Read the full episode transcript
00:00:01 Speaker 1
The energy pipeline is your lifeline to all things oil and gas to drill down deep into the issues impacting our industry. From the frack site to the future of sustainability, hear more about industry issues, tools and resources to streamline and modernize the future of oil and gas. Welcome to The Energy Pipeline.
00:00:23 Jordan Yates
Hey everybody. Welcome back to another episode of The Energy Pipeline. I'm your host, Jordan Yates, and today I am joined by one of my co- hosts, Bill Jensen, and a very special guest that I've just been so excited for Justine Smith. Justine, say hello.
00:00:44 Justine Smith
Hi, good morning everyone, and thanks so much for having me on the podcast this morning. I'm really excited to join today.
00:00:51 Jordan Yates
Of course. Bill, how excited are you to have Justine on?
00:00:55 Bill Jensen
Really good. Looking forward to visiting with Justine today to get some insights on petrochemicals and glad you're here. Thanks for joining us.
00:01:05 Jordan Yates
Okay guys, I just want to go ahead and just kick it off. Justine is the VP of Chevron Chemical Company and she has a really impressive background, everything from being a chemical engineer by trade, up through her years of experience in the industry. But as much as it is fun to listen to me say it, Justine, can you give us a little insight on your current role and your background in this industry?
00:01:35 Justine Smith
Absolutely, Jordan. So I'm currently, as you mentioned, senior vice president for petrochemicals here at Chevron Phillips Chemical. Chevron Phillips Chemical is a joint venture between Phillips 66 and Chevron. And I also have responsibility for sustainability for Chevron Phillips Chemical as well. So I've been in the petrochemicals' role for around two and a half years, going on three years, and I have over 30 years of experience in different chemical value chains that I've been either in the operations or in business management roles or commercial roles for those businesses. I spent six years in Asia Pacific running businesses and I currently reside here in Houston. So happy to be here.
00:02:29 Jordan Yates
I just can't believe we got you on. This is so exciting. Okay, well that is so cool. I want to start off by asking you a question because guys, this is anticipated to be very educational and lay the groundwork for the discussion we're getting into. Justine, can you explain the difference between oil and gas? Everyone kind of pairs them together and says oil and gas like it's one thing and it's only one thing. What is the difference other than viscosity? What is the difference between the two?
00:03:13 Justine Smith
Sure. So I'll try to describe this in a short version. So when you have oil well production, you're basically bringing a mixture of oil and gas out of the ground and the mixture is typically routed directly to either further processing equipment that will separate it or to an export facility. The liquids are the crude oil and that's typically collected in tanks and will go into fuels, so things like gasoline, jet fuel, other types of applications like that, but mainly fuel applications. It's also sometimes used as feedstock into further chemicals production. The gases are further processed. They go to what's called a gas processing plant and they're separated into what's called wet gas or dry gas. And the dry natural gas is what we also use as fuels. So it's important to separate that. The other still wet gas we call raw natural gas liquids or NGLs, and NGLs are... I like to describe it a little bit like a bag of M&M. So you have all different colors and those colors make up the different components of raw NGLs. So you have ethane, you have propane, butane, and some pentanes in there. And so the next process would be to separate those, which is really important to CPChem because ethane is one of our major feedstocks for petrochemicals, but so are butanes and pentanes, et cetera. But generally ethane is one of the important ones for let's say modern petrochemical crackers. I'll also say that the other products that can come from crude oil, so going back to crude, there are some specialty products too besides fuels like asphalt and as I mentioned sometimes used as petrochemicals feedstocks as well.
00:05:34 Jordan Yates
That's really interesting. Just for the listeners who may not understand, what do you mean by feedstock? What is that?
00:05:42 Justine Smith
Feedstock is basically the raw material that you're feeding in to a reactor or to a piece of equipment, a processing piece of equipment. So we call them feedstocks. So it's really just what's coming in as the feed or the raw material coming in that you're going to process and then move through your reactor or through your further processing.
00:06:07 Jordan Yates
Okay, awesome. So there, like you said, is a wide range of applications for petrochemicals rather it's the ones coming from the gas side, the oil side, but can you highlight a few in each that are very large applications like plastics possibly and like the breakdown from pulling it out of the ground to how it becomes a piece of rubber or plastic or something like that?
