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Nov-2016

Revamp cat feed hydrotreaters for flexible yields

Revamping a cat feed hydrotreater to a flexible mild hydrocracker can be the most attractive economic option for adjusting the gasoline to diesel ratio.

DAVID SCHWALJE, LARRY WISDOM and MIKE CRAIG
Axens North America
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Article Summary
The demand for middle distillates from US refiners has increased steadily since 2010, to current production levels totalling over 6.6 million b/d1 as a result of two main market conditions: the US enjoys a feedstock advantage over European and South American refiners thanks to the light tight oil (LTO) boom; and increasing demand from Mexico and South America for transportation fuels. In Q1 of 2016, the top three countries of export for middle distillate fuels refined in the US were Mexico (11.8 million barrels per month), Chile (9.8 million barrels per month), and Colombia (8.8 million barrels per month).2 Low crude prices have reduced revenues for vertically integrated, state-owned refiners, which has contributed to major project delays and increased uncertainty in those regions. Diesel exports to Latin America should therefore continue, with demand for on-road diesel expected to grow at an annual rate of 2.2% through 2020.3

In the near term, the tight oil feedstock advantage over European refiners is expected to tighten thanks to the lifting of the US crude export ban; however, demand in South America and Mexico will remain strong due to project delays4 and demand growth.

In the long term, middle distillate demand growth will continue as a result of the commercial transportation sector and consumption growth in developing regions. Higher worldwide crude prices would result in increased domestic demand from the exploration and production sector as producers in the shale plays return to pre-2015 output. At the same time, consumption of gasoline may decrease as a result of increasing numbers of electric vehicles and improving fuel economy standards.

As a result, many US refiners have either planned or commissioned projects to shift their diesel to gasoline ratio (D/G) to favour middle distillates, as refiners with a high D/G ratio have benefited from a diesel-gasoline finished product spread that has, on average, favoured diesel since 2010. Projects have included new brownfield, high conversion hydrocracking units, reconfiguration projects, and the planned shutdown of multiple FCC units.

However, product markets remain elusively volatile, and the incentive to produce diesel in lieu of gasoline does not exist throughout the year, nor in all regions. Short-term volatility in seasonal diesel-gasoline spreads has historically favoured gasoline during the summer driving season. This trend was especially apparent in the summer of 2015 when low pump prices resulted in increased domestic gasoline demand. This was followed immediately by a mild winter, which reduced domestic middle distillate consumption. These phenomena, coupled with a reduction in diesel demand from E&P operations, resulted in a sustained period of high gasoline margins in 2015-2016. Figure 1 charts the US average diesel-
gasoline spread since 2010.5

The five-year trend has been clear and remarkably consistent, favouring middle distillates during the winter months, gasoline during the summer months, and diesel on the whole. The seasonal swing has historically been in the range of $10-20/bbl. The profitability of the refinery is therefore fluctuating seasonally, not only based on crude acquisition costs but also with each refiner’s unique ability to rapidly shift its D/G ratio to favour the most profitable transportation fuel. There is a distinct financial incentive for a refiner to maintain flexibility of its product slate in response to market conditions.

Current practices for product slate flexibility
A number of strategies are available to refiners looking to shift their fuel balance. In practice, the preferred option for each refiner varies greatly as a function of various site-specific factors such as budget constraints, regional product demand, configuration, and crude source. The most common options include:
• Modifying the refinery’s crude selection
• Modifying crude unit and product fractionator cut-points
• Reducing FCC severity to increase light cycle oil (LCO) production
• Installing new high conversion hydrocracking capacity with high diesel selectivity
• Revamping existing cat feed hydrotreater (CFHT) units to mild hydrocrackers (MHC).

These options range from low or no cost solutions such as shifting product cut-points to high cost and long lead-time solutions such as the construction of a new hydrocracking unit. This article focuses on the conversion of existing CFHT units to MHCs as a low cost, fast track solution.

Modifying crude selection
The modern refiner typically has a wide selection of available crude sources and shifts between crudes based on both economic incentives and processing constraints. The relative content of gasoline-boiling and middle distillate-boiling material in crudes varies greatly and can be a profitable first step in adjusting D/G ratio. Table 1 summarises the distillations of five major crudes processed in US refineries.

However, crudes with higher percentages of middle distillates are also typically higher in sulphur, nitrogen and aromatic content, which limit their appeal for the refiner within an existing configuration. Changing crude diet affects the entire refinery; as a result, many refiners can only blend in small amounts of opportunity crudes up to known limitations.
 
Modifying crude unit and product fractionator cut-points
For a given crude blend, the refiner can also make adjustments in their distillation cut-points, both in the crude unit and in downstream product fractionators. On the lighter end of the boiling range, operators must be cognisant of flash point issues, low heavy naphtha cetane, and hydraulic limitations. On the heavy end, diesel end-point cannot typically be increased substantially due to the diesel product specifications for sulphur, end point, or seasonal cold flow properties.

Reducing FCC severity to increase light cycle oil production
While attractive on paper from a distillate yield perspective, operating at lower severity to increase LCO production for upgrading to ULSD is costly due to the loss in gasoline yield and increase in low value fuel oil production. As 
a result, many refiners choose 
to operate at a more typical gasoline oriented severity and 
undercut the gasoline to boost distillate yield.

Installing new hydrocracking capacity with high diesel selectivity
In the last five years, there have been multiple major hydrocracking projects announced in the US with some complete and some in various stages of engineering and construction. However, the installation of new high pressure, high conversion hydrocracking units is both capital and schedule intensive, requiring a long period between initial inception and unit start-up.

Revamping the CFHT to MHC service
The last option discussed here is to revamp the existing CFHT to increase run vacuum gas oil (VGO) conversion while also improving the quality of the FCC feed. The majority of operating FCC units in the US are equipped with upstream hydrotreaters with a wide range of operating conditions. More recently designed units have higher pressures (>1200 psig) and lower space velocity (LHSV <1.0) to maximise aromatics saturation and the associated volume swell in addition to the classic contaminant removal functions. It is these mid to higher pressure units that are ideal for revamping to MHC service.
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