Positive outlook

Refiners could be forgiven for focusing on the immediate challenges in the light of today’s economic climate; however, it is important not to lose sight of the long-term needs of a business. “Although refiners may be reluctant to commit to large capital expenditure projects in the current market conditions, nevertheless they need to put investment plans in place to be ready in time to meet and exploit the needs of a more favourable market.

The challenges, such as increasing demand, processing more difficult feedstocks and tighter product specifications, will not go away because of the short-term economic conditions,” says Süleyman Özmen, Vice President, Refining and Chemical Licensing, Shell Global Solutions International BV.

Shell Global Solutions has identified a three-pronged strategy, which it calls the multiplatform pentagon model, for providing a framework to help refiners to remain successful in difficult times and plan for the future. The strategy encourages refiners to:

1. focus on operational improvements with no capital expenditure, or sweating the assets, in the short term;
2. revamp to meet demand for clean fuels, increase margins while improving efficiencies and maximise production in the mid-term; and
3. schedule phased investment for the long term.

“Even in challenging markets, there are opportunities to improve margins,” says Özmen. “Refiners can help to optimise their existing assets by improving asset integrity and reliability, increasing capacity and enhancing energy efficiency. Implementing improvements such as these could help to increase annual margins by $0.3–1.0 a barrel.”

While reviewing their business for potential operational improvements, refiners may also be able to identify revamp opportunities requiring limited capital expenditure, typically $20–30 million, that could be completed during a shutdown. Examples of these include upgrading a vacuum distillation unit, revamping residue processing and fluidised catalytic cracking units, and replacing reactor internals and catalysts in hydroprocessing units. These types of project would be designed to help to increase capacity, raise margins through new feedstocks and product slates, and improve product quality.

One example of such a project involved a refinery in Asia that needed to improve the cold-flow properties of its diesel in winter to meet current fuel specifications. It also needed to complete the project within a tight turnaround schedule. Shell Global Solutions helped the client to implement dewaxing technology, which involved a new reactor, Shell proprietary reactor internals and Criterion Catalysts & Technologies’ SDD 800 dewaxing catalyst. The project was completed during the turnaround period, and the refinery has improved the cold-flow properties of its diesel.

“This revamp enabled the refinery to achieve its immediate objective – to meet clean fuel specifications. At the same time, by investing a relatively small amount of capital and implementing the right technology, the refinery was able to create additional margin, which helps to make it a more robust business,” says Özmen.

In turn, the additional margin generated from short-term revamps may be used to help pay for studies, for example, those for front-end development that are required to prepare and execute investment projects. Such projects might include installing a deep flash high-vacuum unit (HVU) to minimise coke formation, a deep-flash HVU in combination with a hydrocracker unit to maximise diesel production, or integrating ultra-low-sulphur-diesel production with dewaxing hydrodesulphurisation.

The multiplatform pentagon model is a useful strategy regardless of location; it does not matter if different regions are experiencing different challenges. In the cash-constrained European environment, large construction projects are not currently being planned, whereas China, which is in a period of economic growth and rising product demand, is investing in large projects. It faces different challenges, such as the need to process imported crude oil that is heavier and contains higher sulphur than domestic crude oil.

“In difficult conditions, the multiplatform pentagon model helps refiners to identify their short- and their longer-term opportunities as part of a well-managed process,” says Özmen. Shell Global Solutions can help clients through each
stage of the process, whether for short-, medium- or long-term plans, for example, in front-end development, with masterplanning and technology selection, in developing the engineering package and through to technology licensing and catalysts.

“The key to the approach is that it is a structured and planned process. It gives refiners a methodology, even in those situations where business is difficult, and helps them to focus on existing assets, because that is the best way to address challenging market conditions. At the same time, the strategy helps them to prepare plans for longer-term projects, so that they are ready to implement when the conditions are right. If you have done your planning well in advance, you can immediately put your plans into action when the market is more favourable,” concludes Özmen.