00:06:35 Justine Smith
So there's a lot of different parts of that process. We talked about the raw NGLs, so I'll start there because they'll get further... So those M&Ms will get separated through what's called fracturing, and so they'll separate those through distillation into different components. So you might have ethane, propane. Those will then be fed into a petrochemical plant. And within the petrochemical boundaries I would say you have a cracker, we often call the cracker, which you're basically heating up to high temperatures in order to separate and react. And then you're going to cool it down and then break apart all the components in the backend. And you're basically making what we call olefins, so an ethylene or propylene or the two largest olefins that are produced. Those will then go into the next step, which would be more of a catalytic reaction. So a reactor that's going to make, let's say, polyethylene or polypropylene. And those products will then go to a converter which will take those and add other additives into it in order to make a film or to make a component of a car. And those applications generally, if I had to break them into to large application baskets, I would say certainly packaging, as you mentioned, is one of the largest ones. Healthcare products, a lot of medical devices are produced from polyethylene, polypropylene or petrochemicals. Also, a lot of hygiene. So our healthcare products. So further down the chain you'll make detergents, you'll make medical equipment, everything down to toothpaste is coming from petrochemicals. And then other industries would be like paints and adhesives, synthetic rubbers like your tires. And certainly automotive parts and lubricants that are used in cars are coming from petrochemicals. So a lot of broad applications and a wide range of products that we interact with every day.
00:09:00 Jordan Yates
Is there another way to make rubber in a cost- effective manner or even in a chemical manner without using petrochemicals?
00:09:10 Justine Smith
I would say that today petrochemicals provide a low cost but also a lightweight of rubbers and plastics. So if you compare it to other competitive alternatives, they're typically heavier. They don't have the same footprint in terms of greenhouse gas emissions. So many of them have higher emissions. And quite frankly, the performance of petrochemicals, particularly in packaging, is significantly better than other packaging in terms of maintaining freshness, keeping moisture out, preventing mold, and ensuring that food products can be preserved over periods of time in order to get it to people that need it in order to eat. So certainly there are not many options today that are, let's say better in those aspects to plastics and to petrochemicals.
00:10:15 Jordan Yates
Bill, how do you feel about all of that?
00:10:18 Bill Jensen
I'd like to ask a question about that. You talk about methodology of making things better to reduce spoilage of food. How about the sustainability moving forward with more in different packaging and in turn the footprint that the petrochemical products make on our environment? Can you talk about that a little bit, Justine?
00:10:42 Justine Smith
Yeah. I would say there's a lot of work that's been done and is being done in terms of the footprint, looking at lifecycle analysis as one aspect. So that's looking at from what we call kind of cradle to grave of what is the footprint of a product. And there's also a lot of work being done currently on product by product, what are the better products in terms of, again... What footprint do you have for this product and what kind of greenhouse gas emissions are related to it, as well as what are the benefits and what are the alternatives? And I would say that today, if you look at many... It depends on what products you're talking about, but let's focus on packaging because that's probably one of the bigger applications of our products. Today, when you start comparing to paper or comparing to glass or aluminum, we are not seeing a benefit of using those alternative products. We are certainly continuing to look at other aspects of let's say plastics in terms of recyclability. And I think the recyclability piece is a topic that does need to be addressed as today you can read in a lot of different references that only, let's say less than 10% is where they're calculating the recyclability of plastics today. And this is an area where companies like CPChem are focused heavily on ensuring that we can increase the recyclability through the value chain for plastics. And also tied to our sustainability goals of ensuring and protecting our planet and also just increasing the benefits of our products and making sure we have a sustainable footprint. I think that piece is extremely important to us in terms of some of the things that we're doing as CPChem and also as an industry for these products.
00:13:08 Bill Jensen
Excellent.
00:13:08 Jordan Yates
That's awesome.
00:13:09 Bill Jensen
Thank you for that. And as you look forward, do we have new technologies coming, anything emerging that will benefit and help us that you can talk about to improve?
