Opportunities for enhancing operational excellence for refineries

It is also faced with the challenges of changing consumption patterns and feedstock slates, as well as the increasing complexity of projects. However, there are also opportunities for enhancing operational excellence and maximising business results through technology, both for existing and new refineries.

Many of the 700+ refineries in the world were designed years ago to process light, low-sulphur crudes. As a result, there is a currently a shortage of capacity for processing the increasingly heavier crudes – with higher levels of sulphur and other contaminants compared to traditional feedstocks – while meeting the market requirement for lighter products that are required to meet ever more stringent fuel specifications.

In addition, over the last 35 years, refiners have had to meet new fuel specifications ranging from unleaded gasoline, to oxygenates as a gasoline blending component, to ultra-low sulphur diesel (ULSD) products, to biofuels, with regulations varying from region to region. The balance of demand for gasoline versus diesel has also changed over time in different regions.

Given the refining industry’s cyclical margin, today’s refiner are looking into ways of maintaining reasonable margins to recover the investments they have made to date and to justify additional investment to cope with a changing market. Refiners are also trying to integrate their operations with petrochemicals production, such as paraxylene for aromatics produced through their catalytic reformer, or propylene from their fluid catalytic cracker (FCC) for polypropylene production, or feeding steam crackers with naphtha or hydrocracker unit bottoms.

Technology is a must

For refiners to sustain their profit margins, access to state-of-the-art technology is a must. Accessing new technology allows refiners to increase their refinery complexity, enabling them to process heavier feedstock while producing higher-margin product, at the same time reducing energy consumption and increasing operational reliability. Shell Global Solutions offers many proprietary technologies and catalyst systems to help achieve this. Indeed, technology is the backbone of Shell’s worldwide refinery operations – state-of-the-art solutions evolving through the application of lessons learned from operating refineries all over the world.

Shell’s technology portfolio includes a deep-flash high vacuum distillation process that helps maximise the recovery of vacuum gasoil (VGO) from long residue to increase a refinery’s overall margins from distillates. The residue from the vacuum unit can be further upgraded by thermal cracking (such as the Shell Soaker VisBreaking [SSVB] process), deasphalting, coking and residue conversion.

More and more residual conversion technology is being offered in the industry as refineries are switching to produce clean fuels. The distillates produced through alternative routes are further processed to produce ULSD products. In fact, more than 100 ULSD projects have been implemented in the US in the last three years, with the trend now coming to Asia.

The dual emissions challenge

As refineries upgrade the residue through either additional hydroprocessing or through processes like thermal cracking, this poses a dual emissions problem. On the one hand, there is the issue of what to do with the emissions of sulphur (SOx). On the other, the drive to conserve energy creates an issue with carbon dioxide (CO₂) emissions.

To help reduce the amount of sulphur in the final product that reaches the consumer on the one side of the equation, Criterion Catalysts & Technologies (Criterion) has developed the next-generation catalyst CENTINEL Gold, which provides significantly better ULSD performance due to improved metals utilisation. Another challenge is what to do with the sulphur component that has been taken out of the hydrocarbon.

Shell also has a portfolio of gas treating technology that converts it to pure sulphur. The company is now looking for an innovative way to utilise this sulphur, which has been taken out of the distillate products specifically in order to meet regulatory requirements.

In addition to adding new units in a refinery to meet tightening fuel specifications, refiners have the option to revamp existing hydroprocessing units by adding more effective catalysts and new reactor internals. The industry will continue adding new units to increase the diesel yield. Today, the main growth area is in the addition of a hydrocracker unit combined with either deasphalting process or coking units. Since 2006, Shell Global Solutions has been awarded 12 hydrocracker licences for such applications.

As already noted, there is also the CO₂side of the equation. One example of how to reduce CO₂emissions is to look at the process design and evaluate how the process units – the crude unit, vacuum unit and the hydroprocessing units – are integrated. Shell Global Solutions has been able to reduce equipment levels by 50% while reducing the energy consumption in one case by 26% as a result of combining the design of a crude unit and a vacuum unit with a diesel hydrotreater and visbreaker unit.¹

The company is also looking into using the most efficient furnace design and has worked for many years to improve the efficiency of the heaters, reducing their energy consumption by more than 12%. The company has enjoyed significant savings within its own organisation through a large energy management programme, which has delivered annual savings of 0.8mn tonnes of CO₂ – equivalent to some 0.3mn tonnes of fuel or 160,000 hot air balloons filled with CO₂.

