Industry trends in 2023

What is the best estimation for refinery and petrochemical product demand in 2023?

Rene Gonzalez
Editor, PTQ

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Article Summary

This question is frequently asked because the second half of 2022 was so much different from the first half. Many end-users of hydrocarbon-based products have been short of product for more than two years and have been trying to rebuild, increasing the margin of error when accurately projecting post-pandemic demand.

Asia will contribute to over 40% of global refinery hydrocracking capacity going forward to increase demand for diesel and middle distillate in their growing transportation markets and industries. In other markets, revamps instead of greenfield projects to existing hydrocrackers are meeting multiple objectives. For example, with a modest investment, Shell revamped the SASREF hydrocracker located in Jubail Industrial City to increase diesel yield, cycle length, and overall safety.

Despite the emerging market for electric vehicles (EVs) long-term diesel, distillate and kerosene demand will continue to be an important refinery product. Heavy road transport, mining machinery, marine transportation, aviation, diesel powered microgrids, etc., are all so energy intensive that it makes these sectors difficult to electrify. The high density of natural gas and oil derived products (e.g., diesel) can better supply these sectors in the long-term. Regardless, overall refinery CO2 emissions reductions will affect efforts to increase hydrogen production for diesel focused hydrocracking operations.

It’s no secret most refineries currently operating source their hydrogen from steam methane reforming (SMR) units. But CO2 emission levels from SMR flue gas are a major contributor to overall facility CO2 limits (in addition to CO2 emissions from fired heater operations in the CDU, DCU, etc.). Investment in carbon capture of CO2 from SMR flue gas can allow continued production of “grey hydrogen.”

To significantly reduce CO2 emissions from hydrogen producing units, “blue hydrogen” production, such as from autothermal reforming (ATR), partial oxidation, etc., could be considered. These options will be weighed in further detail in the March issue of PTQ Gas; comparing operating and capital expenses, including the costs and benefits of pre- and post- CO2 combustion technology offered by technology suppliers and licensors.

Costs and other penalties associated with CO2 emissions are almost certain to accelerate, predicating interest in “green hydrogen” production from hydrogen electrolysis (zero CO2 emissions). This development will be discussed in forthcoming issues of PTQ and Decarbonisation Technology.

Chemical recycling
All things considered; the hydrocarbon processing industry’s development of circular chemical processing loops is in a dynamic state. This includes recovery of end-of-life plastics for conversion back to their basic monomer, and on towards high-margins products, which all sounds very purposeful.

However, just like producing hydrogen without CO2 emissions, research to date points to many challenges, beginning with the strength-to-weight ratio associated with plastic’s high resistance to physical and chemical degradation, that expands the range of wastes fouling process equipment. Regardless, chemical recycling of plastic waste-derived pyrolysis oils opens opportunities to process these “pyoils” through hydrocracking units. So, there’s a lot of effort on trying to make that happen.

Other important trends to watch for revolve around the Gas industry (LNG, NH3, etc.). For example, worldwide food shortages caused by closure of ammonia-based fertilizer plants dependent on affordable natural gas predicate plans for construction of more efficient large-scale fertilizer plants. Catalysts options and process layouts providing the most efficient routes to ammonia production will be discussed in the March issue of PTQ Gas. Other trends beyond 2023 could involve CO2 to methanol (CH3OH) production, changing the way in which CO2 production is avoided, to the way in which it is used.

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