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Turning an IMO 2020 problem into a high profit solution

Few refining industry issues have been as universally discussed by refiners over the last several years as the upcoming IMO regulations on marine fuel quality. Nearly every conference, meeting, or presentation in the industry has a healthy connection to this issue, and the projected impacts have been evolving at a rapid pace, as we near the deadline for the implementation of IMO 2020.

W. R. Grace, along with our partners at Advanced Refining Technologies (ART), has been working for some time to understand the impact of IMO 2020 on refiners, and to identify the most profitable solutions to help refiners adapt to the new environment. While desulfurization via hydrocracking and hydrotreating are major components of many refiners’ strategies, a key unresolved problem for many refiners remains the FCC bottoms disposition.

In most refineries, the FCC bottoms is a reasonably high sulfur stream (1wt%+), and the combination of the high sulfur and the suspended catalyst particulates create a specific challenge for marine fuel blending under IMO 2020. Alternatives which have been discussed include FCC feedstock changes (lower S), routing the FCC bottoms to a resid hydrotreater/heavy oil upgrader, or routing the FCC bottoms to a coker. Each of these comes with their own set of costs and constraints (and many refiners do not have multiple options).

At the same time, the value of middle distillates, including FCC LCO, is pushing toward a relative maximum – purely based on non-IMO market drivers. On top of this, many

economists have predicted that middle distillates will rise in value under the new IMO regulations, as low sulfur cutter stock is proposed as an option to manage the sulfur in the finished marine fuel blend.

Together, these forces line up to drive the incentive to upgrade FCC bottoms to LCO to an all-time high. Luckily, prior to the new IMO regulations, upgrading FCC bottoms to higher value products was often the fastest route to higher profitability. With the onset of new marine regulations, this incentive is expected to become the most significant economic driver for even more FCCs globally. However, many refiners have not yet built this additional incentive into their current plans, and it remains one of the most important near- term opportunities that will evolve as we approach the implementation of the new rule.

Because upgrading bottoms has always been an important part of FCC, Grace has deployed FCC catalysts to address this need at hundreds of refineries. Our newest innovations, including our MIDAS® Gold technology, allow for the inclusion of a high degree of our signature mesoporosity, as well as an increased amount of macroporosity to extend the range of benefits that can be delivered by our catalyst solutions.

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