Presentation to Portfolio Committee on Environmental Affairs and Tourism

Processes and mechanisms to ensure clean air

23rd August 2005

Wayne Hartmann – General ManagerLynne Hanekom – HSE ManagerAlan Munn – Sustainable Business

ManagerSibongiseni Khathi – Environmental Services

Manager

The Engen Refinery team

Why we think we are here:

Current media attention / legal action Perception of poor environmental performance

as a result of Escalating Expectations

To provide you with actual performance information To present our plans for the future To answer any questions

Presentation contents:

Background to Engen and the refinery Discussion of community issues / concerns Discussion of actual environmental

performance and comparison to standards / expectations (SO2 / flares / VOC’s)

Stakeholder relationships summary The way forward

Background to Engen Origins of the company date back to around 1900 Engen created when Mobil disinvested from South

Africa 80% owned by Petronas – the Malaysian state oil

company; and 20% by Worldwide Investment Holdings, a BEE company

Operates throughout Sub Saharan Africa Consists of one refinery and large Marketing operation Joint venture with Sasol liquid fuels in progress

Background to Engen Refinery Initial construction began in 1952

Site chosen-barren land South of Durban Started as the Standard Vacuum Oil Company, became

Mobil, Genref and finally Engen refinery Initially a 15 thousand barrels per day (tbd) refinery Has undergone numerous expansions / upgrades to

current capacity of around 150 tbd Is now a modern, highly complex refinery utilizing much

state of the art technology. Very little of the original refinery left

The Refinery site in 1950

The refinery in 1952

Aerial View of Refinery - 2004

History: Apartheid Era

Group Areas Act moved people of colour into buffer zones around industry

National Keypoints Act meant industry was seen as part of security establishment Secrecy Walls, fences, cameras, armed guards

As a result refineries were seen to be part of oppressive regime

Rocket attack and crude line explosion during 1980’s

General Environmental Issues Engen refinery: its location makes it the most visible Industry in the area One of about 140 industries in South Durban Responsible for about 10 - 20% of the emissions in South Durban (from MPP cost allocation database) Local Environmental NGO will not engage constructively (e.g. objections to projects that reduce emissions) Reality - Our side of the story never gets told

Current Perception is:

Excessive health risk to local community Sulphur dioxide / flares / VOC’s

(especially benzene) are a concern Poor standards and Outdated technology Poor performance / getting worse Don’t care / Lack of commitment

Actual performance / standards

To correct these incorrect perceptions we need to work with the scientific facts:

Strong support for the Multi Point plan Accept that Engen is in a unique situation that requires

better than normal solutions Understand each problem and apply the correct

technical solution on a prioritised basis Work with all constructive stakeholders and understand

each others issues / concerns

Lots of progress to date..

..but not enough (although close to WHO guidelines)

No easy answers!!!

Sulphur Dioxide

Sulphur Dioxide (1) - where we are Already achieved : 60% Reduction in SO2 emissions “Superclaus” technology installed in 1993 (BAT) Switched from high sulphur fuel oil to fuel gas (BAT) FCCU DeSOx technology (BAT) In World terms our emissions are not excessive New ambient SO2 standards / guidelines are tough – presents

challenges Stacks are too low (airport proximity) Very tight operational controls in place All the easy solutions (low hanging fruits) are already complete Major Capital Expenditure required for the next step change in

emissions

SO2 emissions (tons/day)

Sulphur Dioxide (2)

0

10

20

30

40

50

60

70

80

Ave

199

8

Ave

199

9

Ave

200

0

Ave

200

1

Ave

200

2

Ave

200

3

Ave

200

4

Ave

200

5 yt

d

SO

x e

mis

sio

ns

(to

ns/

da

y)

Total SO2 emissions Permit Limit

Sulphur Dioxide (3) : Best Available Technology (BAT)

Utilize Bubble concept, minimize emissions in most cost affective way to achieve emission requirements

Use mix of Hi sulphur fuel oil / Lo sulphur fuel gas as necessary to achieve emission requirements Fuel Gas only

FCCU (Catalytic Cracker) technology:

One of: DeSOx catalyst additive / Feed desulphurization / Regen Flue gas desulphurization

DeSOx

Sulphur Recovery unit (SRU) technology:

One of: SCOTT / SuperClaus / EuroClaus / Claus-pol / Sulfreen / Hydro-sulfreen / CBA/Amoco cold real absorption

SuperClaus

Source: IPPC Reference doc on Best Available Techniques

for Mineral Oil and Gas Refineries. 2001

Data includes both simple and complex refineries and those operating on high and low sulphur crudes.

Engen is a highly complex refinery designed to run on high sulphur crude.

Engen is far better than the worst, but clearly has room to improve.

Sulphur Dioxide (4): How we compare to EU / US refineries

Source: Equal Protection for All Populations? Evaluating the Links between Corporate Social Responsibility and Environmental Justice in the Oil and Gas Sector. Dr Andy Gouldson. Centre for Environmental Policy and Governance. London School of Economics and Political Science

Sulphur Dioxide (5)

Total SO2 emissions (t/day) from South Africa - showing refining industries portion.

