Dimeta pushes ahead with renewable DME projects

  • Market: LPG
  • 20/12/22

Major LPG distributors SHV Energy and UGI International's renewable dimethyl ether (DME) joint venture, Dimeta, is on a mission to quickly ramp up production of the renewable gas. It plans to open its first 50,000 t/yr plant at Teesworks in Teesside, northeast England, by 2024, and another five plants, bringing total output to 300,000 t/yr across Europe and the US, by 2027. By using a "feedstock neutral" technology that allows it to process multiple waste sources, the company believes renewable DME can be "right now". Argus' Waldemar Jaszczyk spoke with Dimeta advocacy manager Sophia Haywood about the company's projects and future plans:

Can you provide an update on your Teesside plant project?

Significant progress has been made since the announcement of our plant location at Teesside, UK, in May. The first phase of detailed engineering design work is now complete as planned, we are in deep discussions with feedstock providers, and we have entered the next phase of engineering works where we will appoint [a final engineering contract] ahead of financial close.

Through our Circular Fuels venture with Kew Technology, we have also joined the Net Zero Teesside Cluster Plan, which is part of the UK Department for Business, Energy and Industrial Strategy's Industrial Decarbonisation Challenge and is managed by Innovate UK. Circular Fuels is an important contributor to this work providing a roadmap to net zero.

Have you secured all the necessary permits and approvals for the plant?

Teesside has a proud industrial heritage, with strong public and political support for these industries, which makes it a prime location to have the first renewable and recycled carbon DME plant in the UK. We are securing planning and permitting approvals, and have received positive feedback throughout the process owing to the strong alignment between our project and the region's net zero vision.

Have you signed any contracts with LPG retailers to sell your renewable DME?

Since the establishment of Dimeta, we have seen a consistently growing interest in renewable and recycled carbon DME from the LPG industry. We are seeing more and more players reaching out to us to discuss supply opportunities for the UK, but also in Europe, the US and beyond. While we can't share commercial information, all the discussions are in progress.

Has the commitment to offer 20pc of the product produced at Teesside to third parties changed?

No, the commitment remains — it is a fundamental aspect of the establishment of Dimeta that the benefit of renewable and recycled DME needs to be realised by the entirety of the LPG industry.

What will be the approximate cost of the Teesside plant project?

The total investment to deliver the facility at Teesside is in the region of £150mn ($185mn). It will create 250 jobs in construction and 50 jobs during operation, providing a boost to the local economy.

In Dimeta's presentation for LPG association Liquid Gas UK's recent Edinburgh conference, your colleague Steven Hallett said that your second commercial-scale production facility would be located in France. Can you confirm this? And if so, what made you choose France and when will you announce the site?

We are currently exploring locations in Europe. There is a considerable LPG market in France with strong decarbonisation objectives — not to mention significant quantities of waste feedstock available for utilisation — making it an attractive geography. We expect to announce the site location in 2023.

Can you tell us some more about Dimeta's plans in the US? That is a potentially huge marketplace.

Propane is the third-most used energy source for homes and businesses in the US, supporting at least 50mn homes and 1.1mn businesses — it is a huge market and there is a significant opportunity for renewable and recycled carbon DME to be blended with propane, helping the sector reduce its emissions as it transitions to net zero. We are developing opportunities in the US and will be announcing these initiatives next year.

Are you looking at the same type of feedstock for future plants or will you use different types?

Dimeta is feedstock neutral when producing renewable and recycled DME. While we are using waste feedstock for our first plant in Teesside, and upcoming plants in Europe and the US are expected to use waste, we are also exploring opportunities with different feedstocks and processes. In addition, technologies at an earlier phase of development, such as power-to-X, could also be of interest for Dimeta further down the line utilising feedstock such as hydrogen and CO2.

What were the reasons behind Dimeta's recent decision to collaborate with the renewable methanol and ethanol producer Enerkem?

In October 2022, we entered into a collaboration with Enerkem, one of the players with the most extensive expertise in waste gasification for producing molecules such as methanol and ethanol. We are working with them in addition to our projects with Circular Fuels. The collaboration is focused on exploring the opportunity for the development of renewable and recycled carbon DME plants in Europe and the US at a larger scale, such as 150,000 t/yr, and with a strong focus on maximising CO2 recycling.

Does this larger capacity refer to the next five 50,000 t/yr plants planned by 2027 or future projects?

Dimeta has an overarching goal of producing 300,000t of renewable and recycled DME a year by 2027. Our first partnership with Kew Technology to create Circular Fuels is one route to delivering this — the plants we develop here are modular, so they can be scaled up or down. These plants are then complemented by additional partnerships, such as our recent arrangement with Enerkem. The size of our upcoming plants is not public yet, but it is ultimately dependent on commercial and market drivers. The important milestone is reaching 300,000t by 2027, so the combination of technology and partners will depend on relative project economics and the speed of development.

