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FEBRUARY 2016 | HydrocarbonProcessing.com
PROCESS OPTIMIZATION
Troubleshoot multistage vacuum systems to avoid unit fouling and shutdown
MAINTENANCE AND RELIABILITY
Prevent overfi lling of storage tanks and hazardous materials leakage
INDUSTRY LEADERS’ FORECASTS
Continuing viewpoints from key industry executives on 2016 markets and technologies
CLEAN FUELS AND
THE ENVIRONMENT
Improve gasoline quality with FCC optimization Control technology for GHGs in modified plants
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FEBRUARY 2016 | Volume 95 Number 2 HydrocarbonProcessing.com
SPECIAL REPORT: CLEAN FUELS AND THE ENVIRONMENT
29 Maximize petrochemicals in the FCCU to increase refinery margins and improve gasoline pool quality
C. Chau, R. Schiller and M. Ziebarth
37 Add power to environmental real-time data through analytics
P. Black
41 Build a solid GHG BACT cost-effectiveness calculation to avoid CCS costs
R. Crum
OUTLOOK: INDUSTRY LEADERS’ VIEWPOINTS 49 2016 Industry Leaders’ Viewpoints—Part 2
L. Nichols
PROCESS ENGINEERING AND OPTIMIZATION
55 Use discrete event simulation as decision support for storage and shipping—Part 2
J. Vazquez-Esparragoza and J. Chen
59 Troubleshoot operation of a steam ejector vacuum system
N. Lieberman and R. Cardoso
MAINTENANCE AND RELIABILITY
65 Prevent the overfilling of storage tanks
A. Dokhkan
PROCESS CONTROL AND INSTRUMENTATION
69 Utilize APC solutions to resolve hydrocracker conversion optimization challenges
G. Oleszczuk and M. Bożek
75 Enhance PSM design with metrics-driven best practices
M. Marshall
GAS PROCESSING SUPPLEMENT
GP-1 Technology and Business Information for the Global Gas Processing Industry
Cover Image: Gazprom Neft’s 12.15-metric-MMtpy refinery in Moscow, Russia produces high-octane gasoline and diesel, servicing approximately 40% of petroleum demand in the Moscow area.
DEPARTMENTS
4 Industry Perspectives
8 Business Trends
19 Industry Metrics
21 Global Project Data
81 Innovations 83 Marketplace 84 Advertiser Index 85 Events 86 People COLUMNS 7 Editorial Comment A low-sulfur world 23 Reliability
Combine metallurgical, structural and physics know-how
25 Global
Reforms will shape future of Nigeria’s refining industry
8
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Industry Perspectives
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US refiners are set to break the 10% “blend wall” for using ethanol in gasoline, but downstream professionals are certainly not happy about it.
Poll findings. In a recent poll conducted on Hydrocarbon Processing.com, 81% of respondents said they did not agree with the US Environmental Protection Agency’s (EPA’s) deci-sion to break the 10% “blend wall” for ethanol. The other 19% said they agreed.
Many in the US refining sector believe the 10% threshold is dangerous to exceed because of potential damage to automobile engines and catalytic converters.
“It’s unclear how the EPA can simultaneously recognize the E10 blend wall and yet establish requirements that exceed those constraints,” said Chet Thompson, president of the American Fuel & Petrochemical Manufacturers (AFPM). “This decision is hard to view as anything other than an attempt by the EPA to placate the biofuels lobby.”
Similarly, the American Petroleum Institute (API) had asked the EPA to set the biofuel mandate at “no more than 9.7% of gasoline demand to help avoid the 10% ethanol blend wall while meeting strong consumer demand for ethanol-free gasoline.” Rules issued retroactively. The new mandate for biofuel vol-umes in refining processes was issued in late November 2015 for the years 2014, 2015 and 2016.
The oil and biofuels industries have sparred for years over whether the US government should mandate higher blends of the fuel—so much so that the EPA took the unprecedented step of delaying the issuance of its annual targets in an effort to reex-amine the program.
“For starters, that the EPA is just now—on the last day of November—establishing standards for calendar years 2014 and 2015 is indicative of just how dysfunctional the program has be-come,” Thompson said.
Specifics of new mandate. Under the new set of rules, the EPA ordered US refiners to blend a record 14.5 Bgal of ethanol into gasoline in 2016. For the first time ever, this means ethanol will make up more than 10% of the total US fuel mix.
However, those targets are still about 500 MMgal short of statutory benchmarks laid out when Congress first passed the Renewable Fuel Standard (RFS) in 2007.
“We applaud the EPA for recognizing that the E10 blend wall is real and for using its waiver authority to reduce the volume requirements,” Thompson said. “But, the fact that the EPA has had to invoke its waiver authority year after year demonstrates that the program is not functioning as Congress intended and that change is desperately needed.”
Visit HydrocarbonProcessing.com today to vote on addi-tional industry polls and to comment on related news.
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EDITORIAL
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Downstream disputes breaking the
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[email protected]Hydrocarbon Processing | FEBRUARY 2016 7
A low-sulfur world
INSIDE THIS ISSUE
8
Business Trends.Nations around the world are implementing stringent emissions standards and low-sulfur transportation fuel specifications. These regulations are an effort to curb airborne pollutants and provide “cleaner fuels” for
consumers. HP examines major clean fuel projects and initiatives being implemented around the world.
41
Special Report.With the right tools and experienced personnel, a real-time environmental data management system with advanced analytics can assist in developing in-house metrics for operations, and foster a necessary dialogue between plant operators and plant environmental specialists.
49
Outlook. In Part 2 ofHP’s Industry Leaders’ Viewpoints, industry leaders and esteemed colleagues in the industry provide HP with their insights into growing regions of activity, technological advances and how the downstream industry can innovate in 2016 and beyond.
