CPD-PCPRS-15-025

KNPC Think K EventTuesday 27th October 2015

Refinery – Petrochemical Integration

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CPD-PCPRS-15-025

Agenda

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World Refining Scenario

Benefits of integration

Strategic Advantage

KPC’s Strategic Direction

ZOR – Petchem Study

Configuration options

Conclusion & Path Forward

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World Refining Scenario

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In the past, Refining was seen as more of an independent business enjoying good margins.

Currently Refining business is facing challenges due to

Volatile oil prices Unstable refining margins Increased alternative fuel awareness Global overcapacity Superior product quality requirements Stringent emission regulations Increased processing of heavy and sour crude Increased emphasis on bottom-of-the-barrel conversion

Integration with Petrochemical is vital to deal with ongoing uncertainty in refining business and to sustain and improve Profitability.

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Benefits of integration

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Proximity of Feedstock

Reduction in transport (costs and risks)

Working capital savings

Synergies from joint infrastructures and logistics

Reduction in Operating costs (steam, utilities)

Shared support services: maintenance, HR, HSEQ management, F&A, etc.

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Strategic advantage

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Product Diversification

Reduced exposure to market risk

Independence and supply security

Long-term stream exchanges

Common business and investment strategy

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KPC’s Strategic Direction

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Grow KPC domestic refining capacity up to 1.4 mmbpd on the medium term

Maximize disposal of Kuwaiti heavy crude in domestic refineries

Maximize complexity of KPC domestic refineries, while meeting local energy demand requirement

Provide petroleum products that  meet domestic energy, transportation and industrial requirements and international market needs in terms of Quantity and quality

Operate KNPC refineries with high standards of operational excellence

Provide required Gas Processing capacity according to upstream Gas availability profiles

Maximize integration of refining and petrochemical operations domestically

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Objective of ZOR-Petchem Integration Pre Feasibility Study

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“Establish the most feasible petrochemical option for Kuwait on a commercially competitive basis and to develop a configuration for a World-Scale Petrochemical Complex Integrated with ZOR”

• Achieved by conducting: Market Study Strategic Assessment Prefeasibility Study Feasibility Study Single configuration to be selected to develop in more detail

CPD-PCPRS-15-025

• Two crudes would be run for each proposed configuration: Mixed crude as the reference case Kuwait Export Crude (KEC)

• Maximise economic returns for each proposed configuration

• Meet gasoline (95/98 octane) demand (1-2 MMTPA) while minimising impact on LSFO supply

• Increase synergies between the domestic refining & petrochemical business

Key study basis

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Configuration options

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Options

(Propane Dehydrogenation)

(Paraxylene)

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• Option 3 and Option 6 are shortlisted after Pre Feasibility Study

• Option 3 results in good integration economics, Option 6 provides higher product diversification.

• One option will be selected at the end of Feasibility Study which is expected to complete by Dec. 2015

• FEED is expected to start by early 2017

• World scale Grass root ZOR – Petrochemical complex will place KPC and Kuwait in a privileged position in World’s Oil Industry

Conclusion and Path Forward

CPD-PCPRS-15-025

Thank you

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• PDH – Propane Dehydrogenation

• PX – Para Xylene

• FCC – Fluidised Catalytic Cracker

• SC – Steam Cracker

• LSAR – Law Sulfur Atmospheric Residue

• VGO – Vaccum Gas Oil

Glossary

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Products considered in ZOR - Petchem Integration study

Option 3Core Products Derivatives Key Uses

Aromatics Block    

  Para Xylene PTA / PET Plastic Industry

  Benzene   Styrene

FCC Block    

  Propylene To PDH Block  

  Mogas Local Market / Export  

PDH Block    

 

Propylene Poly Propylene, Propylene Oxide, Propylene Glycol, Polyols

Acrylic Polymers, Glycol, Epoxy Resins

Option 6Core Products Derivatives Key Uses

Aromatics Block    

  Para Xylene PTA / PET Plastic Industry

  Benzene To Cracker Block  

FCC Block    

  Propylene To Cracker Block  

  Mogas Local Market / Export  

Cracker Block    

  EthylenePE (Poly Ethylene), EAO (Ethanol Amine), MEG (Mono Ethylene Glycol), Styrene

PVC (Poly Vinyl Chloride), Polyesters

  Propylene Poly Propylene, Propylene Oxide, Propylene Glycol, Polyols Acrylic Polymers, Glycol, Epoxy Resins

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Back Up

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Petrochemical derivatives considered

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Core

AssessedEAO

Ethylene

Benzene

PX

Butene-1

PE

EO

Styrene

PP

PO

Propylene

MEG

MEG

PG

Polyols

PXButadiene

PTA

PTA PET

Abbr. Long form

PE Poly Ethylene

EO Ethanol Oxide

EAO Ethanol Amines

MEG Mono Ethyl Glycol

PP Poly Propylene

PO Propylene Oxyde

PG Propylene Gylcol

PTA Purified Terephthalic Acid

PET Polyethylene Terephthalate

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Petrochemical Derivatives

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Option 3 configuration C5/C6 to H2 Plant C5/C6 to Gasoline

