In my last blog, I set the scene around the impact of one of the most important pressures facing the oil and gas industry today—the circular economy.  Despite our research discovering a nearly twofold decline in growth, it’s not all bad news.  For instance, there are many ways of handling waste in developed regions.

The European Union, which restricts the landfilling of organic waste, burns almost 42 percent of its waste; the United States burns 12.5 percent.[1]  Plastics have a high Btu[2] content, some higher than coal or wood. One plastic bottle can provide electricity for a computer for almost half an hour.  Such facts are music to the ears of energy companies—a simple solution with a high value.

But while it doesn’t beat landfill at the bottom of the list for handling plastics, burning is among the lowest values. Using Polyethylene terephthalate (PET) as an example, landfill costs about 3 cents per pound (CPP), while the burn value is calculated to be a positive 3 CPP.  The value in a repurposed, composite material is 12 CPP.

The greatest value of PET waste is as mechanical recycle, which is nearest the virgin polymer price, since consumer product companies like to claim “recycled content” on products or packaging.  The products of chemical recycling[3] can yield more valuable products, which, as technology is developed, represent significant revenue and margin opportunities (Figure 1).

 

Source: Accenture Research calculations and analysis; Plastics News; USITC trade statistics, Fuel value based on electric power delivered gas costs ($/Btu) and plastics Btu content; reuse is composite value, per discussion with producers; recyclingmarkets.net


Squaring the circular economy

So how can producers tackle their future?

  • Tap into technologies: Producers need to embrace multiple polymer waste streams, not only single-use plastics, but also rubber, composites, textiles, and so on. They need to overcome the challenges of recycling plastics film and multilayer packaging cost effectively.

    There are pyrolysis and gasification technologies which can handle “dirty” plastics waste and even create valuable fuels and chemicals from the contaminants in paper or plastics waste stream. With these technologies, a greasy pizza box, a half-empty ketchup bottle or an old T-shirt could be converted into fuels or chemicals.
  • Optimize waste value and flow: Refinery-petrochemical sites are ideal for incorporating recycling technology, especially chemical recycling, pyrolysis and gasification. Here, all types of polymers and organic waste are handled. By-product streams can flow back into refining and petrochemical processes as feedstock to polymer plants. They can blend into fuel products or even be used for the refinery internal fuel system.

    A future model could involve Scale Circular Integration (SCI), where some level of processed waste returns to an integrated refining or petrochemical site.  The waste gets sorted, cleaned and ground according to various requirements for optimal value and flow.  New technologies and software for sorting waste (like infra-red and near infra-red laser sensors or detectors), artificial intelligence, machine learning and other Industry X.O technologies can help to scale. 
  • Build on advantages: Back-integrated petrochemical companies (those having refining or ownership linkages to feedstock sources) with scale process facilities in brownfield locations close to population areas—such as in The Netherlands (Amsterdam, Rotterdam, Antwerp), Houston, Philadelphia, Shanghai, and so on—mostly avoid “not in my backyard” (NIMBY) issues.

    These companies are experts at process manufacturing, scaling and optimizing at a level not found in many other industries. They also have access to capital and are familiar with large capital projects. Such sites have strong existing infrastructure links to rail, port and road. And the companies have superior market and technical knowledge of the resulting products, complete with scale sales, marketing, technical support and research and development.

A matter of scale

One of the biggest hurdles is the supply chain and the large area needed to store and process plastics waste. For example, based on a simple calculation, to feed a 500 kmtpy polymer plant with chemically recycled waste plastic would need about 100 trucks a day.  The trucks could deliver bales of waste plastic as well as acreage for storing and sorting. But, large scale refinery-petrochemical complexes also typically have water access and can instead accept plastics waste by barge.  In this way, congested port areas could be freed up, alongside brownfield sites where space is at a premium.

For the energy industry, collaboration among refiners, petrochemical and polymer producers, catalyst suppliers, waste handling companies, logistic providers, universities, recyclers and government is key.  Now is the time to think creatively and bring technologies together to meet the waste challenge, while discovering new revenue and profit growth.

If you’d like to talk to me about any of the issues raised, please get in touch.

[1] https://www.nationalgeographic.com/environment/2019/03/should-we-burn-plastic-waste/
[2] British Thermal Unit
[3] Chemical recycling is the breaking down of plastics to its original raw material (or depolymerization), as well as into other fuels or chemicals (from technologies like pyrolysis, catalytic cracking & reforming, hydrogenation or gasification).

Paul Bjacek

Principal Director, Resources Research Lead, Accenture

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