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Global energy demands continue to grow and the world’s energy sectors are under increasing pressure to expand supply.

However, market conditions continue to pose serious challenges for many refiners, with three key factors being prevalent in the industry: high feedstock costs, tighter regulations and regional refining overcapacity.

Rajen Moonsamy, Regional Manager – Hydrocarbon Supply Chain Management East, Shell Global Solutions, explains, “Traditional oil, gas and chemicals supplies are becoming harder to produce and good-quality feedstocks currently command premium prices.

Environmental regulations vary regionally but are becoming increasingly stringent globally.

At the same time, many regional markets still face an acute refining capacity surplus, which can lead to depressed margins.”

This means that many refiners are under pressure to rethink how their short- and long-term performance and competitive position can be enhanced and sustained.

Fortunately, refiners can call on an expanding range of innovative technical and business solutions to help provide the enhanced levels of flexibility, capacity and complexity needed to improve their margins while responding to market conditions.

Excellent adaptability to the continuously changing economic environment is the most important attribute underpinning the survival of oil, gas and petrochemicals companies post-2020.

Independent studies show that having the right operating model and an appropriate level of integration can be key factors in long-term survival and  profitability for refiners, with technology playing a key role.

Moonsamy says, “New technologies across the supply chain can widen crude flexibility for refineries and selectively improve the capabilities of individual process units.

Refiners can also benefit from greater flexibility in their product blending options, and continuing integration between refinery and petrochemical plant operations is expected to play a key role in redefining future refinery configurations.”

This creates a requirement for refinery operators that wish to maintain short- and long-term profitability to be able to view their portfolios through several different lenses simultaneously to identify and take advantage of new technical opportunities.

“Refineries can respond more effectively to volatile markets by using a much broader range of feedstocks,” Moonsamy continues.

“They may choose to produce more versatile intermediary feeds to deliver a product slate that can be adjusted rapidly and cost-effectively to meet short-term market fluctuations and long-term trends for cleaner fuels.

The advent of the light tight oil revolution in the USA is also a major game changer for global oil and gas flows.”

Opportunity crudes

One approach many refiners adopt is to exploit the commercial benefits of processing opportunity crudes.

When linked with more flexible processing configurations and product slates, refiners could meet more stringent products specifications, often with the use of non-traditional blending components.

This is an attractive option, but Moonsamy notes, “To be successful, operators must monitor feedstocks carefully and have a clear understanding of how processing constraints will be affected.”

Moonsamy sees an opportunity for refineries that can adopt a flexible approach.

“Increasing feedstock flexibility usually means processing a wider range of crude grades, swapping intermediate products and redesigning the product slate, which will eventually help to maximise margins.

One way to increase flexibility is to have more detailed and accurate information on crude parcel quality and a better understanding of how specific crudes influence processing constraints.

Because the market is highly dynamic, swift analysis is important and requires suppliers and customers to work closely together,” he asserts.

The operator needs to have the right skills and tools such as linear programming models to be able to optimise refinery and petrochemicals operations continuously.”

Shell combines effective analytical  methods and reliable modelling so that crude parcels can be screened against constraints such as corrosion, fouling and impurities.

When this screening is carried out immediately, refinery schedulers or economists can anticipate the impacts of the feedstock changes on product  yields and qualities.

In response, operators can adjust crude ratios or unit operating conditions. Because some crudes are highly variable, Shell uses a centralised crude tracking database to give advance warning of quality deviations.

The power of integration

Some leading refiners are exploring the possibilities of integration with other process plants.

“Refinery and petrochemical plant integration, in which refining streams can be potential feeds for chemical units, creates technical and operational manufacturing synergies that can boost their combined competitiveness and long-term potential,” Moonsamy explains.

“An example is the modification of the Moerdijk cracker in the Netherlands, which can now  process new feedstocks from Pernis refinery.

Synergies in hydrocarbon utilisation; infrastructure and facilities sharing; and utilities and logistics integration are all important factors that contribute significantly to the overall oil and chemicals complex’s profitability.

Refiners can call on an expanding range of innovative technical and business solutions to help provide enhanced levels of flexibility.

“Additional integration with lubricant manufacturing can create more feedstock flexibility and lower site operating costs,” he continues.

“Shell and Hyundai Oilbank have been constructing a new base oil manufacturing plant in Daesan, South Korea, where base oils are a key component of finished lubricant  production and form 60–80% of the end product.”

The ability to improve key process unit capabilities can also increase flexibility.

In many parts of the world demand is shifting from gasoline to diesel.

The decision by many refiners to capitalise on opportunity crude processing, coupled with a focus on improving distillate yields (kerosene and ultra-low-sulphur diesel), has been driving new developments in catalysts and reactor internals.

Another development has been the recent availability of abundant natural gas supplies in the global market.

This, in turn, has made relatively low-cost hydrogen available.

One result has been an increase in the use of hydroprocessing technologies with novel applications for hydrocracking and hydrodesulphurisation units.

Hydrocracking has emerged as the principal technology for converting lowvalue heavy oil fractions efficiently into highquality kerosene and diesel from a wide variety of feedstocks.

These can be partially converted into high-quality automotive fuel distillates, lubricant base oil and fluidised catalytic or ethylene cracker feedstocks.

“This is important,” Moonsamy says, “because the flexible hydrocracker product slate can accommodate considerable component shifts between gasoline and diesel blending, and enables refiners to take swift advantage of market fluctuations.

The concept of the ‘right molecule in the right place at the right time’ must be entrenched into an oil, gas and chemical company’s ‘DNA’.

Flexing the product slate from liquefied petroleum gas to gasoline to diesel to petrochemicals to high-quality base oils cannot be ignored in the future world of volatile demands and prices.”

Development work in hydroprocessing reactor internals has resulted in nearly full catalyst utilisation and better control of reactor exotherms.

Advances in hydrocracking catalyst technology have also contributed to achieving both high selectivity and product quality while extending cycle length.

Responding to more stringent product specifications

In most regions, even lower sulphur levels are anticipated, along with reductions in Reid vapour pressure (volatile content).

Where ultra-low-sulphur diesel is needed, further treatment is usually required.

Changes in marine transportation fuel specifications will also see sulphur reductions in 2015–2020 that are likely to lead to more demand for low-sulphur distillates and a surplus of highersulphur grades.

Refiners may respond by improving existing processing units or constructing new units.

“With a sound understanding of product quality and blending behaviour, it is possible to meet these goals by using new high-quality blending components from sources such as gas-, coal- or biomass-to-liquids processes,” Moonsamy says.

“Gas-to-liquids kerosene and diesel, for example, can create significant opportunities for a constrained refinery product pool and help to improve overall margins.”

Gas-to-liquids products have the additional advantage of being virtually free of sulphur, nitrogen, metals and aromatic and olefinic compounds.

The technology can be used to improve conventional fuel quality or upgrade lower-value components to produce products of the same value.

At present, the specifications and regulations mean they have to be blended with conventional refinery streams.

As markets evolve, technical solutions can introduce the flexibility needed to accept a wider range of feedstocks, introduce new processing options, adopt more efficient processing configurations and produce a more value-adding product slate.