59
Process Optimization. A case study, wherein the operation of a vacuum tower was corrected, highlights the importance of understanding the entire vacuum system, of field observation and of the interpretation of operating vs. design data. Basic concepts to help understand and troubleshoot a steam ejector system are presented.69
Instrumentation.Honeywell Advanced Solutions and PKN ORLEN discuss utilizing advanced process control solutions to resolve hydrocracker conversion optimization challenges. As the world continues to welcome
more vehicles on the road, and as emerg-ing economies invest in civil, industrial and energy projects, global fuels demand is forecast to increase through the end of the decade.
More vehicles on the road equates to higher emissions rates and, in turn, more airborne pollutants. To combat these ef-fects, legislation mandating decreased emissions and lower levels of airborne pollutants is coming into effect. In re-sponse, refiners are implementing opera-tional and processing changes to reduce sulfur levels in transportation fuels.
The refining industry has already made incredible strides in reducing sulfur in transportation fuels. As shown in FIG. 1, sulfur levels in diesel fuel have been cut dramatically around the globe within the past decade. Refiners have invested, and continue to invest, billions of dollars in new units, upgrades/retrofits and expan-sions to meet new sulfur and emisexpan-sions regulations. These investments promote the reduction of airborne pollutants in both diesel and gasoline passenger vehi-cles, help produce higher-quality trans-portation fuels and continue to move the industry toward a low-sulfur world.
>5,000 and above >2,000 - 5,000 >500 - 2,000 Conflicting/missing data 15 and below* >15 - 50 >50 - 500
* Information in parts per million (ppm)
FIG. 1. Sulfur levels in diesel fuel: global status 2005 (top) vs. 2015 (bottom). Source: United Nations Environment Program, PCFV Secretariat.
>5,000 and bbove >2,000 - 5,000 >500 - 2,000 Conflicting/missing data 15 and below* >15 - 50 >50 - 500
Over the past decade, the refining industry has taken incredible steps to reduce sulfur levels in transportation fuels. Refiners have invested billions of dollars in new units, upgrades/retrofits and expansions to meet new sulfur and emissions regulations. These investments promote the reduction of carbon monoxide, nitrogen oxide, hydrocarbons and particulate matter in both diesel and gasoline vehicles. New technologies are moving the refining industry toward a low-sulfur world. New regulations and fuel standards are acting as catalysts for additional clean fuels projects to develop higher-quality transportation fuels.
Photo: Essar Oil’s 20-MMtpy refinery is located in Vadinar, Gujarat, India. The facility concluded a planned maintenance turnaround in 4Q 2015 that included the completion of the D-Max Project. Part of Essar’s Optima Plus program, the project included the conversion of the vacuum gasoil hydrotreater unit into a mild hydrocracking unit, as well as the addition of new installations in the diesel hydrotreating unit. Photo courtesy of Essar Oil.
Hydrocarbon Processing | FEBRUARY 20169
LEE NICHOLS, EDITOR/ASSOCIATE PUBLISHER
Business Trends
Clean fuels—a global shift toward a low-sulfur world
Around the world, legislation mandat-ing decreased emissions and lower levels of airborne pollutants is coming into effect. In response, refiners are implementing op-erational and processing changes to reduce sulfur levels in transportation fuels. New technologies are moving the downstream hydrocarbon processing industry toward cleaner, lower-sulfur transportation fuels.
A low-sulfur world doesn’t come cheap, though. Refiners are investing bil-lions of dollars in new units, upgrades/ret-rofits and expansions to meet new sulfur and emissions regulations. These invest-ments will help produce high-quality fuels that meet Euro 4, Euro 5 and Euro 6 speci-fications. Many refiners around the globe have adopted European standards for fuel quality, as Europe has been the frontrun-ner on regulations for low-sulfur, “clean” transportation fuels. European passenger vehicle emission standards for Euro 4, Euro 5 and Euro 6 are detailed in TABLE 1 and TABLE 2. These standards promote the reduction of carbon monoxide (CO), ni-trogen oxide (NOx), hydrocarbons (HCs) and particulate matter (PM) in both diesel and gasoline passenger vehicles. As shown in FIG. 1, many nations around the world already produce transportation fuels that meet Euro-4 specifications. Other re-gions, such as the Middle East, are invest-ing heavily to increase the production of Euro 4 and Euro 5 standard fuels.
The following is an overview of ma-jor clean fuels projects and trends being implemented around the world. Each re-gion is investing in the implementation of new technologies to meet cleaner fuel re-quirements. These new processing units will help produce higher-quality trans-portation fuels.
US/Canada. The US transportation fuel market is the world’s largest. The coun-try's government will begin to enforce the new Tier 3 program starting in 2017. This program will set new vehicle
emis-sions standards and lower the sulfur con-tent in gasoline. According to the US En-vironmental Protection Agency (EPA), sulfur content in gasoline will be limited to 10 parts per million (ppm). This is a reduction from Tier 2 standards, which limited the sulfur content in gasoline to 30 ppm. The program maintains the cur-rent refinery gate per-gallon content of 80 ppm and the 95-ppm downstream dis-tribution cap. The EPA forecasts that the new rule will significantly reduce vehicle pollutants into the atmosphere. For ex-ample, the EPA forecasts that NOx emis-sions will be reduced by about 260,000 tons in 2018 alone.
Large US refineries (those producing greater than 75 Mbpd) must comply with Tier 3 standards by 2017. Refiners pro-ducing below 75 Mbpd must meet Tier 3 regulation standards by 2020. To comply with new regulations, US refiners have invested in additional units, such as hy-drotreaters, to reduce the sulfur content in transportation fuels.
