Oct-2015

Analytics to identify FCC trends

Robust gasoline demand since the beginning of 2015 has defied expectations. In spite of on-going talks of ‘dieselisation’ in the transportation fuel market, gasoline consumption in the world’s two biggest oil consumers (the US and China) is going strong, supporting refining margins across the globe.

PATRICK CHRISTENSEN, THOMAS GARRETT, AHLY RATTANAKHAMBAY, WILLIAM VUKOVICH
and THOMAS YEUNG, Hydrocarbon Publishing Company

Article Summary

According to the API, US gasoline demand was at its highest in nearly eight years in June 2015, rising 3.5% on the year to more than 9.3 million b/d — the highest gasoline demand the country has seen since August 2007. In China, fuel consumption has been steadily shifting from diesel towards gasoline over the past few years, and total June gasoline consumption was higher than in May — when gasoline demand grew by nearly 14% on the year. European refiners — long time producers of a surplus of gasoline — are the first in line to benefit. Thanks to higher gasoline exports and lower crude costs, Total has reported that its European refining margins indicator (ERMI) rose to $54.10/mt ($7.38/bbl) during Q2 2015, a record high since ERMI was first tracked in 2003.

Will the good times roll for forever? It all depends, as the nature of the refining business is cyclical and the FCC unit — the refinery gasoline machine — also has its ups and downs. So, it is important for refiners to prepare for the next cycle by taking advantage of the flexibility of the FCC unit and technology innovations. Also, technology providers ought to proactively satisfy the market needs and remain competitive.

Analytics — which  refers to the search for and use of patterns in vast quantities of data — has been applied in a variety of industries to help businesses gain a competitive edge. Marketing agencies, sales companies, and even sports teams have turned to analytics. In the US, shale oil exploration and production business can take advantage of big-data analytics to slash break-even costs to $5-$25/bbl and drillers can compete with producers operating ultra low cost fields in the Middle East according to Mark P Mills of the Manhattan Institute in his report called Shale 2.0.

Via analytics, one can realise insights, economic benefits, and strategic significance by deciphering a massive volume of disorganised and apparently different data. The big data and empirical proof enable business managers to avoid guesswork and gut instinct when it comes to making decisions. The purpose of this article is to demonstrate the benefits of using analytics in identifying recent trends in commercial FCC technology and competition by using published papers (or ‘body language’) in major trade journals from 2008 to 2014. Furthermore, the results will be compared with R&D works as revealed by another analytics metric: patent analysis. The objective is to predict business strategies of technology providers in tackling forthcoming challenges and capturing opportunities by examining current events and the latest research endeavours.

Analytics on trends of published papers
In addition to advertisements, technology companies often publish works in trade journals to make news announcements and present results to show success of recent commercialised products. It is an excellent tool to convince potential customers with technical details. Also the articles published provide enough room to present three major product attributes: features, advantages, and benefits.

To undertake the data analytics, the articles published must meet the four primary criteria (4V): (1) considerable publication volume by one company or several companies in particular areas; (2) increasing velocity of papers being filed over time; (3) variety of papers performed in different sources; and (4) credibility or value of the papers.

Papers published over the time period of 2008-2014 in three refining centric magazines are used — Petroleum Technology Quarterly (PTQ), Hydrocarbon Processing (HP) and Hydrocarbon Engineering (HE) — and presentations at annual meeting conferences held by American Fuel & Petrochemical Manufacturers (AFPM) in the US. Seven of the AFPM conference papers were ‘republished’ in these three magazines over the time period. Both PTQ and HE magazines are known to publish papers presented at the European Refining Technology Conference (ERTC). Therefore, without counting duplicates, the ‘republished’ papers were not used and our analysis was based on the total number of unique published papers. There were 228 unique papers on ten different FCC applications: PTQ with 87 papers, AFPM with 58 papers, HE with 52 papers, and HP with 31 papers. Some papers covered 2-3 applications in their discussions and so the number of application references was more than 228 — about 256. For instance, IntercatJM presented a paper discussing a low rare earth catalyst additive for both resid processing and emission reduction in the Q1 2012 issue of PTQ.

What do the numbers tell you?
Figure 1 displays % share of each application in the unique papers from 2008-2014. The traditional applications such as resid/heavy oil, emission control, distillate/LCO, light olefins yield, and maximising product yields are the major topics of interest and innovations continue to be made and announced to the public. These five applications make up 68% of the total applications discussed in the papers. This is fairly consistent to what was observed in the patents issued between 2008 and 2014, where over 50% were related to gasoline yield, gasoline reformulation, LCO yield and/or quality, light olefins yield, SNOx emission control, and resid processing. As R&D works tend to lag behind the market, it is indicative that technology providers are investing to satisfy future market needs and increasing technology options are forthcoming. In the new applications, there were 20 papers on low rare earth metal catalysts (in order to address steep rare earth prices) and eight on tight oil.

Who published the most papers? Unsurprisingly, catalyst and additive producers stood out as more technological advances were made in the traditional applications of resid/heavy oil, emission control, distillate/LCO, light olefins yield, and maximising product yields. The same observation was noted in the patent analysis, where there were more catalyst and additive patents than inventions related to hardware, process and other applications.

For papers covering the FCC catalysts and additives business (see Table 1), Grace published more papers — 47 altogether — than peers such as Albemarle (39), IntercatJM (39), and BASF (31). Furthermore, the data in the table clearly shows the business focus of each technology provider. When focusing on traditional FCC technologies and topics (resid/heavy oil processing, emission control, distillate/LCO production, and light olefins production), the leading publishers were: BASF and Grace for resid/heavy oil; IntercatJM for emission control; Albemarle, BASF, and Grace for distillate/LCO; and Albemarle and Grace for light olefins. As for papers addressing emerging technologies and trends, both Albemarle and Grace published six papers addressing catalysts with low rare earth metals, each releasing their first papers on the subject in 2011; on the topic of tight oil processing, four papers came from Grace and two from BASF, with the first commercial paper on tight oil coming from Grace in 2013. The newcomer Rive Technology with its Molecular Highway technology offered six papers — including maximising yields, distillate/LCO, resid/heavy oil, and rare earth metals — in the time period.

For papers covering the FCC process and hardware business (see Table 2), UOP had the most commercial papers published (17), followed by Technip Stone & Webster (16), KBR (11), Shell (10), and Lummus Technology/CB&I (6). UOP’s papers covered many applications, including five papers each on resid/heavy oil and hardware. The company was also the first to present a position paper on tight oil called Solutions for FCC Refineries in the Shale Oil Era at the 2013 AFPM annual conference in March. Technip Stone & Webster also published papers in different applications and had the most papers on FCC hardware. On the other hand, the papers from Lummus Technology/CB&I and KBR’s paper emphasised the subjects of distillate/LCO production, resid/heavy oil processing, and light olefins production. Please note that Axens technologies are grouped with Technip Stone & Webster as Shaw Group and Axens renewed a licence in 2007 to jointly develop FCC technology for another 15 years. Also, in April 2011, Axens and Shaw were selected by JX Nippon Oil & Energy Corp. and Saudi Aramco to be the worldwide licenser of the HS-FCC technology, and any papers on that process are also grouped under the Technip Stone & Webster heading.