Contributors:
Peter Harrisson, Principal Analyst, Sulfur & Sulfuric Acid, CRU
Angie Slavens, Managing Director, UniverSUL Consulting
Fahad Al Wahedi, SVP, Projects & Technical Center, Adnoc Sour Gas
On the Middle East's status as the world’s largest producer and exporter of sulfur (30% of global supply)
Peter Harrisson (PH): High sulfur content oil and gas reserves in the Middle East is the primary reason for its production potential. When you couple this with the region’s geographical proximity to some of the world’s largest sulfur consumers i.e., China, India and Morocco, there is a logistics efficiency advantage for Middle East supply.
Angie Slavins (AS): Indeed, the Middle East is home to natural gas reservoirs containing large volumes of sour gas - a vital energy source for the region to meet industrial and domestic energy needs for a growing population. And the by-product of this sour gas? Sulfur. Middle Eastern companies such as Adnoc and Aramco treat sulfur as the valuable commodity that it is - a key component in many critical industries.
Fahad Al Wahedi (FW): Indeed, resources and location alone are not automatic roads to success. Appreciation of sulfur’s value and investment into world class extraction and processing technology sets the Middle East apart. As one example, in the last decade, at Adnoc we have implemented two sulfur granulation plants adjacent to two of our largest sour gas plants with the goal to eliminate transportation of liquid sulfur by truck, increasing supply and improving the sustainability of sulfur handling operations. Etihad Rail was subsequently established to transport up to 20,000 metric tonnes per day of granulated sulfur by rail from Habshan and Shah to the port at Ruwais. This substantial investment in transportation logistics is unrivalled anywhere else in the world.
On perceptions that sulfur is a waste by-product only
AS: Historic long-term oversupply of sulfur, aside from a few brief periods, has resulted in a relatively low sulfur price. This, combined with a common perception that sulfur is simply a costly consequence of environmental compliance, often leads to the conclusion that sulfur is a problem or a low value commodity.
PH: It’s worth noting that this view is often in flux, with trends in demand and pricing causing producers to reassess where sulfur sits along this spectrum at any given time. Though, the reality is, there are vital industries that are simply not possible without sulfur. From electric vehicle battery production to fertilizers and metals processing, the demand of sulfur production is often underestimated.
AS: Interestingly, the tide on this underestimation is starting to change. As sweet (rather than sulfur-heavy sour) shale oil and gas dominates the North American hydrocarbon landscape, this previously supply-leading region has been in decline. The supply/demand balance has become tighter and we are seeing more frequent periods of price volatility. The effect this is having on industries reliant on sulfur has caused many to take notice of its importance.
FW: This shift in perception coincides with the emergence of the Middle East as the world’s largest supplier of sulfur. Not only is it the largest producing region today, and Adnoc the largest single exporter of sulfur in the world, but it is also the source of about half of production increases expected this decade. As we deliver gas growth at Adnoc, continuing to responsibly meet global energy and industrial feedstock needs with minimum emissions, we will also expand our supply of high-quality and competitive sulfur, produced with lower carbon intensity. This includes the expansion of the Shah Gas Plant and, in the second half of this decade, the delivery of the Ghasha concession, the largest offshore sour gas project in the world.
Abu Dhabi: Key Gas Facilities
On the evolution of global demand for sulfur and how companies in the Middle East are responding.
PH: Sulfuric acid required for phosphate fertilizer production currently makes up more than 50% of global sulfur demand. This is expected to increase in parallel with global population growth. Remaining, and rising, demand is from a range of industries including metals mining, with the highest demand coming from lithium, cobalt and nickel for batteries, and copper and aluminum for the construction of electric vehicle (EV) batteries specifically.
AS: The energy transition presents the potential for a compounded impact on the sulfur industry. The demand growth Peter mentions is true, but this is coupled with potential decreases in global sulfur supply due to reduced hydrocarbon consumption. While the most pronounced impact is not expected to be realized until the late 2030s or 2040s, the sulfur industry should be putting plans in place for future voluntary production to meet demand.
FW: How we take proactive steps to bring together sulfur producers and consumers to tackle these changes was a key topic of discussion at MEScon 2023. With the Middle East taking a leading role in sulfur production, we need to be constantly exploring and innovating new uses and possible areas sulfur can add value in a decarbonizing world with a growing population.
On sulfur’s role in a low carbon economy
PH: Though sulfur is a by-product of oil and gas production, it has much to contribute to the energy transition. Sulfur’s conversion to sulfuric acid provides carbon free power to many of the operations running sulfur-burners around the world. The subsequent acid which is generated will be critical in extracting the metals and producing the materials required to realize the electrification of economies around the world.
AS: The perception of sulfur is changing as the energy transition unfolds. The world is beginning to take notice of sulfur’s true value and some are coming to the realization that at some point the industry will need to take steps to deliberately manage supply to meet demand. As the Claus process is the most efficient and economical means of producing huge volumes of elemental sulfur, it will likely still be the primary means of supplying sulfur to a decarbonized world. In addition, the Claus sulfur recovery unit is a net energy exporter, generating high pressure steam, a frequently overlooked benefit.
FW: For me, the role of sulfur in the energy transition is two-fold. There are indeed new demand drivers for sulfur which upgrade its value in the energy transition. However, we need to also make sure that we are responsible and sustainable providers of sulfur. Adnoc has a dual advantage, as a result of decarbonization and efficiency efforts, that have made its oil production lowest-possible cost and lowest possible carbon intensity. For example, we already import 100% clean power from the grid and utilize the region’s first railway to export our sulfur. We need to make sure we are extending this dual advantage to our sulfur production, utilizing the latest technology to decarbonize our processing and handling operations, maintain reliability and drive down cost.
On the greatest challenges facing the sulfur industry
PH: The perennial challenge the sulfur market faces is how to manage the constant oscillation of supply and demand from surplus to deficit that has been the defining feature of sulfur’s past. However, the future will face a different, but related, challenge. With the energy landscape shifting from hydrocarbons to renewables, sulfur supply will decrease and the question may no longer be where to put oversupply, but instead where to find it when there is not enough. The decline in oil and gas supply is not an immediate trigger of lower sulfur availability but the more hydrocarbon processing falls, the more sulfur supply will come under pressure. The trend in gas processing in the Middle East is towards higher sulfur production for each unit of gas which will be a useful contributor to meeting future sulfur supply needs.
AS: There will indeed need to be a mindset shift from sulfur as a plentiful, low value commodity to one that must be thoughtfully and strategically managed. While it will still be some years before that need fully arises, the world’s largest producers of sulfur should be crafting strategies now so they are prepared to act when necessary. It is likely that meeting sulfur supply needs in a decarbonized world will still require the production of sour gas, most likely with hydrocarbon reinjection into the reservoir, which could create political challenges unless perception and expectations are properly managed.
FW: There will be many challenges in the years and decades ahead, particularly as sulfur is increasingly recognized as a commodity with strategic value, and we navigate a changing energy landscape. However, with the leadership and collaboration provided by events like MEScon 2023, where we share successes and learnings, innovate and explore together, challenge each other and celebrate the specialist expertise, we will ensure we are resilient and agile to this changing sulfur landscape.