In Canada, petroleum fuels consti-tute 95% of Canada’s transportation en-ergy needs. The country has aligned it-self closely with US fuel standards and is making strides to continually reduce sul-fur levels in transportation fuels. This in-cludes the introduction of stringent Tier 3 fuel regulations for passenger vehicles and light-duty trucks. These fuel
stan-dards will begin in 2017, which coincides with the startup of US Tier 3 regulations. Canadian refiners have already invested over $8 B over the past decade to reduce sulfur levels in gasoline and diesel fuels. Since 2005, sulfur levels in gasoline and diesel have decreased by more than 90% and 97%, respectively. New Tier 3 stan-dards would be instrumental in continu-ing to reduce sulfur in transportation fu-els, as well as reducing vehicle emissions to nearly zero over the life of the vehicle. China. To help curb air pollution, the country has set aggressive fuel economy standards through 2020. China is imple-menting its National V fuel quality stan-dard, which equates to Euro 5 standard transportation fuels. Euro 5 caps sulfur content in gasoline and diesel at 10 ppm. Recent regulations required refiners to produce Euro 4 standard transportation fuels nationwide by the end of 2015. Euro 5 standard transportation fuels will be required for the automotive industry by 2017. These new regulations are being implemented one year ahead of schedule. The implementation of National V fuel quality standards for non-automotive die-sel has been pushed back one year to Janu-ary 2018. This includes “general” diesel used in agriculture and industry. General diesel will need to meet Euro 5 standard requirements within this time frame.
Up-TABLE 1. EU emissions standards for passenger vehicles (gasoline)
CO, g/km HC, g/km NOx, g/km PM, g/km
Euro 4 1.0 0.10 0.08 –
Euro 5 1.0 0.10 0.06 –
Euro 6 1.0 0.10 0.06 0.005
TABLE 2. EU emissions standards for passenger vehicles (diesel)
CO, g/km HC + NOx, g/km NOx, g/km PM, g/km
Euro 4 0.50 0.30 0.25 0.025
Euro 5 0.50 0.23 0.18 0.005
grading the nation’s fuel quality could cost Chinese refiners over $7 B.
India. The country has 22 major refiner-ies in operation, with a total throughput capacity of 4.3 MMbpd. To satisfy increas-ing demand for transportation fuels, India is investing upward of $30 B in additional refining projects through 2020. Capital ex-penditures are expected to be even higher
due to new regulations to curb air pollution and produce Euro 4 and Euro 5 standard fuels by 2020. In January, Road Transport Minister Nitin Gadkari announced that Indian refiners will need to invest $4.5 B to produce Bharat Stage 6 (BS-6) standard fuels by 2Q 2020. BS-6 fuels are equiva-lent to Euro 6 fuel specifications. These new regulations are being imposed four years ahead of schedule and call for a 68%
reduction in NOx emissions. Cars sold in the country are subject to BS-4 standards. India’s new regulations will bypass the BS-5 stage and move directly to BS-6.
The proposed clean fuels bill was in response to a World Health Organization study that found that 13 of the world’s dirtiest cities were in India. The instal-lation of secondary units to comply with new fuel standards could cost Indian refin-ers over $17 B.
Indonesia. Southeast Asia’s biggest economy is the world leader in the pro-duction of palm oil, and is promoting its use as a biofuel. The country boosted the mandated amount of blending in diesel in 2014 from 7.5% to 10%, and subse-quently to 15% in 2015. Indonesia raised the blending requirement to 20% this year and plans to increase it to 30% in 2020. According to the Indonesian Biofuel Pro-ducers Association, Indonesia’s biodiesel consumption will increase from 1.1 kiloli-ters in 2015 to 7.9 kilolikiloli-ters in 2016. The additional usage of biofuels is expected to decrease vehicle emissions substantially. FIG. 1. Vehicle emissions standards: global status as of February 2015. Source: United Nations
Environment Program, PCFV Secretariat.
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Africa. Few countries have adopted low-sulfur fuel regulations, but multiple coun-tries in southern Africa have announced a commitment to produce cleaner fuels by the end of the decade. The African Refin-ers Association has developed AFRI speci-fications as a guideline for the production of cleaner fuels. The region aims to pro-duce fuels with AFRI-4 specifications by 2020. This would constitute maximum sulfur content in diesel and gasoline of 50
ppm and 150 ppm, respectively. To meet these goals, African refiners would need to invest over $7 B in additional units.
The most notable clean fuels initiative has been put forth by South Africa. The country’s Clean Fuels Program 2 (CF2) is an effort to develop Euro 5 specification fuels. This would entail developing fuels to contain 10 ppm or less of sulfur, a low-ering of benzene from 5% to 1%, and the reduction of aromatics from 50% to 35%.
The CF2 program was initially de-signed to begin in 2017, but it has been pushed back to 2020 or beyond. The ex-tended deadline provides South African refiners with time to make the necessary upgrades to produce cleaner fuels and is a more realistic timetable for the program’s implementation—one that could cost South African refiners billions in upgrade costs. The country’s refiners are hesitant to make the necessary upgrades due to the low return on investment.
The country is also in talks with Iran to build a new clean fuels refinery in the country. The plan could replace the $10-B Project Mthombo, in the industrial port of Coega, which has been in limbo for some time. The new refinery, fed with Iranian crude, would produce Euro 5 specified fuels, meeting the government’s mandate.
Other countries, such as Egypt and Al-geria, are planning projects to improve lo-cal fuel quality. With ultra-modern refiner-ies being built in Asia and the Middle East, Africa may continue importing refined products to meet demand, in lieu of invest-ing heavily in capital-intensive projects. Middle East. The region continues to increase refining capacity to diversify ex-ports and provide higher-quality refined products to the global market. Tradition-ally, Middle East refineries have had sim-ple configurations and high fuel oil yields, partly due to strong power generation re-quirements. This condition is changing. A new generation of highly complex plants, combined with upgrades and expansions at existing plants, is radically altering the product mix. New unit configurations include hydrocracking, catalytic cracking and hydrotreating capacities designed to minimize fuel oil output and maximize low-sulfur middle distillate, diesel and gasoline production.
