restructure plants to boost margins- paolo scafetta

7/25/2019 Restructure Plants to Boost Margins- Paolo Scafetta

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www.icis.com26 |ICIS Chemical Business|18-24 November 2013

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ICIS CONSULTING REFINING

PAOLO SCAFETTA ICIS CONSULTING

With increasing supplies of gas-based petrochemical feedstocks comingon stream in the Middle East, now is a good time to consider reconfiguringrefineries to boost production of chemicals for export to Asia

Restructure plantsto boost margins

demand in Asia, driven mainly by increasingpopulation and high economic performance,

is making this area an attractive market formajor players. According to the latest releaseof the ICIS database (2013), oil consumptionis expected to increase at a higher rate thansupply, resulting in a growing deficit overthe next few years.

In the South Asia and Pacific (SAP) region ashortage of road diesel is expected to reachover 50m tonnes by 2025 while gasolineshould achieve almost 20m tonnes as well asLPG. Finally, kerosene demand should have aminor impact on the regional deficit if it iscompared with the other oil products (see SAPbalance chart on page 29).

Based on 2012 statistical trade data, north-east Asia shows a deficit of about 950,000tonnes of mixed xylenes while maintaining asurplus of benzene (577,000 tonnes) and tolu-ene (almost 260,000 tonnes). The SAP regionrecords a shortage of 165,000 tonnes of tolu-ene, a surplus of benzene (753,000 tonnes) and

NFC ASSAY1AND PRODUCTS PROPERTIES

NFC assay Cuts C Yieldswt%

SPG N*vol% A*vol% SUL wt% RON RVIpsi

VIS (40C)cSt

CTI

Whole crude 0.747 0.226 10.9 0.775

LPG 3.7 0.572

Light Naphtha 15-80 19.5 0.665 11.4 4.0 0.058 67 11.6Heavy Naphtha 80-175 38.5 0.752 31.1 14.8 0.218

Kerosene 175-230 15.8 0.794 0.234 1.46 47.8

Gas Oil 230-375 20.1 0.822 0.308 3.03 63.5

Residue >375 2.4 0.880 0.413 17.46 54.1

Products supply

LPG 0.521

Unleaded Premium 0.743 0.025 95 8.7

Jet Kerosene 0.794 0.234

Road Diesel 0.820 0.050 3.66 62

Benzene 0.884

Toluene 0.872 105 1.0

Mixed Xylenes 0.873 108 0.3SOURCE: Total.com *N=Naphthenes, A=Aromatics N.B. Totals may not add due to rounding

mixed xylenes (almost 70,000 tonnes). In ad-dition, the spread between benzene, toluene,

xylene (BTX) demand and supply shouldgrow over the next few years unless addi-tional investments are made in petrochemi-cal capacity.

Therefore, in this context, it is interestingto analyse a hypothetical hydroskimming re-finery located in the Middle East and export-oriented towards the Asian market. For thistype of plant, reformate represents the keyinterface between the refinery and petro-chemical plant, as it is the most importantcomponent for gasoline blending as well as aprecious feedstock for BTX production.

TWO CASE STUDIESTherefore, two cases have been taken intoconsideration. The first (a non-integratedplant) is a simple refinery equipped with acondensate splitter (110,000 bbl/day of ca-pacity), a naphtha splitter (66,000 bbl/day),an isomerisation unit (26,000 bbl/day), acontinuous catalytic reforming unit (40,000bbl/day) plus the necessary hydro-desulfuri-sation processes.

The second (an integrated plant) includesa simple petrochemical complex (32,000bbl/day) that produces benzene, toluene andmixed xylenes (see chart on page 27).

Process integration, in terms of mainstreams, is based on recovery of aromaticsfrom reformate through the BTX complexand backflows (raffinate and C9+) blending,after extraction, into the gasoline pool.

The main drivers are, on one side, feed-stocks costs and, on the other, product pricesas well as the quality of the products re-quired from the reference market.

Condensate average prices have been in-dexed to Dubai crude oil while oil productsare referenced mainly on the Singapore mar-ket (see table on page 27). Price quotationsfor gas oil (0.05% sulfur content) are not

available therefore it has been evaluatedstarting from gas oil (0.5%) FOB Singapore

In the Middle East gas field development iscontinuing at a rapid pace, recording anaverage annual growth rate of about 9%between 2000 and 2011, according to the

International Energy Agency. Qatar and Iranrepresent almost 60% of the total regionalsupply. As ethane and liquefied petroleumgas (LPG) are good feedstocks for petrochem-ical plants as well as condensates for refiner-ies, the recovery of liquids from natural gasis an added value.