Are there any other partnerships you are pursuing with other companies for future developments?

Dimeta is looking to establish more partnerships to deliver a net zero future for the LPG industry, through renewable and recycled carbon DME. Our partnerships with Kew Technology to create Circular Fuels, and now with Enerkem demonstrate that we are looking for collaboration across the whole value chain, from innovative technologies for DME production, to integrating DME into the LPG supply chain, or financing investments in DME infrastructure, for example. You can expect to hear more about our new partnerships in the coming months.


Sharelinkedin-sharetwitter-sharefacebook-shareemail-share

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News
23/05/24

US ethane supply gains seen trailing demand growth

US ethane supply gains seen trailing demand growth

Houston, 23 May (Argus) — Export and domestic demand growth for US ethane is expected to outpace US supply growth by as much as 72,000 b/d by 2026, according to a recent forecast from consultancy East Daley Analytics. A surplus of US ethane production, bolstered by gains in natural gas drilling and production to meet growing demand for electricity generation and LNG exports, has led to increasing investments in additional ethane export terminal capacity to provide other outlets for the petrochemical feedstock. The US Energy Information Administration (EIA) showed US ethane production from natural gas processing rose to a record 2.78mn b/d in October of 2023 and fell to 2.69mn b/d in February, the latest data the agency has available. Those volumes don't take into account ethane that is rejected into the gas stream at processing plants during periods of restrained capacity or when natural gas prices spike on weather-related outages, incentivizing lower ethane recovery. Mont Belvieu, Texas, EPC ethane's premium relative to its natural gas fuel value at Waha reached a peak of 50.31¢/USG on 6 May, a 16-month high, and has averaged 26.08¢/USG in May so far, according to Argus data. As ethane margins versus natural gas rise, ethane extraction at natural gas processing plants becomes even more profitable, pushing ethane recovery rates higher. Yet East Daley's forecasts suggest projects to absorb this additional feedstock may quickly outpace production. The consultancy projects US ethane production will rise by 283,000 b/d by 2026, driven mostly by gains in natural gas production in the Permian and Marcellus basins. Increased gas takeaway capacity from the completion of maintenance on Kinder Morgan's Permian Highway pipeline (PHP), the Gulf Coast Express (GCX) pipeline, and the Transwestern pipeline at the end of this month, will allow for higher levels of ethane rejection, according to Rob Wilson, East Daley's vice president of analytics, limiting potential gains in ethane production from the additional gas. Further gas capacity restrictions in the Permian are expected to be mitigated when the 2.5 Bcf/d Matterhorn Express pipeline — which runs from the Waha, Texas, gas hub to Katy, Texas, on the Gulf coast — comes online in the third quarter of this year. Domestic demand for ethane is projected to rise by 129,000 b/d by 2026 with the addition of Chevron Phillips Chemical's joint venture with QatarEnergy to construct a 2mn t/yr ethane cracker on the Texas Gulf coast that is scheduled to come online in 2026. That joint venture will consume 118,000 b/d of ethane when at full capacity, but will operate at 50pc of capacity when first on line in 2026, according to East Daley. Increased US ethane cracking will come on top of a 231,000 b/d increase in ethane exports by 2026, driven by demand from Chinese crackers and burgeoning demand from Indian crackers, according to the consultancy. Ethane export expansions at Energy Transfer's Marcus Hook terminal in Pennsylvania and Enterprise Products Partners' new flexible LPG and ethane terminal at Beaumont, Texas, are expected to be complete by 2025 and 2026, respectively. Combined, these projects add another 360,000 b/d of ethane demand by 2026, outstripping expected supply growth by an estimated 72,000 b/d, according to East Daley's forecast. By Abby Downing-Beaver Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Find out more
News

LPG World editorial: Clean cooking’s watershed moment?


16/05/24
News
16/05/24

LPG World editorial: Clean cooking’s watershed moment?