Saudi Arabia and Kuwait are leading the charge in new clean fuels projects in the region. To comply with mandatory sul-fur specifications for gasoline and diesel, Saudi Arabia is spending billions of dollars to construct multiple clean fuels projects. The country is seeking to reduce sulfur content in diesel and gasoline to 10 ppm and to lower benzene content in gasoline to 1%. This represents a dramatic shift in sulfur levels from 2012, when Saudi Ara-bia’s maximum sulfur level for diesel was greater than 500 ppm. The country plans to commission its 400-Mbpd Jazan
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ery by 2018. The refinery will produce higher-grade transportation fuels, includ-ing ultra-low-sulfur diesel. Along with its JVs, Saudi Aramco will upgrade all of its do-mestic refineries to produce lower-sulfur transportation fuels. Several projects—the Ras Tanura Refinery Clean Fuels and Aro-matics project (which was on hold, but was reinstated in mid-2015), the Riyadh Refin-ery Clean Transportation Fuel project, the Saudi Aramco Mobil Refinery Co. Clean Fuels project (completed in 2014) and the PetroRabigh Clean Fuels project—are de-signed to accomplish the Kingdom’s goal of producing near-zero-sulfur fuels.
Kuwait is investing over $30 B on am-bitious plans to overhaul its refining sec-tor and become the region’s clean fuels leader. The plan focuses on modernizing and integrating the country’s Mina Abdul-lah and Mina Al-Ahmadi refineries, as well as on building the region’s largest refinery, the Al-Zour plant. Once completed, the reconfigured and integrated Mina Abdul-lah and Mina Al-Ahmadi refineries will decrease the sulfur in gasoline production from 500 ppm to less than 10 ppm.
Ben-zene and aromatics concentrations will also decrease. Bunker fuel oil sulfur con-tent will decrease from 4.5 ppm to 1 ppm, and maximum sulfur content of full-range naphtha will drop from 700 ppm to 500 ppm. With the construction of Al-Zour and the upgrading and integration of its domestic refineries, Kuwait is set to be-come the largest producer of clean fuels in the Middle East by 2019.
Other countries in the region are also making sizable investments to produce higher-quality transportation fuels. Efforts include the Ruwais refinery expansion (completed in 2015), the Jebel Ali and Fu-jairah projects in the UAE, the Sohar refin-ery upgrade and Duqm refinrefin-ery projects in Oman, the Sitra refinery modernization project in Bahrain, and the SOCAR Tur-key Aegean Refinery project in TurTur-key. Latin America. Due to the growth in the region’s middle class, Latin America has seen tremendous petroleum product demand growth over the past decade. De-mand has been shifting to more middle and light distillates, as opposed to fuel oil.
Multiple refinery upgrades, expansions and greenfield facilities have been delayed or canceled due to the drop in oil prices. Latin American countries, which rely heavily on oil export revenues, have been hit hard by the drop in oil prices. In turn, this has left little money to fund capac-ity expansions and upgrades to produce higher-grade transportation fuels. New clean fuels initiatives are taking place in the region, however.
In late 2014, Brazil increased its ethanol blending mandate in gasoline from 5% to 7% and in diesel from 25% to 27%. These new blend requirements, along with the startup of new refining capacity, are fore-cast to help mitigate a substantial portion of refined fuel imports. Additional refin-ery plans have been announced, but mas-sive debt, corruption and cost overruns have put projects on the back burner.
In late 2015, Mexico’s state-owned oil company, Pemex, announced plans to reinstate its domestic refinery upgrade program. The $23-B investment will up-grade Pemex’s refining system to increase production of cleaner-burning diesel and
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gasoline. The plan’s goal is to more than double the production of ultra-low-sulfur gasoline and increase the production of ultra-low-sulfur diesel.
Colombia is also investing heavily in the production of higher-grade transporta-tion fuels. State-owned Ecopetrol plans to complete the full ramp-up of its Cartagena refinery in 2Q 2016. The $7-B expansion project more than doubled capacity to 165 Mbpd, which included the modernization of the existing refinery to take advantage of the new complex and improve efficien-cies. The project will help reduce regional refining constraints; produce ultra-low-sulfur gasoline and diesel from heavy, high-sulfur crudes; adhere to the latest emissions protocols and requirements; increase the refinery’s conversion capacity from 76% to 95%; and meet international standards for transportation fuels.
Russia. The country produces more than enough refined products to meet domes-tic demand, but it lacks advanced facilities to produce higher-grade transportation fuels, such as Euro 4 and Euro 5 fuels. In
response, Russia launched a $55-B pro-gram in 2011 to modernize its existing plants and encourage exports of high-quality products. The plan called for the installation of 130 new units by 2020. The program saw delays in 2015 due to falling oil prices and Western sanctions, which have limited the ability for Russian com-panies to secure financing.
The peak of Russia’s modernization program is forecast for 2016–2018. The country’s two largest refiners, Rosneft and Lukoil, have led the charge on refinery up-grades to produce Euro 4 and Euro 5 fuels. Smaller Russian refiners are also upgrad-ing their refineries to reduce sulfur con-tent in transportation fuels. Russia's mod-ernization program will continue to focus on increasing its light products yields, with a key focus on meeting demand for gasoline and jet fuel, increasing fuel stan-dards to Euro 5 specifications, and replac-ing old units to decrease residual product yields and maximize utilization.
Bunker fuels. A major change for Euro-pean Union (EU) refineries is the required
sulfur content reductions for marine fuels. Marine fuels constitute about 7% of EU refining output, according to Concawe. New regulations kicked into effect in 2015 that require shippers to switch from ma-rine residual fuels to lower-sulfur mama-rine fuels in designated emission control areas (ECAs). These areas include the Baltic and North Sea, coastal areas off of the US and Canada, and the US Caribbean Sea.
Sulfur content in marine fuels con-sumed in ECAs was capped at 0.1%, the same quality as lower-sulfur distillate ma-terials. The International Convention for the Prevention of Pollution from Ships (MARPOL) directive also sets limits on marine fuels in non-ECAs. Beginning in 2020, the sulfur content of marine fuels used in non-ECAs will be reduced from 3.5% to 0.5%. Although the initial start date of this new regulation is January 1, 2020, the plan will be reviewed in 2018 to check the availability of the required fuel oil. Depending on the outcome of the review, the startup date of new non-ECA sulfur regulations could be postponed un-til at least 2025.
