26/03/31
Bulk terminals firm HES prepares for energy transition
Bulk terminals firm HES prepares for energy transition
Paris, 31 March (Argus) — Bulk terminal company HES International operates 14
facilities in four European countries and anticipates important changes to its
operations as the energy transition and hydrogen market evolve. Argus spoke with
new energies business development director Otto Waterlander and chief commercial
officer for HES Med Terminal Firas Ezzeddine about how an infrastructure player
must adapt to serve customers. Edited highlights follow: What does HES do and
what is its role in decarbonisation? Ezzeddine: We are an essential and critical
part of the logistics value chain for the industrial heart of Europe. Our value
proposition is that we are located in deep sea ports in close proximity to
industrial zones, meaning that we are well positioned to serve strategic
European industries and their logistical needs. Waterlander: We are purely an
infrastructure player; we do not normally have a stake or exposure to the
commodities that we manage through our terminals. Our customers tend to be
carbon-intensive and they all are struggling with the question of
decarbonisation. For HES, it is both a necessity and an opportunity. It is a
necessity because classic flows of commodities will phase out over time. And an
opportunity because of the energy transition... new things are happening, for
example, [development of a] CO2 [market]. Today, we are not involved in handling
CO2, but it is going to become a commodity in the future. What are the main
challenges related to energy transition activities? Ezzeddine: I see challenges
in three buckets. The first is timing: there is a bit of a lag between project
deployment and when the infrastructure should be ready to facilitate flows.
These are generally not well aligned. The second challenge is around financing.
We see from both private and public sector a bit of a risk averseness in terms
of investing in the infrastructure for the future. The final challenge is
regulation regarding both the new flows of commodities and the actual
development of infrastructure. Waterlander: There is also a question about what
the utilisation of new infrastructure will be like, particularly in the early
years. What you see in the industry is that often projects get delayed, either
because they are not economic or because their utilisation challenges create an
[unfavourable] economic situation. A recent example is the CO2 transport
pipelines. They require large volumes to make it economic and those volumes are
not there yet. You need to factor in some long periods of underutilisation of
the infrastructure. H ow are you addressing this last challenge, for example for
CO 2 infrastructure? Waterlander: We believe that the key to unlocking the
market is to go smaller and create optionality. For example, with regard to CO2
terminal activities, we are advancing in Wilhelmshaven and Rotterdam. We already
have infrastructure there to receive tankers and we have dedicated jetties to
handle the unloading or loading of vessels. We just need to adjust them so that
we can also move CO2. We believe that we can actually get our terminals
economically viable at about 1.5mn or maybe 2mn t/yr of CO2 handling, when most
of the projects will look at 10mn t/yr plus. If we could develop a smaller size
terminal to begin with and then grow to larger sizes, we can help the market to
come to grips with those volumes. And then gradually over time, volumes will
move into pipelines as well. Will the CO 2 be liquefied at the HES terminals?
Waterlander: There are two models. In one we have pipeline transport of gaseous
CO2, then HES will liquefy the CO2 at its site before it goes onto the ships.
That is the most efficient way because otherwise each player would have to have
their own liquefaction. But before we have the gaseous pipelines, we will see
customers installing their CO2 capture facilities, liquefy it on site, load it
into rail tankcars or into barges on the Rhine, for example, to Rotterdam. In
this case we receive it in liquid form already. We are planning to have CO2
infrastructure in place by 2029. In the first year, that is only for a small
volume, but by 2030 it starts to become significant. We will launch an open
season for our first two CO2 terminals in the coming weeks and we are aiming to
analyse more specific capacity bookings through these. In France's Fos-sur-Mer,
you are working with the Gravithy green iron initiative . What additional
infrastructure is needed for that? Ezzeddine: We will be managing the inflow of
material for them, which is the iron ore, and the export of their hot briquetted
iron [HBI] production. What that entails, in essence, is having some cranes and
conveyor belt infrastructure from and to their facility. For the iron ore side,
it is not different from the infrastructure that we have for other sites. But
the HBI requires dedicated infrastructure because of the nature of the product.
What we are doing now is designing a conveyor belt network going from our
terminal to theirs, which is around 2km away, where we send iron ore and we
receive HBI, and we dedicate a specific slot on our terminal land where we have
specific storage for them. Does GravitHy need to book capacity in advance to
enable the expansions? Ezzeddine: We have a specific planning and demand
forecasting system where we input the potential volumes going in and out. When a
new client comes in, they add their inflow and outflow requirements to the
model. Then we see whether that is feasible or not given the current
infrastructure and the land capacity that we have. The client, in this case
GravitHy, tells us they have a need for ‘X' million tonnes of throughput in our
terminal, and it is up to us to design the optimal inflow and outflow process.
We update the model quite frequently so that we have visibility on what is
needed by when, especially because some projects require infrastructure that
takes years to build. What are HES' plans for e-methanol? Waterlander: We're
working on an e-methanol import project where it will be brought from across the
Atlantic into Germany. We have a storage site in Germany that is a former
refinery and has liquid storage facilities. We still have an element of the
refinery operational that provides security of supply today. We're discussing
with a partner the construction of a synthetic aviation fuel (e-SAF) facility as
well, which they would locate on our premises. What about other hydrogen
carriers or hydrogen-based fuels? Waterlander: We're very proactive on following
everything in the hydrogen space. We had discussions about liquid hydrogen
imports. We are also into advanced project steps on imports of ammonia into
Germany and are in project definition for imports of liquid organic hydrogen
carriers. For our Wilhelmshaven site, we already have signed a letter of intent
with grid infrastructure company OGE to be connected to the hydrogen network.
Ammonia in particular is rather expensive because you need crackers. Is HES
planning to develop ammonia crackers? Waterlander: It depends, it is still such
early days. If we do it, it would not be at our sole risk, that is clear. Send
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