Jul-2011

Refinery configurations for maximising middle distillates

A comparison of configurations for upgrading residual oil products for the maximum production of diesel

Arun Arora and Ujjal Mukherjee
Chevron Lummus Global

Article Summary

Refiners globally continue to face numerous challenges as environmental laws become increasingly stringent. Principal among them in the near future will be the International Maritime Organisation’s (IMO) proposed changes to bunker fuel oil sulphur limits, from the current limit of over 3.5% down to 0.5% globally and from 1% to 0.1% in Emission Control Areas (ECA, see Figure 1). Global demand for high-sulphur residual fuel oil (HSFO) is steadily declining too, by 35% since 1995. Both of these changes will significantly impact a refiner’s ability to market any significant quantity of HSFO at a price that will maintain refinery profitability. Refineries currently making a significant amount of fuel oil and lacking the complexity to upgrade the residual oil to premium products (middle distillates) will face two difficult options: either invest in commercially proven and reliable solutions to convert HSFO to more valuable liquid products such as Euro V diesel to greatly improve the refinery’s profitability, or face a threat to shut down the refinery as the operation becomes uneconomical to continue.

Shift in product demand
The IMO’s looming specification changes (see Figure 1) are likely to accelerate the decline in demand for HSFO by the year 2020, if not earlier. Worldwide, including emerging markets such as China, India and the Middle East, there is a shift in product demand from gasoline to diesel. Ethanol substitution in gasoline and improvements in engine technology are just two of the reasons why the demand for diesel continues to outpace that of gasoline. IMO regulations will indirectly increase diesel demand further as refiners are forced to blend in additional low-sulphur diesel to meet fuel oil sulphur specifications. Worldwide, production of mid-distillates is projected to account for 55% of the rise in oil demand expected over the next 20 years. The shift to diesel puts emphasis on bottom-of-the barrel processing.

Growing demand
Worldwide demand for refined products is projected to increase significantly in the next 20 years, driven by population growth and the transition of emerging markets into the global economy, with the majority of growth coming from China in particular and Asia in general. According to OPEC, global demand for diesel fuels is expected to grow by 10 million b/d by 2030, driven by an increased share of diesel-driven vehicles in Europe and developing countries.

Current refining investment is predominantly made in Asia, the Middle East, Russia and Latin America — regions with growing demand for refined products. Tightening of product quality specifications will accelerate the implementation of deep conversion units in existing refineries, but often these refineries are constrained by plot space, hydrogen and other infrastructural issues. Grassroots, export-oriented refineries are all geared towards high conversion to mid-distillates.

For the strategically oriented refiner, stringent requirements for high-quality products actually present an opportunity to invest in the right technologies to significantly improve refinery margins. Based on increasing product demand and the closure of multiple non-performing refineries, refining margins are expected to recover by 2015.

A wider and more intense requirement for the deployment of emissions reduction technologies may also act as a catalyst for new investments. Modern hydroprocessing technology will eliminate the need for expensive downstream remediation technologies.

It is our view that refining should be viewed as an ongoing business, where long-term average margins and product price differentials will support the investments that are needed.

Residue upgrading technologies
In view of the increasingly stricter regulations expected in the near future, along with the emerging trends in product demand, CLG evaluated multiple combinations of residue conversion technologies, keeping the intentions of a global refiner in mind. The conversion technology:
• Should be commercially proven and reliable with a good on-stream factor
• Should maximise the most valuable product (diesel) while retaining the capability to address niche product demands for the foreseeable horizon
• Should be flexible to handle more difficult feedstocks
• Should be environmentally compliant to meet future stringent specifications
• Should have enough complexity so that the refinery remains profitable when margins remain depressed for prolonged periods (based on current trends only such refineries will survive in the future)
• Ideally, should be part of a conversion platform encompassing complementary technologies.

Technologies on the cusp of commercialisation were excluded, because we did not want to prescribe any solution without a reasonably long operating history. For example, there are several slurry-phase residue conversion processes on the verge of commercialisation, but without a commercial operating history there is no data on reliability and on-stream factor — a major consideration in any residue upgrading process because of the difficult nature of the feedstock.

Major refinery processes included in this evaluation were:
• Delayed coking
• LC-Fining (a high-conversion residue hydrocracking process)
• Residue desulphurisation (RDS)
• Solvent deasphalting (SDA)
• Combinations of the above, along with secondary processes such as hydrocracking, residue catalytic cracking (RFCC) and gasification(VR and coke), FCC feed/product desulphurisation 
and various gasoline-producing processes.

In the studies we conducted for various clients, the residue conversion technologies that rose to the forefront were delayed coking, LC-Fining and RDS. The screening phase quickly ruled out several technologies as being too expensive, such as gasification, or not geared towards maximising diesel, the product of choice. A brief description of the primary upgrading processes follows.