HYDROGEN DISTRIBUTION
AT THE
OOSTERHORN PORT
The sustainable use of hydrogen gas
STEF HELDER
University of Groningen
Faculty of Economics and Business
Master Thesis - Technology Management
Preface
In front of you lies the thesis that is written for the final project of my master study Technology Management at the faculty of Economics and Business at the University of Groningen. The thesis is the result of six months of reading, observing, thinking and writing about hydrogen, and synergy. The aim of the project was to investigate the possible synergy opportunities at the Chemical Park Delfzijl for the shared service centre of AkzoNobel. However, even before my internship started, I came in contact with the NOM, who were planning on doing the same study. Therefore, the two studies were combined, and the focus was now wider, the Oosterhorn port area.
I would like to thank Hendrik van der Meulen and Gerald Jonker, my first respectively second supervisor of the University of Groningen, for their assistance, feedback, and suggestions during the research, which pushed me to be critical towards my results and writing. Furthermore, I would like to thank Bart Schanssema and the NOM for the opportunity to combine both studies and conducting the interviews together. I would like to say thanks to the people at AkzoNobel, who have always supported me during the period that I executed my research at the company. The discussions I had with them were very interesting, informative and educational and have given me valuable baggage for the rest of my life. I especially like to say thanks to Michael Roosendaal and Pieter Bakker who accompanied me during my project. Finally, I would like to thank the people that stand the closest to me, have been there for me and always give me their absolute support; in the past, now and in the future. Thank you for everything!
Management summary
The goal of the research is promoting the development of the industrial site Oosterhorn in Delfzijl to high dignity and sustainability. In order to give further shape to this objective an exploratory "substance flow study" is performed. The purpose of this study is to identify potential leads for the sustainable use of energy, residues, water and industrial gases of companies in the Chemical Park Delfzijl and some businesses located nearby.
The second goal of the thesis will be to advise AkzoNobel how it can increase its operational excellence by implementing one of the found projects; the distribution of hydrogen from the MEB to FMC. This resulted in the following research question:
How can Akzo improve its operational excellence by using a synergy possibility?
The answer to this question is given by researching possible projects, hydrogen distribution and synergy types.
Potential projects for the Oosterhorn port are discussed and a selection between these projects is made for further research during the substance flow study. Found projects are the utility infrastructure, bio-based economy, residual and waste substances and acquisition. Based on economic, ecological, time, costs, complexity and risk constraints, hydrogen distribution is chosen as projects for further investigation.
The cost for making hydrogen by steam reforming of natural gas depends primarily on the cost of natural gas. One kg of hydrogen will yield 2,58 € for the MEB. Several sources estimate the hydrogen steam reforming production cost, excluding capital, to be 150 percent of the natural gas cost. This makes the cost for FMC to produce hydrogen 3,87 € per kg, giving hydrogen distribution a margin of 1,29 € / kg (figure 1).
For the transport of hydrogen, there are three options: gaseous hydrogen by truck (up to 180 kg), liquid hydrogen by truck (up to 4000 kg) or gaseous hydrogen by pipeline (up to and larger than 4000 kg). The main factors affecting the choice of hydrogen transport are the application, quantity, and distance from the production site to the customer.
Figure 1. Production cost of H2 at FMC
Figure 2. Maximum revenues after 1 year (inclucing capital costs)
There are five different scenarios for truck transport, and one for pipeline transport:
Table 1. Transport scenarios
Scenario # Trucks # Trailer Total capacity (kg) Annual delivery (ton)
1 1 1 180 716,6 2 2 1 360 1433,2 3 3 1 540 1500 4 1 2 360 1433,2 5 1 2 380 1500 6 pipeline - 1500
Table 2. Revenue transport scenarios
Scenario # Trucks
Capacity
(kg/y) Capital cost
Annual costs
Transport
cost (kg) Margin (y)
relationship between costs and activities. Using ABC will have a positive impact on the understanding of the cost structure within networks. ABC particularly improves the understanding of the allocation of indirect costs. It is plausible to suppose that an ABC-chain analysis can be used for the distribution of costs and benefits over the partners.
The external supply of hydrogen to FMC should increase efficiency of the production process. FMC and MEB should make agreements about information sharing, delivery times and price conditions. Appointments to increase the efficiency of the product stream should be made. Framework synergy could be achieved by the changes to the logistical framework. These are changes on different processes in the chain, the location of supply points and movements between processes and inventory items. This involves optimizing the supply chain to achieve cost savings by, for example, deleting activities, reducing stockpiles, tuning product streams, etc. Scope effects are expected to occur, because the use of hydrogen from the MEB is cheaper than producing the products alone at FMC. An ABC-chain analysis could provide the first step for the distribution of costs and benefits over the partners. This could be done by: price adjustment, sharing the investment, transfer of a lump sum, ensuring / increasing revenue.
Abbreviations
Literature
ABC - Activity Based Costing
ABCD - Activity Based Costing & Decision support CPD - Chemical Park Delfzijl
ECR - Efficient Consumer Response EDI - Electronic Data Interchange GDP - Gross Domesic Product
ICT - Information and Communication Technologies JIT - Just In Time
MERA - Environment, Energy, Recycling and Waste park NOM - Northern Development Company
PSA - Pressure Swing Adsorption
SBE - Cooperating Companies Eemsdelta SCM - Supply Chain Management
SCOR - Supply Chain Operations Reference SME - Small and Medium Enterprises UFO - Utility Facilities Oosterhorn
