The changing dynamics of refinery-petrochemical integration - Global and Asian trends in the drive for ever increasing barrel-fraction of petrochemicals production

Noor JivrajGroup Manager, Refining & Petrochemicals

Jacobs Consultancy Ltd., Londonnoor.jivraj@jacobs.com

Petrochemicals Asia 201220-21 June 2012

Agenda• Changing Business Drivers and competitive advantage of

Refinery-Petrochemical Integration• Advantages and Challenges of refinery-petrochemical integration• Technology/Process/Catalyst developments and possibilities

helping for increasing petrochemical feed stocks from the refinery• Towards maximization of Refinery-Petrochemical Integration

Configuration with full downstream petrochemical integration• Level of Integration - Comparative of some recently

completed/ongoing/planned refinery-petrochemical integrated projects

• Conclusions

Changing Business Drivers and competitive advantage of

Refinery-Petrochemical Integration

Refinery-Petrochemical Integration has been an ever evolving business model• In the 1970s-80s, major oil refining companies had petrochemical

units that were largely a naphtha outlet: o the refining business drove the decision makingo Integration was minimalo the refining and petrochemical businesses operated as

independent “over-the-fence” style transactory entitieso Refineries lacked enabling complexity for world scale

petrochemical feed stock availability• The 1990s saw more integration as Asia responded to the

contrasting and evolving demand growths of the refining cuts• The availability of large capital in the Middle East and the need to

integrate downstream has elevated the level of integration • Technology – process and catalyst developments allowed greater

extraction of petrochemical feed stocks from heavy distillates

Extraction of Value downstream• Project Investment Returns on refinery cuts increase with

downstream integration – cracker yields greater value and downstream petrochemicals increase IRR/NPV returns further– Indicative IRR for 350 kbpd refinery would be 7-10%– Indicative IRR for 350 kbpd refinery, 1400 kta naphtha cracker and

downstream petrochemicals would be 11-17%• Truly integrated complexes can extract around 35% of

petrochemicals from refinery crude (mass basis) – this is excluding gasification opportunities for residues and petcoke

• Refinery-Petrochemical complexes can evolve both by evolution as well as revolution thus staging investment, engineering and logistics complexity

Contrasting Refinery Cut Demand Drivers propelling the changing face of refinery schemes• Demand for heavy fuel oil with high sulphur contents has slowed

markedly• Demand away from gasoline and towards diesel and aviation fuels• “Cleaner” Fuels drivers – reduced aromatics, olefins, better

combustion characteristics, lower sulphur etc. • Light olefins, ethylene, propylene and butylenes demand rising

faster than for aromatics due to damp demand for benzene and toluene

• Crackers have been unable to meet the increasing propylene demand. Propylene and Aromatics demand from refinery sources has been growing

Advantages and Challenges of refinery-petrochemical integration

Integration – Advantages from complexity

• Reliability of feedstock supply with less transport cost• Supply chain optimization resulting in faster delivery of products and

optimum distribution• Significant reduction in shared utilities system, less variable cost• Synergies from joint infrastructures and logistics• Working capital savings• Size effect on support services: maintenance, HR, etc• Higher cash margin• Less recourse to trading market• Independence and supply security• Long-term exchanges

Integration – Challenges posed by complexity

• Integration gives rise to enormous complexity (>15 process plants)

• Extremely high capital requirements (>$20 Billion)• Technology access and licensing limitations may mean a number

of partnership ventures• Construction labour force mobilization and coordination a major

challenge – tens of thousands of workers on site• Availability of experience skilled plant operators• Integration and Optimization can lead to limited operational

flexibility, and complex plant start ups

Technology/Process/Catalyst developments and possibilities

helping for increasing petrochemical feed stocks from the

refinery

Enabling technology example - The “Petrochemical” R-FCC• Asia and the Middle East are getting long of heavy fuel oil

• RFCCs/FCCs represent the lowest capital cost conversion option

• Traditional FCC operation yields large volumes of gasoline

• Maximizing propylene by over-cracking/high ZSM-5 addition minimizes gasoline but yields a gasoline of low blend value

• This high SG gasoline is an attractive aromatics feedstock with high ultimate PX yield

