Aquatech, said he expects particularly strong demand for reuse and recycling within the next three to five years. Richard Oberholtzer, director of service solutions for Degrémont-owned Water and Power Technologies, said there has been a marked increase in activity in industrial markets for reuse and recycling.
“We’ve seen more opportunities in the last 12 to 14 months than I can recall seeing in my career to date,” Oberholtzer told AWI. “[Refineries and plants] want it for a lot of reasons. They want to be good corporate citizens, but they’re also looking at it from a risk management standpoint.”
Tom Schultz, director of sales and marketing for Siemens Energy Water Solutions, told AWI that any game change for reuse in the United States will have to be driven by new regulations or economics. He cited recent projects in Canada where oil sands upgraders in water-scarce northern Alberta are recovering and reusing larger volumes of wastewater to be re-integrated in their operations.
“Almost every petroleum company understands the cost of reuse and every one of them is anticipating that day in the future when they’re going to need reuse for economic reasons or environmental reasons,” Schultz said. “They’re all looking for that new silver bullet – that new solution that’s going to be more economically attractive than what’s currently available.”
There does not seem to be a clear “silver bullet” on the market at the moment, but equipment providers are thinking forward in terms of research and development. Schultz said reverse osmosis appears to be the choice for operators seeking to partially reuse wastewater streams to feed boilers and provide cooling tower make-up water. That water must be treated to high quality for use in boilers and as cooling water.
RO systems are ideal for operators looking to recover 60-70 percent of their wastewater streams, Schultz said, but higher recovery rates in the region of 90 percent may require more costly evaporation technology. Although evaporation can be cost-prohibitive in such a hyper-competitive industry, Schultz said environmental concerns and freshwater costs and availability are making the technology more common.
“You take a look at putting an evaporator in to recover wastewater – they can be tens of millions of dollars,” Schultz said. “It’s a lot of money and there has to be a significant environmental or economic driver behind it. There are a lot of people looking at more economical solutions right now, and I think the industry will eventually get there.”
Reverse osmosis has been a go-to technology for process water at petrochemical and refining facilities for many years. Other technologies such as electrodeionization (EDI) also appear to be making inroads despite setbacks that occurred during the technology’s introductory phase.
“We’re starting to see EDI a little bit,” Schultz said. “The economics haven’t proved out and there were some major failures back in the early days, some of which were associated with technology development and some of which were associated with improper pretreatment of the water. It got a bad name because of those issues. There is some potential there, depending on flow rates and water quality.”
Oberholtzer said facilities are beginning to embrace nanofiltration (NF) and ultrafiltration (UF) for pretreatment of water that flows downstream through RO systems and treatment of wastewater that will be reused for cooling towers, which require lower quality water than boilers.
Schultz said wastewater treatment in the refining and petrochemical industries has remained fairly standard through the years. Most facilities employ the same API oil/water separation technologies that were used as many as 80 years ago, he said, though much of that equipment has been upgraded to ensure compliance with evolving environmental regulations. As for treatment beyond oil/water separation, the use of membrane bioreactor (MBR) technology looks to be slowly gaining traction in North America.
“MBRs are becoming more popular compared to the more conventional biological treatment with a gravity clarifier,” Schultz said. “We see a few MBRs in North America. They’re more popular internationally right now. A lot of that is because in the United States most of the facilities are existing. The new construction is happening outside the U.S., where you’re seeing newer, more innovative technologies being put in.”
Treatment equipment and service suppliers agree that the petrochemical and refining industries in North America tend to be risk-averse and put higher priorities on core competencies when planning capital expenditure. As with other industrial markets in North America, it’s very difficult for a new entrant to get in on the action.
It will be interesting, however, to see what new technologies for reuse and recycling emerge in the years to come. Venture capital investments in the oil and gas industry are surging, and the confluence of cash and economic and regulatory necessity could shift the dynamics of a relatively flat market.