Calculations
ADS Alternative depreciation system atm Atmospheres (pressure)
°C Degrees Celsius cal Calorie d Day GJ Gigajoule gm Gram h Hour hr Hour kg Kilogram km Kilometer kW Kilowatt kWh Kilowatt-hour L Liter m Meter MPa Megapascal
Nm3 Normal cubic meter Pa Pascal Q Heat sec (s) Second ton 1,000 kilograms Wc Work (compression) yr Year Chemical substances CH4 - Methane CO - Carbon Monoxide CO2 - Carbon Dioxide
CaCO3 - Calcium carbonate
Cl2 - Chlorine
H2 - Hydrogen
HCl - HydroChloric Acid
MgOH - Magnesium hydroxide N2 - Nitrogen
NH3 - Ammonia
NOx - Nitrous Oxides NaCl - Salt
C-PVC - Chlorinated PolyVinyl Chloride DME - DiMethyl Ether
EDC - Ethylene DiChloride MCA - MonoChloroAcetic Acid
MDI - Methylene Diphenyl DiIsocyanate PVC - PolyVinyl Chloride
SNG - Synthetic Natural Gas VCM - Vinyl Chloride Monomer
Companies
AkzoNobel MCA - MonoChloroAcetic Acid Company AkzoNobel MEB - Membrane Electrolysis Company AkzoNobel AUB - Akzo Utility Company
AkzoNobel Salt and Sulfate Company Aldel BioMCN Delamine Delesto Dow Dynea
E.ON Energy from Waste ESD-SIC FMC Kemax Lafarge Gips Lubrizol NAM North Refinery PPG
Rohm and Haas SGS
Stork
Table of content MANAGEMENT SUMMARY ... 3 ABBREVIATIONS ... 6 INTRODUCTION ... 10 1 INTRODUCTION ... 11 1.1OOSTERHORN PORT ... 11 1.2AKZONOBEL ... 12 2 RESEARCH METHODOLOGY ... 15 2.1.RESEARCH STAGES ... 15 2.2PROBLEM OWNERS ... 16 2.4RESEARCH QUESTION ... 17 2.5BUSINESS INTERVIEWS... 18
3 SUBSTANCE FLOW STUDY ... 20
3.1CURRENT SITUATION ... 20
3.2FUTURE ... 21
3.3UTILITY INFRASTRUCTURE ... 22
3.4BIO BASED ECONOMY ... 24
3.5RESIDUAL AND WASTE SUBSTANCES ... 25
3.6ACQUISITION ... 26
4 PROJECT CHOICE ... 28
4.1PROJECT COMPARISON ... 28
5 HYDROGEN DISTRIBUTION ... 30
5.1PURITY AND SECURITY ... 30
5.2PRODUCTION ... 31
5.3STORAGE ... 32
5.4TRANSPORTATION ... 32
6 HYDROGEN DISTRIBUTION COSTS ... 34
6.1PRODUCTION COSTS ... 34
6.2STORAGE COSTS ... 35
6.3TRANSPORT COSTS ... 35
6.4COMBINED STORAGE AND TRANSPORTATION COSTS ... 37
6.5CONCLUSION ... 38
7 HYDROGEN DISTRIBUTION SYNERGY ... 39
8 CONCLUSIONS ... 41
8.1RESEARCH QUESTIONS ... 41
8.2LIMITATIONS OF THE RESEARCH ... 43
8.3DISCUSSION ... 44
LITERATURE ... 46
APPENDIX A. INVESTIGATED COMPANIES ... 50
A.1AKZONOBEL MCA(MONOCHLOROACETIC ACID COMPANY) ... 50
A.2AKZONOBEL MEB(MEMBRANE ELECTROLYSIS COMPANY) ... 50
A.3AKZONOBEL UTILITY COMPANY (AUB) ... 51
A.5ALDEL ... 51 A.6BIOMCN ... 52 A.7DELAMINE ... 52 A.8DELESTO ... 53 A.9DOW ... 53 A.10DYNEA ... 54 A.11ESD-SIC ... 54 A.12FMC ... 54
A.13LAFARGE GIPS ... 55
A.14LUBRIZOL ... 55
A.15NORTH REFINERY ... 55
A.16PPG ... 55
A.17ROHM AND HAAS ... 56
A.19ZEOLYST ... 56
APPENDIX B. GLOBAL INFORMATION INVESTIGATED COMPANIES. ... 58
APPENDIX C. PROJECT SELECTION ... 60
APPENDIX D. HYDROGEN STORAGE ... 61
D.1LIQUID ... 61 D.2GAS – ABOVE GROUND ... 62 D.3GAS – UNDERGROUND ... 63 D.4PIPELINES ... 63 D.5COMPRESSORS ... 63 D.6EXPANDERS ... 64 D.7STORAGE CHOICE ... 64
D.8ANALYSIS OF STORAGE COSTS ... 65
D.9GAS STORAGE METHODOLOGY... 65
D.10GAS STORAGE CALCULATIONS ... 66
APPENDIX E. TRANSPORT CALCULATIONS ... 69
E.1TRUCK TRANSPORT METHODOLOGY ... 69
E.2PIPELINE DELIVERY METHODOLOGY ... 72
APPENDIX F. ASSUMPTIONS AND CALCULATIONS OF HYDROGEN DELIVERY ... 75
G.1NETWORKS ... 78
G.2NETWORK FORMS ... 79
G.3STRATEGIC ALLIANCES ... 80
G.4SCOPE AND INTENSITY OF STRATEGIC ALLIANCES ... 81
G.5SYNERGY IN NETWORKS ... 82
APPENDIX H. SYNERGY EFFECTS ... 83
H.1SYNERGY TYPES ... 83
H.2ECONOMIES OF SCALE AND SCOPE ... 84
H.3SCALE AND SCOPE EFFECTS IN NETWORKS ... 86
H.4EMPIRICAL STUDY ON SCALE EFFECTS IN NETWORKS ... 86
H.5CONCLUSIONS ... 87
APPENDIX I. MEASURING SYNERGY ... 89
I.1ABC ... 89
I.2MEASURING PERFORMANCE ... 90
I.3COST ALLOCATION IN THE CHAIN ... 91
I.4ALLOCATION MECHANISMS ... 91
Introduction
This thesis is part of the final project of my master study at the faculty of Economics and Business at the University of Groningen. The aim of the project was to conduct a substance flow study, in order to find potential synergy opportunities. The initial research provides recommendations for the companies located at the Oosterhorn port for potential synergy projects. The result of the research should be delivered in a written form as a master thesis, in English. The research and its results are presented during a presentation at AkzoNobel, the industry group of the SBE and a colloquium at the University of Groningen. The research and the thesis are defended during an oral defence, in the presence of the supervisors from the University of Groningen.
The synergy and substance flow study served as the underlying principles, e.g., for the problem analysis, proposed concepts and the design of the hydrogen case. Furthermore, the conclusions and discussion are based on the conducted interviews with the plant managers at the Oosterhorn port.
1 Introduction
Firstly, this chapter gives a brief description of the Chemical Park Delfzijl and other industrial sites located at the Oosterhorn port. Secondly, the more specific characteristics of AkzoNobel’s plants in Delzijl will be described.
1.1 Oosterhorn Port
Besides the CPD, the Port Oosterhorn also contains other clusters. East of the CPD the Metal Park is located. The most striking company is aluminium melter Aldel. Besides Aldel other to metal-related activities are located here.
Chemical companies that are not part of the CPD are also located at the Oosterhorn port. These companies do not produce products that are further processed by others on the CPD. Although these companies are not part of the CPD, it is possible to create links with companies at the CPD. Examples are steam supply or connections to the piping-network of nitrogen and compressed air. Companies located at the Chemical Park Valgen are Zeolyst, PPG, Rohm and Haas, Lafarge Gips, and E.ON Energy from Waste.
South of the Oosterhorn port the MERA (Environment, Energy, Recycling and Waste) park is located. The emphasis is on recycling. Companies active on the MERA Park include North Refinery and NAM.
Furthermore, south of the Oosterhorn port lies the company park Oosterwierum. This area is suitable for chemical companies, agribusiness, logistics and SMEs. The companies in Oosterwierum are therefore, very diverse. Large chemical companies like Dow Chemical and ESD-SIC are located here.
More specific information about AkzoNobel companies and other companies located in Delfzijl can be found in Appendix A.