It is worth noting that a typical regionalcondensate such as North Field Condensate(NFC) being light (API 57.95), sweet

(0.23% sulfur content), and low in metalscontent is an excellent raw material for ahydroskimming refinery. In addition, grow-ing availability of feedstocks and low-pricednatural gas provide competitive advantagesfor additional capacities in the Middle East.

Strong growth of petrochemical and oil


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www.icis.com 18-24 November 2013 |ICIS Chemical Business|27


INTEGRATED REFINERY CONFIGURATION

NHT

BEN

C

SP

N

S

P

DHT

TOL

MXY

ISRLPG

FRN

Heavy Gas Oil

HVN

LTN Raffinate

Reformate

C9+

Kerosene

Gas Oil

Naph

BTXExtr/Fract

Mogas

Diesel

CCR

Only main streams havebeen included

Glossary:CDS = CondensateCSP = Condensate SplitterFRN = Full Range NaphthaDHT = Distillate Hydro-treatingNHT = Naphtha Hydro-treatingNSP = Naphtha Splitter

LTN = Light NaphthaHVN = Heavy NaphthaISR = Isomerization unitCCR = Continuous Catalytic

ReformingMogas = Motor Gasoline

adding the differential price takinginto account the sulphur content differenceinto gas oil products available on the interna-tional market. What are the fundamental dif-ferences between an integrated and non-inte-grated site? What is the gross refining marginfor each plant? What are the benefits and dis-advantages of integration?

Typically, a linear programming (LP)model is used for solving the issues above inorder to maximise refinery profit. Throughthis optimiser tool, it is possible to select theoptimal refinery operations in terms of out-

put and, consequently, revenues.Running an LP model, the answer is

that the refinery handles about 11,980tonnes/day of condensate providing globallyabout 11,900 tonnes/day of products with arecovery of 99.4%. The properties of feed-stock and products are summarised in thetable on page 26.

As percentage yields to weight of conden-sate are about 58% of the total for light distil-lates and 36% for middle distillates, NFC re-sults in a suitable feedstock in transportationfuel products.

In the table on page 29 we have reported

daily feedstock processing and its cost, plusthe product slate that optimises the refinery

operation and the value of each product. Interms of the full range of naphtha processing,about 36 wt% of light naphtha goes to isom-erisation or to market while 64 wt% of heavynaphtha is for reforming capacity.

According to the simulation, the isomeri-sation process required to increase low oc-tane of C5/C6 normal paraffins, producesalmost 2,400 tonnes/day of isomerate forthe non-integrated configuration and lessthan 250 tonnes/day for the integratedmodel. A 3,100 tonne/day surplus of naph-tha is available.

Total available volumes of distillates re-main unchanged for both schemes while theamount of gasoline shows a decrease fromabout 6,200 tonnes/day to 700 tonnes/daybetween non-integrated and integratedplants because 94% of total reformate avail-ability is addressed to BTX manufacturing.

In addition, analysing NFC assay, N+2A ofheavy naphtha (called feed index) results arehigh (60.7), making it a good feedstock for re-former unit.

Reformate production in the two cases isanother interesting issue. The LP model sug-gests two different types of reformate for the

non-integrated plant: RON 102 and RON 90.There are two opposite drivers. In the non-

integrated site the reformer needs to operatemore intensively for octane boosting, there-fore losing some volumes of reformate (totalproduction: 3,720 tonnes/day). By contrast,in an integrated plant it is necessary to de-

crease the operations of reformer severity bymaximizing the availability of reformate for

AVERAGE ANNUAL PRICES

Feedstock cost $/tonnes price quotations 2012

North FieldCondensate 109.1*

Assessed Dubaicrude oil

Product sales

Naphtha 103.6* Spot FOB Singapore

LPG+ 954.2Large cargo Far EastIndex

UnleadedPremium 123.6*

Gasoline 95 RONFOB Singapore

Jet Kerosene 1,006.1 Spot FOB Singapore

Road Diesel 133.3* Estimated

SUL 197.8 Spot CFR China

NH3 573.9 Spot CFR India

Benzene 1,208.1 Spot FOB SE Asia

Toluene 1,215.3 Spot CFR SE Asia

Mixed Xylenes 1,197.5 Spot CFR SE Asia*Prices in US$/bbl +30% Propane, 70% ButaneSOURCE: ICIS Pricing

CDS

JetKero


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18-24 November 2013 |ICIS Chemical Business|29www.icis.com


SOUTH ASIA AND PACIFIC

M tonnes

SOURCE: ICIS Global Supply and Demand Expert View (formerly ATEC)

LPG Gasoline Gas OilsKerosenes

-60

-50

-40

-30

-20

-10

0

10

2025202020122005

the BTX plant. This operating conditioncauses a slight increase of total reformatevolumes (3,894 tonnes/day) compared withthe first case.

