Case Study: Grupa LOTOS hits the residue conversion sweet spot

Polish refiner Grupa LOTOS has taken a positive step towards its goal of becoming the most advanced oil corporation in the Baltic Sea region by implementing a major capital investment initiative, the “10+ Programme”.

The key element of this was a residue-upgrading project that it undertook with Shell Global Solutions. As a result, Grupa LOTOS has not only enhanced its refining capacity from 6 to 10 Mt/y, but it has also enhanced its margin by $5 a barrel. In addition, the refinery is now better equipped to meet all the forthcoming environmental standards, such as emissions limits and product specifications, and has optimised its oil product streams to meet market conditions.

Grupa LOTOS is feeding DAO, which has traditionally been used in refineries as an FCC feed owing to its high metals content, to a newly installed 45,000-bbl/d hydrocracker. Indeed, the company has become the first refiner in the world to make operational a new generation of DAO hydrocracking technology, although more units have been designed.

Figure 4: Grupa LOTOS’s DAO hydrocracker runs on a feed of 50% VGO and 50% DAO, and produces a high-quality product slate that includes ULSD.

Grupa LOTOS’s Gdańsk facility is a highly complex refinery that now has two hydrocrackers. It is technologically advanced and Chief Executive Pawel Olechnowicz says it has become one of the two most modern refineries in Europe and that it deserves the title: the greenest, most environmentally friendly refinery in the Baltic Sea region.

The residue upgrading project is the key element of a larger initiative, the "10+ Programme", which saw a massive $2 billion upgrade of the Gdańsk refinery. In addition to the hydrocracker, the refiner installed an integrated crude distillation-vacuum distillation unit (CDU/VDU), a HDS unit, a ROSE unit, an amine sulphur recovery unit (ASR), a hydrogen manufacturing unit (HMU), a refinery–harbour product pipeline, product tanks and pumping stations, and revamped its hydrogen recovery unit.

The ROSE unit is licensed by the technology and engineering firm KBR, which is one of Shell Global Solutions' alliance partners. The ROSE unit provides superior quality DAO that is suitable for hydrocracking because it has reduced levels of contaminants such as sulphur, nitrogen, metals and asphaltenes (Figure 4).

Grupa LOTOS’s original project plan also involved the construction of a Shell gasifier for processing the residue. However, that project had to be scaled back in 2007 as project costs for steel, engineering services and labour increased significantly. The plans were further affected by the 2008 economic crisis.

In response, Grupa LOTOS carefully reconsidered the project. The Shell gasifier was put on hold; it may come with a later investment programme. In the mean time, the residue is being blended into bitumen (seasonally) and used as fuel oil.

KBR’s ROSE unit and Shell Global Solutions’ DAO hydrocracker are now fully operational and integrated into the refinery operation. For the ROSE unit, the key specifications on DAO quality (asphaltenes, metals, Conradson carbon) have all been better than guarantee at the design DAO lift.

Breakthrough year

In the final quarter of 2010, Grupa LOTOS processed 2.2 Mt of crude oil, which was 42.7% more than in the corresponding period of 2009. It also reached its planned processing target of over 8 Mt, which is the highest annual throughput ever recorded by the refiner.

"What is equally important, apart from expanding the production capacity, is that we are also increasing our market share; in 2010, our share in the domestic fuel market grew to 30%," says Olechnowicz. "2010 was a breakthrough year for Grupa LOTOS."

Unlocking the potential of DAO hydrocracking

The new generation of DAO hydrocracking has become possible through advances in recent years in catalyst technology that enable the catalyst system to remove the metals and manage other contaminants associated with DAO, writes John Baric, Licensing Technology Manager, Shell Global Solutions International BV.

"The combination of solvent deasphalting (SDA) and DAO hydrocracking is one of the lowest-capital-cost options for residue conversion, especially compared with other direct residue hydrocracking options.

"Traditionally, DAO had to be processed in an FCC unit because of its high metals content and high Conradson carbon (CCR) content. VGO has about 1–2 ppm metals content and 0.5–1.0%wt CCR content, whereas DAO typically contains 15–30 ppm of metals and 6–10%wt CCR. But that is no longer a problem as the state of the art has progressed and a well-designed catalyst system with demetallisation followed by pretreatment and cracking catalysts can easily handle this.

"The key is to understand the application of the catalysts specific to DAO. Metals removal is actually a very fast and easy reaction; the trick is to design the reactor conditions so that they slow down the metals removal in order to maximise the metals uptake on the catalyst. The catalyst selection is also important, for both pretreatment and cracking, as you need to strike a balance between selectivity and activity to match the properties of the DAO.

"Of KBR’s 50 references for ROSE units, 48 of them are supplying an FCC unit. Only two feed a hydrocracker, but there is a clear trend towards this technology becoming more prominent. Indeed, at Shell Global Solutions we have designed four DAO hydrocracker units in recent years. One reason for this is market needs; hydrocracking is increasing in prominence at the expense of FCC as global demand for distillates rises and that for gasoline and naphtha diminishes.

“That is why, I believe, we are going to see DAO hydrocracking becoming an increasingly prominent technology,” he concludes.