1.2 AkzoNobel
AkzoNobel Base Chemicals produces and markets high-grade solutions based on chlorine and alkali for industrial buyers in the fields of medicines, glass, textiles, detergents, paper, high-grade synthetic materials and disinfectants. AkzoNobel has a prominent position in many markets in North and West Europe, and their chemicals play a key role in the manufacture of many everyday items.
The construction of the membrane electrolysis plant (MEB) marks the completion of AkzoNobel’s largest investment in chemicals in the Netherlands; almost two hundred million euro’s. The new development has also put an end to regular (train) transportation of chlorine in the Netherlands. The membrane electrolysis plant is a durable and innovative plant for the production of chlorine. This plant makes around ninety thousand tons of chlorine.
The basis of chlorine production is brine. Using electricity (electrolysis) and special membranes that are extremely fine filters, purified brine is separated into chlorine, hydrogen, hypochlorite and caustic soda. These products serve as raw materials for other consumers at the CPD, such as the chloroacetic acid plant (MCA), Teijin Aramid, Delamine and Delesto.
Besides business (production) units, there are also service units. These service units deliver various services to the business units. The fire department, security and infrastructure are some examples of functions that are provided by service units. AkzoNobel provides these services through a shared service centre; costs for these services are allocated to the companies on the chemical production site.
Figure 1.2 Operational Excellence in an Integrated Business Model (Highlighted are the products produced at the Chemical Park Delfzijl)
Figure1.3 Industrial Chemicals in the value chain
1.3 Reason for research
increases the chemical GDP. However, the study can also be used to generate new ideas about infrastructure.
Goal
The objective of the research is promoting the development of the industrial site Oosterhorn in Delfzijl to high dignity and sustainability. In order to give further shape to this objective an exploratory "substance flow study" is performed. The purpose of this study is to identify potential leads for the sustainable use of energy, residues, water and industrial gases of companies in the Chemical Park Delfzijl and some businesses located nearby.
2 Research methodology
In chapter 1, an introduction to AkzoNobel and the chemical park Delfzijl is given. In this chapter the research stages, the sources of information, the description of the problem and an analysis of the problem-owners will be given. Based on this information the problem statement of this research will be given.
The methodology discusses the research structure, the case analysis and the research problems. Stuart et al. (2002) suggest that the process of case study research should be broken down in five critical stages (figure 2.1). The first stage of the research process involves defining the problem statement, the goal, the research question, the sub-questions and the scope. The second stage is the development of measurement instruments to capture data for the analysis. The third stage is gathering data via the selected quantitative and/or qualitative methods. The fourth stage involves analyzing the data, to determine what has been learned and how to present it. The last stage is writing the report, what means in this case that the results have to be written down in the form of a thesis.
Figure 2.1 Case study research (Stuart et al., 2002)
2.1. Research stages
The methodology used in this thesis is based on Stuart et al. (2002) and consists out of several stages, the content of these stages will be discussed below.
Investigation of the problem area - Data sources used in the first stage are interviews with the
principals of this research, Michael Roosendaal; Manager Finance & Human Resources at the Shared Service Centre Delfzijl and Pieter Bakker, Manager Fire Department, Security and Infrastructure at the Shared Service Centre Delfzijl, the AkzoNobel intranet and additional internet sites. At the end of the first stage, the problem statement will be formulated.
Literature study - To support the research a theoretical framework will be developed. This will
be done by studying literature (theory and case studies), on the subjects of chemical products, processes, properties, substances, utilities and synergy possibilities. Data will be gained by studying articles and books found in the libraries of AkzoNobel and the University of Groningen as well as information found on the internet.
Interviews - Based on the knowledge of the literature study, plant managers and chemical
engineers at the Oosterhorn port will be interviewed. The focus of these interviews is on the substance flow that the company produces.
Collection of data for substance flow study - To perform the actual substance flow study
Analysis of substance flow study data - Based on the data collected at the production plants a
framework will be developed that contains the substance flow data of all production plants at the chemical park Delfzijl. The synergy opportunities can be examined and identified in this stage.
Report of results - When the results of the substance flow study are known, these results will be
reported to the industry group of the cooperating companies Eemsdelta (SBE) in a clear way, so that the information can be used to exploit synergy possibilities at the Oosterhorn port.
Evaluation - When the results are reported to the industry group, an evaluation of the research
process is made to ensure that the framework developed during the research is complete and correct.
Recommendations - The last stage of the research will describe recommendations on synergy
possibilities to the plant manager of the Oosterhorn port. These recommendations are based upon the results of the research.
2.2 Problem owners
The various parties involved and their goals will be discussed.
1. AkzoNobel Shared Service Centre Delfzijl - The shared service centre of AkzoNobel at
Delfzijl wants to use the research to gain insight into the possible new companies that can be acquired to the chemical park. The costs of shared services can then be split among more companies, making the total costs for individual companies lower. New companies will also add value to the production chain of AkzoNobel at the chemical park Delfzijl.
2. The Regiegroep Chemistry - The Regiegroep Chemistry wants to make the chemistry within
the Eemsmond area more environmental friendlier ‘greener’, but also wants to double the chemical GDP. In order to do this, chemical companies that produce in a green way need to be acquired to the Eemsmond area.
3. The Harbour Advisory - The Harbour Advisory is interested in ideas about the infrastructure within the Eemsmond area. New companies may need new infrastructure to be supplied with or deliver substances to other companies.
4. NOM - In co-operation with the Industry-group of the Samenwerkende Bedrijven Eemshaven (SBE), the Noordelijke Ontwikkelings Maatschappij (NOM) is conducting research on the possible synergy possibilities within the Eemsmond area.
2.3 Problem analysis
On the other hand, there is FMC, who produces hydrogen peroxide at the Oosterhorn port. It chose this production location because pure hydrogen was available at Methanor. However, Methanor ceased to exist causing FMC to build its own methane steam reforming facility to produce the needed hydrogen. FMC is interested in investigating the possibility to transport hydrogen from the MEB to FMC. The hydrogen of the MEB might be cheaper for FMC than producing it themselves. This way mutual synergy could be achieved.
2.4 Research question
A sharp and clear formulation of the problem theorem is tripartite: questions, objective and constraints. The objective is described in the paragraph above the issues and constraints will be defined below. In order to come to a correct problem theorem, a distinction between these three factors is required (De Leeuw, 2000).
Main question
Based on the problem description given earlier and the projects found during the substance flow study the following main question for research has been formulated:
How can Akzo improve its operational excellence by using a synergy possibility?
Sub-questions:
To generate / collect the needed information to answer the main question, it is divided into several sub-questions. Answers to these sub-questions should expose problem areas and provide insight in auditing the research question. Table 2.1 shows, the sub-questions and the chapters in which they are discussed.