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Industry Metrics
MIKE RHODES, MANAGING EDITORHydrocarbon Processing | FEBRUARY 201619 US product markets weakened despite unseasonably strong gasoline
demand, and the gasoil crack spread hit the lowest level seen in more than five years, under pressure from increasing supplies amid thin de-mand due to warmer winter weather. Asian margins remained relatively healthy due to stronger regional demand for gasoline and naphtha. Euro-pean markets exhibited mixed performance.
Pr oduc tion, Bcf d Gas pric es, $/Mcf 0 20 40 60 80 100 0 1 2 3 4 5 6 7
Monthly price (Henry Hub) 12-month price avg. Production D N O S A J J M A M F J D N O S A J J M A M F J D 2013 2014 2015
Production equals U.S. marketed production, wet gas. Source: EIA. Monthly price (Henry Hub) 12-month price avg. Production
US gas production (Bcfd) and prices ($/Mcf)
Oil pric es, $/bbl 35 4555 65 75 85 95 105 115 Dubai Fateh W. Texas Inter. Brent Blend D N O S A J J M A M F J D N O S A J J M A M F J D 2013 2014 2015 Source: DOE
Selected world oil prices, $/bbl
Global refining margins, 2014–2015*
WTI, US Gulf Arab Heavy, US Gulf Brent, Rotterdam Dubai, Singapore LLS, US Gulf
Margins, US$/bbl 0 2 4 6 8 1012 14 16
Dec.-14 Jan.-15 Feb.-15 Mar.-15 April-15 May-15 June-15 July-15 Aug.-15 Sept.-15 Oct.-15 Nov.-15 Dec.-15
Global refining utilization rates, 2014–2015*
60 70 80 90 100
Utilization rates, % USEU 16 JapanSingapore
Dec.-14 Jan.-15 Feb.-15 Mar.-15 April-15 May-15 June-15 July-15 Aug.-15 Sept.-15 Oct.-15 Nov.-15 Dec.-15
US Gulf cracking spread vs. WTI, 2014–2015*
-10 0 10 20 30 40 50 60
Cracking spread, US$/bbl
Prem. gasoline unl. 93 Jet/kero Gasoil/diesel, 0.05% S
Fuel oil, 180c
Dec.-14 Jan.-15 Feb.-15 Mar.-15 April-15 May-15 June-15 July-15 Aug.-15 Sept.-15 Oct.-15 Nov.-15 Dec.-15
Rotterdam cracking spread vs. Brent, 2014–2015*
Prem. gasoline unl. 98, 10 ppm S
Jet/kero Fuel oil, 1% SGasoil, 10 ppm S -20 -10 10 20 40 3 0
Cracking spread, US$/bbl
0
Dec.-14 Jan.-15 Feb.-15 Mar.-15 April-15 May-15 June-15 July-15 Aug.-15 Sept.-15 Oct.-15 Nov.-15 Dec.-15
Singapore cracking spread vs. Dubai, 2014–2015*
-20 -10 0 10 20 30
Cracking spread, US$/bbl Prem. gasoline unl. 92Jet/kero Gasoil, 50 ppm SFuel oil, 180 cSt, 2% S
Dec.-14 Jan.-15 Feb.-15 Mar.-15 April-15 May-15 June-15 July-15 Aug.-15 Sept.-15 Oct.-15 Nov.-15 Dec.-15
Supply and demand, MMbpd
Stock change and balance, MMbpd
Source: EIA Short-Term Energy Outlook, January 2016. 82 84 86 88 9092 94 96 98 100 -3 -2 -1 0 1 2 3 4 5 6 Stock change and balance
World demand
World supply Forecast
2011-Q1 2012-Q1 2013-Q1 2014-Q1 2015-Q1 2016-Q1 2017-Q1
World liquid fuel supply and demand, MMbpd
* Material published permission of the OPEC Secretariat; copyright 2016; all rights reserved; OPEC Monthly Oil Market Report, January 2016.
An expanded version of Industry Metrics can be found online at HydrocarbonProcessing.com.
Brent dated vs. sour grades (Urals and Dubai) spread, 2015*
Light sweet/medium sour crude spread, US$/bbl
Dubai Urals -4 -2 0 2 4 6
Global Project Data
LEE NICHOLS, EDITOR/ASSOCIATE PUBLISHERHydrocarbon Processing | FEBRUARY 2016 21 At present, Hydrocarbon Processing’s Construction Boxscore
Database is tracking over 2,100 projects around the world. At the time of this publication, approximately 60% of active projects are in the preconstruction stage. The Asia-Pacific region continues to dominate in total active projects in all sectors of the downstream
hydrocarbon processing industry. The closest contender is the Middle East, which has witnessed a significant number of downstream projects over the past several years. The region continues to increase refining, petrochemical and lube operations to provide value addition and portfolio diversification.
Boxscore new project announcements, December 2014–present 55 115 95 26 189205 112 71 162 142 75 51 16 6 39 16 105 6346 39 63 42 32 28 Africa Asia-Pacific Canada Latin America Refining Petrochemical Gas processing/LNG Other Middle East 119 106 88 35 Europe US
Detailed and up-to-date information for active construction projects in the refining, gas processing and petrochemical industries across the globe | ConstructionBoxscore.com
Breakdown of downstream HPI projects by activity level Jan-16 Dec-15 Nov-15 Oct-15 Sep-15 Aug-15 Jul-15 Jun-15 May-15 Apr-15 Mar-15 Feb-15 Jan-15 Dec-14 27 20 18 17 13 21 24 26 25 30 22 17 18 26
27%
Planning6%
Study40%
Under construction10%
FEED17%
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MEDAL RECIPIENTYOUR REFINERY CHALLENGES
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Hydrocarbon Processing | FEBRUARY 2016 23
Reliability
HEINZ P. BLOCH, RELIABILITY/EQUIPMENT EDITOR
Combine metallurgical, structural and
physics know-how
We recently received an update on the capabilities of a mod-ern professional entity that combines metallurgical, structural and practical applied physics know-how in a US Gulf Coast loca-tion (see www.knighthawk.com).
