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Hydrocracking: Today's economic imperative
Although industry analysts suggest that cost pressures and depressed refining margins will remain, there is still significant growth in the hydrocracking market. Following the successful implementation of recent hydrocracker projects at, among others, Grupa LOTOS and CNOOC, this supplement aims to capture some important lessons, best practices and thought leadership that may help other refiners to deliver their own value-adding initiatives.
Süleyman Özmen, Vice President, Refining and Chemical Licensing, Shell Global Solutions International B.V.
As a result of the global economic downturn, numerous refinery projects were slowed down, shelved or even cancelled outright. And, although the economic recovery appears to be gathering momentum, a new set of challenges is emerging for refiners.
For example, IHS CERA reports that the cost of refinery construction projects is marching slowly back to pre-recession levels, with steel prices in particular showing a high degree of volatility.
Then there are the changes in demand patterns. The downturn triggered a significant drop in the short to medium term global oil demand. Although it is now recovering, oil demand is now swinging from the West to the East; the fall occurred mainly in the OECD countries while the developing economies continued their strong growth.
Moreover, there is a huge shift under way in the global gasoline-distillate balance, as demand for high-quality low- and ultra-low-sulphur diesel (ULSD) skyrockets in Asia and the Middle East. Middle distillates such as diesel, jet fuel and kerosene now account for 35% of global product demand and are expected to gain an additional 10% by 2015.
The impact of these changes on refiners, who are already contending with the changing feedstock slate and increasingly stringent environment standards, has been severe.
Nevertheless, there are success stories. For instance, the Polish refiner Grupa LOTOS has not only succeeded in implementing a residue conversion project at Gdańsk refinery (as part of its “10+ Programme”), it has also enhanced its margins by $5 a barrel (Grupa LOTOS article). Meanwhile, CNOOC Ltd has brought the $3 billion Huizhou refinery on-stream, which includes a 4-Mt/y hydrocracker that is one of China’s largest in terms of single-unit capacity. Both of these hydrocrackers were licensed by Shell Global Solutions, and both met their performance guarantees.
Of course, these are all hydrocracking projects, and there are other common denominators across these initiatives that may explain why they have been successful in the current economic climate where others have not. These common factors include project phasing, solution integration and optimising the conversion level, and are detailed in 'The anatomy of successful hydrocracker projects'. Investigation of these factors may also provide insights into the steps that operators can take to help safeguard a project’s viability.
We are taking an in-depth look at hydrocracking in this supplement because the technology is seeing significant growth; consultancy firm The Catalyst Group estimates that global hydrocracking capacity, which was at 5,835,683 bbl/d in 2010, will have increased by 40% by 2013. This is because refiners are leveraging it to respond to the momentum in global dieselisation, especially as rising crude prices are forcing refineries to consider upgrading distressed crudes and difficult feedstocks.
Almost 60% of the new hydrocracker construction will be in the Middle East, Asia or Eastern Europe, The Catalyst Group suggests. Meanwhile, a number of hydrocracker projects will be implemented in North America, including two new units at Valero licensed by Shell Global Solutions.
In addition, the sulphur paradox – that crude supplies are becoming increasingly sour while plant emissions legislation seems set to continue tightening – remains vitally relevant. As we highlighted in our Hydrocarbon Processing supplement earlier this year, although the hydrocracker can play a key role in the production of ultra-low-sulphur fuels, it is also important to have a robust plan for dealing with the displaced sulphur, as this will otherwise impact on refinery emissions. An integrated solution is likely to be required.
Perhaps you are finding it difficult to make your planned investment viable as the project market heats up again. Perhaps you have concerns about costs, access to technology, how best to integrate new hardware into your facility or your overall sulphur balance. Whatever your challenges, I hope you can glean some valuable insights from this supplement that will help you to deliver a value-adding project.
Süleyman Özmen
Vice President, Refining and Chemical Licensing, Shell Global Solutions International BV
About Us
- Shell is one of the largest hydrocracker operators in the world, with a capacity of 512,000 bbl/d.
- Shell Global Solutions provides technical support to over 50 sites worldwide. It has signed 12 hydrocracking licenses in the last five years, and has more than 60% of the hydroprocessing reactor internals market.
- Criterion Catalysts & Technologies (Criterion) is the world’s largest hydroprocessing catalyst supplier and has a track record of over 50 years.
- Zeolyst International (Zeolyst) is the global leader in commercial and speciality zeolites, and its advanced hydrocracking catalysts are currently installed in more than 50 of the world’s hydrocracking units.
- Sulzer Chemtech is a leading supplier of mixing and separation technology. With Shell Global Solutions, it has developed a feed inlet device, the Schoepentoeter* Plus, that can cope with the most severe applications.
*Schoepentoeter is a Shell trademark.
