an overview and challenges for producing cleaner fuels in asia may 2006 manila, philippines john d....
TRANSCRIPT
An Overview and Challenges for Producing
Cleaner Fuels in Asia
May 2006
Manila, Philippines
John D. Courtis
Questions on the Production of Cleaner Fuels
• Is there a need for cleaner fuels in Asia ?• Is the technology to produce cleaner fuels
available ?• What are the costs ?• How soon clean fuels can be produced ?
What is the best strategy ?
Is There a Need for Cleaner Fuels?
• The air pollution problem in most Asian metropolitan areas is significant
• Both fuels and motor vehicles are the major contributor to the air pollution problem
• Experience from the USA, EU, Japan shows that clean fuels and M.V standards result in improvements of air quality
• The vehicles need cleaner fuels to meet the M.V standards and to operate as designed
• Euro 4 or better fuels are preferable
Is the Technology Currently Available to Produce Cleaner
Fuels?Actual experience in USA, EU, Japan indicates• The refining process technology is mature
and available• There is experience with the installation and
integration of new processes in exiting refineries
• There is experience with the production, blending,distribution, and quality monitoring of cleaner fuels
• There are tools available to optimize refining operations
Are the Costs Known?
• Numerous studies in EU, USA, Asia were performed and evaluated the costs of producing clean fuels
• There are actual costs from areas where refinery retrofits were implemented
• Usually the costs are: – refinery specific– function of the properties that need to be
controlled
Refining Industry in Asia
Asia: Small vs. Large Refineries
Refineries<65000BPD Refineries
>65000BPD
% Refineries
%Crude Processing
0
10
20
30
40
50
60
70
80
90
% Refineries %Crude Processing
Asia: Refineries by Process (%Crude Capacity)
0
5
10
15
20
25
30
Asia: Refinery Complexity
Part 3
Comparison: Refinery Complexity
0%
10%
20%
30%
40%
Perc
en
t of
Cru
de
Th
rou
gh
pu
t
Th
erm
al
Cra
ckin
g
Cokin
g
Vis
bre
akin
g
Cat
Cra
ckin
g
Hyd
roC
rackin
g
Japan
Germany
California
Singapore
Indonesia
India
China
Part 3
Comparison: ASIA Vs. Northern Europe
Part 3
0
10
20
30
40
50
60
70
NORTHERN EUROPE ASIA
Comparison: Asia Vs. Southern Europe
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10
20
30
40
50
60
SOUTHERN EUROPE ASIA
Comparison: Average Hydrotreating, Hydrocracking Capacity
0%
10%
20%
30%
40%
50%
Perc
en
t of
Cru
de
Th
rou
gp
ut
Jap
an
Germ
an
y
Califo
rnia
Sin
gap
ore
Ind
ia
Ch
ina
Hydro-treatingHydro-cracking
What is Needed to Produce Fuels
What are the Costs of Production
What Fuel Properties Need to be Improved?
Gasoline DieselLead SulfurSulfur Cetane
RVP DensityBenzene PolyaromaticsAromatics DistillationDistillationOxygenates
Refinery Block Flow Diagram
ATM&
VacDist
VacuumResid
CokerHvyGasoi l
SR Lt Gaso
SR Naphtha
Fro mBottomof Page
Coker Lt. Gaso
Coker Naph
Isom. and/orBz Sat/HDS
CatReformer
NaphHDS
HydroCrack
Poly/Dimer
Alkylation
FCC L t Naph
FCC Hv NaphCat
GasoHT
Lt Cat
Hvy Cat
Alkylate
Poly Gaso
Reformate
SR/HC Light Gasoand/or Isomerate
C3”
FCC Hvy Cycle Oil
and S lurr y
Coker
To Top of PageCoker Lt Gaso .