00:13:21 Justine Smith
Sure. So let me talk a little bit about our efforts really to focus on life enriching products and also on addressing climate change as well. I think those two go together because if you look at our sustainability, let's say pillars at CPChem, we have addressing climate change and then we have circular polymers or creating more sustainable and circular products. And so if you take a step back and look at what technologies are evolving there. So I'll start with the circularity piece. Certainly mechanical recycling is an area for plastics in general that has been evolving and improving over time, but there's also something called advanced recycling, which is emerging. I would say it's in more early phases due to the ability to collect plastic waste, make it into something that's called paralysis oil. And then going back to Jordan, your question on feedstocks, it becomes a feedstock into the processing units that we can then produce plastics that have the same type of performance that we had from the original product. And so that's very important because sometimes when you're mechanically recycling, you can have a degradation of some of your performance properties. So looking at harder- to- recycle plastics is an area that CPChem has been very focused on. And advanced recycling is a technology which is developing and that we are actually investing in. We've made investments in two paralysis oil companies very public with Nexus and Mira, and we're helping support them in order to produce more paralysis oil feedstock. So that's evolving. I think one of the challenges we have in that space though currently is policy. So we're very engaged in ensuring that advanced recycling is approved as a recycling process so that we can increase those rates to much higher than let's say around 10% for recycled plastics. So that technology is evolving, there's a lot of focus on that and also what will be further recycling technologies of the future so that we can continue to keep the circular world alive and very engaged in driving that to higher levels of recycle. If you go back to reducing our footprint and on addressing climate change, I think this is also one of our focus areas as Chevron Phillips Chemical and also for our industry. And for Chevron Phillips, we are doing a lot of work in terms of reducing our greenhouse gas emissions, and that's an area where we're looking across our existing plants. But when you start talking about new technologies, we are heavily engaged in looking at what will be the future, look at crackers as I mentioned earlier, which is the petrochemicals process and also our polyethylene plants. What will be the technology of the future that reduces those emissions? And so CPChem, we have a target of reducing 15% intensity of our greenhouse gas emissions by 2030, and that's starting with the 2020 baseline, so over 10 years. And a big effort for that work is to assess what we can do in our existing plants and where we can find opportunities to electrify. We're looking at hydrogen as a fuel in some cases. We have two projects ongoing currently in that space that will reduce our intensity, but also our new investments. We have a large investment that will come online in 2026 in Orange, Texas, and we're very focused on ensuring that the intensity of that production will help us with our target of the 15% reduction. And then I'll add one more item. We just collaborated with one of our co- producers, I would call it, or one of our competitors if you want to say, LyondellBasell Industries. So we're working with them and with Technip Energies, which is a technology company that has worked on an electric furnace. So can you completely electrify the furnaces in a cracker? Again, we go to very high temperatures in a cracker, and so can we electrify a furnace and understand what the operations would look like and the performance of that and the safety and reliability around that. So we've entered into memorandum of understanding, an MOU with them to work on a potential retrofit of one of Lyondell's furnaces in Channelview to see if that's a future technology for us and for the industry.
00:18:54 Jordan Yates
That just sounds so cool. You guys are going just above and beyond in terms of not even just sustainability, but adapting to, like you said, the new technologies and just constantly trying to better your processes. And I like how you were saying the circular products of recycling and trying to reuse those in a more sustainable way. I also like that you mentioned policy because I had a friend ask me the other day and she said, " Do oil and gas companies just constantly fight the more liberal people like in politics because they don't want to do better, but they're forced to do better? And is sustainability all an act? Who is it just because they're being made to do it?" And my response was, " Obviously, I don't truly know what's going on, but I think that there are very large teams of R& D and there is so much time and money spent into making their products more sustainable and better." And I think you did a good job without me even asking, explaining all the different ways you guys are doing that. But I guess my question would be where does that need come from? Where does the pressure come from? Is it internal, is it external? Is it a bit of both or is that just kind of the natural way that a company evolves?