Table 2.1 Sub-questions
# Sub questions Chapter
Theoretical
1 Which synergy projects are possible? 3 3 How can hydrogen be produced, stored and transported? 5
Diagnosis
2 Which project should be chosen for further research? 4
Design
4 How can hydrogen distribution costs be calculated? 6
Implementation
5 Which synergy effects could influence operational excellence? 7
Structure
Figure 2.2 Research Structure Theoretical framework
Chapter 3 and 5 are an orientation into the topics of possible projects and hydrogen distribution. It describes aspects and tools that are applicable to analyze the hydrogen distribution case.
Diagnoses
Chapter 4 is the diagnoses of how to choose a project. It discusses the variables used to choose a project.
Design
In this phase (chapter 6) costs associated to hydrogen distribution will be discussed. Different scenarios will be compared to determine the most profitable option to distribute hydrogen.
Implementation
In chapter 7 an analysis will be made to see how synergy effects could influence the operational excellence of Akzo Nobel. A theoretical background on synergy types, synergy effects and tools to measure and divide synergy is given in Appendix G, H and I.
2.5 Business interviews
Companies
In consultation with the NOM and Akzo Nobel, a list of 19 companies (Appendix A) to approach has been compiled. These 19 companies are visited in the period from July to October 2010. All the companies approached responded positively to the request to cooperate with the substance flow study.
Procedure
Before a company was visited the involved persons were shortly informed about the background and purpose of the research. First an invitation letter was sent before making appointments by phone. Subsequently, the talks were bilateral and conducted on a confidential basis. Of every interview, a report is made, which are checked for accuracy and completeness.
Results
3 Substance flow study
The goal of this chapter is to identify the potentially synergy projects at the Oosterhorn port. This chapter describes the current and desired situation of the Oosterhorn port. The results of the substance flow study at the 19 companies mentioned in appendix A will be discussed by describing the found synergy projects; utility infrastructure, bio based economy, residual and waste substances and acquisition. The first sub-question; which synergy projects are possible, will be answered in this chapter.
3.1 Current situation
The chemistry on the Oosterhorn, like in the Netherlands as a whole, can be characterized as basic chemistry. These substances are mainly basic inorganic chemicals (salt, chlorine, methanol and hydrogen) and related industries (aramid fibers, MCA, MDI, etc.). Oosterhorn is one of the few major areas of chemistry in the Netherlands. At present, 90,000 tons of chlorine are produced at the Oosterhorn. The chemistry in Delfzijl and surroundings provides direct employment to about 1,500 people. The number of indirect jobs (cleaning, maintenance, engineering, catering, retail as well as derivatives, etc.) can be estimated at around 2,500.
Compared with other Dutch chemical production areas, such as the Rijnmond area, the Geleen area, the Terneuzen area and the Emmen area, it can be concluded that at the Oosterhorn much basic chemistry is located, a sector characterized by relatively low market sensitivity. This is an advantage for Oosterhorn. A disadvantage is the lack of pipelines (for ethylene and other substances), something that Geleen, the Rijnmond area and Terneuzen have. The European competition is usually also connected to pipeline networks like for ethylene.
On the chemical park, a chlorine-related cluster is developed. There are underground cable and pipeline networks for nitrogen, compressed air and electricity. The further construction of utility networks is promoted by the UFO foundation (Utilitaire Faciliteiten Oosterhorn), which supports the businesses located at the Oosterhorn. UFO does so because such networks lead to increased efficiency and environmental benefits.
The Chemical Park Delfzijl has its own power plant, Delesto. This plant distributes steam and electricity directly to other companies at the Chemical Park Delfzijl. The electricity not used on the park, is supplied to the public grid. The park management also offers security, maintenance and disposal of waste.
In the near future, a further increase of production in the chlorine cluster is expected. For the basic chemistry, the margins (per unit) are low, however because of their basic nature products are difficult to replace, and a moderate but steady growth is expected.
environment and safety since 2006 chlorine shipments in the Netherlands are prohibited by the government. This means that chlorine should be locally produced and processed. Industries that use chlorine as a raw material must be located at the site where chlorine is produced.
3.2 Future
Oosterhorn is an area that plays a vital role in the economy of Groningen and has strong prospects. In order to realize those expectations, there should be actively worked on opportunities to capitalize them. It is the ambition to develop the industrial site Oosterhorn into a sustainable, well embedded space, easily accessible, large-scale industrial area of international importance, in the areas of fine green-and chlorine-related chemistry (light) metals, agribusiness, small businesses and energy.
It is the ambition to develop Oosterhorn on a sustainable way in which economic goals congregate social goals within spatial constraints, and with justice to the carrying capacity of nature and environment and the intrinsic value of ecosystems. Concrete interpretation to the sustainability ambition means:
• Balanced attention to the three Ps (People, Planet, Profits) in the process. • Considering the long term effects of new activities
• Taking into account different spatial scales in estimating these effects.
In order to implement these intentions, it is important to implement sustainability aspects in the further development of projects. Another aspect of sustainability implies that all stakeholders are involved in the process. A process that is properly, and in respect of all parties, designed offers better guarantees to a good result.
Besides the comprehensive assessment of projects a number of examples of sustainable frameworks are provided for the development of Oosterhorn. These are partly already implemented:
• Optimization of existing business. Benefits can be achieved (both economic and ecological) in expanding the existing chain management (joint use of energy, recycling waste materials and heat, a network of steam and industrial gases (nitrogen / compressed air, etc.). The ambition is to continue to work on 'closing the cycles’ and saving energy and raw materials.
• Transition of existing business towards more sustainable production processes, using green energy, organic materials (green chemistry).
• Development of renewable energy sources.
• Application of industrial ecological principles that lead to environmental benefits and energy gain. Through partnerships between businesses, it is possible to function as an ecosystem in which exchange of energy, water, raw materials and residual gasses yields lasting benefits for the cooperating companies.
Oosterhorn is in a good economic position. The companies in the field can benefit from global and European market developments (demand for light metals, clean energy, chemicals), while the region has raw materials (salt, magnesium, natural gas, energy, agribusiness, biomass and knowledge).
Sustainable development means that on the Oosterhorn port besides the continuous improvement of environmental performance by individual businesses a joint approach should be included. An approach based on emissions, waste and energy reduction can be achieved by closing production chains and creating common facilities such as energy and industrial gases production or water purification and recycling.
Based on the collected data (appendix B) about the use and consumption, the nature and extent of the residues and side-products and the characteristics of the various companies, a start is made to define a number of potential projects that contribute to sustainability. These projects include one or more of the following characteristics:
The joint use of facilities
Use of residues as raw materials to new processes Exchange of residues
At this stage of project identification only technical and chemical aspects are considered and issues such as organization, funding, market and business aspects have largely been ignored. It is evident that these aspects combined with the technical and chemical practicability determine the feasibility of a project and that these aspects must be considered in detail during the next stage. The identified projects as presented are still at the stage of ideas that need to be elaborated further when there is sufficient interest of involved companies or external parties (suppliers, investors). It is important that all stakeholders support the project. This stakeholder approach fits within the sustainable development of Oosterhorn, which seeks to balance the various interests. The projects are divided into four categories: infrastructure, synthesis gas, residual and waste substances and acquisition.
