PILIPINAS Shell Petroleum Corp. (PSPC) will build a hydrogen manufacturing facility within its Tabangao, Batangas oil refinery, allowing the company to produce more grades of crude and increase its output by early 2021, its top official said.
“We are basically installing a hydrogen manufacturing unit because the availability of more hydrogen will allow us to process more advantaged crude, more exotic crudes. So, yes we are installing a facility in the refinery,” PSPC President and Chief Executive Officer Cesar G. Romero said in a briefing Tuesday ahead of its annual stockholders meeting on the same day.
He said the Tabangao expansion will account for about P2 billion to P3 billion of the company’s P6-billion in capital expenditure this year. The retail business will corner about P2 billion, with the remainder going into to the rest of its supply chain.
In the past year, the company’s P4.1-billion budget was allocated mainly to the retail business, taking up P2 billion, with refinery enhancements cornering P1 billion, and the remaining P1 billion going into the rest of the supply chain.
“It’s not primarily intended to be a main capacity-increasing option, but it will yield some improvements in capacity as well. But the primary intention is to increase the crude flexibility because we really need hydrogen to process more sour crude,” he added.
Sour crude has a higher sulfur content and is more difficult to process compared to light sweet crude, which yields more final product per unit of input. Sources of sour crude include Saudi Arabia, Kuwait, Iraq, Venezuela and Canada.
Mr. Romero said the commissioning of the hydrogen facility is targeted for around the fourth quarter of 2020.
“So for planning purposes, we’re hoping we will be able to operate that in Q1 (first quarter) 2021,” he said.
PSPC distributes the refined products produced at the Tabangao refinery and imported petroleum products, including lubricants and bitumen, through its 25 fuel distribution terminals and supply points, 10 lubricant warehouses and 2 bitumen production and import facilities spread throughout the Philippines.
“Our refinery will start investing in its hydrogen optimization project that will allow it to improve flexibility of its crude intake and product slate,” Jose Jerome R. Pascual III, PSPC chief financial officer, said in the same briefing.
He said the company’s growth target of opening 50 to 70 new retail sites, 15 to 20 Select Shops, 15 to 20 deli2go offerings, and 30 to 50 Shell Helix oil change plus, and Helix service centers will remain the same.
At the end of 2018, Pilipinas Shell had 1,084 service stations, with around 44% company-owned and 56% dealer-owned.
The company has produced the country’s first-ever batch of domestically-blended bitumen, a road paving material also known as asphalt. Pilipinas Shell remains the only bitumen supplier in the country with local manufacturing capability.
“Before we had the bitumen facility, we already have roughly 40-50% of the domestic market for bitumen,” Mr. Pascual said. “The new bitumen facility is sized larger than the domestic market, which means that we can supply both the domestic market as well as export.”
In the fourth quarter, the company made its first export of finished bitumen within the region, to Vietnam.
“This gives us a lot of opportunity with the hydrogen optimization that we’re doing that will allow us to produce more residue for bitumen production as well as more diesel. It will enable the bitumen plant to produce the bitumen required both domestically and the market that we see in the region,” he said. — Victor V. Saulon