00:20:17 Justine Smith
So I mean, I will very much say... I very much feel that Chevron Phillips Chemicals, I call it CPChem here. We set off on I would say a journey based off of our principles of sustainability as I mentioned earlier, to really accelerate into this space and look at what can we do and where are the opportunities for us to develop in this space, but also profitably grow and continue to look at opportunities where we can either differentiate or work as an industry. I think we recognize the recycle topic, recycle, reuse. That is an effort that we as an industry feel very strongly about and are working across associations like the American Chemistry Council, AFPM is another industry group, and we're working collectively to find solutions for the industry. And I think that's really important. It reminds me very much having been in this industry for 30 years of what safety was. It's a requirement and important to the industry and to all of us to be successful in this space. So I think that's one topic. I think another is on the policy piece, I feel that there's a lot of education that's required. People don't understand where petrochemicals are used. They see the bottle and the water or whatever, and they're like, " Oh, petrochemicals." Petrochemicals is so much bigger than that and so much a part of our modern lives. From insulation in our homes to waking up, you turn off your alarm on your phone. Components of your phone, the adhesives, electrical components in your phone are all tied to petrochemicals. Your toothpaste has petrochemicals as a basis for some of the ingredients. You have breakfast and you have your cereal and your milk; they're preserved by packaging that's created from petrochemicals. You get in your car, whether it's a hybrid car, a hundred percent electric or a gasoline car, many of the components, your bumpers, your seatbelt, I could go on and on. And my point is that this is all based off of petrochemicals and the value that they bring to modern life today from hygiene to safety, to feeding the world. I believe that we're going to continue to grow as countries continue, the middle class grows and they develop and require products and food, et cetera, that petrochemicals are a necessary and very important part of that growth. So where policy I think doesn't support our ability to continue on a sustainable path and encourage us to innovate and continue to develop pathways to more sustainable means of recycling and managing waste, et cetera, I think that hurts us. And that's where, as an industry, we are working very hard to ensure that we're educating on the value of the products as well as committing to further developing sustainable pathways for our products, which a lot as I mentioned is on the recycling side.
00:24:12 Jordan Yates
Yeah, I like how you mentioned the education piece because that's a big reason I am very passionate about this podcast is because ideally, somebody who is on the opposing side of just oil and gas bad, electric good, is like, " Oh, they're actually a bit more integrated into our society than we thought." Yes, there's always going to be a need to push for more sustainability, more growth and all of that, but it's just really nice that we are actually stepping out and saying, " Hey, here's where we are. Here's how we're contributing to society." Because how would you expect a regular person to know? How would you expect your parents to know? How would you expect kids growing up to know when the narrative in a lot of media is just oil and gas bad? They don't say where all it's used. And the other day someone asked me... Sorry, I don't mean to laugh. This is a real question. Was like, " I heard that by 2030 or 2035 that all of cars are going to be electric and that means we don't need oil gas anymore, right?" And I was like, " Oh boy, we're going to need to sit down for a minute." But I think it's just questions like that where they genuinely think that that is true. The fact that people not knowing where oil and gas chemicals go and where petrochemicals are used for isn't necessarily their fault. It is a responsibility of honestly the oil and gas industry to educate. And I think that's why education is so important. And I'm curious, what is your company doing to educate everybody else who isn't in this world or in our industry on what you guys are using your products for and how it's actually broken down?
00:26:05 Justine Smith
Sure. That's a great question. I would say that two areas that we are very focused on in terms of education are back through the industry. So we look at external and also our employee education. So I think it's twofold. I'll start with external. We work very, very closely with industry groups. Again, going back to ACC and AFPM, those are two key industry groups for us. And also there's the Texas Chemistry Council, so TCC. But I would say that all of those groups are working on more education into all different respective, let's say stakeholder groups and general population. So if you go onto their webpage, they have educational links, they have active engagement with schools, because I think it starts at a younger age. I think it's the general population, but I think educating in the school system is really important as well. I actually went to high schools and taught about petrochemicals in some environmental classes, really focused on the recycling and sustainability aspects as part of my role. And I think we all have a responsibility working in the oil and gas industry to ensure that we're participating in that education. The other thing that we're doing, which is a little bit new that I'll share within CPChem is we have a sustainability and me series, which is running currently, and we are addressing the three pillars, again, going back to circularity and sustainability, so products and then addressing climate change. And then the third one is on social responsibility, which is our third pillar for sustainability. And we have a series of 15- minute videos that discuss the attributes of our products, the importance of petrochemicals, but then what are we doing in these sustainability areas so that all the way from our headquarters through our operating sites and an operator sitting at one of our plants really understands the value of the products that they're producing, but also how we're continuing to address some of these topics and how they can play a part in it. So there's then a discussion session between managers and their teams that is asked to really talk about it and to think of and brainstorm ideas where they can be engaged in it. So we've rolled that out this year. We'll be finished by the end of the year, and I think it's been going over very, very well so far. But we have to constantly be doing it, to your point, because the energy transition as you described, I think there's a misconception sometimes that, for example, oil is going to hit a peak at some point and then fall off the cliff. But a transition is a transition where you're going to see more renewables, you're going to see transition to lower carbon solutions for some of fossil fuels today, but we are still going to need those products for a very long time. And I think that somehow in a lot of people's minds, they think it's like a cliff and then it's over. And that's not how it's going to... I don't think that's how it's going to play out. We need to continue to reinforce that and ensure that as an industry, we're doing the right things to continue the momentum, but then continue to educate as you described.