FCC
C4”
C4
HC Naph th a
HCLt Gaso
Crude
Coker Lt Gaso il
Coker NaphthaTo Distillate Fuels
SR Kero
SR LGO
SR HGO
Lt VGO
Hvy VGO
To
Dis
t F
ue
ls
FCC L GO To Distillate Fuels orHydorcracking (Ca)
Cat FeedHT
HC Gaso ilTo DistFu els
Co
nv
ers
ion
Fe
ed
s
Part 3
Example: Sulfur Reductions for Gasoline (Target: 50 ppm / 15 ppm)
FCC GASOLINE
HDSUNIT
GASOLINEFUEL
REFORMATE
NAPTHA
UNTREATED FCC FEED
ISOMERATE/HYDROCRACATE
ALKYLATE
((0 ppm)
((lowS content)
(high S content)
(0 ppm)OTHERS
FCC
FCC FEED
HDSUNIT
HDS
ADD.ALKY.CAPACITY
(lowS content)
ADD. ISO.CAPACITY
(butane, MTBE, etc)
Example: Sulfur Reduction for Diesel (target: 50 ppm/30 ppm)
REVAMPEDDISTILLATE
DESULFURIZATIONUNIT
HIGHWAYDIESEL
FUEL
HYDROCRACKED STOCK
STRAIGHT RUN
CRACKED STOCK
COKER DISTILLATE
STRAIGHT RUNNEW
CAPACITY
low S
med. S
high S
very high S
very high S
Changes in Gasoline Properties
Property Process-Blendstocks
Aromatics Reduce the use of reformate, reduce reformer severity, use of isomerate/alkylate, oxygenates(dilution)
Benzene Reducing the use of reformate, reductions in reformer severity, benzene extraction, benzene saturation
Olefins Reduce FCC severity, hydrotreatment
RVP Reduce butanes, remove light streams
Distilation Change distillation cutpoints, alkylation, oxygenates use
Sulfur FCC feed, FCC gasoline hydrotreatment
Changes in Diesel Properties
Property Process-Blendstocks
Sulfur High, Medium pressure hydrotreating, hydrocracking
Distillation Reducing the use of heavier compounds, hydrocracking
Cetane Hydrocracking, use of additives, dearomatization
Costs of Production
GASOLINE(c/L) DIESEL(cents/L)
Enstrat Intl. All Asia Sulfur Reductions -50ppm
2.1-3.3
Australia Gov. Australia Fuel Reformulation EURO 4 (S, benzene)
0.7 1.1
Trans-Energy China Fuel Reformulation
(EURO 4)
0.5 0.8
Daedalus LLC Thailand Fuel Reformulation
(EURO 4)
1.6 0.6
California (Many Studies)
California More severe than EURO 4
2.64 1.6
JAMA Asia EURO 4 (Sulfur) 0.2-0.4 0.7-1.4
USEPA USA EURO 4 (Sulfur) 0.4-0.6 1.2
• Ability to finance and recover costs• What will happened to the small
refineries ?• What is the optimum strategy?
– Phased introduction of cleaner fuels– Supply and demand– Timing– Flexibility
Challenges
Ability to Finance and Recover Costs
• Capital availability– Current fuels market is expected to increase refiners’
ability to raise capital(assumes the ability to recover expenditures)
– For governmental owned refineries capital investments may need to compete with other social expenditures
– In competitive markets some projects may be considered to be not financially viable
• Can the costs be recovered?– Competitive markets usually allow the recovery
of capital expenditures– Price controlled markets need to have prices
adjusted to reflect additional costs
What will Happened to Small Refineries
• Small topping, and some hydro-skimming refiners will require significant refinery modifications to produce clean fuels
• Because of their small size the costs on per liter basis would be higher
• Their ability to continue operations may have an impact on local fuel supply
• Governmental owned small refineries may continue operations in a protective/controlled market
• Some will supply unregulated markets• An option: Different standards or a different
compliance schedule (issues)
Timing for Implementation
• European implementation in 4-6 years• USA implementation in 6-7 years• Realistic implementation time:
– Permitting, financing, engineering, etc.: ~2years– Construction: ~ 2 years– Contingencies: ~ 1 years
• Total time:~ 4-6 years• Must be concurrent with the implementation of
M.V standards
Phasing the Introduction of Cleaner Fuels
• Option A: Allow concurrent introduction of fuels and motor vehicle standards but phased over years– delay health and air quality benefits; in high growth areas air quality
will deteriorate – phase the investment costs over years– potential increases in long term costs
• Option B: Implement some fuel quality standards first and follow later with more comprehensive standards– requires less capital investments in the short term– sub-optimum strategy; more costly in the long term– lose some air quality benefits
Phasing the Introduction of Cleaner Fuels (continued)
• Option C: Limited introduction of fuel quality standards in cities and regions where air quality is an issue; different standards for the remainder of the country.– depends upon the ability to monitor compliance; possible
enforcement and fuel adulteration issues– reduces the costs of compliance; increases the costs for fuel
segregation; increases the costs of compliance monitoring– potential for quality of fuels in the uncontrolled areas to
deteriorate• Option D: Follow an integrated strategy for all fuel
properties at the same time – optimum strategy; takes full advantage of refinery integration– requires larger capital investment; all air quality benefits
materialized
Supply and Demand Issues• Supply and demand balance will change
– Expected increases in demand due to growth– New refineries and expansions are needed; planned
expansions much needed– Potential reductions in supply due to:
• some small-independent refiners may discontinue fuels production• reductions in yields
– The production and use of biofuels would increase supply
• Questions– Will the merchant/export refineries increase production?– Will local refiners invest in sufficient capital to increase
production as needed?
Flexibility is Critical
• Fuel regulators in the USA have built flexibility in their fuels programs– Flexible standards: Average, caps, predictive models,
alternative standards– Special treatment for small-inefficient refineries– Time phase-in, regional delays
• Flexibility would allow reductions on both capital and operating expenses
• However, flexibility would require increased resources for monitoring, enforcement, etc.
