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Shell plans to convert its oil refinery at the Wesseling site in Germany into a production unit for base oils, the UK-based supermajor said on Friday.
Shell Deutschland GmbH has taken a final investment decision (FID) to turn the Wesseling site at the Energy and Chemicals Park Rheinland into a manufacturing facility for Group III base oils, used in making high-quality lubricants such as engine and transmission oils.
Crude oil processing will end at the Wesseling site by 2025 but will continue at the Godorf site at the Rheinland park, Shell said in a statement.
Shell’s Energy and Chemicals Park Rheinland near Cologne is comprised of the Wesseling and Godorf sites. The park currently has the capacity to process over 17 million tons of crude oil a year, of which 7.5 million tons are processed at the Wesseling site.
The Wesseling base oil plant is expected to start operations in the second half of this decade. It will have a production capacity of around 300,000 tons per year, which would be equal to around 9% of current EU demand and 40% of Germany’s demand for base oils.
The high degree of electrification of the new base oil plant, as well as the ceasing of crude oil processing at the Wesseling site, is expected to reduce Shell’s Scope 1 and 2 carbon emissions – those which come directly from operations and those from the energy to run said operations – by around 620,000 tons annually.
“This investment is part of Shell’s drive to create more value with less emissions,” said Huibert Vigeveno, Shell’s Downstream and Renewables Director.
Over the past few years, Shell has divested several refineries globally, including the sale of the Martinez Refinery in California to PBF Holding Company, and the sale of its 50% stake in the 340,000-barrels-per-day Deer Park Refinery in Texas to its joint venture partner Pemex.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com