• Recent Examples:o Reliance Jamnagar used “Petrochemical FCC” to couple high propylene

production and FCC gasoline for aromatics production

o Oman Sohar project further extends these concepts to heavier feeds and higher Propylene + PX yields

The “Petrochemical FCC” reduces heavy gasoline and maximizes propylene and aromatics

Coupling aromatics production with a high olefin yield FCC maximizes the petrochemicals value added from the FCC

unit

Diverting the highly aromatic gasoline to aromatics production gets around the difficult problem of blending this

stream to gasoline

High Olefins & Aromatics Yield Feedstock Enablers

Gas Plant

Frac

tiona

tor

Vacuum Gas Oil (VGO or AR)

Propylene

Slurry Oil To Fuel Oil Blending

Fuel Gas

FCC

C4s to Alkylation

Light FCC Gasoline to Blending

Heavy FCC Gasoline to Aromatics

LCO to Diesel

Towards the idealized refinery-petrochemical cracker integrated

configuration

“Integration” Example: No integration between refinery and petrochemical cracker complexes

The refinery may/may not have a naphtha reformer. It operates independently from the cracker. It may

have a modern FCC unit to enhance propylene production

Stand Alone Refinery & Cracker

Atmospheric And

Vacuum Distillation

Reformer

Fluid Catalytic Cracker

Refinery Hydrotreating

BTX Extraction

Distillate Processing & Blending Pool

Benzene

Toulene

Xylene

Jet/Kerosene

Fuel Oil

Gasoline

Ref. Propylene

Ethylene

Propylene

Butadiene

Benzene

Toulene

Heavy Feed Steam

Cracker

Fuel/Flare

Fuel/Flame

MoGas Processing & Blending Pool

Hydrogen

C8 + Fraction

Pyrolysis F.O.

C4 Raffinate

Crude Oil

Naphtha

Secondary Products

Primary Products

By-Products

AGOVGO

Hydrogen

Reformate

FCC Gas

Straight Naphtha

Steam Cracker designed in tandem with the refinery enhances petrochemical synergies and value maximization• Adding a steam cracker to this scheme exploits further

synergies with the refinery:o Ethane and ethylene in FCC dry gas can be upgradedo Ethane rich streams from the aromatics complex (CCR,

transalkylation and xylenes isomerisation) can be upgradedo Raffinate and light naphtha streams can be cracked to produce

ethylene and propyleneo A single unsaturated gas plant can be shared by FCC and steam

crackero Pyrolysis gasoline from the steam cracker can be processed in the

aromatics complex

Integration Example: Significant integration between refinery and petrochemical cracker complexes

A heavily integrated refinery-petrochemicals complex could in theory convert around 35%

of the crude oil to petrochemicals maximizing value. Additional Naphtha than what the

refinery would be capable of producing could be required depending on cracker capacity

Integrated Refinery & Cracker

Atmospheric And

Vacuum Distillation

Reformer

Benzene

Ethylene

Propylene

Butadiene

Benzene

Toulene

Heavy-Feed Steam Cracker

with Olefins Conversion

Unit

Pyrolysis F.O.

C4 Raffinate

Crude Oil

NaphthaHy

drog

en

Jet

Fuel

Dies

el F

uel

Fluid Catalytic Cracker

Refinery Hydrotreating

BTX Extraction

Distillate Processing & Blending Pool

Toulene

Xylene

Jet/Kerosene

Fuel Oil

Gasoline

Ref. Propylene

MoGas Processing & Blending Pool

Hydrogen

C8 + Fraction

Reformate

Pyro

lysis

F.O

C 8+ F

racti

on

C 4 Raffi

nate

Arom

atic

Nap

htha

Paraffinic Naphtha

FCC Gas

Condensate Splitter

Condensate

Paraffinic Naphtha

Gas O

il

A Common Integrated Complex - Simplified

The Cracker, RFCC and Aromatics Units become the core design units for level of integration

