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HA20170207-001.pptx

Oil-to-Chemicals In search of the Holy Grail

Jelle Ernst Oude Lenferink GPS conference, Athens, November 2017

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Outline

Company introduction

Introduction

Refinery to chemicals

Oil-to-Chemicals configurations

Reliability impact

Conclusion

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Company introduction - Fluor Corporation

… a passion to build!

Client with an

idea and a

business plan

Operating facility

producing the

right product

in a cost

competitive and

sustainable way

Fluor Turning ideas

into reality

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Integrated Solutions Comprehensive Life-Cycle Services for Client Capital Assets

Construction Management

Contractor Management

Craft Staffing & Training

Equipment, Tools & Fleet Services

Field Mobilization Material Control Modular Construction Project & Program

Management Quality Control Rigging Safety Programs Scaffolding Self-Perform

Construction WorkFace Planning

Conceptual Design Estimating Feasibility Studies Permitting Process Simulation Project Financing Routing Scope Definition Siting Technology/

License Evaluation

Advanced Work Packaging

Cost Control Detailed

Engineering Fabrication Front-end

Engineering Modular

Construction Planning &

Scheduling Process Simulation Safety Planning Systems Integration

Commissioning Engineering Support Initial Production Plant Readiness Precommissioning Systems Checkout Turnover Validation

Asset Management Solutions

Contract Staffing Electrical &

Instrumentation Equipment, Tools, and

Fleet Services Fabric Maintenance Inspection & Integrity Mechanical & Piping Power Services &

Products

Contract Staffing Contracts Management Expediting Fabrication Logistics Low Cost Country

Sourcing Materials Management Purchasing Requirements Planning Sourcing Supplier Quality Warehousing

Engineering Procurement Construction Start-up Diversified

Services Design

Contractor Management

Material Control Modular Construction Purchasing Quality Control Safety Programs Self-Perform

Fabrication Sourcing

Fabrication

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Fluor Corporation

One of the world’s largest engineering, procurement, fabrication, construction and maintenance companies

Designs, builds and maintains capital-efficient facilities for clients on six continents

Delivers integrated solutions for clients in the energy, chemicals, government, life sciences, advanced manufacturing, infrastructure, mining and metals and power market sectors

Serving more than 4,000 clients in over 100 countries

#155 on the 2017 FORTUNE® 500 list with revenue of $19 billion in 2016

More than 60,000 employees executing projects globally

105-year Fluor legacy

Dallas, Texas

Fluor Corporate Headquarters

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Typical Fluor Projects by TIC

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General Downturn in Transportation Fuels

There is a direct link between refinery utilization and gasoline demand

Lower gasoline demand results in reduced crude oil intake and consequently lower refinery revenue

Are there opportunities?

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Europe’s Refining Sites not that Integrated

https://www.fuelseurope.eu/knowledge/refining-in-

europe/fuelling-the-eu/links-with-petrochemicals-

other-industries/

Only one-third of refineries are integrated with petrochemicals sites

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Slido poll

Where is your company in integrating refineries with (petro)-chemicals? Study phase

FEED phase

EPC phase

Not yet looked at

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Where is Added Value

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How the Oil Price affect your Chemical Prices

Table taken from Oil-price shocks and the chemical

industry: Preparing for a volatile environment

McKinsey & Company, May 2015

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Complex Fuels Refinery

Converts crude oil into motor fuels

Bottoms of the barrel upgrade using hydrocrackers/FCC

No downstream integration

Low added value compared to petrochemicals products

CDU

VDU

HCU

VRDS

LPG Plant

FCC

LPG

Naphtha

Naphtha

DieselAtmospheric

Residue

Vacuum Residue

Kerosene

Fuel Oil

UCO

HCO / Slurry

Naphtha

Isom

Reformer

Alkylation Gasoline

Isomerate

LPG

Light SR Gasoline

Butanes

Reformate

Alkylate

Kerosene

Diesel

LCO

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Example - Petrochemical Production vs. Fuels

Source: Saudi Aramco

Traditional refinery-petrochemicals integration using LPG and naphtha

Step-change required to go for 30-50% petchems

Alternative cracker feedstocks

More petchem from refinery units

30-50% Petrochemical Refinery

10-25%High Level of Petrochemicals

5-10%Low to Moderate Level of Petrochemicals

Source: Saudi Aramco

5

10

15

20

25

30

35

40

45

50

5 10 15 20 25 30Refinery Capacity, MMTPA

Wt%

Yie

ld a

s Petr

ochem

icals

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Oil to Chemicals – Crude to Olefins (CtO)

Depending on crude type additional process units may be required to e.g. remove sulfur and metals

