Jurong Island: In search of a new miracle

Word has it that where Big Oil produces, dozens follow. It almost never happens that the oil giants would choose to coexist their refineries in one place, but when they do, magic happens.

Each supermajor draws its village of large chemical producers, and these villages will most certainly spark a chain reaction of investments – from gas suppliers and storage operators to utility and logistics players, all wanting a piece of the action.

This was how Jurong Island struck gold over the past 30 years, attracting more than S$50 billion in investments to the sleepy backwaters of Singapore – a tiny island-state with no oil or gas reserves to call its own – as over 100 companies across the chemical production value chain cosied in.

Key to the success was the audacity of the government, spending some S$7 billion on land reclamation over the years to amalgamate seven southern islands and realise the industrial cluster, which today contributes to a third of Singapore’s manufacturing output.

But a case is building for the government to keep this magic alive with the same decisiveness it demonstrated in the 90s.

Of late, the island’s proposition as a prime destination seems to be eroding with Shell’s ongoing search for a buyer for its refinery and petrochemical assets in Singapore, after having called off its sustainable aviation fuel and base oil plant projects here.

On top of supporting the aviation industry, the cancelled projects could have potentially supplied renewable diesel and bio-naphtha feedstock to the island’s chemical players, which are anyway reckoning with the need to green their processes in a net zero world.

Jurong Island could easily get lost in the weeds, toiling over making up for its lack of a hinterland for renewables deployment and biofuel production by clocking tiny wins in an ultimately losing game.

But experts have a radical proposition: Why not make an ally out of carbon dioxide (CO₂) – the unwanted by-product filling Jurong Island’s skies, contributing to a disproportionate half of Singapore’s emissions?

Tan Wooi Leong, Surbana Jurong’s managing director for energy and industrial, said natural gas-derived hydrogen can be fused with CO₂ to form the synthetic version of hydrocarbon “Lego blocks” that naphtha is known for.

Naphtha – the refined state of crude oil – is cracked here and channelled to the off-takers that have crowded here to use its various broken-down forms. These carbon and hydrogen combinations are essential to the production of plastics, synthetic rubber, adhesives, and other everyday materials.

“The ‘C’ and ‘H’ are always there. It’s just that when it comes from fossil fuels, we are needing to capture the carbon, use it, or sequester it somewhere else,” he said, pointing out that one possible use is making future synthetic fuels out of these elements.

“People will want to invest here. They’re already here,” Tan added. “Don’t wait until they leave. (Do) you know how hard it is to convince them to come here in the first place? It’s easy for them to leave, but difficult for us to woo them back.”

Besides, the oil giants are already trialling such technologies under the Carbon Capture, Utilisation and Storage (CCUS) banner elsewhere. “We will lose our position if we don’t start piloting. Through such pilots, we learn, the ecosystem learns, and the small and medium-sized enterprises learn,” Tan said. 

When asked, ExxonMobil Asia Pacific’s chairman and managing director Geraldine Chin highlighted ExxonMobil’s belief that a “network of regional Carbon Capture and Storage (CCS) hubs” could help the industry across Asia meet its decarbonisation goals.

The company has in fact announced progress on multiple CCS opportunities globally, she noted.

Particularly in Singapore, ExxonMobil’s consortium with Shell, called S-Hub, was just selected by the government last month to evaluate and develop a cross-border CCS project for cutting the country’s emissions, she pointed out.

“We continue to work on evaluating opportunities here that can reduce our greenhouse gas emissions and help others reduce theirs,” she said.
 

Defending the gold

The Singapore authorities are already tinkering with the idea.

Speaking to The Business Times , Lim Wey-Len, Executive Vice President of the Economic Development Board (EDB), calls it a game-changer if Jurong Island players are able to store CO₂ permanently and access captured CO₂ as a feedstock.

Already, Lim pointed out, companies can process natural gas through steam-methane reforming to produce hydrogen and CO₂. If players can find a way to deal with the CO₂, it can become the island’s source of low-carbon hydrogen to lower the emissions associated with electricity generation, he said.

With the attention cast on ammonia – the nitrogen-hydrogen compound touted as the top contender for transporting renewable hydrogen, identified as the fuel of the future – Lim said many forget that natural gas is a good hydrogen carrier too.

Natural gas’ main compound carries four hydrogen atoms, versus three in ammonia, which is zero-carbon. But ammonia comes with a whole host of unique issues around its delivery, being a highly toxic gas with the added problem of being colourless, he pointed out.

