Hydrocarbon Processing - April 2022 - 66

Sustainability
asset and the process, further efficiency
improvements of 15%-30% are possible
and feasible for many sites. For example,
two of Europe's largest downstream organizations
decided to deploy the author's
company's advanced adaptive process
control across their enterprise to meet
near-term carbon footprint reduction
commitments. This is a much broader and
more accelerated scale of deployment of
this proven energy efficiency and carbon
reduction technology than seen before.
There are still hurdles to leap. With
the wide range of sustainability initiatives
and directions the industry is taking,
EPCs are facing a diverse basket of capital
project opportunities. However, therein
lies a challenge. How does a company pick
the correct areas to focus their capabilities
and expertise? The author had the opportunity
to speak with one Chief Executive
Officer (CEO) of a mid-sized EPC company
in North America. He personally is
spending a large fraction of his time working
on the company's strategy to grow in
the sustainability projects area. He believes
his personal focus on this mission is
critical for the future direction of the firm.
This reality is one of the key factors at
play: sustainability project work is a strategic
pivot and requires executive attention.
For his company, as a mid-sized contractor
with a strong reputation, business is
significantly tied to ongoing relationships,
dating back to multiple successful projects
over the years. However, the challenge is
to maintain that trusted relationship with
clients and to assemble the right capabilities
to be credible and to prove themselves
again as the EPC of choice in new sustainability
technology areas, such as bio-based
feedstocks, carbon capture, hydrogen and
new materials. It is a seller's market for
technology experts and experienced practitioners
in those areas. The largest EPCs
are bent on assembling a critical mass of
staff with the right skills, leaving smaller
players with the task of building bench
strength in an expensive free agent market.
To get the right strategic focus on sustainability
projects, just under half of the
responding companies have set up a separate
organization or division to pursue and
perform sustainability projects. The other
half are not yet taking that route. The author
spoke with a group of key executives
at another EPC that has made the decision
to set up a separate group for sustainability
projects. The group is set up under a
66 APRIL 2022 | HydrocarbonProcessing.com
separate executive reporting to the CEO.
This approach can win in terms of getting
the right executive focus and direction. It
also provides a more transparent way to
measure the progress in building the capabilities
and execution success, as well
as be successful in mapping directly to
clients' focus on sustainability. Of course,
the counter argument is that nearly all future
projects will have some sustainability
content, and that this distinction in some
ways will not make sense in the future.
Closing the skills gap is top of mind.
Regardless of what format of business
development is chosen, this survey also
sought to find out what the biggest barriers
to sustainability capital projects execution
are, as perceived both by the EPCs
and owners. Building a staff of engineers
with the right domain expertise was cited
as a barrier by 45% of the respondents,
the second largest barrier beyond the economics
of the projects themselves.
In terms of how to build up the right
staff capability in today's environment,
also known as addressing the skills gap,
companies are pursuing a range of approaches.
Fifty-four percent of companies
are increasing investment in in-house
sustainability design training. Forty-two
percent are incentivizing their staff to take
supplemental sustainability design training,
30% plan to hire recent engineering
graduates whose coursework has increasingly
focused on sustainability aspects,
and 34% are seeing the need to invest in
software tailored to addressing the new
design and economic challenges of sustainability
projects.
New partnerships are emerging.
Sustainability initiatives are driving new
types and levels of partnerships. This is
due to a few factors, including managing
risks of new technology (e.g., CO2
capture and green hydrogen among multiple
participants) and extended value
chains. For example, in a recent forum,
Eni's Chief Operating Officer for Energy
Evolution provided two examples of new
partnership types. One example is CO2
capture, in which companies with old hydrocarbon
reservoirs that can store CO2
,
and have the technical ability to do so,
will collaborate with industries-such as
steel-that are hard to decarbonize to develop
joint solutions. Another example is
biofuels, where land owners that produce
biomass to supply biorefineries can combine
with local employment initiatives in
emerging economies such as central Africa.
This will address multiple sustainable
objectives simultaneously.
These and other types of partnerships
will require EPCs to improve how they
are using digital technologies. Partnerships
require digital collaboration of many
aspects of a design and an asset's data, far
beyond what process industry players are
accustomed to. Fifty percent of companies
say they are pursuing owner-engineer
partnerships. Forty-two percent are looking
at cross industry partnerships, such as
between upstream companies and metals
refiners, and 38% of EPCs are looking
at consortia or partnerships that link up
multiple EPCs with different skill sets.
Improving the economics with
advanced digital technologies. The
elephant in the room is the economic investment
required for sustainability, and
reducing what Bill Gates refers to as the
" green premium. " 4
Seventy-three percent
of respondents feel that economics are a
significant barrier to momentum in these
projects. The EPCs who look at this opportunistically
will see that there is a way
to strongly differentiate based on going
further than " designing to meet a specification. "
Instead, the best design teams
will embrace the most advanced digital
technologies, including hybrid models
that incorporate artificial intelligence
with rigorous design tools.
Major takeaways for EPC leaders.
Future market leaders will be those that
incorporate sustainability results into all
their capital project bids and execution.
There are significant hurdles that largely
revolve around developing the proven capability
and expertise to conduct sustainability
projects and reduce the future risk.
However, companies across many industries
and geographies are strongly committed
to meaningful capital projects across
various sustainability dimensions.
LITERATURE CITED
Complete literature cited available online at
www.HydrocarbonProcessing.com.
RON BECK is the Senior Industry Marketing Director
at Aspen Technology, Inc., leading the company's
global energy industry marketing. During his 14 yr
at AspenTech, he has held multiple marketing roles,
including Industry Marketing, Product Marketing
and Telesales Marketing. He has more than 30 yr of
experience in providing software solutions to the
process industries and 15 yr of experience in chemical
engineering technology commercialization. Mr. Beck
earned a Bch degree from Princeton University.
http://www.HydrocarbonProcessing.com http://www.HydrocarbonProcessing.com
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