With the increased global focus on the environment, there is a great deal of talk about clean fuels today. Clean fuel issues and challenges show up on the news, in politicians’ speeches and debates, and from keynote speakers at industry conferences. Clean fuels is a common topic in magazines, on the Internet and on television. So, it is no surprise that the term “clean fuels” has come to mean different things to people around the world. For the refining industry, “clean fuels” primarily refers to reducing contaminants and volatile components in transportation fuels to meet increasingly stringent fuel-product quality specifications.
Refiners must meet these challenges while delivering desired financial results to their shareholders. The refining industry is struggling because meeting the challenge requires capital invest- ment, and it comes at the same time that world crude quality is degrading. Result: Refiners are being forced to decide to invest
the capital necessary to meet the new clean fuel regulations—a tough decision in its own right—or to make the tougher deci- sion to shutdown or sell one or more of their refining assets. The question is: How will operating companies best address these challenges, especially with the added complexity that not all regions have the same challenges, standards and requirements?
Regional challenges. The implementation of more strin- gent fuel specifications differs significantly in various parts of the world:
Europe has led the way with clean fuel regulations, and
refiners have responded either by implementing the required refining technologies to meet these challenges, or by shutting down or selling refineries to another company that is willing to make the investment. European refiners must comply with national regulations and European Union (EU) directives such
as Euro 5 diesel. The challenge that they face today is con- tinuing to produce low-sulfur, clean transportation fuels with emerging Renewable Energy Directive targets and regulated carbon dioxide limits.
Asia Pacific. The challenge for Asian refiners is to meet fast
growing demand while complying with new emissions and fuel quality regulations and directives. Each country has its own challenges with unique regulations that are largely modeled after the EU plan. However, while in the Western World, clean fuels production is often a leading issue, in Asia, it is usually on par with many other national issues that divert attention and fund- ing. As a result, Asia’s initiatives are moving to compliance at a more measured pace.
Middle East. In the Middle East, ultra-sophisticated and com-
plex refineries are being built to meet growing energy demand for the region, and to help meet the growing demand in Asia Pacific. Transportation-fuel quality is becoming a higher priority in the Middle East due to increasingly stringent regulations within the region and tighter regulations for fuel products that are exported to other regions.
Latin America. It is no surprise that clean-fuel regulations are
being rolled out slowly over time in Latin/South America. Each country has its own set of regulations. Many countries, led by Brazil, have the additional complexity of high ethanol and other biofuels blending requirements in transportation fuels.
North America. In the US, there are so many sophisticated
fuel regulations that refiners are extremely challenged by the task of keeping track of all requirements that must be honored. There are numerous regulatory bodies that manage the multiple fuels programs at both the national and state levels. Similar to Europe, US refiners are struggling with driving profitability, while meet- ing the new regulations and supporting long-term renewable content and carbon emissions limits and goals.
Technology and innovation. How do refiners respond to the clean fuel challenges? The quick answer is the same way that they have always responded to industry challenges—by looking to new technology and innovation to provide practical solutions to meet the market demands and to create value for their shareholders.
Refining technology is typically provided by three types of companies: 1) those whose only business is technology, 2) those who are operating companies that also have technology busi- nesses, and 3) those who are engineering companies that also have technology businesses.
While each type of company has its advantages, alliances
Douglas N. Kelly, PE, is KBR’s vice presi-
dent of refining technology. He is respon- sible for the refining licensing, engineering and proprietary equipment business within the KBR Technology business unit. Mr. Kelly joined KBR in 2010. He started his career at Shell Oil Co. Prior to his current position, he held a variety of leadership positions with Zero Emission Energy Plants, Invensys and Aspen Technology. He represents KBR as an associate member on the board of the AFPM (formerly NPRA). He holds a BS degree in chemical engineering from The University of Oklahoma and has more than 25 years of refining and petrochemical experience.
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FEBRUARY 2012 HydrocarbonProcessing.combetween different types of companies provide refiners with additional advantages. For example, alliances between engineer- ing and operating companies that have technology offer unique and valuable experience to help refiners overcome challenges and evaluate options. They bring together different perspectives that provide innovative ideas that address challenges in the most economically attractive way.
To address the clean-fuel challenges, refiners are partnering with refining technology suppliers to provide innovative technol- ogy options to help:
• Meet clean fuel standards • Improve reliability and efficiency
• Provide operational and crude handling flexibility • Evaluate options and support economic decisions.
Significant improvements have been made by technology companies in hydroprocessing technology and catalyst to address these challenges. This is only part of the solution. Bundling these technologies with other adjacent technologies is often what makes
a project meet the economic hurdles necessary to support share- holder-value creation. Each refinery is unique! There are many
different scenarios, configurations, issues and constraints that must be considered to determine the best and most cost-effective approach to meeting clean-fuel regulations.
Refiners who have spare hydrocracking and/or hydrotreating capacity and can use existing vessels and equipment to meet the new environmental specifications are rare. However, new develop- ments in technology and catalyst occasionally make it possible to address these challenges with no more than equipment revamps as a low-cost option.
Other refiners have determined that their best option is to add new parallel hydroprocessing units to meet the required specifications. One European refinery had to overcome sev- eral challenges to produce low-sulfur Euro IV diesel to meet regulations and significantly increase capacity. In addition to the clean fuel challenge, the bottoms capacity of the vacuum tower was limiting. The optimum solution was to add a second crude vacuum column, a supercritical solvent deasphalting unit and a parallel hydrocracker. While this option was more capital intensive, it provided the refinery with increased flexibility to handle more challenging crudes and meet increasingly more stringent limits.
The future. Whatever your current refining situation, the constraints on the refining industry are not getting any easier. As regulations increase and crude quality decreases, refiners will need innovative ideas and new developments from technology provid- ers to profitably meet the challenges ahead. HP