Decision imminent on bp renewable diesel refinery

If the business case stacks up, bp’s former oil refinery in Kwinana, WA will be producing 10,000 barrels of renewable diesel and sustainable aviation fuel by 2026

A final investment decision is expected to be made this year on bp’s proposed Kwinana Energy Hub which will see the former oil refinery redeveloped into a green energy hub producing renewable diesel (HVO), sustainable aviation fuel (SAF) and green hydrogen.

A bp spokesperson says the biofuels project is in front-end engineering design, with a final investment decision anticipated later this year. Environmental approvals processes are under way.

The company intends to repurpose much of the existing infrastructure at Kwinana for its biofuel project including two of the former oil refining units.

Hundreds of workers are currently dismantling the oil refinery, with the massive storage tanks that for decades stored oil and petrol being repurposed to carry biofuels.

The planned biofuels refinery will be integrated with existing terminal operations and on-site utilities such as the wastewater treatment plant, flare system and utilities, the spokesperson adds.

The company also plans to repurpose some of the existing on-site tankage for the storage of feedstocks and biofuel products and use existing jetties and supply pipelines for feedstock receival to site and product supply to market.

Kwinana, which was established in 1955 and operated as a fuel refinery until early 2021, is one of five biofuel projects that bp has planned globally.

It is expected these and other existing projects will produce around 100,000 barrels of SAF and HVO per day by 2030.

The WA renewable fuels refinery is planned to produce SAF and biodiesel from bio feedstocks by 2026. It will have a production capacity of 10,000 barrels per day of renewable diesel or SAF.

The bp spokesperson says the company is in ongoing discussions with local and international feedstock suppliers.

Progress on the renewable fuels refinery follows last week’s report that HVIA – along with 13 other organisations – has penned a letter to Climate Change and Energy Minister Chris Bowen appealing for Australian Government support in enabling an on-shore renewable diesel refining industry.

An advanced biofuel made from animal fats, vegetable oils including used cooking oil, and agricultural waste, renewable diesel is chemically identical to conventional diesel and can be used as a 100-per cent ‘drop-in’ fuel without machinery needing any modifications. Its use is widely supported by Original Equipment Manufacturers.

While readily available overseas, it is not commercially available in Australia.

“Renewable diesel is a critical transition fuel while other technologies, such as electrification and renewable hydrogen, gather pace,” the letter says.

“Access to domestically produced renewable diesel represents a significant and immediate decarbonisation opportunity across multiple sectors, including road transport, construction, maritime, mining, rail, agriculture and forestry.

“These sectors are the bedrock of the local economy and decarbonising these industries is critical to achieving the Australian Government’s emissions reduction target of 43 per cent by 2030 and net zero emissions by 2050.”

Bp hydrogen business development director Justin Nash tells The Australian Financial Review the viability of the green hydrogen industry is reliant on state and federal assistance in the early stages of development.

The proposed Kwinana Energy Hub will also include a green hydrogen production facility, H2Kwinana. A just completed concept development phase study identified two potential base-case scenarios, with the hub producing either 44 tonnes per day of green hydrogen or 143 tonnes per day. The potential growth target of 429 tonnes per day was selected as the third and final case.

“We do need government support like any new nascent industry, to get us started down that pathway to scale to then ultimately drive the cost out,” he says, adding bp will be targeting the federal government’s $2 billion Hydrogen Headstart program.

WA Energy Minister Bill Johnston, who last week toured the Kwinana refinery, points out that while the state government cannot compete with the deep pockets of the US and its Inflation Reduction Scheme, it is doing what it can to remove barriers for local investment.

“Kwinana has been a central hub of fuel operations for the past 65 years, the potential development of a green hydrogen hub would progress the decarbonisation of the Kwinana Industrial Area.

“These kinds of projects are possible thanks to the WA Labor Government’s $180 million investment into renewable hydrogen, he says.

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