411 400 Raffinate

NaphthaFR Naphtha Splitter3441 Benzene

343

C7+ PX2225 1000

to Gasoline319

VGO ex ARDS Gasoline2262 C4 from Aromatics Complex Recovery LCO

SlurryIsomerate400

375Isom and CCR C341Purchased Propane 100880 921 750

200

NHT

ISOMERIZATION

CCR and PX Complex

PP

FCC

PDH

Alky

Gasoline HDT

MTBE

PO

PG

Polyols* all values in TPD

Aromatics Block

PDH / PP Block

FCC Block

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Option 6 configurationPX1000

FRN Benzene to Styrene

IsomerateLight Naphtha

RaffinateLPG to Gasoline

C4 from Aromatics Complex RecoveryGasoline

Alkylate

VGO Treated FCC gasoline 100

LCO Propylene MTBE

Slurry 200

Ethylene 1400 Total PERecycle streams

Propylene

Refinery LPG Ethylene Glycol

Purchased Propane80

Butene-1

Benzene from PX Styrene

Butadiene

Aromatics and Naphtha

Isomerization

FCCAlkylation

Gasoline HDT

Steam Cracker

PP

LLDPE/HDPE

MEG

Styrene

PO

PG

Polyols

EO(550kta)

EOA

Butene-1(50kta)

* all values in TPD Ethylene Derivatives

Propylene Derivatives

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Incremental EconomicsRefinery Option1 Option2* Option3 Option4 Option5 Option6

Total Project Capex 18180 24238 22823 25177 30383 30284 31874Total Project IRR -1.10% 0.8% 3.4% 4.6% 2.6% 2.6% 4.5%Integration IRR 6.0% 10.2% 13.8% 7.3% 7.4% 9.9%

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• Based on Economics Option 2, 3 && 6 are shortlisted

• Option-2 was excluded as it is more of a refining option, without much integration with petrochemicals

• Option 3 & 6 both have Aromatics and FCC. Additionally Option 3 has PDH and Option 6 has Steam Cracker

• Option 3 provides integration with Propylene Value chain

• Option 6 provides integration with Propylene as well as Ethylene value chain

Options

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Preferred Options

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• Based on Economics Option 2, 3 && 6 are shortlisted

• Option-2 was excluded as it is more of a refining option, without much integration with petrochemicals

• Option 3 & 6 both have Aromatics and FCC.

• Additionally Option 3 has PDH and Option 6 has Steam Cracker

• Option 3 provides integration with Propylene Value chain

• Option 6 provides integration with Propylene as well as Ethylene value chain

Options

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Integration Synergies / Benefits

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• Naphtha, raffinate and LPG integration Use of these streams can be optimized by routing to steam cracker feed, PX feed, hydrogen

feed or gasoline pool as optimal One naphtha hydrotreater only to serve the entire project All LPG used internally Depending on the selected option, all naphtha also used internally

• FCC and steam cracking have a number of synergies: Ethylene recovery from FCC dry gas Propylene recovery C4s and MTBE Use of LCO as quench oil (not in the LP)

• Common or linked hydrogen system• Common or linked fuel gas system• Capital cost synergies in the utilities and off-site system

Estimated at 1-2% of OSBL costs in a very preliminary manner

• Operating cost synergies

FS expected to provide a better estimate

Specific to Option 6

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Ethylene Uses

Ethylene - C2H4 - is used for accelerating the ripening of bananas, and maturing the color of citrus fruits. It is also used to increase the growth rate of seedlings, vegetables, and fruit trees; in oxyethylene welding and cutting of metals; in manufacture of mustard gas, ethylene oxide, ethylene alcohol, polyethylene and other plastics; and as an inhalation anesthetic. The simplest member of the olefinic hydrocarbon series and one of the most important raw materials of the organic chemical industry; chemical formula, CH2 {double bond} CH2. It occurs in both petroleum and natural gas, but the bulk of the industrial material is produced by heating of higher hydrocarbons. Numerous large-scale processes have been developed, using raw materials ranging from ethane to whole crude oil; in the U.S., ethane and ethane-propane mixtures are commonly used.

Ethylene undergoes polymerization (combination of small molecules to form large molecules) to polyethylene, a plastic material having many uses, particularly in packaging films, wire coatings, and squeeze bottles. The polymerization may be carried out at high pressures and temperatures or by the more recently introduced Ziegler process, which uses a catalyst. With sulfuric acid, ethylene forms a mixture of sulfates that can be hydrolyzed to ethyl alcohol; it combines with chlorine or bromine to yield the corresponding ethylene dihalides, useful solvents and gasoline additives. The reaction of ethylene and oxygen gives ethylene oxide, used in the manufacture of antifreeze, detergents, and other derivatives. Ethylene and benzene combine to form ethylbenzene, which is dehydrogenated to styrene for use in the production of plastics and synthetic rubber.

In botany, ethylene is a plant hormone that inhibits growth and promotes leaf fall. In fruit, how-ever, ethylene is regarded as a ripening hormone. Involved in its action in fruit is some other factor that influences ethylene sensitivity of the tissues.

Pure ethylene is a colourless, flammable gas having a sweetish taste and odour; it freezes at -109.4° C (-272.9° F) and boils at -103.9° C (-155.0° F).