Again LPG (30% propane and 70% bu-tanes) production is, by and large, lower for a

plant that incorporates a BTX complex be-cause the lower reformer intensity causes aminor production of gaseous streams.

The share of road diesel corresponds toabout 23% by weight of the total productsupply and is constituted mainly by hydro-treated gas oil and hydro-treated heavy gasoil streams that account for almost 83% and10% of total blending volume, respectively.

To meet the required specification of sul-fur content (0.05% maximum), the desulfuri-sation of heavy gas oil (0.413% sulfur) isnecessary before the blending process.

Therefore, the refinery sees zero fuel oil

production. The increasing demand for high-value cleaner transportation fuels and the de-cline of low-value heavy residue market rep-resent a competitive advantage for the prod-uct slate released by this type of refinery.

Standard sulfur specification for jet kero-sene requires a maximum content of 0.3 wt%.As the kerosene cut has 0.23 wt% of sulfur,the refinery configuration is not equippedwith a kerosene hydro treating unit.

Hydrogen sulfide coming from differentrefinery gas streams, after an amine treat-ment unit, is converted in elemental sulfur

FEEDSTOCK AND SUPPLYFeedstock Configuration Tonnes/day $000/day

NFC CDS splitter 11,982 10,910

Supply

Naphtha Integrated plant 3,107 2,895

LPG Non-integrated plantIntegrated plant

858737

819704

UPR Non-integrated plantIntegrated plant

6,226713

6,466722

Jet Kerosene For both plants 1,859 1,871

Road Diesel 2,708 2,774

TOTAL DISTILLATES 4,567 4,644

SUL For both plants 20 0.389

NH3 1 0.046

TOTAL MISCELLANEOUS 21 0.435

Benzene Integrated plant 1,350 1,631

Toluene 730 887

Mixed Xylenes 532 637

TOTAL PETROCHEMICALS 2,612 3,155

Refinery Fuel Non-integrated plantIntegrated plant

240182

TOTAL PRODUCTS Non-integrated plantIntegrated plant

11,91311,940

TOTAL SALES Non-integrated plantIntegrated plant

11,93312,124

GROSS MARGIN Non-integrated plantIntegrated plant

1,0231,214

N.B. Totals may not add due to rounding

by a conventional Claus process. The small

quantity of sulfur recovered, about 20tonnes/day, can be shipped to Asia as feed-stock for fertilizer manufacturing.

PRODUCTION FIGURESThe petrochemical complex produces about2,600 tonnes/day of BTX, 822 tonnes/day ofraffinate and 229 tonnes/day of C9+, and ac-counts for about 22% by weight of total productsupply. The LP model evalutates a higher grossrefining margin for the integrated site comparedwith the non-integrated model.

Indeed, according to price scenarios for 2012,

as the weighted average of BTXs premium to

gasoline is slightly over $160/tonne, the modelcalculates, in the first case, a gross margin of$1.214m/day while in the second case$1.023m/day, providing almost 19% of incre-mental profitability. Finally, gross refining mar-gin, in terms of US$/bbl, is $15.8/bbl for the fa-vourable case while it is $13.3/bbl for theunfavourable. Integration could be deeper if theplant produces only benzene and paraxylenes.

Synergies are evident not only in terms of in-cremental profitability but also as security offeedstock supply to the petrochemical industry,logistics optimisation, saving on transport costs,reduction in utilities system costs (heat, steam,

water, hydrogen and power) and re-processingof by-products (raffinate) to add more valuableproducts. Again, refining and petrochemical in-tegration increases the level of flexibility andmitigates risks of market volatility.

Indeed, with increasing gasoline demand, therefiner can optimise operations to maximiseproduction of fuels (toluene and mixed xylenescan be also blended into gasoline pool). Con-versely, if fuel requirement is decreasing, thevalue of specific refinery streams can be higherin chemicals production.

Among the main disadvantages of integration,it is interesting to highlight the higher initial invest-

ment, increased complexity of the plant, moretechnical problems, and more complex planning.

However, environmental challenges based onmore and more strict constraints in the transpor-tation fuels, low refining margins and growingcompetitiveness provide excellent reasons forassigning to refinery streams valuable assets formanufacturing products other than convention-al transportation fuels. It is apparent that the in-tegration process adds mutual value to opera-tions of refining and petrochemical industry.Italo Righi contributed to this article

Paolo Scafettais a chemical engineer and joinedParpinelli TECNON (now ICIS Consulting) in 2001. He isengaged in annual multi-client reports, as well as single-client studies. Contact: [email protected]

restructure plants to boost margins- paolo scafetta

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