African clean cooking schemes could prove to be an early energy transition success story now that world leaders view them as environmental imperatives London, 16 May (Argus) — The $2.2bn in funding pledged for clean cooking programmes in Africa over the next five years, announced at the IEA's Clean Cooking Summit in Paris on 14 May, could be a "turning point", according to the agency's executive director Fatih Birol. Not only would this be true in terms of tackling what is a long-neglected problem. It is also true for the LPG industry, which has been extolling the benefits of a transition to LPG in sub-Saharan Africa for many years. Other than the dozen or so individual financial commitments made by governments and organisations, what resonated most from the event was just how achievable transitioning sub-Saharan Africa to cleaner fuels such as LPG actually is. Often the immediate reaction is to balk at the challenges — the lack of infrastructure, the lack of regulatory frameworks, the corruption, the cost of the LPG and equipment. Yet this was when it was looked at purely through the prism of the market. Now it is an environmental and social imperative. Many of the political leaders from Europe, Africa and the US that spoke noted that greenhouse emissions from cooking were comparable to the airline and shipping sectors, yet tackling the former is far less complex, less expensive and receives scant recognition in comparison with the latter two. "We can fix it now… it is not high-tech, it is low-tech," Norway's prime minister Jonas Gahr Store told delegates. Another often ignored part of the issue is how disproportionately women are affected by cooking with harmful solid biomass fuels — perhaps an underlying factor behind the many years of neglect at a national and international level. This is a gender issue, both Birol and Tanzania's first female president, Samia Suluhu Hassan, noted. The obvious health and social benefits from the transition to clean cooking will be most keenly felt by women and their children, who are at home breathing in the smoke from open fires. Several of the speakers, including African Development Bank president Akinwumi Adesina and World Health Organisation director-general Tedros Ghebreyesus, even spoke of their own experience of growing up in a household with open fires, and the consequent unnecessary suffering their mothers in particular had to endure. LPG is not the only solution here — others mentioned included electric cookers, biogas, bioethanol and cleaner cooking stoves. And as a fossil fuel, it will ultimately be replaced at some stage by renewable alternatives. But it is the best solution right now for large parts of the region. "LPG is the most efficient in terms of its benefits and its ease of use," Togo's president Faure Gnassingbe said. LPG markets can develop in the region through subsidies and LPG price regulation to moderate volatility, while countries must also invest in domestic LPG production as well as import and distribution infrastructure, he said. Each country will be different, but it is "well within our reach", Gnassingbe added. From pledge to realisation The sub-Saharan African region and the LPG industry must now work with foreign governments, financial institutions and private-sector companies to ensure that the large sums pledged are invested in a pragmatic and fruitful way. The IEA will come back in a year's time to report on the progress of the various commitments made at the summit and will provide updates online in an effort to ensure progress and transparency, Birol said. There is reason for cautious hope. The feasibility of achieving the transition and the relatively low levels of foreign investment involved — and the huge opportunities for LPG companies that will emerge — could create the conditions for success of a kind that has so far eluded many other such ambitions. It would be a huge boon for the world to have one such success story to point to by 2030 in its long, hard struggle to transition to a cleaner energy future. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Japan’s Mol orders dual-fuel LPG, ammonia VLGCs


16/05/24
News
16/05/24

Japan’s Mol orders dual-fuel LPG, ammonia VLGCs

Tokyo, 16 May (Argus) — Japanese shipping firm Mitsui OSK Lines (Mol) has ordered two dual-fuel very large gas carriers (VLGCs) to deliver LPG and ammonia, with commissioning expected in 2026. Mol has reached a deal with TotalEnergies' shipping arm CSSA Chartering and Shipping Services to charter two 88,000m³ VLGCs to deliver LPG and ammonia, although the specific time period is undisclosed. The vessel will be built by South Korean shipbuilder Hyundai Samho Heavy Industries, which has developed an engine that can use LPG and fuel oil. Japan's LPG consumption totalled 11.8mn t in the 2023-24 fiscal year ending 31 March, down by 3.2pc from a year earlier, according to the Japan LP Gas Association. Japan's trade and industry ministry expects the downwards trend will be driven further by technology innovation of high efficiency equipment. But its expects ammonia demand as a fuel to increase to 3mn t/yr by 2030 and to 30mn t/yr by 2050. Japan has set a goal of a 20pc ammonia co-firing at domestic coal-fired power plants by 2030 and above 50pc by 2050 to achieve the country's 2050 decarbonisation goal. By Reina Maeda Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Rains hamper LPG distribution in south Brazil


14/05/24
News
14/05/24

Rains hamper LPG distribution in south Brazil

Sao Paulo, 14 May (Argus) — Torrential rain and flooding in southern Brazil's Rio Grande do Sul state reduced LPG distribution by 7-10pc in the affected area during the first two weeks of May, according to local market participants. LPG distributor Copa Energia's operations at its Canoas city unit — responsible for 30pc of the state's supply — were expected to resume by mid-May. The heavy rains since late April left 100 people dead, a further 128 missing and around 164,000 displaced from their homes, according to the state's civil defence. LPG companies have been working to ensure supplies are maintained in the region, with some advancing salary benefits to support workers during the crisis, local participants say. Distribution began to normalise by 6 May after "the chaos and lack of information" over the 4-5 May weekend passed, an industry executive says. State-controlled Petrobras' 201,000 b/d Refap refinery was also affected, cutting LPG output, but the volume was not disclosed. Many LPG retailers are now able to receive supplies, but it is unknown how many distribution routes have been compromised, according to local industry. LPG stocks have been able to meet demand, preventing shortages, they say. Oil regulator ANP's measures to cut red tape and foster collaboration during a crisis has kept the market supplied, according to LPG association Sindigas chief executive Sergio Bandeira de Mello. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Iraq’s BGC boosts LPG exports as BNGL start-up nears


