Frequent international visitors to Austria’s charming capital Vienna, often find the Schwechat Refinery hard to miss come day or night. As aircraft come in to land or take-off from the city’s airport, the sprawling integrated petrochemical production hub looms large for pilots and passengers alike.
The complex is running at a 97% utilization rate these days and accounts for over 50% of Austrian oil and gas company OMV’s refinery capacity of nearly 18 million tons. On its grounds, hidden away from prying eyes, amid the chimney masts, manifolds, pipelines and tanks, a rather unique and as yet commercially untested project is underway that could have a profound impact on the crude oil and plastics market, via a unit that connects both by converting plastic waste into synthetic crude.
By going down the route, OMV (VIE:OMV) has taken a bet on a nascent industry that could become a $50-55 billion a year business within this decade, according to projections by the likes of McKinsey & Co. And the Austrian company has a rather catchy name for it product – ReOil.
OMV’s a synthetic crude oil – ReOil – which it produces from breaking down plastic waste.
Giving your correspondent access to Schwechat, Thomas Gangl, Chief Downstream Operations Officer of OMV, points to a processing unit that has passed over “1,000 hours” of rigorous testing, and regularly produces synthetic crude that could sit well alongside its fossil counterpart extracted from the ground.
The idea seems simple enough in theory; after all plastic is derived from crude oil and can be broken down and converted back. However, the practicality of bringing this about is an entirely different matter. Extracting oil from plastic by reverse cracking it requires the waste to be heated to over 400°C for long periods to disrupt the long-chain molecules and produce synthetic crude.
Given plastic is a very poor conductor of heat makes it an almighty task in the laboratory, let alone at a commercial production facility. Yet, OMV thinks it close to cracking it at scale, no pun intended, and it all came via a “bottom up approach” according to Gangl.
“It wasn’t some boardroom decree that kick-started the project. Wolfgang Hofer, our Senior Expert of New Technology initiative at Schwechat Refinery, and his team conceptualized it as one of the ideas that could change the way we do things.”
But that was way back 2009, and the oil market was reeling from the global financial crisis. “Like every one of our peers, we were facing tough decision on cost cuts. Yet, we backed the concept, albeit only with a team of two asking them to prove it. All they asked for was a laboratory testing stipend to keep it going and we did.”
Within three years, Hofer’s team had produced sound results and the oil market began a recovery run. Soon “single digit” millions were earmarked in phases for the project by OMV. “And here we are in 2020, outside a ReOil unit that can process up to 100 kg of plastic per hour turning into around 100 liters of synthetic crude. Next stage is to hit 2000 kg per hour processing levels,” Gangl says pointing to the processor.
Going by the trust but verify logic, your correspondent asked for and got a demonstration of how it is all done. In simple terms, OMV specialists introduce “a material” into the plastics at the start of the process to improve the heat conductivity of the feedstock that goes through the unit, bringing the energy intensity during processing down while increasing the yield.
OMV ReOil unit (center) is capable of converting 100kg of plastic waste into 100 liters of synthetic … [+]
After the mix has melted, this mass is vaporized into gas, the long molecule chain is broken down and subsequently reassembled into smaller chains via chemical processes resulting in synthetic crude. Components of the unit do not appear out of place in a refinery but how they have been cobbled together from an engineering and petrochemical perspective is what gives OMV’s prototype “an edge.”
Built to specifications using a modular system premised on lessons learnt in the laboratory, especially ideas on keeping the unit clean and managing heat during a sticky conversion cycle, it was put together and brought online at Schwechat in 2018.
In terms of volume, the processor is 20 times the capacity of what OMV was attempting in the laboratory. “We have now gone beyond the first ton of production. Time has come to view plastic – the basis of modern life – not as a problem but as valuable emerging feedstock for refineries. We could work towards a circular economy for plastics like paper. Synthetic crude produced in this way could be recycled back into automotive fuels, jet fuels, petrochemicals and recycled plastics.”
The idea itself has a valid premise but may appear outlandish and risky to some. However, Gangl appears unperturbed. “Every project is risky to begin with. If risk appetite wasn’t there, we wouldn’t innovate. If you hire experts, it is better that you give them the room to be creative, use their talent to innovate and their ideas to flourish. ReOil is our bottom-up project that demonstrates this.
“Alongside, commercial considerations there are several aspects from environmental and legislative ones. Legislatively, in the European Union clear targets are being set for recycling as much 50% of the plastics we consume, especially for packaging materials. ReOil processing plant targets precisely those packaging materials out of the total plastic waste volume.”
In the run up to 2025, OMV will have one commercial unit processing 200,000 tons per year. “That would mean we would have half of Austrian plastic waste [polyethylene, polypropylene, etc] processed in the refinery. By this one unit we can fulfill EU regulatory requirements for Austria.”
While the venture is backed by the Austrian Research Promotion Agency (FFG), and the Austrian government has a stake in the company, the petrodollars being pumped into it are OMV’s. The scale up will take some years and Gangl says it would require patience but the potential is huge.
OMV’s iconic Schwechat Raffinerie in Vienna, Austria could be expanded eastwards to accommodate … [+]
“That brings us to the environmental aspect. Alongside creating a circular economy for plastics, ReOil will also reduce the CO2 footprint of OMV’s product by 50% and keep us on the right side of United Nations’ sustainable goals. I consider it to be a compelling preposition for stakeholders.”
If as expected ReOil operations will be scaled up, OMV already has the real estate ready at Schwechat with plans for an eastward expansion on land it already owns. It’s decades-old partnership with polyolefin producer Borealis has been extended to include the venture, and enjoys full backing of the Abu Dhabi National Oil Company (ADNOC), another key stakeholder and partner of OMV.
From a resource allocation of just two people in 2009 to spending “single-digit” millions on the project less than five years ago, OMV has presently set aside $500 million in phases on green technology to 2025, and is upping its game considerable. The idea is that millions could eventually yield billions and green points with society at large.
“Commercially, we have screened more than 400 technologies in this area, and we are one of the leading companies in a sphere where there aren’t that many. Once the 200,000 tons per year synthetic crude processing mark has been achieved, then it’s just a matter of time, perhaps 5 to 10 years to roll out the technology on an even bigger.”