Combining these areas of expertise is taking on increasing im-portance to the petrochemical and oil refining industries. In years past, it was customary for these industries to send failed parts to stand-alone laboratories. These laboratories then subjected the components to one or more types of metallurgical analyses.
Their findings were typically reported in a language under-stood only by other trained metallurgists. If the client was fortu-nate, the report would attribute the failure to, for example, “high cycle fatigue.” The equipment owner would then be tasked to determine what vibrated, why it vibrated and how the problem should be cured.
Combining knowledge areas in specialized laboratories.
Fortunately, today, users have access to metallurgical labs that take into account all of the above knowledge areas. As an exam-ple, Knighthawk often begins an investigation by using a scan-ning electron microscope (SEM) to find failure mechanisms. Its detailed reports then comment on contributing issues, such as environmentally assisted cracking.
The company uses energy-dispersive spectroscopy in making corrosion assessments of certain nickel alloys found in the hydrocarbon processing industry. Here, too, suitable techniques make microscopic fatigue failures visible and dis-tinguish surface flaws from subsurface flaws. Measuring the length of striations—which usually occur once per cycle—is well within the capabilities of a modern metallurgical labora-tory, as is optical microscopy.
Established as an advanced laboratory, Knighthawk can con-duct field metallography to determine, among many other items of interest, boiler tube heat excursions and stages of creep. This laboratory moves on to determine and quantify fitness for ser-vice based on measuring the depth of decarburization. As an ex-ample, its reports have squarely (and without “hedging bets”) at-tributed root-cause reasons to flawed post-weld heat treatment.
Design reviews in parallel with investigations. Time is of
the essence in failure investigations. Accordingly, we were im-pressed with the initiatives advocated and pursued by Knight-hawk. These concentrated on a review of the entire system.
Secondary modes of failure were occasionally identified, and long-term monitoring was mapped out, in some instances. Process parameters were closely examined, and process dy-namics were reviewed with modern computer tools. In many
instances, Knighthawk initiated the development of a compu-tational fluid dynamics model and surprised the client with un-anticipated findings.
Our advice is to work with practical experts and conduct several types of investigations in parallel. Recall the Deepwater Horizon disaster. When aspersions were cast on many kinds of equipment, Knighthawk carried out metallurgical investiga-tions on a supplier’s product and established—authoritatively and conclusively—that the supplier had provided flawless products. Here is proof that it pays to work with experts.
Never overlook practical knowledge. However, we do not want to leave the impression that one should only work with lab-oratories. Many times, a plant or facility will greatly benefit from calling in an expert with decades of practical work experience in the exact industry where a particular failure has taken place.
The answer can be found on p. 271 of Analytical Troubleshoot-ing of Process Machinery and Pressure Vessels by Anthony
Sofro-nas, where an expert looks at fretting and wear (FIG. 1). Both are usually associated with misalignment or lubrication issues. Fa-tigue failures can result from cyclic torques, such as those occur-ring from torsional vibration or from bending fatigue originating with defective shaft couplings. A twisted spline is the signature of bulk yielding of the shaft due to excessive torque; fatigue is ruled out here. The question, then, becomes: What torque is required to produce such permanent deformation? Rest assured that the practical expert knows your machine and will explain it!
HEINZ P. BLOCH resides in Westminster, Colorado. His professional career commenced in 1962 and included long-term assignments as Exxon Chemical’s regional machinery specialist for the US. He has authored over 650 publications, among them 19 comprehensive books on practical machinery management, failure analysis, failure avoidance, compressors, steam turbines, pumps, oil mist lubrication and practical lubrication for industry. Mr. Bloch holds BS and MS degrees in mechanical engineering. He is an ASME life fellow and maintains registration as a professional engineer in New Jersey and Texas.
Length of spline engagement
Torque Torque
Spline twisted
Twist plane Spline straight
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Hydrocarbon Processing | FEBRUARY 2016 25
Global
SHEM OIRERE
Contributing Writer
Reforms will shape future of Nigeria’s refining industry
Oil-rich Nigeria’s new presidential administration hasan-nounced several changes in the country’s oil sector, as it sets out to fulfill a pre-election campaign pledge by President Mu-hammadu Buhari to streamline the West African nation’s hy-drocarbon industry. Among the administration’s goals are the eradication of corruption and mismanagement that brought the country’s three state-run refineries to their knees.
Port Harcourt Refining Co. (PHRC), Kaduna Refining and Petrochemical Co. (KRPC) and Warri Refining and Petrochem-ical Co. (WRPC) are chronPetrochem-ically underperforming, with an av-erage throughput of 64 Mbpd last year—or approximately 14% of their nameplate capacity. Nigerian National Petroleum Corp. (NNPC), the owner of the refineries, reports that PHRC has a 210-Mbpd capacity, while KRPC and WRPC have capacities of 110 Mbpd and 125 Mbpd, respectively. At present, the country meets 70% of its fuel needs through imports.
Analysts say that these refineries have attracted little invest-ment because the facilities are known for a high level of corrup-tion, poor maintenance, theft and operational hiccups.
The oil sector reforms proposed by President Buhari include identifying specific factors that hamper investment in the refin-eries, along with their causes; what the government can do to address these issues; and how the private sector can be brought on board for the revival and management of the plants.
Crude program blamed for refinery underperformance.
A report published by the nonprofit policy advisory and ad-vocacy organization Natural Resource Governance Institute (NRGI) singled out the Domestic Crude Allocation (DCA) program as the leading cause of the chronic poor performance by Nigerian refineries. The report advocates the scrapping of the DCA scheme to create opportunities for competition in the sup-ply of crude oil, and also to pave the way for a possible privatiza-tion of the plants as a long-term soluprivatiza-tion to boosting crude oil refining in Nigeria.