00:30:04 Jordan Yates
Yeah, absolutely. So it's so hard for me because I'm so passionate about this topic and I'm just like, everybody needs to know how great they are. But this is educational podcast and I do have to ask this question from the other side as well and grill you just a little bit because... Or else people are going to say I'm being unfair and that I'm just too pro- petrochemical. So if you were to look at the different things that you guys make and break down, and there's a product, maybe not from CPChem, but just in the world that exists from petrochemicals that is probably the hardest to break down and needs the most attention in terms of recycling and putting it back into the circular type of process, what would you say would really need to be focused on? Because if it's not, then it just does not do well in the environment. Does that make sense?
00:31:01 Justine Smith
Yeah, sure. I would say the best answer I could give to that is if you look at... I'll just say plastics because that's probably the biggest topic today in terms of recyclability and our ability to do that. I would say that you have durables and you have non- durables. And durable products like a canoe or let's say a swing set that's made out of plastic, those products are made to last and be used over and over and over and over again. So I think on the durable side, they have longevity. I mean, some products are built... Like polyethylene piping is a great example. So high density polyethylene piping is made to last in some cases up to a hundred years, and we want them to last that long because they're going to be used for that long. So I would put that in one basket of not concerned on recyclability of those because that's the life of the product. Where you run into some challenges, and here's where I think technology and innovation can help us. There are a lot of food packaging that are many layers of different types of whether it be paper and then plastic, and you have multi- layers which are more difficult then to recycle because you're layering different technologies. And there's reasons why they were created that way in order to maintain freshness for foods that probably would mold quicker. And that's an opportunity certainly because they're more difficult to recycle. So I think where a lot of focus has been for innovation and where we can improve is really looking at can you convert to a single type of plastic that will make it easier to recycle? And then also working with recycling facilities. That's a huge opportunity in terms of collection and then separation. So there's some new sorting and separation technologies that are starting up and that will enable, let's say, ease of recycling. And CPChem and other companies in the industry are looking at how can we participate in that, how can we help? And then how can we innovate better to accelerate our ability to recycle? So a lot of really good stuff happening there, but that's probably the types of products that are the biggest challenge right now in terms of making them circular.
00:33:50 Jordan Yates
Yeah, I think if they made it easy to do, more people would do it for sure, just like magically sort our trash for us that we don't recycle.
00:33:58 Justine Smith
So I will share, there is some technology today that's already in use in California that does a very... Basically you throw all your trash in, you don't separate anything, and it's able to separate the organics from the non- organic and then has sensors to separate all of the different streams. So the technology is there, the issue is municipalities investing in it so that we can get the separation and then the recycle streams.
00:34:30 Bill Jensen
Well, the question there is how do we drive the public to learn, to follow, to apply putting those technologies to work to help with recycling, because basically the population is just a use it, toss it and get a new one. So how can we work to make that a better system driving it economic, whether it's economics that do it or, I hate to say governance to force it, but in turn there might be things there to allow for an economic improvement of the system to make it better. And are there technologies out there? You speak of this process in California, are there other things out there that are breakthroughs or advancements that are helping in that?