3.3 Utility infrastructure
This project provides a common utility infrastructure for companies operating on the industrial site Oosterhorn. This allows the delivery of utilities in a more efficient and therefore, cheaper and more environmentally friendly way. Another advantage for companies is that they no longer have to work on these utilities and can concentrate on their core business. The production and distribution of utilities must be on a central place and executed by one or several collaborating companies or suppliers. Heat, steam, water (industrial, demi, process, cooling water), industrial gases (N2, O2, air, H2, CH4, etc.) and substances (caustic soda, hydrochloric acid, etc.) are
centrally produced or collected and reprocessed through a pipeline network to be delivered to customers. Such a center (with the possibility for new entrants to start participating) also enhances the appeal of the terrain, and is of both current and future interest.
Some facets that play a role in further research into possible new connections within this infrastructure are:
• Incorporation of existing infrastructure (electricity, water, steam) • Distribution of other gases such as H2, O2, Cl2, N2, CH4, etc.
• The costs and benefits of increasing the attractiveness of the industrial estate for newly established companies (investing in infrastructure versus job creation).
• The technical feasibility of material flow (e.g. steam) distribution over relatively large distances.
• Technical and financial aspects (e.g. length of the pipeline, pipes under the canal). • Ability to connect with existing structures (Delesto, E. ON, North Water, Linde). • Organization for long-term management / organizational structure.
The strength of this project is to get everything (the whole Oosterhorn) linked. In some cases, the distance between companies is too big, but where this is technically, financially and organizationally feasible, one should seek to link.
Technical aspects and management of infrastructure must be closely matched. It is important to map out how different companies are located relative to each other. Joint purchasing (clustering) of certain products, may decrease the price. Of interest is that economies of scale arises, it provides cost savings. Suppliers will need to be involved in order to study the feasibility. The common need also needs to be big enough.
Plug & Play facilities
The companies at the Oosterhorn need an extension of plug & play features: a network of cables that provides them with electricity, steam, (demi) water, gases such as nitrogen, oxygen and possibly hydrogen. This includes the possible relocation of existing cable and pipeline network that may cause issues to future expansions. To strengthen the business climate, this infrastructure needs to be built in advance (so that new businesses can settle with ease by using ‘plug and play’).
Synergy possibilities
Dynea, PPG, Rohm and Haas Zeolyst note that compounds (e.g. caustic soda and hydrochloric acid) can be traded through a market-based platform from a central storage (this may include information about concentration, volume and pollutants). Lubrizol and Delamine are interested in the sale or recovery of hydrochloric acid.
Greening of energy (fuel, steam) will ensure further sustainability of the production of chemicals; Akzo Salt, MEB, Delesto, FMC and Aldel see this as an opportunity for the future. Rohm and Haas notes that companies should be possible to exchange power among themselves without involving the energy companies.
3.4 Bio based economy
Residues of several businesses that are currently used as fuel or are disposed, constitute as a potential resource for existing or new processes. This substance flows study identified several residues that can be regarded as raw material in different processes and through conversion; reprocessing, cleaning and production can be converted into basic chemicals, synthesis gas and products.
The finite nature of fossil fuels, the economic dependence on politically unstable regions and also the Kyoto treaty are drivers for sustainable synthesis gas. Synthesis gas is currently used mainly for the production of a wide variety of chemicals and the production of liquid transportation fuels. In smaller quantities synthesis gas is also used for producing electricity and synthetic natural gas (SNG). The main raw material for synthesis gas is natural gas. Besides natural gas, coal, oil residues and waste are used as raw materials.
Synthesis gas is used in the Netherlands for methanol synthesis, hydrogen production and electricity generation. The number of direct applications of synthesis gas is low, but through methanol, synthesis plays an important role in the production of many products. Methanol can also be converted into the most basic organic chemicals. Synthesis gas can be directly used to produce hydrogen (H2) and carbon monoxide (CO). In chain analysis synthesis gas is often
wrongly not seen as a product. It is not a finished product but an intermediate product that is multifunctional and distributed through pipeline networks.
The petrochemical industry uses so-called platform chemicals as raw material for the production of chemicals with a higher added value such as fine chemicals. If the agricultural sector would be able to use green materials, preferably in the form of organic waste, to provide for the production of such-existing platform chemicals it could have a significant impact on the further (greenish) economic development of Oosterhorn. Such a link can also be a serious step towards a more bio-based economy oriented. It should be examined in which way available residues in the region from both agriculture and the agro-industry can be used for the production of such chemicals. Moreover, the production of bio-DME (dimethyl ether) is an opportunity to greener the chemistry. DME can be used as a diesel substitute in heavy trucks and / or shipping, resulting in very high reductions in emissions of CO2, NOx, fine dust and noise. DME is extremely energy
efficient. DME can be made by dehydration of (green) methanol (Figure 3.1).
Synergy possibilities
North Refinery process waste oil streams to different fuels. This oil is potentially an important material for the production of basic chemicals, e.g. the conversion into ethylene and propylene by thermal cracking or synthesis gas through gasification. Synthesis gas can then be upgraded to a quality suitable for production of e.g. methanol, di-methyl ether (potentially clean replacement for diesel fuel engines) or Fischer-Troppsproducten (middle distillates, paraffin).
During the production at ESD-Sic large quantities of carbon monoxide and flammable gas that can be used to produce raw synthesis gas, are currently used as fuel to produce electricity. By further purification of this gas, mainly removal of sulfur compounds it can be made suitable for synthesis gas processes.
During the steam reforming of natural gas Dynea produces excess hydrogen (2000 ton / year). Currently, this is mainly used as fuel. Hydrogen can be used as raw material in synthesis processes. At the MEB, there is also a hydrogen flow released during the production of chlorine. Besides the listed companies BioMCN, FMC, and Rohm and Haas and Aldel are interested in synthesis gas and / or CO2 processing.
3.5 Residual and waste substances
Several companies release residual or waste substances that might be interesting for further processing at one of the companies on the industrial site Oosterhorn. These ideas are briefly described. Further monitoring these potential projects can be done by investigating feasibility in cooperation with the interested companies.
Lafarge gypsum
There is a waste stream from PPG that contains sulfates any application thereof at Lafarge is a possibility. However, this should be technically possible. This stream must meet the required specifications.
CO2
CO and CO2 are significantly present in the excess gas from the incinerators for several
companies. Besides its use as synthesis gas, CO2 can be used for example in greenhouses. These
greenhouses must, however, lie close to the chemical park to use this CO2, most likely this
project has no real chance of success and surpluses should be resolved internally.
