Although it has been a financial burden on the refining industry, everyone agrees that lower sulfur in refined products has environmental benefits. There is, however, a potential problem on the horizon that has received nearly no attention: what to do with all the excess sulfur that is produced?
At the National Petrochemical & Refiners Association's annual meeting in San Antonio last month, Robert Morris, president of the Sulphur Institute, Washington DC, outlined the extent of the problem that the oil industry could face during the next 10 years.
"Failure to respond now to an increasing surplus could mean costly disposal of recovered sulfur, refinery disruptions, and even possibly refinery shutdowns," Morris said.
The surplus will result from the confluence of a number of factors:
- Future fuel specifications throughout the world will significantly increase the amount of sulfur produced.
- Increased use of opportunity crudes (lower-cost crudes not on a refiner's usual slate) also increases the amount of sulfur passing through refineries.
- Existing market demand for sulfur is increasing at a slower rate than its production.
- Limited storage space is making it tougher to secure an outlet for produced sulfur.
Sulfur production
The sulfur industry has changed from a mining industry to primarily a by-product of the oil and gas industry. Gas processing and refining now account for 97% of all elemental sulfur production in the world and 100% of US production. North America produces 19 million tonnes/year (tpy) of sulfur and is the largest sulfur-producing region in the world. Current worldwide production is about 40 million tpy. The institute predicts that production in 2011 will increase to more than 55 million tpy, due to stricter regulations coming into effect and overall demand growth for refined products.
According to Morris, another potential problem is the removal of sulfur from bunker fuels. Based on current production levels, he estimates additional sulfur production from this source at 2.2-4.5 million tpy. Additional supply could come from developing countries that have not yet finalized clean-fuel regulations. Morris said that if developing countries enact requirements similar to those in developed countries, that added sulfur increment could total 1.8 million tpy.
Sulfur demand, storage
According to the institute, global sulfur demand in 2001 declined for the first time since 1993. It predicts sulfur production will increase at 3%/year through 2010, but the expected consumption growth rate will be only 2%/year. China currently imports more sulfur than any other country, mainly due to growth in its phosphate fertilizer industry. However, demand growth for sulfur there will still not keep pace with production rates.
In 2001, the sulfur surplus was 2.2 million tonnes, which the institute predicts will rise to 5.4 million tonnes in 2006 and 5.9 million tonnes in 2011. Accounting for clean-fuel regulations, this surplus could balloon to 8.5 million tonnes in 2006 and 12.1 million tonnes in 2011.
Morris said that sulfur logistics are increasingly complex in the US because the supply is relatively stable, whereas demand, mainly from the phosphate fertilizer market, is relatively cyclical. In the past, incremental sulfur production from Frasch mines would make up the additional supply required. The imbalance became harshly evident in 2001. Morris said that sulfur actually had to be stored in rail cars because of insufficient demand, and refineries were still producing with limited storage capacity.
Inventories of solid sulfur in 2001 were at their highest level in 20 years. And additional storage capacity may or may not materialize. In fact, Tengizchevroil recently was fined $7 million by a court in Kazakhstan for alleged environmental damage caused by storing millions of tonnes of sulfur at its Tengiz field (see related item, p. 8).
New markets
Donald Messick, the Sulfur Institute's director of agricultural and market studies programs, identified two markets that could use the additional volumes of sulfur: fertilizers and construction materials.
The phosphate fertilizer industry remains the largest single consumer of sulfur. The institute expects the largest growth in fertilizer sulfur consumption in East Asia and Africa. The potential plant-nutrient sulfur market could require an additional 8.6 million tpy. Increased food production could raise sulfur requirements even further, to 10.5 million tpy by 2011.
Because sulfur is so much more available and cheaper due to oversupply, it is garnering more interest for use in asphalt road-paving products. Morris said that sulfur capturing 5% of the asphalt market is a conservative estimate. If this market penetration were realized, it would represent nearly 1 million tonnes of sulfur in 2011.
