In conversation with: Lamma Khodeir, W.R. Grace
Lamma Khodeir, Market Segment Manager at W.R. Grace, speaks about the changing industry, and difficulties for refiners in finding the balance between maximising profitability while also achieving sustainability and decarbonisation goals.
Hi Lamy, and thank you for taking the time to speak to us! Let’s start off with you telling us about Grace and what you do. What are the biggest challenges of your role?
Sure – Grace is a leading global supplier of catalysts, engineered materials and fine chemicals. We have two industry-leading business segments: Catalyst Technologies and Materials Technologies. These segments provide innovative products, technologies and services that enhance the product and process of our customers in over 60 countries around the world.
Our four businesses are “Polyolefin Catalysts and Licensing”, “Specialty Silica and Pharma Fine Chemicals”, our joint venture with Chevron “ART Hydroprocessing Catalysts”, and the “FCC Catalysts and Additives” business. My position is within the FCC catalyst and additive business as a segment marketing manager. So I’m responsible for leading the Resid Conversion segment within this business.
Grace drives a heavily customer focused and solution-oriented approach of innovation. At Grace, we prioritise our customers’ perspective – our reinvestments and development strategies are aligned with our customers’ feedback and market dynamics. So our portfolio and technology strategies are tailored to maximise our customers’ profitability, and meet their sustainability objectives. To achieve this, my role requires a collaboration with a cross-functional team including the commercial team, R&D and our manufacturing plants, close connectivity and activities with this team and with our customers. The goal is to achieve a deeper understanding about industry trends, and the customer value chain. In my role, you could say that I bring the customers’ voice to our R&D projects!
We translate insights and market trends into product concepts targeted at helping our customers differentiate themselves in the market and to deal with challenges – and the past three years have been very challenging. The market has been very dynamic, and learning customer priorities and objectives have shifted as well. Some of these shifts are relatively quick and require quick adjustments because of changing market demands, so we need to change accordingly while making sure we don’t lose focus on long-term priorities.
I like how you brought up how dynamic the industry is; in the current state of the industry, what are some key concerns you think refineries might have?
There are the challenges with a global supply chain, and it’s not only the refining industry – a large number of sectors are facing these challenges as well which are due to port congestion leading to shipping delays, shipping container shortage, rising freight costs, labour and material shortages. All of these really require attention.
Then there is the discussion around the profit drivers of the refinery. The demand has outpaced a re-stabilisation of the labour markets after COVID. Coupled with the decline in global refining capacity through the refinery shutdowns during COVID, for example, have created a tight market for transportation fuels. This has caused a lot of pressure on supply, which results in the need to have high reliability for the refiners to run near maximum utilisation. On the other side , there is also the concern of uncertainty due to the elevated global inflation, the energy and commodity prices are soaring. So the strong demand recovery last year outpaced supply restart and capacity on many materials, driving inflation. Global market on key raw materials is very tight.
Tell us more about how Grace is helping refiners alleviate current concerns surrounding the industry.
Grace is committed to the industry and its future, so a broad-based innovation is really a critical requirement for the industry’s future.
- We’ve put a lot of focus on developing new technologies, catalysts and additives. To address these challenges, we’ve invested e.g. in new solutions to help refiners to decarbonise. We have also invested in innovative manufacturing processes to support new technology.
- We work with our customers to develop creative solutions and create additional value for refiners within the current situation.
We continue toimprove our global manufacturing footprint so we are able to support and make supply lines more resilient. We also dedicate a lot of effort to technical service support, which includes new hardware to maximise yields, new digitalisation tools, lifecycle assessment for carbon footprint – just to name a few! These are all things that we do to support our customers in the current situation, when the market is changing.
And are there any case studies that you might be able to share with us?
Post-pandemic, there’s been a return of strong demand for transportation fuelscreating an imbalance between demand and supply, so refiners are seeking to maximise their output. Now, however, maximising throughput and utilisation cannot be disengaged or disconnected from the ongoing decarbonisation initiatives, because decarbonisation has become a critical global priority. In this specific case, our expert team proposed a reformulation to our premium technology FUSION®, which resulted in a profitability increase driven by improved feedstock mix; higher conversion, higher value products within the unit constraints. Through our technical service programs and re-defined profitability metric, our team was able to identify opportunities to reduce CO2 emissions to support the refinery’s environmental sustainability efforts, while at the same time ensuring maximum profitability using our premium technology FUSION®. This reference is published in Catalagram, where we also share a large number of case studies as we develop new technologies, on our web page.
It’s great that you mention how it’s difficult to find that balance between maximising profitability, while also achieving sustainability and decarbonisation goals.
