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As they strive to remain competitive against the new breed of world-scale, highly efficient refineries under construction in Asia and the Middle East, many refiners are looking for ways to process discounted crudes and provide higher-value products. Meanwhile, air quality standards and product specifications continue to tighten around the globe, which makes it increasingly difficult for refiners to meet their environmental mandate and secure their licence to operate. 

Clearly, many technological solutions could help them to meet these objectives, but enormous value is at stake when trying to identify the most appropriate solution for a specific situation.

To demonstrate this, we have devised two fictional scenarios called “flexibility/upgrading constrained” and “capacity/quality constrained” (see below). Although both refineries are fictional,they are representative of many facilities operating today.

Flexibility/upgrading constrained
SCENARIO A: Flexibility/upgrading constrained B: Capacity/quality constrained
Scale
World scale (30 Mt/y) Medium scale (20 Mt/y)
Complexity (NCI ) 7 14
Market situation
  • Weak state regulation of fuel quality and standards
  • Medium-level environmental standards
  • Increasing state regulation of fuel quality and standards
  • Highly stringent environmental standards
Feed flexibility Refinery scheme enables processing of only light to medium crude oils Refinery scheme enables processing of even the most difficult crude oils
Operational flexibility Limited conversion capacity with little or no flexibility to adapt to seasonal product demand shifts Ability to swing between the gasoline mode and the distillate mode
Primary conversion FCC Delayed coking, hydrocracking
Secondary processes Alkylation, hydrotreating FCC , alkylation, reforming, coking
Product slate Gasoline, diesel and fuel oil High percentage of diesel, jet and gasoline, along with fuel-grade petroleum coke
High-value product yield (%) 75 87
Business objectives Increase upgrading capability Comply with increasingly stringent emissions standards and meet tighter product quality specifications

As they strive to remain competitive against the new breed of world-scale, highly efficient refineries under construction in Asia and the Middle East, many refiners are looking for ways to process discounted crudes and provide higher-value products .

In the capacity/quality-constrained scenario, a highly complex, medium-scale refinery is contending with increasingly stringent environmental regulations. With both a hydrocracker and a fluidised catalytic cracking (FCC) unit in the line-up, it benefits from highly flexible assets that enable it to process difficult feeds and to adapt its product slate in response to market demand. Its current principal business objectives are to comply with new, stringent emissions standards that are on the horizon and also to meet tighter product quality specifications.

The other scenario, flexibility/upgrading constrained, features a larger facility but, because it has less-demanding product specifications and air quality standards to meet, its Nelson Complexity Index (NCI) is lower. It also has less feed flexibility; it can upgrade only light or medium crude oils. With only an FCC unit as the main conversion vehicle, it has limited conversion capacity and its current principal business objective is to increase its upgrading capability.

Scenario A: Flexibility/upgrading constrained

This refiner has expressed a desire to increase its upgrading capacity. However, before identifying capital projects that will help to achieve such goals, Shell Global Solutions always recommends that refiners should first focus on maximising the value of their existing assets, as proposed in the Shell Global Solutions Multiplatform Pentagon Model. Maintenance and reliability studies, energy management projects and hydrocarbon management reviews, which do not require capital expenditure, are likely to come into play here. These are short-term initiatives, and can help to fund the medium-term capital projects that follow.

How do you select which longer-term projects to embark on?An experienced strategic licensor might be drawn to one indicator of a lack of value: the level of refinery bottoms (which in this case is 100% – 75% = 25%). With some very brief, indicative calculations we can calculate how much value the refiner is failing to capture by not converting the bottom of the barrel to high-value products.

We will assume a figure of $30/bbl for the light–heavy differential, a term that describes the difference in margin between high-value (light) products such as gasoline and diesel, and low-value (heavy) products such as fuel oil and bitumen. Of course, this uplift potential varies on a daily basis, but $30/bbl is a reasonable ballpark figure to use.

Next, if we assume that 1 t of crude oil = 7.3 bbl (with a specific gravity of 33 API ) then the refinery’s capacity, 30 Mt/y, can be also expressed as 219 MM bbl/y. 

This means that the plant currently generates 164.25 MMbbl/y of high-value products and 54.75 MMbbl/y of low-value products. Running the calculations with those capacities and prices, reveals that every percentage point by which the refinery can reduce its bottoms (and, therefore, increase its yield of high-value products) could add up to $65.7 million to its bottom line (although, of course, the refinery’s energy costs would also increase in line with the increase in upgrading).

To capture at least some of this value, the flexibility/upgrading constrained refinery may investigate reducing its bottoms (vacuum gas oil and short residue). Options to consider may include:

  • thermal cracking, visbreaking or delayed coking;
  • solvent deasphalting;
  • hydrocracking; and
  • gasification.

Determining the most appropriate technology option requires a much closer look at the refinery’s economics, local regulatory environment and market trends. For instance, owing to the oil–gas price disconnect that has emerged in recent years, liquid residue gasification is, generally speaking, uncompetitive at the moment in some regions, especially Europe and the USA, although it remains attractive in others. 