Operational excellence

There has been much progress within the industry in terms of achieving operational excellence. However, there are always more opportunities to enhance this further. Operational excellence means ensuring that plants are able to produce when required – a key element in ensuring profitability. Refineries need to sustain the profitability of their operations so that every day they operate a unit at full capacity, they increase their return.

Another major business challenge is supply chain management. This can be addressed by starting from wise decision-making when procuring feedstock and ending with strategic product marketing, supplying the market with the product it needs. In between these two points is the need to ensure all maintenance services are on track and hiring the right engineers.

Meeting the business challenge

Although margins are eroding and the nature of the business is cyclical, refiners have been able to secure high margins over the last few years. However, the next few years look to be very challenging due to market uncertainty.

A key means to meeting this business challenge and achieving operational excellence is Shell Global Solutions’ ‘flawless-start-up’ programme. This allows refiners to start on time and bring their unit to full capacity within a reduced timeframe. A good example is the steamcracker unit being built by the Jubail United Refinery, for which Shell Global Solutions provided the start-up services. By following the right methodology, the refinery was able to start the unit 30 days earlier than originally scheduled. With an average of $1mn/d in margins, the refiner was therefore able to secure $30mn in margins a whole 30 days earlier.

Another example of operational excellence is a refinery in Port Dixon, where a residue FCC unit was being constructed. The facility also utilised the ‘flawless-start-up’ programme, which led to the unit functioning at full capacity within 72 hours – a record for the refinery. It was also able to run a full cycle of four years with no shutdown.

In addition to supplying state-of-the art technology, advanced catalyst systems and extended technical assistance at all stages of a project, Shell Global Solutions can also help its own refineries, in addition to those of its technology licensees, by using remote monitoring systems for regular support.

Outlook for newbuilds

While increasing operational excellence is a priority for existing refineries, new greenfield refineries face their own set of challenges and opportunities – some of which are regional in nature. North America underscores the truth of this, as it has been more than 30 years since a new refinery has been built in the country. Instead of building new facilities to meet growing demand, US refiners have elected to build additional capacity at existing sites, or to buy ‘stranded’ refineries and upgrade them.

However, the global industry is seeing more opportunities to build new refineries in countries that have access to crude oil either because they are near crude oil supply or they are at the end of a pipeline. There are also opportunities for potential projects in countries like China, where there’s a strong demand for transportation fuel.

The biggest issues right now are how projects are being organised and the rising cost of engineering, construction and materials. Once a project is well defined, it’s crucial for investors to spend considerable time deciding the configuration of the refinery, gauging the future to the best of their ability and ensuring facility flexibility to cope with changes. From there, it is very important that the project is implemented. The contracting philosophy in putting together refineries is extremely important so as not to increase the capital expenditure and delay the return on investment.

Maximising business results

Considering, weighing and gauging the future is key to securing a good return on investment (ROI) for any refinery. As the investment is in place for between 30 to 40 years, gauging future specification and demand requirements is crucial.

With the experience that the industry has gained over the last 50 years, refiners today have a much better sense of what’s to come. For example, in the past the industry experienced a cycle where the West called for oxygenates to be added to gasoline. This led to a huge demand for producing methyl ter-butyl ether (MTBE), which was later banned in the US.

Today, first-generation biofuels are very popular – although the industry is watching to see if that trend looks set to continue for the next decade amidst reports of the fuel’s market influence on the price of food.

In response to this, a second generation of biofuels is being developed that is derived from either the residual non-food parts of current crops, such as stems, leaves and husks that are left behind once the food crop has been extracted, as well as other crops that are not used for food purposes such as switch grass and jatropha, and also industry waste such as wood chips.

From a technical standpoint, setting the right basis for a project is another crucial element in securing a good ROI. This means spending enough time to set a basis that will sustain growth in the business. Refiners should consider a design that ensures optimum flexibility to be able to process a range of feedstock and produce a product with high margins as well as minimising fuel oil production. They should also consider opportunities to build in phases, allowing for scalability and flexibility.

The consideration for integrating with a petrochemical complex can provide additional opportunities and challenges. Finally, timely execution is also of paramount importance in maximising business results.

The refiners who are the most successful will be the ones who implement the project in the fastest possible way after deciding on the right configuration, using the right technologies and partners, including licensors, project management contractors, consultants and others.

¹ Paper presented by Alie Hoksberg at Pre-ERTC conference in Barcelona in 2007.