FLEXIBLE FEED ETHYLENE PLANT

AROMATICS COMPLEX

POLYETHYLENE UNIT

DISTILLATE HYDROTREATER

OPTIONAL PRETREATMENT

PolyethyleneLight Ends

Crud

e Di

stilla

tion

Uni

t ( C

DU )Medium

Sore Crude

POLYPROPYLENE UNIT

EO/MEG

EB/SM

Polypropylene

MEG

Styrene

Diesel

Paraxylene

RFCC

(RES

IDUA

L FL

UID

CATA

LYTI

C CR

ACKI

NG)

Slurry Oil

AR

Light Ends

Ethylene

Propylene

Benzene

PX

NAP

HTHA

SPL

ITTE

R

KERO

GO

FRN

Diesel

Oxygen

LVNC4-

HVN

HCO

LCO

LCO

Heav

y Ar

omati

c Pu

rge

Pyro

lysis

Gas

olin

e

Raffi

nate

Ligh

t End

s

Level of Integration - Comparative of some recently completed

and ongoing/planned refinery-petrochemical integrated projects

Middle Eastern Refinery-Petrochemical Complexes show very varying degrees of integration

• PetroRabigh 1 - KSAo 20 Mt/yr Crude Refinery with 2.15 Mt/yr petrochemicals (1.25Mt/yr petchems

is based on “imported” ethane) = 0.9Mt/yr crude based ~ less than 5% crude to petrochemicals conversion

• Takreer – Abu Dhabi – (Ruwais Expansion – start up 1Q2014?)o 20 Mt/yr Crude with est. 1.3 Mt/yr petrochemicals - ~ 7% crude to chemicals

• Sohar – Oman o 116 kbpd = 5.8Mt/yr Crude with 350kt/yr PP, 800kt/yr PX, 210 kt/yr Benzene

~23% of the crude to petrochemicals

• Duqm – Oman – (Proposed, delayed and now under discussion as a JV)o 300 kbpd ~ 15Mt/yr Crude, with 1.5 Mt/yr PP, 2.8 Mt/yr Aromatics, 0.75 Mt/yr

styrene. ~ 4.6 Mt/yr ~ 30% of the crude to petrochemicals

Asian Refinery-Petrochemical Complexes also show varying levels of integration • Formosa Mailiao: 3 refineries in total, 3 crackers

o 450 kbpd ~ 22Mt/yr Crude – 3.0 Mt/yr Aromatics (incl. 1.2 Mt/yr Benzene, 490 KTA Toluene, 880 KTA PX) 1.6 Mt/yr Ethylene (2 crackers), 800 KTA propylene, ~ 25% Petrochemicals

o Twin RFCCs now produce 12% propylene

• Reliance Jamnagar 1: (as per original nameplate configuration)o 560 kbpd - 28Mt/yr Crude with 1.4Mt/yr PX, 0.2Mt/yr OX, 0.5Mt/yr Bz and 1.5Mt/yr PP =

3.25Mt/yr petrochemicals ~ 12% of the crude

• ExxonMobil Jurong Island: 2 Refineries (evolved since 1966)o 605 kbpd ~ 30 MT/yr Crude, 1.35Mt/yr Aromatics (2 units), 400 KT solvents, 900 KTA

ethylene cracker, 435 KTA propylene, 270 KTA n-butylene, 80 KTA MTBE: ~ 12% of the crude

• Petronas RAPID: Mega Grassroots project in Johor on-stream 2016/2017 – will require 10-12 JV partners – estimated in excess of $20 Billion total investmento 300 kbpd refinery, 1 Million tons naphtha/mixed feed cracker (LPG??) ~ 3 Million Tons

petrochemicals - estimated 30% plus petrochemicals

Conclusions

Conclusions• Recent and in-progress/planned refinery-petrochemical complexes are

showing an increasing trend in greater petrochemicals fraction from every barrel of crude oil.

• Technological developments allow much greater conversions to petrochemicals/petrochemical feed stocks

• The addition of a steam cracker, RFCC and an optimized Aromatics “BTX” complex are the core of the current integration efforts

• Future efforts will see bringing in of other fuels such as natural gas, coal and biofuels to develop further synergies for the next level of integration

• Integration also poses major design, construction and operational challenges to be able to harvest the promised returns

• Integration can be staged – it can be evolution and just by revolution

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