U.S. Gulf Coast refiners increasingly buying hydrogen

March 18 (UPI) -- United States Gulf Coast refiners have increased hydrogen purchases for their hydrocrackers to reduce levels of the highly pollutant sulfur and are likely to continue to buy more as the need for cleaner fuel rises.

"As global demand for distillate fuel oil has increased and sulfur content regulations have become more stringent, refineries have needed to use more hydrogen," the Energy Information Administration (EIA) said in a report issued Friday.

Sulfur comes in varying proportions with all types of crude oil, with grades that have a high proportion called 'sour,' as opposed to those with less sulfur called 'sweet.' Unless refineries process the sulfur, once burned, it becomes sulfur dioxide, a precursor to acid rain, according to the EIA.

Hydrogen demand will rise very soon because shippers will now need to conform to new sulfur contents in marine fuels that will take effect at the start of next year, the EIA said.

Fuel used in shipping currently has to have no more than 3.5 percent sulfur, but starting next year the sulfur emissions need to be capped at 0.5 percent. Ships conventionally run on fuel oil and diesel.

Pollution legislation at sea is catching up with that on land, as regulations against emissions near cities and in inland areas has limited sulfur content in fuels for over a decade. Unlike pollution near cities, emissions by ships in high seas occurs in areas outside of national jurisdictions.

Hydrogen is used to process sour crude, which often commands lower prices precisely because of the need to process the sulfur with hydrogen, or mix it with a "sweeter" crude so that the resulting blend is not as sour.

Refineries can produce hydrogen "through steam reforming of natural gas or by purchasing it" from third parties.

The trend for most of this decade has been for increases both in demand of hydrogen as well as in purchases from third parties, the EIA said.

The delivery is made through a 600-mile network of hydrogen pipelines running from Louisiana to Houston, with connections to refineries.

In addition to the U.S. Gulf Coast, other areas of the U.S., such as the Midwest, have increased capacity to use hydrogen to treat sour crude oil and products, with use rising 13 percent from 2012 to 2017, the EIA said. The U.S. Midwest is home to refineries that process sour Canadian crude oil.