14/05/24
News
14/05/24

Iraq’s BGC boosts LPG exports as BNGL start-up nears

The BNGL plant will help Iraq reduce its gas flaring and increase power generation capacity when it fully comes on line, writes Ieva Paldaviciute Dubai, 14 May (Argus) — Iraqi upstream joint venture Basrah Gas' (BGC) growing production and exports of LPG are helping to raise the country's overseas LPG shipments this year despite delays to the start-up of its Basrah Natural Gas Liquids (BNGL) plant. The BNGL project, launched in 2019, incorporates two 200mn ft³/d (2.1bn m³/yr) gas processing trains, the first of which was inaugurated in May last year. Each train will produce 700-900 t/d of LPG — BGC's LPG output has risen by about 400-500 t/d to 6,000 t/d this year. Yet the first train has yet to reach full processing capacity despite being scheduled to do so in late 2023. The company now expects both trains to be fully operational by the end of this year. BGC, a joint venture between Shell, state-owned South Gas and Japan's Mitsubishi, has 1bn ft³/d of gas processing capacity split between two of its NGL plants in Khor al-Zubair and North Rumaila. The 400mn ft³/d BNGL plant will increase capacity by 40pc and includes "best-in-class" cryogenic NGL trains, the firm says. These facilities process associated gas from oil production at the Rumaila, West Qurna 1 and Zubair fields. BNGL is also intended to help Iraq reduce its gas flaring and increase power generation capacity by around 1.5GW. BGC's LPG exports have nevertheless been climbing as it works to bring the BNGL plant on line. The company primarily supplies LPG to Iraq's domestic market, mostly for residential cooking, and exports the surplus. But smaller local suppliers are now cutting into BGC's domestic market share, freeing up more of its LPG for export. This includes Iraq's new 140,000 b/d Karbala refinery, which started operations earlier this year and is now selling around 700 t/d of LPG domestically. BGC typically exports split propane-butane cargoes through tenders to south Asian importers such as India, Pakistan, Bangladesh and Sri Lanka, as well as to east African countries such as Tanzania and Mauritius. These are shipped from the company's Umm Qasir terminal on the Mideast Gulf — which can store around 222,000t of LPG, Argus data show — historically on board small pressurised ships but as of this year on Handysize vessels as well, according to analytics firm Kpler. BGC shipped its first semi-refrigerated 100pc propane cargo on the Handysize Navigator Gemini on 2 May, which is due at China's Yizheng port around 27 May, Vortexa data show. The buyer has not been confirmed but the port is owned by Sinopec Yangzi Petrochemical and is close to Sinopec's 280,000 b/d Yangzi refinery. Sinopec has recently been importing more LPG to cover losses during planned maintenance. BGC helped to turn Iraq from a net importer of LPG to a net exporter in 2016. Exports rose strongly to above 200,000t in 2018, before falling over the next three years, Kpler data show. They have increased significantly in 2024, nearly tripling on the year to 49,000 t/month in January-April and forecast to hit a monthly high of 86,000t this month. But the data may be partially skewed — local industry sources have suggested some Iranian LPG cargoes have been disguised as Iraqi exports through ship tracking to bypass sanctions on the former country's oil and gas sector. Flare cuts Iraq is becoming less dependent on BGC for LPG, but the country still relies heavily on its dry gas production for its growing power generation needs. The firm produces enough gas to generate around 3.5GW of the 20GW of power Iraq can generate daily, which is still short of the 35GW it needs at peak times. Iraq simultaneously flares more than half of its gross gas production of around 3bn ft³/d. But Iraq has the world's 12th largest proven natural gas reserves. Underinvestment, mismanagement and conflict have kept it dependent on Iranian gas importsand allowed flaring to continue. Baghdad intends to attract investors to ramp up gas output. The BGC project and a multi-billion dollar deal with TotalEnergies last year that includes a 600mn ft³/d processing plant signal it is moving in the right direction. Iraq seaborne LPG exports Iraq sea LPG exports by country 2023 Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Generic Hero Banner

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more