Sulphur Dioxide (6)

The new ambient SO2 standards / guidelines are very tight.

About twice as tough as the previous set Based on health risk to susceptible populations We are committed to achieving them and do not

quite make these all the time (yet). Transition issues.

Sulphur Dioxide (7)

Sulphur Dioxide (8)Groundlevel SO2 Exceedences (10 min - 191ppb)

5862

9789

73

64

41

17

410

41

2

24

1 0 1

20

39

0 07

30

20

20

40

60

80

100

120

140

Au

g-0

4

Sep

-04

Oct

-04

No

v-04

Dec

-04

Jan

-05

Feb

-05

Mar

-05

Ap

r-05

May

-05

Jun

-05

Jul-

05

nu

mb

er

Total Exceedence Engen Related

Sulphur Dioxide (9) – Stack height limitations

Short / Medium term options: Sulphur Recovery Units

Tight operational Controls Efficiency / Reliability improvements Sulphur plant specialist visit

FCCU: DeSOx Catalyst additive

Long term (High Capex) options: Sulphur Recovery Units

Improve Recovery Efficiency Tail Gas Scrubbing

FCCU Clean Fuels Synergies:

- Pre Treat and Post Treating options- FCCU flue gas Scrubbing (Cross media issues)

Sulphur Dioxide (10) – Way forward

Highly emotive issue

Generally not a health issue

Hidden agendas / Misinformation

Refinery safety at risk

Flares

The safety valve of a refinery Seen as a nuisance / concern – good lever to drum up

emotion International focus on reducing flaring from oil / gas

production fields Can be misused (economic flaring) Our flares meet BAT criteria Very tight operational controls in place

Flares (1)

Flares (2)

Flares are there for safety reasons Accepted as the environmentally acceptable way of

disposing of excess gas If operated correctly there should be no health impact Excessive controls on flaring could adversely affect

safety

Flares (3)

Flares (4) : Best Available Technology (BAT)

Use flaring as a safety system (start-up, shutdown and emergencies)

Ensure smokeless and reliable operation

Minimise flaring by a suitable combination of:

Balancing the refinery fuel gas system

Installing a gas recovery system

Using high integrity relief valves

Applying advanced process control

note

Reducing relief gas to flare by management/good housekeeping practices

Source: IPPC Reference doc on Best Available Techniques

for Mineral Oil and Gas Refineries. 2001

Note: Flare gas recovery system decommissioned

– not enough gas for viable operation

What is economic flaring? And why is it a problem?

Tight Operational Controls Focus on control of incidents causing the flare As the other refinery sources of emissions

reduced the relative size of flare emissions becomes more significant

Flares (5)

Flares (6)

Benzene is linked to one type of Leukaemia

Highest risk to public from traffic

Refinery emissions very low (but can and will be reduced further)

VOC’s and Benzene

Major reduction in VOC emissions from the refinery MPP data show fenceline benzene levels lower than

traffic emissions Concern about Settlers school levels (measured levels

higher than at Engen fenceline)

VOC’s and Benzene (1) – Where we are

VOC emission reductions

VOC’s and Benzene (2)

VOC Emissions

8981

7231

3397

0

1000

20003000

4000

5000

6000

70008000

9000

10000

1999 Survey Sep 2001 Jun 2003

Kg

/da

y

Photos of VRU at Wentworth Road loading

VOC’s and Benzene (3)

Covers on Effluent treatment plant and Vapour Recovery unit (example of BAT)

VOC’s and Benzene (4)

Ambient monitoring data:

VOC’s and Benzene (5)

Southern fence line

Rec Club

Admin GateMain Gate

Mosque

Southern Works

Passive Sampling Locations

VOC’s and Benzene (6)

Settlers School

Stakeholder Relationships / Escalating Expectations

Government Local Community Employees Shareholders

National Government / DEAT Aiming for very tight standards Not enough engagement Concern about standards implementation

process / transitional arrangements Recent indications of confrontational approach

vs constructive approach Technical capacity limitations Support for MPP (Which they initiated)

EIA process limitations Outstanding Appeals

Provincial Government / DAEA

Local Government (City Health Dept.)

Strong technical capacity via MPP Concerns about implementation of new

permit process Strong working relationships

Local Community

Many Good leaders Liaison forum Lack of constructive engagement from

some NGO’s : Misinformation / hidden agendas

Employees

Majority from local community – under unfair pressure

They don’t come to work to cause environmental / health problems

They feel hurt when unfounded accusations are made

Shareholders

Have always supported our improvement plans Fact based decisions (not emotive) Prioritized Limited resources Credibility loss as a result of leading edge

technology failure

How can Government help?

Science and Facts; not emotions Work with us Assist us to make best use of limited resources Give us adequate time Level playing field Understand the issues In Summary; You can help, we need your help !

Summary – The way foward

We are committed to working with the facts and getting off the “radar screen”

Prioritised road map for the future

Thank You