Shifting industry trends are set to challenge refiners’ current destinations for light cycle oil (LCO). Those that use it as a cutter stock for marine bunker fuel will find it unsuitable when the sulphur specifications tighten. Those that export it to countries that still allow high-sulphur diesel will find that, as clean fuel regulations gather pace in developing countries, these outlets will shrink too. Soon, depending on their assets and the markets they serve, many refiners may find that the most attractive solution is to upgrade LCO in an existing hydrodesulphurisation (HDS) unit using aromatic saturation technology. Here is why.
In recent years, aromatic saturation has emerged as a valuable, low-cost margin improvement opportunity. Several refiners have revamped an existing low- or medium-pressure hydrotreating unit to add enhanced or deep aromatic saturation (EAS/DAS) in order to upgrade LCO to ultra-low-sulphur diesel (ULSD).
Their principal driver was to improve margins. Upgrading even a small proportion of LCO can have a major impact. For example, if the LCO upgrade margin was $66 per tonne1 in atmospheric gas oil, then increasing the co-processing of LCO by 5% in a typical 100-t/h unit would increase margins by some $2.8 million per year.
1Basis: The 12-monthly average from January 2015 to December 2015 = 1.6 vacuum gas oil versus atmospheric gas oil (NWE price).
However, additional incentives for refiners to upgrade more LCO are emerging. These are:
- tightening marine bunker fuels specifications. LCO has long been an attractive blending component for high-sulphur marine bunker fuels. But, as discussed in The Bunker Fuels Challenge: How should you respond?, those specifications are tightening, so LCO will need to be upgraded to a more valuable product.
- the global clean fuels push. Some refiners in developed countries export LCO, along with other difficult distillate streams, to countries that allow higher sulphur levels in road and off-road diesel. However, almost all the developing countries are in the process of adopting <50- or <10-ppm-sulphur diesel specifications, so that will soon no longer be an option.
In the future, therefore, refiners may need to desulphurise their LCO. However, its composition is such that it is difficult to achieve the required cetane and density specifications in a standard low- or medium-pressure hydrotreater.
Consequently, there are three main LCO upgrading options:
- hydrocracking. This option can meet the cetane and density specifications, but it generates an excessive amount of naphtha, which is undesirable in many markets (however, for refiners that serve gasoline-focused markets such as the USA, distillate mild hydrocracking may be preferable; for more on this, see Distillate Mild Hydrocracking). Hydrogen demand and, therefore, the operating costs would also be high.
- high-pressure hydrotreating. This would improve the cetane and density properties close to the specifications, thereby enabling LCO’s use as a ULSD blending component, and there would be less yield loss compared with hydrocracking. However, this option is also hydrogen intensive.
- low- or medium-pressure hydrotreating with a line-up that includes EAS or DAS. This would bring the density and cetane also relatively close to the specifications; however, the yield loss and operating cost would be the lowest of the three options.
So what are EAS and DAS? These techniques involve dedicating either a bed or an additional reactor for operation in a slightly different temperature regime to ULSD production. This way it can function in the aromatic sweet spot that enables the saturation of almost all of the aromatics.