Shell Nederland Raffinaderij B.V., a subsidiary of Shell plc, is to temporarily pause on-site construction work at its 820,000 tonnes a year biofuels facility at the Shell Energy and Chemicals Park Rotterdam in the Netherlands to address project delivery and ensure future competitiveness given current market conditions.
Story By Robert Brelsford |Oil and Gas Journal| Shell PLC subsidiary Shell Nederland Raffinaderij BV has suspended construction activities on a proposed 820,000-tonnes/year (tpy) biofuels plant already underway at the Shell Energy and Chemicals Park Rotterdam, the Netherlands, formerly known as the Pernis refinery (OGJ Online, Sept. 17, 2021).
On-site construction works for the biofuels plant have been “temporarily pause[d]…to address project delivery and ensure future competitiveness given current market conditions,” the operator and its parent company said in separate July 2 releases.
According to the companies, the interim suspension will reduce the presence of on-site contractors and construction-related works, which will enable Shell to control costs and optimize project sequencing.
“Temporarily pausing on-site construction now will allow us to assess the most commercial way forward for the project,” said Huibert Vigeveno, Shell’s director of downstream, renewables, and energy solutions.
In the wake of its decision to suspend work at the Rotterdam biofuels plant, Shell said it plans to undertake a project-impairment review. Further guidance will be issued in the company’s second-quarter 2024 earnings update note, due for release on July 5.
According to the companies, future updates will communicate additional information regarding the project’s status and timelines.
Despite the renewable project’s indefinite suspension, Shell reiterated its ongoing pledge to local and global decarbonization efforts.
“We are committed to achieving net-zero emissions by 2050, with low-carbon fuels as a key part of Shell’s strategy to help us and our customers profitably decarbonize,” said Vigeveno.
“And we will continue to use shareholder capital in a measured and disciplined way, delivering more value with fewer emissions, Vigeveno added.
Shell previously said it plans to invest $10-$15 billion between 2023 and 25 to support the development of low-carbon energy solutions, including e-mobility, low-carbon fuels, renewable power generation, hydrogen, and carbon capture and storage.
Rotterdam biofuels project overview
Approved for final investment in September 2021 for the proposed start of production in 2024, the Rotterdam biofuels plant was to produce sustainable aviation fuel (SAF) and renewable diesel made from waste, producing enough renewable diesel to avoid 2.8-million tpy of carbon dioxide (CO2) emissions the equivalent of taking more than 1 million European cars off the roads.
A range of certified sustainable vegetable oils, such as rapeseed, were used to supplement the waste feedstocks until additional sustainable advanced feedstocks became more widely available.
According to the operator, SAF was to make up more than half of the proposed plant’s production.
A major component of the project was to involve the construction of a new hydroprocessed esters and fatty acids (HEFA) plant that would be vital to the manufacturing site’s path to net zero and Shell’s transformation as part of the energy transition (OGJ Online, Oct. 19, 2021).
Upon announcing the project, Shell said it planned to capture carbon emissions from the plant’s manufacturing process and store them in the empty P18-2 gas field beneath the North Sea via the Port of Rotterdam CO2 Transport Hub and Offshore Storage (Porthos) project (OGJ Online, May 13, 2024).
FOOTNOTES:
Following the decision to pause on-site construction, an impairment review will be conducted for this project. Further guidance will be included in Shell’s second quarter update note scheduled for publication on Friday, July 5, 2024.
Shell made the final investment decision for the planned biofuels facility in September 2021. The facility is designed to produce sustainable aviation fuel (SAF) and renewable diesel made from waste. Future updates will communicate additional information regarding project status and timelines.
Shell is one of the world’s largest energy traders and blenders of biofuels. Through its Raizen joint venture in Brazil, Shell is the largest producer of second-generation ethanol and the leading sugar cane ethanol producer globally.
As announced at Capital Markets Day in June 2023, Shell plans to invest $10-$15 billion across 2023-2025 to support the development of low-carbon energy solutions including e-mobility, low-carbon fuels, renewable power generation, hydrogen, and carbon capture and storage.