Residual heat
Large quantities of residual heat from various companies are available. Direct or indirect use of the residual heat in the environment can be manifold, for example:
• Evaporation of aqueous solution (sea salt)
• Underground storage / combined with geothermal energy • Horticulture / greenhouse
• Application in organic rankine cycle power generation • City heating
Waste heat can be stored in an underground reservoir (e.g. salt cavern) as geothermal heat. This heat can be used for heating greenhouses. At Delesto, Akzo Salt, MEB, ESD-Sic and Aldel residual heat is available. FMC is interested in a heat flow of around 90 °C.
Low grade waste heat reuse is a difficult and complex issue. Especially the financial feasibility is an obstacle. Purification of (water) heat flow is often more expensive than new water use in practice because treatment costs are often high because of expensive purification.
An intelligent matching of supply and demand of energy is important, in the form of electricity and / or heat. Industrial waste heat should be used in a good way. One form of this is the use of biomass to produce green energy, Akzo MCA, Salt, Aldel, BioMCN and Zeolyst are interested in this subject.
Organic and inorganic residues
Inorganic (metal) combined with organic waste residues can be processed into synthetic gas, metals and synthetic basalt. This means that a number of residues that are currently released and elsewhere are removed can over time be processed locally. Examples include:
• Silicon-containing filter cake of Zeolyst
• Water flow PPG (contains sulphates, calcium and sodium) • Filter cake PPG (glass and dry matter)
• Waste oil, metal wastes and construction and demolition waste several companies • Sludge flow Akzo Salt (contains chlorine)
• MgOH / CaCO3 stream (containing chlorine) Akzo Salt
• Flow of brine from BioMCN and Delamine (cleaned reuse is possible at the MEB) • Dredge of ESD-Sic can be used as fuel
• Sulphuric acid of Akzo MEB can be sold to Zeolyst • Hydrogen from the MEB which is transported to Delesto
Waste water drainage
Waste water system for the collection, recycling and possible deployment of industrial water elsewhere. Due to the current low cost of (ground) water this is probably a project for the longer term. BioMCN, Delesto and Zeolyst are interested in the further execution of this project by investigating its feasibility.
3.6 Acquisition
Besides possible hassles between existing material flows and utilities respondents were asked about potential new businesses and industries that could settle on the Oosterhorn.
Ethylene
chloride (PVC) could be produced. The MEB, Delamine and Dynea are interested in this project. Currently, at Lubrizol PVC powder is chlorinated to C-PVC. If in addition to chlorine, ethylene is also available, Lubrizol is interested in the development of an alternative C-PVC synthesis with ethylene and chlorine as raw materials.
Oxygen
Akzo MEB mentions that an oxygen producer is required to produce hydrogen. However, a major consumer of oxygen is difficult to find. FMC could increase efficiency of its production process of hydrogen peroxide if pure oxygen is available.
Other possibilities
In addition, almost all companies hope that a large customer or supplier decide to move to Oosterhorn. Chlorine users are mentioned by the MCA, Delesto and Lubrizol. Delesto also mentioned steam and water customers and is looking for a supplier of green fuels.
Aldel would like a secondary magnesium melter. Delamine sees future in ammonia and / or ethylene-based industries. Dow likes to see new customers of MDI to some to Delfzijl. Dynea likes to see companies further down the processing chain of its products to come to Delfzijl (MDI production, MDF, particle board or other uses of glue). ESD would like an iron foundry. FMC mentions a propylene cracker and a propylene oxide producer. The possible use of a new silicate dissolver could mean cooperation between PPG and Zeolyst.
4 Project choice
For the different project ideas presented in the previous chapter it must be determined if and how they can be transitioned into a profitability project. The size and the number of companies involved in the various projects determine the complexity, organization and implementation of a project. A uniform approach to the monitoring of individual projects is therefore, not obvious. The second sub-question; which project should be chosen for further research, is answered in this chapter.
The utilities' infrastructure project seems the most complex project. Basically, all current (and future) industrial companies are involved, as well as producers, distributors and suppliers of utilities, operator(s), governments and development organizations.
The synthesis gas project is characterized by a limited number of interested companies that may provide input for the hydrocarbon process in which basic chemicals and synthesis gas can be produced. Since these products serve as the basis for new processes, this project is of potentially great importance for the strategic development of northeast Groningen. The feasibility of the conversion of alkanes and / or waste oil into base chemicals serving the process industry, in conjunction with the production of chlorine and possibly other new industrial activities needs to be investigated further. It is desirable that interested companies in collaboration with stakeholders map the technical, financial and organizational conditions for the realization of this project. An important question that must be answered is how and by whom, in addition to the existing methanol synthesis, new synthesis processes in the current and future market can be realized.
For most of the residues and waste water projects it is quite simple for the companies themselves to determine whether coupling of substance flows is interesting. An exception is the residual heat project, where the combined heat from several companies may find its use outside of these companies (i.e. glasshouses). It is recommended that at the initiative of NOM and in cooperation with the interested companies the potential for recovery of residual heat in northeast Groningen is further investigated.
Finally, a number of acquisition opportunities are outlined. Ethylene and oxygen are the main ones. There are also opportunities with respect to specific industries in Delfzijl.
The next step in the identified projects is primarily to examine the actual likelihood of being funded and developed; activities could include designing a project, development of planning and project structure, the visualization of potential executive parties and examination of social and political constraints. An important element in developing projects is the choice of the parties in the consortium. Which parties are involved and which parties are not involved? This will be project based and must be agreed upon by the interested parties.
4.1 Project comparison
projects that are named in the residual and waste substances project are compared and prioritized to determine the most valuable project to investigate further.
Fifteen different waste and residual streams have been found during the research that might increase the operational excellence and synergy on the Oosterhorn port. In order to prioritize the streams a priority table is used (appendix C). Each of the streams is classified based on the financial and ecological impact the project may yield on a 1-5 scale.
The three projects (hydrogen, CO and CO2) with the highest score are further classified based on
the effort needed to implement the project and the financial impact the project may yield. The time to implement, costs, complexity, risk, demand and supply are ranked under the effort. While the financial and ecological benefits are ranked under the impact. The importance (1-5) and given rates (1-5) are given by the researcher. For example, there are no suppliers available at the Oosterhorn port and thus a score of 1(given rate) *5 (importance rate) = 5 is given, while a large amount of supplier's results in a higher score 5*5 = 25.
Figure 4.1 prioritizes the streams in a priority matrix. A priority matrix is a simple diagramming technique that helps to choose which projects to prioritize (and which ones to drop) to optimize time and opportunity costs. It is useful because there may be more projects on the ‘wish list’ whether these are bright ideas to pursue, exciting opportunities or interesting possibilities than that there is time available. By choosing activities intelligently time and opportunity costs can be optimized.
