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Jan-2009

Hydrocracking and hydrotreating developments

Current emphasis on middle distillate production requires the expansion of hydroprocessing capabilities affecting reactor and catalyst design. Increased diesel yields depend on the ability to effectively upgrade cracked feedstocks and LCO, while eliminating fuel oil production

René Gonzalez

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Article Summary

Against a backdrop of global recession, most refinery investment up to 2012 involves improvements to existing assets. Improvements to catalytic processes will focus primarily on hydrotreating and hydrocracking. This includes expansion of necessary hydrogen sources and tail gas treating/sulphur recovery capacity. These expanded hydroprocessing networks, coupled with efficiency improvements to crude units and select thermal conversion processes (eg, delayed coking and visbreaking), increase the facility’s Nelson complexity index. The higher the refinery’s complexity index, the more capable it is of processing and converting heavier feedstocks into lighter components.

Over the next two to three years, the light components expected to yield the highest margins are typically in the middle distillate range. However, the high concentration of metals contaminants and inorganics found in many of today’s crudes can decrease a hydroprocessing catalyst’s activity level and ability to upgrade feedstocks into ULSD and other high-margin products. Regardless of how much additional reactor capacity is added to compensate for the negative effects of these metals contaminants, the most cost-effective strategy may be to consider employing several types of catalyst in each reactor.

In almost every case, an increase in catalyst inventories at many refineries is a reflection of the flexibility needed to deal with the changes in feedstock properties that typically require higher severity hydrotreating/hydrocracking conditions (eg, higher temperature, and hydrogen partial pressure). More importantly, it is the cost of maintaining a diversity of catalyst types inventoried at refineries that complicates refinery operations, particularly in the current downturn.

Economic considerations

The downturn in the global economy comes just as several world-scale facilities are due to come on-line in 2009 and 2010. For example, the United Arab Emirates (UAE) is set to double its refining capacity as it and other Middle Eastern countries make efforts to diversify their oil and gas industry away from simple crude oil exports. A glut of spare refining capacity may actually accelerate efforts to remain competitive by increasing refinery complexity. It therefore stands to reason that the level of catalyst capabilities will also increase. While cyclicality is built into refining outlooks, the current negative outlook stems from demand changes that appear to be structural and enduring, according to Andrew Oram, Senior Credit Officer for Moody’s. The downturn marks the end of a long boom period for refiners that began in 2003 as world demand for diesel and other products took off.

By the end of 2009, another 2.5 million bpd of refining capacity will be added around the world, according to Goldman Sachs. But those projects that have taken years to move from the conceptual phase to construction are now threatening to flood the market with a glut of extra capacity just as growth in demand for many hydrocarbon-based products has slowed in line with a weakening global economy. It is impossible to predict how long this downward cycle will last, just as it was difficult to predict when it would begin. But more complex refinery networks, as well as those with rapidly expanding populations such as in the Middle East, may be somewhat insulated from the downturn because domestic demand for refined products is booming and refining units are part of larger state oil firms. For example, Saudi Arabia, the world’s top oil exporter, became the fastest growing oil consumer in 2008 and will see oil product demand increase by 7.0% in 2009 to 1.8 million bpd. Large facilities under construction in the region include two export-orientated refineries in Saudi Arabia, a refinery in Kuwait and the Abu Dhabi National Oil Company’s (Adnoc) refinery expansion at Ruwais, which is scheduled to be completed by 2014 and will add 417 000 bpd to Adnoc’s refining capacity.

The major slowdown in China’s economy is, of course, another aspect to consider with regard to refinery profitability. China has seen a drop in its economic growth as The Organisation for Economic Co-operation and Development (OECD) economies curtails its demand for Chinese goods. For example, Chinese exports in November 2008 fell 2.2% from the same period in 2007, the first decline in seven years. China’s economic growth slowed to 9.0% in Q3 2008, down from 11.9% in 2007. The World Bank has cut China’s 2009 growth forecast from 9.2–7.5%, the lowest since 1990. China’s economic annual growth has averaged 9.9% for the past 30 years. A recent International Energy Agency (IEA) forecast noted oil demand in China grew 5.3% to 7.9 million bpd in 2008, but expects it to weaken to 3.5% growth in 2009, approximately 180 000 bpd less than previously expected. According to the IEA, if the country’s economy were to expand by only 7.0% in 2009, oil demand growth would be just 70 000 bpd, a level not seen since the 
late 1990s.

However, many other factors must be taken into account when considering the viability of today’s refinery operations, including:
— The previously noted flexibility in the refinery’s configuration for crude processing
— The superior product slate of the refinery
— The strategic location of the facility
— Freight advantages
— Ability to maximise jet fuel and diesel and minimise furnace oil
— Captive cogeneration power plants to meet the facility’s steam and power requirements
— Hydrogen production efficiency.

The most complex refiners can choose the types of crude they want to process. This advantage may become even more important in the future as refiners strive to reduce their overall emissions by differentiating crudes according to their potential to generate CO2. Being able to choose the types of crude to be processed depends to a large extent on a facility’s catalyst-based processes, including hydrotreating, hydrocracking, fluid catalytic cracking (FCC) and others.

Global distillate demand
Since the new millennium, diesel hydrotreating has primarily involved sulphur removal to low (<500 ppm) or ultra-low (<10 ppm) levels. In addition, cetane uplift and poly-aromatic hydrocarbon (PAH) removal are possible with new catalysts. Hydrotreating diesel can require severe processing, especially when ultra-low sulphur is needed and the feedstock contains cracked components. The highest activity catalysts are usually required for ULSD production to reach acceptable cycle lengths. CoMo catalysts are most often specified for diesel and ULSD hydrotreating operations, but NiMo catalysts may be preferred in some cases.


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