00:35:25 Justine Smith
Right. Yeah, I would add to your question and to your comment that first there's an organization that CPChem, we're founders, one of the six founders of the Alliance to End Plastic Waste. It's a industry group. It's the only complete value chain industry group that goes all the way from let's say waste management companies through consumer goods companies. So all those companies are... I think there's 73 companies now engaged in the alliance. And the alliance's focus is on solutions for recycling. So it's not an advocacy group, it's not doing other industry government topics. It's really focused on solutions for recycling and starting up recycling technologies and testing them all over the world. So they're based out of Singapore, but have a heavy presence globally. Our CEO sits on the executive team for the alliance, and we are investing a lot of money as well as other companies into the alliance in order to fund these new technologies for recycling. And a lot of it spans from mechanical through advanced, but a big focus on the upstream side of it. So the waste management, sorting, ability to collect. And if you look at plastic waste, which the heaviest portion of that plastic waste is in Asia and with many of the islands like Indonesia, unfortunately, where there's a large amount of plastic waste. They have quite a few projects running in those regions. We also have some in North America and South America, and this year we actually put a CPChem employee into the alliance as a project manager to help facilitate the project management of these projects and continue to accelerate them. So that's one area that there's a lot of work going across, again, the whole value chain. So not just the petrochemicals industry, but the whole value chain. And I have a lot of personal support for the alliance in terms of hoping that we can continue to drive that and go faster and accelerate some of the work that they're doing. So that's one area. And then going to policy and education, one of the areas that we're also focused on is looking at... I mentioned paralysis oil earlier. Looking at that network of paralysis oil companies tied to municipalities that are collecting plastic waste and the ability to produce the oil and then get it to a manufacturing facility that can use it as feedstock. And trying to look at that footprint and also trying to minimize adding any footprint or emissions from that. So once you create your circular loop, you also don't want to create additional discussions on emissions and so forth. So reducing that footprint is important as well.
00:39:07 Jordan Yates
Justine, everything you've said to me today has been... I feel like I've learned so much. I think one of the things I'm most excited about, given my manufacturing background as well, is the fact that there is a system that can sort through different kinds of trash and recycle accordingly and parse it out. I want that to be more of an initiative. Personally, I think that sounds awesome. I say we dig up all the landfills and start sorting, but I don't think I'll get much support there, but it's been so awesome to have somebody with your background, experience and stature on this podcast. So thank you so, so much for taking the time and just walking the walk, talking the talk. You're on here educating the community. Like you said, that's important. You are doing it. Chevron is going out and they're doing so much more than I even realized. And I looked into this stuff and I didn't realize how many organizations you guys are heading up and leading and all the different initiatives outside of just actually creating the products that you're paid to create. So thank you for being a part of that, and thank you for coming on today. Bill, before we sign off, do you have any last questions or remaining thoughts for Justine?
00:40:23 Bill Jensen
No, I don't have any more questions. It's been educational, it's been insightful. And to see how CPChem... Did I say it right?
00:40:32 Justine Smith
You said it right.
00:40:33 Bill Jensen
Yeah, excellent. How they're being involved from cradle to grave, as you mentioned earlier, that start to finish, looking to be the technical leaders to go out there to incorporate and bring up educational items to teach, to train, to vitalize what's out there so that we can see what we need to do as individuals to help recycle, to reuse, and to repurpose, to allow things to get better for us all. Thank you very much for your time today. I've enjoyed it and I've learned. Thank you.
00:41:12 Jordan Yates
And be nice to people who work at oil and gas companies. They're doing the best they can.
00:41:17 Justine Smith
It's a transition, right?
00:41:20 Jordan Yates
Yeah.
00:41:20 Justine Smith
Thanks so much. I really appreciate the opportunity to talk with both of you today. So nice to chat with you, Jordan. Thanks for all the great questions. And Bill, great to meet with you today too. So thanks again for having me.
00:41:33 Jordan Yates
Of course. And guys, that's all we have for today. Thank you so much for listening to The Energy Pipeline. I'm your host, Jordan Yates, and I'll see you next time. Bye- bye.
00:41:43 Speaker 1
Come back next week for another episode of The Energy Pipeline, a production of the Oil and Gas Global Network. To learn more, go to oggn.com.