The matrix has two axes (impact and effort) and consists out of the four quadrants, which are: 1. High impact, low effort: Quick wins 2. Low impact, low effort: Fill-ins
3. High impact, high effort: Major projects 4. Low impact, high effort: Hard slogs
Table 4.1 Priority table
# 1 2 3 EFFORT H2 CO CO2 Time (4) 12 16 16 Costs (4) 8 16 12 Complexity (2) 4 10 8 Risk (4) 20 16 12 Sum 44 58 48 IMPACT Economical (5) 25 15 15 Ecological (5) 25 25 25 Sum 50 40 40
Graph 4.1 Priority matrix
5 Hydrogen distribution
In this chapter theoretical concepts behind hydrogen distribution will be discussed like the purity, security, production, storage and transport of hydrogen. The third sub-question; how can hydrogen be produced, stored and transported, is answered in this chapter.
5.1 Purity and security
Chemical processes require high purity of hydrogen. The impurities in hydrogen gas such as carbon dioxide, carbon monoxide, sulphur and ammonia can affect process installations durability and compromise performance of the process. The allowable limits of impurities in hydrogen fuel are still under investigation. For more detailed information, one should consult specifically with the corresponding industrial standards and codes used in the investigated company. Here it is assumed that the hydrogen of the MEB corresponds to the specifications of hydrogen needed at FMC.
Pressure swing adsorption (PSA)
In a PSA installation hydrogen can be purified. Hydrogen that is enclosed in residual gasses of chemical processes can be purified. The PSA technique is based on membrane separation whereby hydrogen reaches a purity of 99,999vol%. The production capacity depends on the amount of residual gasses. Because it is assumed that the hydrogen specifications at the MEB correspond with those at FMC, there is no need to invest in a PSA installation.
Since hydrogen is the lightest element, it can dissipate rapidly into the air. If the facilities are built in a confined area, once there is a hydrogen leak, hydrogen can accumulate quickly and the concentration will reach the limit of flammability and detonatability soon. Hydrogen can be easily ignited and denoted and as the flame of hydrogen fire is invisible, thus it is hard to be sensed and very harmful to the people. Currently, hydrogen is generally applied in the industrial or laboratory areas and is handled by the certified technical personnel, but in the future with the widespread applications of hydrogen fuel cells ordinary people will have close contact with hydrogen, thus more comprehensive safety standards and codes must be established for the public safety. Staff should be educated about hydrogen safety. Additional personnel might be needed for installing, maintaining, working with and inspecting hydrogen pipelines or trucks. When a pipeline is installed it should be regularly checked for leaks and abnormal conditions. Maintaining pipeline safety is vital, especially to those who work or live near a pipeline. Comprehensive integrity management plans involving the operation and maintenance of a hydrogen pipeline to ensure the safety and reliability of the pipeline should be implemented. These plans should at least include the following:
The performance of baseline assessments and periodic reassessments of segments of each hydrogen pipeline to identify and evaluate potential threats to such segments.
The continuous monitoring of each hydrogen pipeline, including physical inspections, to ensure that the integrity of each pipeline is maintained, with priority being given to those segments of pipeline that are located in densely populated areas or near facilities.
5.2 Production
A variety of energy resources such as fossil fuels, nuclear, solar, wind, hydro-electric and geothermal energy can be utilized to generate hydrogen. Note that this variety of energy sources and production pathways will contribute significantly to energy security and sovereignty. Besides direct production hydrogen is also produced in chemical processes as a side product. Various processes such as methane steam reforming, water electrolysis, high temperature electrolysis, and thermo chemical cycles are available to produce hydrogen as well. Currently, methane steam reforming is the most common way and about 95% of hydrogen products are generated through this method. Because FMC has its own hydrogen production based on natural gas and hydrogen is available as a side product at the MEB the thermal cracking of natural gas used at FMC will be discussed.
At the MEB, chlorine is produced by the electrolysis of sodium chloride dissolved in water. Along with chlorine, this chlor-alkali process yields hydrogen gas and sodium hydroxide, according to the following chemical equation: 2 NaCl + 2 H2O → Cl2 + H2 + 2 NaOH. In this
process hydrogen comes free as a side- product.
Thermal cracking of gas
Hydrogen production from hydrocarbons by thermal decomposition includes generation of hydrogen and carbon only. The water gas shift reaction and gas cleaning can be omitted. Thermal decomposition of natural gas takes place at high temperatures (between 800 and 1400 º C). In a particular embodiment, a gas generated by the required air mixture is burned in an oven. When the oven is heated to 1400 º C, this decomposes the methane and air stopped until the temperature has decreased to 800 º C. After being re-mixed with air the process repeats. The two reactions that take place are reversible in nature.
CH4 + H2O → CO + 3 H2
Additional hydrogen can be recovered by a lower-temperature gas-shift reaction with the carbon monoxide produced. The reaction is summarized by:
CO + H2O → CO2 + H2
The first reaction is strongly endothermic (consumes heat), the second reaction is mildly exothermic (produces heat).
The further hydrogen purification process may be needed for fuel cell applications as the impurities in hydrogen may cause catalyst poisoning and membrane failures, especially sulphur compounds and carbon monoxide. Note that production via steam reforming contributes to the production of carbon dioxide, which is the key contributor to the global warming. Finally, the costs associated with hydrogen production are currently closely related to the cost of natural gas. In the future the cost of natural gas is expected to increase dramatically, which will limit the natural gas reforming production.
5.3 Storage
The main options for storing hydrogen are as a compressed gas or as a liquid. Each alternative has advantages and disadvantages. For example, liquid hydrogen has the highest storage density of any method, but it also requires an insulated storage container and an energy-intensive liquefaction process. The MEB and FMC currently both store hydrogen in the gaseous form in storage tanks before it transported further. The storage options for hydrogen are discussed in Appendix D.
5.4 Transportation
Hydrogen can be distributed as liquid or gas. Hydrogen gas can be distributed by high pressure cylinders, tube trailers, and pipelines. Pipeline distribution is economical for large scale production with respect to low density of hydrogen gas. Hydrogen gas pipelines were built in many countries in North America and Europe. Liquid hydrogen is transported in a double-walled insulated tank to minimize boil-off. Some designers also apply liquid nitrogen heat shields to cool outer wall of the container. A cryogenic tank truck can carry 360-4300 kg of liquid hydrogen, the boil-off rate is about 0.3-0.6% / day (Timmerhaus and Flynn, 1989).
The quantities of transporting hydrogen for each of these possibilities are very different. Hydrogen pipelines are made of steel with diameters from 25 to 30 cm. The pressure ranges from 10 to 30 bar. The investment costs, mainly the costs of installation are high. Transport costs comprise mainly energy for pressurizing and during transport keeping pressure on the gas, and are relatively low. In several industrial areas in Europe, America and Canada hydrogen pipeline network are installed. For transport of gaseous or liquid hydrogen special trucks are required. Compared to gas, the cost for transport of hydrogen in the liquid form is very high.
Investment and transport costs are determined by production rate of hydrogen and distance. They determine the size of the transport system (pipe length, number of trucks, etc.), the transportation costs (electricity consumption of the compressor, fuel costs of the truck, wages of the driver, etc.).