All of these technology options should be rigorously tested against several different economic, regulatory and market outcomes. This can be key to avoiding regret solutions and is an area in which experience is key. This is the objective of the Shell Global Solutions value creation architecture (VCA), see box below.

graphic one

 

The VCA provides the platform for Shell Global Solutions’ diagnostic and collaborative way of working. It comprises the following elements:

  • External pressures: What does the competitive landscape look like?
  • Owner’s objectives: What is the organisation striving to achieve?
  • Licensor’s perspective: A strategic licensor with operational experience can bring expertise and perspectives that help to create a deep level of understanding of an owner’s business challenges.
  • Owner’s perspective: The value of the expertise and experience that exist within a customer’s organisation should never be underestimated. Nobody understands their business or their processes better than they do.
  • Value creation: What projects will help the owner to achieve its objectives? Typically, there are many.Improvements are possible right across the value chain, from crude evaluation and procurement through operations and processing to investment planning. Experience can help to identify the widest possible technical solution set.
  • Optionality: There are usually many ways to deliver a solution. For instance, if the objective is to enhance the yield of high-value products, the refiner should evaluate the benefits of a unit revamp, the possibility of upgrading existing hardware and the feasibility of building a new unit.
  • Sustainability: This area of the VCA is designed to help prevent regret decisions. It considers whether the decisions taken reflect the current market situation, the refiner’s longer-term objectives and the potential future market conditions.
  • Execution: It is imperative that the plant starts up on time and on budget, and works in concert with all the existing pieces of hardware and the interfaces that make the current refinery work so well.
  • Co-created solution: Customers benefit from the VCA because it brings together distinct viewpoints that help to provide a fundamentally better understanding of their problem or situation. It also ensures that the widest possible technical solution set is evaluated so that truly effective, no-regret solutions can be devised.

Scenario B: Capacity/quality constrained

Although the fictional refineries shown in scenarios A and B have very different circumstances and the eventual solutions are also likely to be very different, the process that they both work through should be broadly similar. So, as in scenario A, this refiner would be advised to start by ensuring that it is maximising the value of its current assets. 

This may involve ensuring operational reliability, pushing capacity and optimising the crude slate so that it can achieve the highest product values from the lowest feedstock prices.

Like the previous scenario, there is a wide range of longer-term options that could help the capacity/quality-constrained refinery to achieve its business objectives of complying with increasingly stringent emissions standards and meeting tighter product quality specifications.

For instance, the options to be investigated could include:

  • optimising the integration between the hydrocracker and FCC unit, including feedstock distribution between the two units and hydrocracking conversion;
  • revamping the hydrocracker to increase conversion and, therefore, produce less FCC feed and more middle distillates;
  • refilling the hydrocracker with next-generation catalysts and installing state-of-the-art reactor internals;
  • Installing a new hydroprocessing unit to help comply with tighter product specifications;
  • upgrading low-value streams such as light cycle oil or thermally cracked gas oil from fuel oil into diesel; and
  • upgrading naphtha from gasoline into chemicals (aromatics or propylene).

When installing new hydroprocessing units to comply with tighter product specifications, the treating systems, utility systems and logistics infrastructure can often be a key constraint. It is likely that the refinery will have to handle H2S and ammonia, which will require additional capacity in the sulphur recovery unit (SRU) (Claus/SCOT™), sour water strippers and wastewater treatment plants. The refinery’s import/export facilities and tank allocation scheme may also need to be adapted. 

As with scenario A, all of the options above must be screened against potential future economic, regulatory and market outcomes in order to ensure that the most robust project is selected. Again, this is the objective of the Shell Global Solutions VCA. In recent years, Shell Global Solutions has been involved in projects that exploit many of these options and that have delivered strong results.

 

Value creation architecture (VCA)

In this article, we have presented two simplistic, but typical, refinery scenarios. In both, there are numerous potential solutions to the same problem.

At Shell Global Solutions, we believe that the precursor to added value is the ability to tailor the solution to the particular nuances of the problem. Every organisation’s marketplace and asset portfolio are unique; what is an appropriate solution for one refiner may be sub-optimal for another. 

This is the basis of the Shell Global Solutions VCA: a methodology that guides our approach to technical collaboration and helps to merge the owner’s highly valuable site-specific knowledge and marketplace perspectives with our global operational and technical expertise. The articles on the following pages demonstrate how we have applied this methodology in practice.

 

Common solutions

Revamp or grassroots unit? Estimates suggest that new capacity is about 25% less expensive to install through a revamp than with a  grassroots unit. Moreover, the gestation period for a revamp is far less than the three to four years it takes to deliver a major project.

Looking to increase diesel yield? Refilling a hydrocracker with next-generation catalysts can often be a compelling solution. A new hydrocracking catalyst, Advanced Trilobe Xtreme, from Criterion Catalysts & Technologies can increase diesel yield by up to 1.5%. So, a 50,000-bbl/d hydrocracker could produce as much as an extra 750 bbl/d simply by adopting one of these catalysts, which are trilobal rather than cylindrical.

Striving for ultra-high levels of sulphur recovery? When sulphur recovery levels of up to 99.99% are required, the CANSOLV™ tail-gas treating plus (TGT+) system can be an attractive solution. It offers a simplified process line-up (compared with conventional line-ups used to treat complex gases) with centralised treating of all sulphur-containing process off-gases. we believe that the precursor to added value is the ability to tailor the solution to the particular nuances of the problem.

 

Süleyman Özmen

Vice President, Refining and Chemical Licensing,

Shell Global Solutions International BV

We believe that the precursor to added value is the ability to tailor the solution to the particular nuances of the problem.

CANSOLV is a Cansolv Technologies Inc. trademark.

SCOT is a Shell trademark.