While the CO₂ captured can in theory be used to make chemical products, Lim said such technologies are still nascent, so the government had to set up a Low-Carbon Energy Research programme looking to back research and development (R&D) and partnerships that can lower CCU cost.

Lim noted that S$55 million has been awarded under the programme so far, with another S$129 million committed. And as Singapore moves along its decarbonisation and energy transition journey, more R&D support on this front can be expected, he said.

But Tan said Singapore should make bolder moves and take greater risks on this front. He considered the Agency for Science, Technology and Research’s upcoming translational test bed to test Carbon Capture and Utilisation (CCU) solutions on a kilogramme scale too small and conservative, for instance.

Sandboxing should already be done on an industrial scale, he argued. From his experience, R&D that found success in the lab often fails on an industrial scale.

By the time the pilot reaps results, some years would have passed, and the work to scale it up would take another five to six years, he said. “By then, the game is already over.”

The risk is that the longer Singapore waits around, the more likely it is to slip from being a price-setter to becoming a price-taker amid the global transition to a low-carbon economy, Tan said.

“As a price-taker, what do we learn? We just pay the price for it. You train more traders. You train more to do commercial banking. But the technical expertise will be on the other side of the shore.”

Adding that CCU research of course comes with a hefty price tag as these are untested waters, he said Singapore has to bite the bullet and drive the building of a critical mass of companies with a compelling case to store and use CO2 en masse as a feedstock for their production.

“When it becomes viable to use CO2, everyone will want to capture it, and it can get commoditised,” Tan added. “The next question naturally becomes where the CO2 can be stored. Do we have to use it immediately, or can we store it somewhere, and wait for the price to go up before selling it in the market?”

Justin Goh, Accenture’s principal director for sustainability and net zero transition in Southeast Asia, said government support and regulation are needed to accelerate such a pace of decarbonisation, which would require an integrated effort from an entire ecosystem.

As Singapore’s Carbon Pricing Act sets the marginal cost of abatement for companies on Jurong Island, the carbon tax policy should be continually enhanced to encourage continuity in investments and the impetus to adopt CCUS technology, he suggested.
 

Bottlenecks and inertia

In fact, by now, players on Jurong Island should already be rapidly scaling low-carbon power and hydrogen to ensure affordable and secure supply, Goh said.

The inertia on Jurong Island is palpable to players that tried to carve their own path.

Take specialty chemicals maker Croda Singapore, which had attempted to work with ENGIE Impact, the sustainability consulting arm of French energy giant ENGIE, to implement CCU at its Seraya plant on the island in 2021.

The plant’s site head, Chok Vui Shung, said the non-competitiveness of kicking off the solution at just one facility had ENGIE Impact knocking on the doors of a string of companies for buy-in. But many players remain reserved about sharing their numbers, or collaborating.

“Sometimes, these activities... have to be led by government agencies for traction,” he said.

Meanwhile, Chok shared that it was only through Enterprise Singapore and JTC’s Jurong Island Innovation Challenge that Croda, which makes products that are sold in more than 30 markets, was able to find a suitable solution to cost-effectively recycle the plant’s wastewater to meet its sustainability goals.

The waste stream is especially complex, being a mix of all sorts of chemicals from batch production that are hard to break down, and a number of bigger players had turned it down before it participated in the challenge.

Chok said the sustainability agenda is not the primary reason driving the British player’s continued operations in Singapore after almost 39 years. The company, which is targeting net zero by 2050, remained here as the location grants a logistic advantage, keeping the business competitive.

That said, “for every emission generated, we now need to figure out how to offset it”, Chok said. This is also why access to green electricity has become “extremely crucial”, and the company looks forward to accessing it on the island by around 2027, he pointed out.

Jurong Island newcomer Arkema, which hosts ambitions to reach net zero as well, shares similar concerns about the availability and competitiveness of renewable energy.

The French materials manufacturer wants to halve the life-cycle carbon emissions of polyamide 11 – the high-performance polymer it produces here using the plant-based castor oil – to below one CO₂-equivalent per kilogramme in the next few years.

But whether it can achieve this goal here is not entirely within its control. Even if Arkema installs rooftop solar panels and solarises its car park, the efforts would not be enough, said Danny Foong, general manager of its regional high-performance polymer business.

The company will not have to work half as hard to tap clean energy sources at its only other production facility in France’s Marseille Saint-Menet. It already derives 75 per cent of its electricity there from nuclear power, which is associated with near-zero emissions.

Without more renewables, Foong is banking on the Singapore government’s commitment to be “very agile”, “very pragmatic”, and “listen” to industry.

