SK Innovation pledges 5-trillion-won to shift from petrochemicals to low-emission alternatives

Industry

Published: 11 Oct. 2022, 14:00 Updated: 11 Oct. 2022, 19:39

SK Innovation pledges 5-trillion-won to shift from petrochemicals to low-emission alternatives

A bird's eye view of Ulsan Complex of SK Innovation [SK INNOVATION]

ULSAN — While hundreds of thousands of liters of oil run down 600,000 kilometers (372,823 miles) of pipes at its Ulsan refinery every day, SK Innovation pledged a 5-trillion-won ($3.5-billion) investment over the next five years to shift its focus from petrochemicals to low-emission alternatives and recycling products.

The move is part of the carbon-heavy industry’s effort to seek a breakthrough amid the accelerating transition to green energy worldwide.

“SK Innovation is making a major shift in our business portfolio strategy, from carbon to green,” said Seo Kwan-hee, head of SK Energy’s new tech and process engineering office during a press briefing Thursday held at the Ulsan Complex.

SK Innovation, which runs Korea’s oldest and largest oil refinery in the southeast city of Ulsan, hopes to reach net zero emissions by 2050 after six decades in the petroleum business.

“Compared to emission volume in 2019, we reduced emissions by 9 percent, which equals 99 tons, in 2021,” said Seo. “We aim to cut 5.32 million tons of carbon emissions by 2030, which is 50 percent of the total.”

Of the 5-trillion-won investment by 2027, SK Innovation plans to spend 1.7 trillion won in the recycling business, and 3 trillion won in expanding its eco-friendly product line-up by replacing equipment and expanding production of more sustainable fuel products. In the shorter term, the company said that it is replacing carbon-heavy fuels such as bunker fuel with liquefied natural gas (LNG) and enhancing energy efficiency by optimizing the manufacturing process at its production site.

Seo Kwan-hee, head of SK Energy’s new tech and process engineering office, speaks during a press briefing Thursday held at the company's Ulsan Complex. [SK INNOVATON]

During his visit to Ulsan in March, SK Group Chairman Chey Tae-won emphasized “the focus of energy will shift from petroleum to decarbonization, which means electricity.”

“Ulsan Complex is well capable of generating decarbonized energy with electricity, hydrogen and energy storage systems, and a lot of opportunities will be made in the future,” said Chey.

SK Innovation’s Ulsan Complex, measuring 2.5 million pyeong (2,042 acres), began operation in 1964 as the first oil refinery in the country. On a daily basis, 840,000 barrels of petroleum are processed at the five refining plants at the complex, according to the company.

The Ulsan Complex also houses several production plants run by SK Innovation’s other petroleum-related subsidiaries, such as SK geo centric, a petrochemical manufacturer, and SK Lubricants, a lubricant supplier.

The 58-year-old complex resembles a city with an industrial skyline, filled with seemingly rusted pipes in all shapes and sizes tangled together.

“If we connect all of the pipelines in the complex in a straight line, it would be enough to reach the moon and then come back halfway,” explained Geum Soo-min, a manager in the external relations team at SK Energy, who guided journalists through the factory.

Being located in Ulsan, which is on Korea’s southeastern coast, the complex receives and sends off several trade ships a day. About 70 percent of its 34-trillion-won annual revenue last year came from overseas, according to the company.

One of the company’s major projects at the Ulsan Complex is the construction of a 215,000-square-meter (53-acre) plastic recycling factory with an annual recycling capacity of 250,000 tons. A total of 1.7 trillion won will be put into the project, which will be underway from Sept. 2023 to 2025.

A 215,000-square-meter site (53-acre) at Ulsan Complex where SK geo centric's recycling factory will be built [SK INNOVATON]

The factory will be capable of three chemical recycling processes: ultra-pure polypropylene extraction, which extracts transparent polypropylene (even from colored plastics) through chemical processing; depolymerization, which recycles waste PET, or polyethylene terephthalate plastic, and polyester fiber; and pyrolysis which extracts chemical feedstock from discarded plastics.

To secure the polypropylene extraction technology, SK geo centric formed a strategic partnership to establish a joint venture with PureCycle Technologies, a U.S. recycling company. SK geo centric also made an equity investment in Loop Industries, a Canadian company, for the depolymerization technology.

As Ulsan has been heavily dependent on petrochemical and oil refining businesses over the past decades, the city, which has been struggling to revive its shrinking economy, also hopes SK Innovation’s green transition will boost its own eco-friendly agenda.

“Many people think of Ulsan as a city of heavy pollution, but as you see, Ulsan is no longer a city of pollution,” said Noh Dong-won, director-general of the innovative industry bureau at Ulsan Metropolitan City Thursday. “It represents itself as an ecological city, and at the center of the city stands SK together with Ulsan.”

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]