Margins currently seen are near record-high levels, so operators are already responding in this margin environment by using premium technologies to get the maximum out of their assets. They are challenging their equipment to run at maximum capacity. So what we say is, challenge your equipment; use premium technologies to maximise required yields in this time of record margins as this enables refiners to create differentiated value. Premium technology is actually a strategic element to achieve maximum profitability. We also recommend ensuring operating reliability, which is very important in this time of high margins. Refiners need to prioritise the security of supply for critical material and equipment that is needed for them to run reliably. We at Grace are committed to fulfilling all of our customers’ requests or orders on a global level. We are investing in our plants to optimise the supply network, to optimise logistics and the supply chain for our customers.
What are some changes in trends that you’ve observed, and where do you think the industry is going to be in the near future?
There is a temporary strong focus on gasoline demand in Asia Pacific and other parts of the world as well. We are seeing very strong margins for gasoline in this post-pandemic recovery period. In some regions, we have also seen that there is strength in diesel. If we tie back to what we discussed about what operators should focus on to thrive in this industry, the margins are good for focusing on traditional fuels.
However, refiners should not lose sight of their long-term projects and investments to maximise e.g. the propylene output. In supporting our customers in achieving their current short-term priorities, and providing solutions, we are also keeping our innovation focus on providing solutions for the growing petrochemical feedstock segments.
Another observation that we are seeing is the growing pace of the energy transition. I mean, the ongoing conflict in Europe has shifted the focus from the energy transition to a larger focus on energy security. Refining will continue to be a key contributor to the energy required in growing regions, especially in Asian societies, but in many places, obtaining these high-value products will have to be in line with decarbonisation targets, which may imply profound changes in the refinery operation’s scheme. This is a focus that refiners have to keep in mind, moving forward.
Regarding trends and sustainability, we know it’s a growing corporate CSR and ESG concern. How can organisations adapt to the stakeholders’ sustainability demands in a way that is still very focused on the region’s needs and current capabilities?
Most refinery operators have developed a sustainability function in their companies to a varying degree, depending on the region or country. The extent of the stakeholders’ demand depends on the company and the specific stakeholders themselves.
There are few areas that we think are in common to many refiners across the world.
- For example, there is the transparent reporting, which has to be aligned with third party frameworks around sustainability. You can see these metrics in annual sustainability reports.
- Investment and reinvestment in the current operation to drive decarbonisation and energy efficiency.
- Adaptations to the refinery product mix – so we see a reduction in transportation fuel while increasing petrochemical precursors
- We see refiners are pursuing to process bio based or other low carbon intensity feedstocks. Grace has been working with renewable feedstocks for several decades, and we are currently supporting customers in co-processing renewable feedstocks as a growing component of their FCC feed.
Another common thing that these refineries have is the adaptation of existing refining operations to pursue lower carbon intensity operations. And that includes deployment of major new operations like low carbon hydrogen routes, renewable power, CCUS and other significant adaptations to operations.
But what are some of these challenges that can come the way of achieving this increased sustainability? And how can we overcome them?
So to achieve sustainability objectives, the first thing that an organisation has to do is to define what sustainability means to them, for the company’s strategic outlook, and what does it mean for the company and the country they are operating in in general? You must dedicate human resources to this area. It’s really very critical to have a well-defined organisational view and appropriate staffing to define, execute and govern proper sustainability efforts.
Additionally, to have long term impact, new business processes and practices have to be created. And the effort associated with these new processes and practices should not be underestimated. So many sustainable changes require significant organisational investment, and these investments often require local, national or regional financial frameworks to support their interests. So working with local officials to enact frameworks that can support investment returns is one way that refiners can advance their sustainability objectives. Let’s not forget, of course, that sustainability requires strong conviction and a significant effort to create public trust – especially in today’s world, where building trust with stakeholders is so important to sustainability programmes. Leading companies do this by driving transparency and delivering on commitments, so it’s important that sustainability leaders put significant attention on avoiding greenwashing, and plan on communications in a way that keep expectations in line with the ability to drive things forward. This is very important.
Moving on, sustainability and the energy transition are overarching themes at this year’s Asian Downstream Summit in Singapore – what can we look forward to from Grace at the event?
First of all, Gary Cheng, our marketing manager for FCC in the Asia Pacific region, will present a technical session on novel processing technologies to help balance FCC catalyst properties, improve unit performance and drive value for refiners in the midst of the global energy transition.
We’ll also have an abbreviated case study to show how premium technology drives profitability and sustainability goals. I would also encourage everyone to join our booth, talk to our expert team and get printed versions of case studies on identifying value from CO2 reduction in the FCC.