Choice of transportation
The main factors affecting the choice of hydrogen transport are the application, quantity, and distance from the production site to the customer.
Application
Quantities
For large quantities of hydrogen, pipeline delivery is cheaper than all other methods. The next cheapest method of delivery would be liquid hydrogen. Pipeline delivery has the benefit of a very low operating cost, consisting mainly of compressor power costs, but has a high capital investment. Liquid hydrogen, on the other hand, would have a high operating cost, but possibly a lower capital cost, depending on the quantity of hydrogen and the delivery distance. The break-even point between liquid hydrogen and a pipeline will vary depending on the distance and quantity.
For smaller quantities of hydrogen, pipeline delivery is not competitive, but compressed gas delivery may be competitive. Compared to liquid hydrogen, compressed gas has lower power requirements and slightly lower capital costs for the tube trailers, but many more tube trailers are required to deliver the same quantity of hydrogen. Which delivery method is more economical will depend on the delivery distance, because it may be possible to use the same tube trailer for several trips per day if it is a short distance.
A hydrogen pipeline is not an option for small quantities of hydrogen because of the high capital cost. The deciding factor between liquid hydrogen and compressed gas becomes a matter of distance. For long distances, the higher energy costs of liquefaction will balance out against the higher capital and transportation expense of many compressed gas tube trailer trips back and forth. If the distance is relatively short, and the quantity of hydrogen transported is small, compressed gas may be more profitable. Because there is not a given amount of hydrogen wherefore pipeline transport is cheaper than truck transport the cheapest option will be calculated in the next chapter.
Distance
As mentioned earlier, distance is an important factor. For a short distance, a pipeline can be very economical because the capital expense of a short pipeline may be close to the capital cost of tube trucks or tankers, and there are no transportation or liquefaction costs. As the distance increases, the capital cost of a pipeline increases rapidly, and the economics will depend on the quantity of hydrogen, pipelines will be favored for larger quantities of hydrogen. For small quantities of hydrogen, at some point the capital cost of the pipeline will be higher than the operational costs associated with delivering and liquefying the hydrogen.
6 Hydrogen distribution costs
The subject of investigation is to transport hydrogen from one company to another, in this case from the Akzo MEB (where it is produced as a side product in their chlorine production) to FMC (where it can be used as a raw material). For this project, the use of a new infrastructure is needed between these two companies. The goal of this chapter is to determine the costs of transporting hydrogen from one company to another and to compare these costs to costs of own production. To make a good comparison external cost will also be included, these can include economic or technical aspects. The fourth sub-question; how can hydrogen distribution costs be calculated, is answered in this chapter.
The case study is limited to local constraints. Hydrogen at the MEB (2000 ton/year) is already being transported to other companies (500 ton/year to MCA and Teijin Aramid) and the surplus is sold to energy supplier Delesto (1500 ton/year). One of the main reasons FMC settled in Delfzijl was the availability of hydrogen from Methanor. However, Methanor ceased to exist, causing FMC to produce its own hydrogen (3000 ton/year) by thermal cracking of natural gas. If another company is willing to transport hydrogen to FMC for a lower price than their production price, FMC is very interested in cooperation. Relevant factors that play a role in producing, storing and transporting hydrogen will be discussed to see if it is economical feasible.
6.1 Production costs
FMC needs hydrogen in the quantity of 3000 ton/year. The MEB produces only 2000 ton/year, of which 1500 ton/year is transported to the power station Delesto to be burned to produce electricity. The price the MEB gains for its hydrogen transported to Delesto is the same price as natural gas. The cost for making hydrogen by steam reforming of natural gas depends primarily on the cost of natural gas. Several sources estimate the hydrogen production cost by steam reforming, excluding capital, to be 150 percent of the natural gas cost (Riegel, 2007).
The price the MEB gains for its hydrogen transported to Delesto is the same price as natural gas. Which are 0,23€ per Nm3 on 20 December 2010 (www.zichtopenergie.nl). A kilogram of hydrogen is 0,089 Nm3 thus one kg of hydrogen will yield 2,58 € per kg for the MEB. The cost for making hydrogen by steam reforming of natural gas depends primarily on the cost of natural gas. Several sources estimate the hydrogen steam reforming production cost, excluding capital, to be 150 percent of the natural gas cost. This makes the cost for FMC to produce hydrogen 1,5 * 2,58 = 3,87 € per kg. Hydrogen from the MEB is thus cheaper than producing it at FMC. However, the transportation costs have to be added to the production costs to see if transport is possible.
Table 6.1 production cost margins
Figure 6.1 production cost of hydrogen by FMC
6.2 Storage costs
The storage costs for gas above the ground (in storage tanks) and in pipelines will be discussed as well as costs for compressors. A choice between the storage methods and an analysis of the storage costs is made in appendix D.
6.3 Transport costs
Gaseous hydrogen can be transported by pipeline or trucks. Gaseous transport requires a good compression. Depending on the number of cylinders a truck can transport 63-460 kg of hydrogen at a pressure of 20-60 MPa (www.airproducts.nl). Investment costs are around 90.000 euro per cylinder (Amos, 1998). Pipelines with a diameter of 0,25 meter contain a much lower pressure of 1-3 MPa. Costs depend on the length of the pipeline. Costs of hydrogen are besides production depended on distribution distance and manner. Transporting large amounts of hydrogen is the cheapest when a large pipeline is used. Smaller amounts of hydrogen can better be transported by tube trailers. For small distances and large amounts of hydrogen, it can be cheaper to install a pipeline. Investment costs for trucks are lower than for a pipeline. Therefore, these two options are considered: gaseous hydrogen by truck (up to 180 kg), gaseous hydrogen by pipeline.
Truck costs
Tube trailer capital costs depend on the operating pressure of the truck, the storage capacity of each trailer, and the distance to the customer site. Higher operating pressures increase the capacity of a tube trailer, but increase the purchased price of each truck. This can result in lower overall capital costs by reducing the number of trucks required. The distance to the customer site also affects the number of trucks. For local delivery, the same truck can make several trips back and forth between the production site and the customer site, but for long distances, each truck might be able to make only one or two deliveries per day. Operating costs include fuel costs and driver wages or freight charges.
Five different scenarios of truck transport are researched. In all scenarios hydrogen is delivered in gaseous tanks that are carried by a truck. In the first three scenarios, the truck carries one tank of hydrogen (180 kg). The difference between these scenarios is the number of trucks that drive continuously throughout the day (either 1, 2 or 3 trucks a day). Letting one truck drive decreases the investment cost. However, it also decreases the amount of delivered hydrogen.
Scenario 4 is based on scenario 2, the same amount of hydrogen is transported only this time instead of 2 trucks only 1 truck is needed to transport the same amount of hydrogen. This is possible to the addition of an extra trailer and hydrogen tank to the truck.