“CDU 1”

“CDU 2”

SC

Aromatics

Complex

C4 Block

Light Hydrocarbon Fraction

Atmospheric

Residue Other C4's

Butadiene

Propylene

Ethylene

Benzene

Toluene

Xylene

Pygas HTHeavy Hydrocarbon Fraction

Residue

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Oil to Chemicals – Full Chemicals

Prepare total crude for downstream petrochem units

HCU – upgrade VGO

VRDS/RFCC – convert VR to SC and Aromatics

feedstock

CDU

VDU

NHT

KHT

DHT

HCU

ARDS/

VRDS

Naphtha

Splitter

SC

RFCC

Aromatics

Complex

Pygas HT

C4 Block

LPG

LPG

LPG

Naphtha

Heavy Naphtha

Light

Naphtha

Naphtha

Diesel

Diesel

Kerosene

Atmospheric

Residue

Vacuum Residue

Kerosene

Diesel

Fuel Oil

Other C4's

Butadiene

Propylene

Ethylene

Benzene

Toluene

Xylene

Raffinate

UCO

LCO

Naphtha

Pygas

HCO

Naphtha

C4's

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Reliability Impact

Individual units have on-stream factors (OSF) Multiple units in a row affect complex’ availability

if one unit fails overall complex capacity is impacted

Mitigate by investing in catch-up capacity for process units and increasing

storage capacity CAPEX impact can easily be 5-10%

CDU

OSF 0.98

VDU

OSF 0.98

NHT

OSF 0.98

HCU

OSF 0.98

SC

OSF 0.98

Naphtha

Naphtha

Atmospheric

Residue

18%

21% 0.98 x 0.98 x 0.98 = 0.94

for 21% of crude

0.98 x 0.98 x 0.98 x 0.98 = 0.92

for 18% of crude

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Find The Fastest Route Through The Maze

Need independent judgement Understanding refinery &

petrochemical interactions Accurate cost information

CDU

VDU

NHT

KHT

DHT

HCU

ARDS

Naphtha

Splitter

SC

RFCC

Aromatics

Complex

Pygas HT

C4 Block

LPG

LPG

LPG

Naphtha

Heavy Naphtha

Light

Naphtha

Naphtha

Diesel

Diesel

Kerosene

Atmospheric

Residue

Vacuum Residue

Kerosene

Diesel

Fuel Oil

Other C4's

1-butene

Butadiene

Propylene

Ethylene

Benzene

Toluene

Xylene

Raffinate

UCO

LCO

Naphtha

Pygas

HCO

Naphtha

C4's

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Comparison Between Configurations (@50 $/bbl)

Crude @ 50 $/bbl Full Conv Ref Ref-Petchem CtO Full Chem

Overall conversion 90% 90% 70% 90%

Overall conversion to chemicals 4% 25% 55% 82%

Relative CAPEX * 1.0 1.3 1.1 1.6

Relative IRR * 1.0 1.2 1.8 1.6

Investment/ton product 1196 1617 1764 2152

Gross Margin (GM) [$/bbl] 19 30 39 47

Ethylene cost [$/ton C2=] - 2262 1358 1253

Crude @ 100 $/bbl Full Conv Ref Ref-Petchem CtO Full Chem

Gross Margin (GM) [$/bbl] 38 53 65 78

Ethylene cost [$/ton C2=] - 1495 1364 1189

GM = ($ Products – $ Crude) / total crude (bbl)

* Based on Fluor in-house data

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500

1000

1500

2000

2500

3000

3500

4000

4500

5000

10% 20% 30% 40%

Eth

yle

ne

Co

st [

$/t

on

]

Capital Return [%]

Cost of Ethylene @ 50 $/bbl

Ref-Petchem

CtO

Full Chem

Cost of Ethylene @ 50 $/bbl

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500

1000

1500

2000

2500

3000

25 50 75 100

Eth

yle

ne

Co

st [

$/t

on

]

Crude Price [$/bbl]

Cost of Ethylene @ 20% Capital Return

Ref-Petchem

CtO

Full Chem

Cost of Ethylene @ 20% Capital Return

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Take away

Refinery cornered by its configuration, limited by demand drop

Reliability of complex impacts profitability, counter by investing in catch up capacity (multiple units, more storage)

Expanding into chemicals increases potential for profitability

More chemicals per barrel of crude makes complex less sensitive for crude price fluctuations

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Contact details

Jelle Ernst Oude Lenferink

Process Engineering Manager

Fluor B.V., Amsterdam

Tel: +31 (0)23 543 2414

Jelle.Ernst.Oude.Lenferink@fluor.com