Decarbonisation Technology - August 2023 Issue

Why the reluctance? Why has it taken so long for industry to embrace deeper cross-party optimisation between complementary facilities under different ownership when optimisation across single entity-owned complementary facilities has been ongoing for decades? For example, large individual companies create opportunities to optimise across multiple sites to boost economies of scope and/or scale. Or a chemical manufacturer might operate multiple sites as a connected complex, pursuing opportunities to optimise across them. Similarly, large single-owned Verbund-type sites with a diverse array of on-site processes and highly interlinked product flows may also create opportunities to optimise within. There has been a reluctance to synchronise more elements of operations across separately owned third-party facilities for a variety of reasons. First and foremost, in bringing independent businesses together, there needs to be a fundamental element of trust. Thereafter, key questions to answer include:  Economics Is integration beneficial (sustainably and financially)? What high- level objectives, such as decarbonisation, can individual businesses align on?  Business model Can we make it work between businesses?  Operations Can we operate in an orchestrated manner?  Technology How can technology support closer integration? An often overlooked factor is one of competition policy or antitrust. Pooling resources or capabilities should make the underlying businesses more efficient and more capable competitors. However, if competitors are engaged in clustering activities, can it be claimed that competition in a market is being prevented or reduced? How can competitive facilities within a single cluster ensure they steer clear of anti-competitive behaviour? Antitrust issues in clustering The threat of scrutiny under relevant provisions of local competition policy (or ‘antitrust’) laws can be a deterrent for considering or implementing greater synchronisation across operations of separately owned third-party

cases operation & maintenance (O&M). Over time, through changes in corporate strategies, individual facilities within these integrated chemical parks have been divested to new owners, resulting in a ‘patchwork’ of ownership across the chemical parks, albeit with all still benefiting from historic facility integrations. While these clusters are mostly formed, they continue to expand and incorporate new neighbouring facilities, such as process facilities, data centres, and hydrogen and steam networks.  Forming . These comprise large industrialised areas with multiple, often diverse businesses and production processes under different ownership. In many respects, these facilities are complementary to each other; however, they do not benefit from the same smart integration, physical connections, and common shared services. Examples include decarbonisation clusters with carbon capture, utilisation and storage (CCUS), hydrogen, steam, and other material flows. The creation of such smart integrations, physical connections, and common shared services remains the subject of feasibility studies to evaluate beneficial linkages. Areas of clustering opportunity may also be offshore, comprising clusters of adjacent oilfield production assets, wind, or solar arrays. Across both cluster typologies, individual occupier sites typically optimise their own operations to satisfy their respective operational priorities and corporate business objectives. This is usually done in isolation from neighbouring facilities. It comprises some form of ad hoc/static or real-time optimisation of their operations, such as raw materials/feedstocks, process/products, workforce/people, energy, maintenance, utilities, emissions, inventory, and supply chain. Maybe cluster-wide optimisation was undertaken in the past. However, it was likely a one-off, ad-hoc static optimisation representing a snapshot in time, in many cases 10+ years ago, as part of complex-wide master-planning activities. Since then, facilities have been changed, debottlenecked, expanded, upgraded, revamped, shut down, or divested. Where representative models of on-site assets exist, these models are principally used for one-off capital investment analyses and decisions but not ongoing monthly, weekly, or intra-day optimisation.