Under the DCA program, the government allocates 445 Mbpd to NNPC, which transmits the crude to its subsidiary, Pipelines and Product Marketing Co. (PPMC). PPMC then sends the supplies to the three refineries for processing. PPMC is, in turn, tasked with selling the refined products (including gasoline, jet fuel, diesel, fuel oil and liquefied petroleum gas) and using the proceeds to pay NNPC for the crude feedstock. NNPC is also required to pay the government for the allocated 445 Mbpd of oil.
However, the NRGI report, released in August 2015, claims that the DCA has become the main cause of waste and revenue loss from NNPC oil sales, with the Nigerian treasury receiving only 58% of the $16.8-B value of the oil.
According to the report, the DCA was designed to feed Ni-geria’s refineries, although NNPC actually exports
three-quar-ters of the domestic crude oil. In practice, the refineries process approximately 100 Mbpd (NNPC statistics peg the figure at 64 Mbpd), with NNPC ultimately rerouting most of the DCA oil into export sales and oil-for-product swaps. The payments en-ter separate NNPC accounts, which NNPC officials then draw upon freely, according to the NRGI.
The Nigeria Extractive Industries Transparency Initiative (NEITI) had also called for the termination of the DCA plan because the three refineries have been operating at low capaci-ties for many years, with the extra crude being diverted to meet the Offshore Processing Agreement (OPA).
NNPC signed the OPA at the beginning of last year with Duke Oil Co. Inc., Aiteo Energy Resources Ltd. and Sahara Energy Resources, under which the corporation allocated 210 Mbpd for refining at companies’ offshore locations in exchange for petroleum products at a pre-agreed yield amount.
However, the contracts were revoked in August, with the new NNPC management team claiming that they were skewed in favor of the companies, such that the value of product deliv-ered was significantly lower than the equivalent crude oil allo-cated for the program.
NNPC contract fluctuations impact crude use. NNPC
also terminated a contract for the delivery of crude oil to the three refineries using marine vessels, claiming that the contract cost was exorbitant and the process of engagement was inap-propriate. In the short term, NNPC has mandated its subsid-iary, NIDAS Marine Ltd., to deliver crude oil to the refineries pending the establishment of a more advantageous contract.
NEITI’s Zainab Ahmed told Nigerian media in August that some of the changes by NNPC may have resulted in “…a
lit-0 10 20 30 40 50 60
Jan. Feb. Mar. April May June
MonthJuly Aug. Sept. Oct. Nov. Dec.
%
KRPC PHRC WRPC
tle improvement [on refinery performance], but still far from their installed capacity, which is below 30%.” Mr. Ahmed also suggested that the reduction of the domestic crude allocation to NNPC would “serve as incentive for refineries to improve their capacity development.”
Although Nigeria produces an average of 63.34 MMbbl of crude oil and condensate, the country’s refineries process only 261 Mbbl with the three refineries’ combined capacity utiliza-tion, according to NNPC.
This discrepancy is not unique to Nigeria. Market analyst Wood Mackenzie reported a 7-MMbpd gap between crude pro-duction and refinery output in Africa between 2010 and 2013.
Refinery maintenance issues dent profits. NNPC
re-ported that the utilization levels of the refineries dropped from 11.18% between January and August 2014, before shutting down between February and June of 2015, when the corpora-tion implemented a much-discredited maintenance program for the three processing plants. The utilization level increased by 13.62% in July 2015 and by 24.08% in August 2015, before plunging to an all-time low of 1.96% in September 2015.
Under the maintenance program, NNPC planned to rehabil-itate the refineries, using the original refinery builders for each plant. However, the builders declined the offer and, instead, nominated partners to perform the rehabilitation. NNPC reject-ed the partners’ price offers, basreject-ed on the high estimatreject-ed costs.
In August 2015, however, new NNPC Group Managing Director Ibe Kachikwu hinted at the possibility of incorporat-ing private investors into the revival and expansion of Nigeria’s state-run refineries. Mr. Kachikwu advocated establishing some level of independence, along with performing turnaround main-tenance when it is due and creating contractual models to make the businesses profitable. At present, the refineries are losing more than $200 MM/month as a result of underperformance.
Suggested reform plans drive discussion. The NRGI
has made several suggestions that President Buhari’s admin-istration may find useful in reforming Nigeria’s hydrocarbon processing sector. The NRGI says that NNPC should consider granting the refineries operational independence and leasing refining capacity from them in exchange for providing crude oil. The provision could be in the form of a repurchase agree-ment, under which the corporation would buy crude from its upstream partners on behalf of the refineries. The agreement would leave room for additional parent-subsidiary sales, with volumes capped at the refineries’ actual needs.
Another option presented by the NRGI is to force the refin-eries to buy their own oil from upstream operators, although the report cautions that some producers might be initially hesitant to conduct business with the underperforming, cash-starved refineries.
The government could also consider the controversial pro-posal of new legislation that coerces international oil compa-nies or other operators to sell parts of their equity production to the refineries. “Finding the best transaction type depends in part on whether the government plans to change the refiner-ies’ ownership and management structures—for example, by signing product-sharing and technical service contracts with competent foreign refining companies, or by selling off equity
to a private investor through a formal privatization exercise,” re-ported the NRGI.
In the meantime, Mr. Kachikwu said that NNPC plans to proceed with the construction of new refineries next to the ex-isting ones to increase the capacity of Nigeria’s light petroleum products for domestic consumption and export markets. In 2000, NNPC said it planned three new crude processing plants with a combined capacity of 400 Mbpd–550 Mbpd in Lagos, Bayelsa and Kogi.
“The strategy is to develop investment consortia—in part-nership with local and foreign investors—for these projects, with the government only retaining a minority interest,” an-nounced NNPC in a 2002 release. The corporation said that the consortia would then decide on the locations, configura-tions and shareholdings of the refineries.
A feasibility study by Mackenzie Energy Consulting Ltd. and Foster Wheeler Energy in 2011 reported that the planned refin-eries were economically viable, and proposed capacities of 200 Mbpd for Lagos, 100 Mbpd for Kogi and 100 Mbpd for Bayelsa. According to NNPC, with the completion of the new refineries, West and Central African countries will look to Nigeria for fuel supplies and discontinue imports from Northwest Europe, the Middle East and Asia.