Comforted that CCUS and renewable energy imports from neighbouring countries are among options being explored, he said: “We are convinced there will be a solution. It’s just that we’ll have to be a bit more patient.”

Among those craning their necks for greater renewable energy capacity is Finnish energy giant Neste, which has invested €1.6 billion (S$2.3 billion) in expanding its plant in Tuas to produce sustainable aviation fuel.

The hunger stems from the energy-intensive nature of the chemical industry, said Steven Bartholomeusz, its head of public affairs for the Asia-Pacific.

Nonetheless, “the situation is what it is today”, he said, pondering upon the status of the solar transmission project by Australia’s Sun Cable.

“All of these are something of the future. We will have to see what happens.”

Watch and pace

The grand vision shared by Tan of Surbana Jurong is for Singapore’s leading oil and gas trading hub status to evolve to cover future-relevant “molecules and electrons”.

“We have to go back to where we started. We have no oil and gas reserves, yet we are a major trading hub. That kind of concept must have a comeback,” he said.

By “electrons”, Tan envisions Singapore’s possible role in setting up transnational grids across Asia to transport renewable electricity powered by solar, wind, or hydropower, replicating what Europe has managed to achieve.

“If everybody brings their socket here and plugs in, then you’ll have a means to move electrons as and when you want,” he added.

As for molecules, Jurong Island might not be where green hydrogen or ammonia is produced, but it could surely play a role in aggregating supply, owing to its mature ecosystem of storage, logistics and trade players, he pointed out.

The only thing missing now is the infrastructure, he argued.

Yet, aligning investments and, more critically, investment pace, is the priority of Jurong Island’s largest independent tank-storage operator, Vopak. In 2013, Vopak built Singapore’s first ammonia tank – which has remained the island’s only such installation after all these years.

Vopak Terminals Singapore’s president Rob Boudestijn said the storage business is capital intensive, so every investment has to be backed by customer contracts and long-term trends.

Within the maritime industry, the winds are first shifting in favour of fossil-blended biofuels, so Vopak has gone only as far as to repurpose assets previously used to store and move 40,000 cubic metres of petroleum products for its use. The next bunker fuel in line will be methanol, with the number of methanol ships on order growing, Boudestijn said.

Ammonia will take a while longer. The number of players experienced in handling it remains small, with just a 20-million-tonne fraction of the lot traded by sea annually, he added.

While some form of storage and handling standards are in place, they are not developed to the extent seen in the oil and gas industry, where products are handled in large volumes daily, he said.

He reckoned that it will take some years yet for ammonia to emerge as a widely traded commodity, as was the case for liquefied natural gas.
 

Undying propositions?

All things considered, Lim of EDB said Jurong Island has to host a confluence of future-ready solutions – be they carbon capture, low-carbon hydrogen, renewables, or energy-storage systems – to attract new companies making sustainable products.

These could be the likes of Arkema and Neste, which are substituting fossil fuels with bio-based feedstock centred around plants, animals, microorganisms, or fungi.

Why would Jurong Island draw these players, which would most likely have to import their bio-feedstock for further processing here? Would it not make more sense to situate their operations near the plant mills, for instance?

Lim said in return: “How do we set up our oil refineries? We never had access to crude.”

Would Singapore have to struggle to replicate its success story with bio-materials or used cooking oil, which come in much smaller qualities and are more varied in type?

Lim contended that the factors raised are precisely why the country would retain its competitive advantage, given supply chain complexities.

“There is no single location that can generate enough feedstock to baseload a biorefinery,” he said. “It would require feedstock from all over the world… from Malaysia, Indonesia, China, Australia, and New Zealand. Then you’ll have enough.”

In the case of used cooking oil, the case is even stronger for volumes to be consolidated and processed before shipping it to the end market, as up to 40 per cent of the feedstock could be lost to inefficient production, Lim said.

In fact, some of the units found on Jurong Island today can be converted to deal with biomass as the production process concerns a similar hydrogenation process used by refineries to produce fuel, he pointed out.

In so saying, Lim disagreed that Jurong Island’s value proposition was fading. Its limitations are “not a trap, but an opportunity”, he said.

Rounding up with an elevator pitch, he said: “The proposition is built on the foundations that we set for this industry. These investments are still billions of dollars, and companies will want to be in a jurisdiction that continues to support them.

“You need good access, a good transportation supply network. And it’s a chemical production process. You need people who know how to deal with it; usually people that produce the biomass don’t know how to deal with it in an effective way.”
 

Source: The Business Times ©️ SPH Media Limited. Permission required for reproduction.