Jan-1999

Development of a refinery petrochemical master plan

A master plan for a refinery/petrochemical complex justifies comprehensive study of all the variables, from market forecast to operating costs

W J Hillier Maureen F Gilbert W C Petterson
Kellogg Brown & Root (Now KBR Technology)

Article Summary

Prior to the recent economic developments in the Far East, the economies of most countries in the region grew at phenomenal rates in the 1990–96 period, ie 5–10 per cent/year. However, Japan’s lingering recession during this period held the overall economic growth rate in the Far East to about 4 per cent. The economic crisis there has significantly impacted on the current and short-term growth rates. It is anticipated that the economies will rebound in the new millennium and strong economic growth will return.

This market forecast is drawn from a recent study prepared by Purvin & Gertz, which reviewed the worldwide energy and petrochemical markets. The forecast product demand growth rates for the 1995–2015 period are in the 4-5 per cent/year range. Crude consumption in the Far East market area increases from 700 million tonnes/year in 1995 to about 1200 million tonnes/year in 2015, a growth rate of 2.9 per cent/year.

Asia’s rapid move to industrialise is stimulating energy demand. Obviously, the need for petroleum products has been reduced in the short term due to the economic crisis in the region. If the forecast long-term economic growth rates do not materialise, the demand for petroleum products will also be reduced. The fuels product consumption forecast is shown in Figure 1.

Gasoline and distillate continue to grow at the expense of heavy fuel oil. The naphtha consumption for petrochemicals more than doubles from 1995 to 2015. The compounded annual growth rates for the various products are shown in Figure 2. Wealth created by the economic growth has allowed the upward movement from bicycles to motor bikes and automobiles. Gasoline consumption, which is growing at 3.3 per cent/year, is driven by this trend. Demand for middle distillate is forecast to increase by 3.1 per cent. 

The Far East is a net importer of middle distillates; consumption of these products has grown rapidly. Consumption of jet fuel and kerosene has increased rapidly and is expected to continue to increase at a more moderate rate in the next 20 years. The consumption of residual fuel oil is expected to increase at only 1.1 per cent/year. The Far East is a net importer of residual fuel oil, primarily from the Middle East.

In terms of petrochemicals, ethylene growth into the future is projected to be 4.5 per cent/year, while propylene growth is projected to be at a rate of 4.9 per cent/year. Hence, there is a need to evaluate various technologies that generate a higher yield of propylene in order to remain in olefin balance. In order to meet the growth in ethylene, naphtha is forecast to grow at a very high rate. The compounded growth rate is projected to be 4.8 per cent/year.

The strong growth in petrochemical demand will place considerable pressure on feedstock supplies and prices. Refineries will be required to process crude and condensate for both fuels and olefin feedstock markets. The production of ethylene from the various feedstocks is shown in Figure 3. Olefins producers are expected to build ethylene plants with crackers that handle gas oil and naphtha for increased feedstock flexibility.

Goals of a master plan
The overall goals of developing a master plan are project specific. For instance, in a grassroots facility, there is an opportunity to match the processing scheme to the market forecast using various crude mixes. There are considerable amounts of freedom and options available to the planner to meet the client’s goals. In the case of a major revamp, the client may wish to lower the feedstock costs and/or upgrade the bottom of the barrel.

The optimum processing scheme will be determined to meet the client’s objectives. In many cases, the refiner is improving the quality of the products produced to meet both environmental and market requirements. In some cases, the objective of the master plan can be focused on reducing operating costs and reducing energy usage.

In the past year, the company has received a number of requests to develop master plans to upgrade fuel products to petrochemicals and integrate refinery and petrochemical complexes. The driving force behind this trend is the desire of owners to improve the overall margins of the complexes and take advantage of the synergies between refineries and petrochemical complexes. In addition to supplying fuels to the transportation market, the refinery will supply a secure feedstock to the petrochemical complex and potentially, a feedstock for the utility sector.

Clients have significant interest in integrating a power generation system into the overall complex and generating power, steam, hydrogen etc by gasifying a low-valued byproduct stream. For all these project specific master plans, there is tremendous pressure to satisfy the goals and capital constraints of the client. Often, this will lead to a phased approach for the project.

Planning methodology
The scope of a study can range from pre-feasibility to a more complete detailed feasibility report. The pre-feasibility study is characterised by an evaluation of a market-based process configuration, a limited analysis of feedstock options, an overall material balance and conceptual stage economics. These economics include a preliminary estimate of capital and operating costs and an estimate of cash flows and payout.

In general, the results of the pre-feasibility study will establish the incentive to proceed to a more detailed analysis. A more detailed feasibility study includes a full market study that addresses crude supply, product supply/demand and product quality, as well as feedstock and product pricing. At this point, the configuration can be optimised, and the specific technologies can be identified.

It is important at this stage to establish a basis for the onsite and offsite scopes so that a more detailed capital cost estimate can be generated. Typically, capital estimates are generated from a database that has been developed from previous studies or are available from a recent engineering/procurement/construction (EPC) project. The generation of a credible capital estimate is critical to providing input to the economic analysis phase.