Lagos private refinery project under development.
Dan-gote Group, owned by Africa’s wealthiest man, Aliko DanDan-gote, has received approval to build a $9-B refinery, along with fertil-izer and petrochemical plants, in Lagos, Nigeria.
The refinery, which would have an estimated capacity of 500 Mbpd to 650 Mbpd, is the first private crude processing plant in Nigeria in decades, after the cancellation and delay of earlier projects due to uncertainties surrounding government plans to deregulate the downstream sector.
Dangote Group has acquired interests in at least three blocks to secure feedstock for the new refinery, which is planned to come online in 2017, at the earliest. The company has also taken up to a 9% stake in Block 1 in the joint development zone be-tween Nigeria and São-Tomé. Other partners include Chevron and ExxonMobil.
Additionally, Dangote Group has acquired a 10% interest in Block 3 in the same basin where Anadarko operates, as well as a 6% investment in Block 315 with partners Statoil and Petrobas.
In late 2014, Dangote Group reported that it had signed a $3.3-B loan agreement with a consortium of local and foreign backers to fund the ambitious refinery project. The company is expected to provide $3 B in equity, while $6 B will come from loan capital.
After many decades of mismanagement and corruption in Ni-geria’s downstream sector, it is hoped that the ongoing industry reforms will help transform the country’s refineries into viable business entities.
SHEM OIRERE has reported widely on the business beat for Kenyan newspapers The Daily Nation, Kenya Times and The People. He also freelances, reporting extensively on Africa’s energy, construction and chemical industries for various international publications. He graduated from journalism school in London.
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CLEAN FUELS AND THE ENVIRONMENT
The global refining industry continues to invest with the goals of increasing processing flexibility, reliability and safety. Outside of the US, demand for transportation fuels is shifting toward diesel and other middle distillates. However, gasoline demand will continue to increase in developing nations. The highest-demand region for refined products and transportation fuels remains Asia-Pacific. Refiners will continue to make investments to increase environmental and sustainability performance, as well. The special report investigates opportunities available to cost-effectively process clean transportation fuels and products, and adhere to existing and impending environmental regulations.
Hydrocarbon Processing | FEBRUARY 201629
Special Report
Clean Fuels and the Environment
C. CHAU, R. SCHILLER and M. ZIEBARTH,
W. R. Grace, Worms, Germany
Maximize petrochemicals in the FCCU to increase
refinery margins and improve gasoline pool quality
Over the last several years, the refining industry has been weathering a storm of volatile market conditions. Overall growth in fuels demand and global gross domestic product have driven new refinery construction and supported refinery utili-zation rates. Refiners have also had to contend with extreme oil market volatility, driven in part by the shale, or tight oil, revo-lution in North America (NA). Additionally, more stringent environmental regulations for fuels quality have required refin-ers to make capital investments and alter operating strategies to maintain compliance. These shifts, among others, have created a dynamic market environment that requires flexibility.
The most flexible unit within any refinery is the fluid cata-lytic cracking unit (FCCU). Refiners need that flexibility to operate with a dynamic feed slate of varying quality, as well as to produce a range of products to meet market demand. The shift to more liquefied petroleum gas (LPG) olefins production using the FCCU is worth noting. The majority of new refinery construction in the Middle East and Asia-Pacific is geared to-ward maximum propylene operations to
feed either existing or new downstream petrochemical processing. In existing re-fineries, a general trend toward incremen-tal octane has been observed. Tight oils often result in lower refinery pool octane due to the nature of the hydrocarbons present in the feedstock.
Increasingly stringent environmental regulation is causing more refiners to seek solutions to offset octane loss due to deep-er hydrotreating of the naphtha streams to remove sulfur. Incremental high-octane, zero-sulfur gasoline blendstock from the alkylation complex compensates for oc-tane loss due to post-treater severity. It also enables refinery compliance with strict fuels regulations. An additional burden on catalytic reforming has also occurred with tight oil in refinery crude. Aside from capacity, to maximize alkylate production, the FCC feedstock must be available in the refinery. The FCC process has the flexibility to meet these product demands when optimized with the right catalyst technology. In light of the
cur-rent market dynamics, challenging the FCCU to move out of its “maximum gasoline” comfort zone is a winning strategy to drive overall refinery profitability.
Optimizing FCC products. The FCCU is at the heart of the
re-finery and plays a key role in operations due to its remarkable ca-pability to convert a wide range of hydrocarbons into more valu-able products—including gasoline, but also light olefins, such as propylene and butylenes—for both refining and petrochemical applications. Beyond its core role in producing transportation fuels, as described in FIG. 1, the FCCU can play a major role when integrated into a petrochemical-oriented complex. The FCCU has the ability to adapt to changing market conditions and the relative demands of fuels and petrochemicals. Maxi-mum unit profitability relies on the constant optimization of the value of FCC products through high-performance catalytic solutions. Specific emphasis is given in this article on innova-tive solutions and opportunities offered to refiners when
imple-Fuel gas Amine unit Total naphtha HDT Crude distillation unit Vacuum distillation unit Vacuum residue Atm. residue Residue Clarified oil Coker naphtha to NHDT LCGO/HCGO to HDT or FCC PetCoke Crude HDS Visbreaker Coker LVGO FCC Ethanol ETBE Alkylation Selective gasoline HDT LCO VGO HDS/MHC Hydrocracker HVGO Isomerization Catalytic reformer SRU Sulfur LPG Gasoline Naphtha U95 U98 Diesel Diesel Fuel oil LS FO HS FO Jet fuel Heating oil H2 H2 H2 H2 H2 H2 H2 C 3= C3= C3 C4 C4= iC4= nC4=
FIG. 1. The FCCU: A fully integrated unit with the flexibility to maximize light olefins for alkylation or petrochemicals.