Shape up the refineries of the future through integration & reliability to cope up future demand-MMS

MMS - The Multimedia Studio Mumbai India www.multimediastudio.net

India is one of the fastest-growing economies in the world and one of the largest importers of crude & edible oil. India’s refining capacity is expected to increase to about 439 million tonnes per year by financial year 2029-30. Being an Mechanical Engineer by "Profession" and "Content - Blog Writer" by choice having vast experience with O&G entities worldwide #yusufbhandarkar. As new and existing refineries continue enhancing their infrastructure, a significant addition to the current capacity will be contributed by the west coast refinery in Maharashtra when it comes on stream in 2025 joint venture with ADNOC & ARAMCO respectively. Amidst this growth trajectory of India’s refining business, it is imperative to note that India is moving to Bharat Stage emission -- BS-Vl fuel regime by the end of 2020. To meet this deadline, the industry must adopt the latest technologies to make the business efficient and profitable.

At present, the leading global trend in a refining ecosystem is an end-to-end integration of applications that will make business operation more profitable, especially in a fast-changing global energy marketplace.The negative impact of fossil fuels on the environment (global warning) has become widely accepted, and our global society has begun to specialize in alternative fuels. The pollution of the local, regional and global environment has become a primary concern globally and specially the densely polluted countries of the world, India one of them due to huge growth within the number of automobiles, the rise in heating or aircon in offices and houses, and therefore the growth of commercial plants have focused opinion on the harmful effects of in depth use of oil products in our day to day life.

To protect the environment, stringent specifications for fuel qualities are implemented by various regulatory bodies; these specifications have forced refiners to extend investments in leading-edge, advanced technologies to process clean fuels. The aim of the UN Sustainable Development Goal 7 of 2019 is to make sure universal access to reliable, affordable and clean modern energy by 2030, with increased sustainability through the increased share of renewable energy within the global energy mix.1 an identical objective is printed within the EU Energy Road-map 2050, which aims to make a competitive low-carbon energy system.

Key factors that impact oil demand include economic process, increase, substitution by other energy sources and oil price. the planet population is predicted to succeed in 9.7 B by 2050, and therefore the world economy could quite double in size over that very same period thanks to continued technology-driven productivity improvements.4 As populations still expand and living standards rise, demand for energy and petrochemicals will grow. Key trends driving this growth include urbanization, the increasing movement of individuals from lower to middle economic classes in developing countries, mounting industrial demand, and increases in personal and commercial transportation needs. As demand for energy grows, refining and petrochemical companies must evaluate whether to form new plant investments or upgrade existing ones to satisfy production capacity needs.

The article discusses various aspects of evaluating options that enable an existing refiner to form investment decisions to optimally diversify into petrochemicals through integration. A case study by our team of experts @ Multimedia Studio Mumbai was conducted, and therefore the findings will help refiners to require actions to adapt their business model roadmaps to remain within the market profitably and sustainably.

Energy demand trends

Oil competes with other energy sources, and therefore the extent to which substitution occurs depends on relative prices, availability, government policy with reference to taxation and environment, and therefore the relative plant cost where products are going to be processed. The demand growth of traditional transportation (gasoline, diesel, etc.) is declining thanks to several factors, including:

Higher-efficiency vehicle engines

• Fuel substitution, like liquified gas (LNG), compressed gas (CNG), hydrogen (H2) and biofuels

• The growth of electrical vehicles

• Strict environmental regulations

• Circularity of economy.

These inputs tremendous pressure and challenges on refiners, which face lower sales and profit margins, and in forcing them to utilize or innovate alternative options for sustainability. In contrast, the market demand for petrochemicals, like ethylene, propylene and aromatics, continues to rise thanks to key driving factors that include global increase and economic upliftment in developing countries like India and China. World leading oil broker IHS Markit has predicted that by 2040, the worldwide average demand rate of growth for refined products are going to be but 1%, whereas the worldwide petrochemical demand growth will remain strong and can increase steadily at approximately 4%/. Refiners can maximize this growing petrochemicals demand to stay competitive and stay in business through integration with petrochemical units.

Standalone refinery or petrochemical facilities face market pressure thanks to crude price volatility and swings in global products demand and specifications. Feed availability, flexibility in feed stock, domestic or global market-based products demand, economies of scale and capital investment efficiency are key drivers in placing the main target on refinery and petrochemical integration. An integrated complex enables refineries to raised accommodate future shifts in product patterns and demand which will see a greater specialize in chemicals than on transportation fuels.

Solving a posh problem

The economics of the integrated facility are extremely complex. Feedstocks are often processed by many possible configurations, each of which incorporates various technology options that depend upon market demand for finished products. Furthermore, the multiple blend pool destination of intermediate streams, uneven product demand, multitudinous specifications on final products, etc., make the entire system a sophisticated web of options. thanks to the competitive market, companies are driven to optimize all potential investment options and choose those options that provide the utmost profit and sustainability. Unfortunately, choosing the optimal configuration using conventional simulation techniques is practically impossible.

The hydrocarbon processing industry (HPI)—indeed, any industry—cannot shake the economic logic that any investment must end in acceptable profitability. The expected margin will, therefore, govern the difference of integrated facilities to satisfy the market demand. Companies must meet product quality constraints and growing product demands while maximizing profit. The competitive market drives the choice of the optimum configuration that satisfies multiple objectives.

Evaluating options

Linear programming (LP) algorithms are effective mathematical tools to efficiently handle this complex problem. LP techniques are particularly useful within the oil industry for planning when many alternatives are possible with available resources. LP determines the optimum allocation of resources while providing a transparent indication of the mixture of supply, processing, blending and selling activities that ought to be followed to realize highest level of monetary success. For both a grassroots or expansion add-on integrated complex, the investor must consider what products to supply, which markets (domestic or global) are the simplest fit, what proportion investment and equity to commit and, most significantly, the return on investment (ROI) and payback time.

This approach must be underpinned by an in depth modeling exercise using LP tools that incorporate these factors and tests them through different scenarios using sensitivity analysis. the target is to assess whether and where integration is acceptable, and what market drivers will deliver the optimum ROI. The result's an in depth economic analysis for the general profitability of an integrated complex. While standalone refineries are gradually exploring integration opportunities with petrochemical complexes, it's beneficial for brand spanking new refineries to think about such integration from the design stage.

Integrated Facilities

Integration implies identifying synergies and optimizing them for operational and economic gains by sharing and exchanging numerous streams, like feed stocks, byproducts and utilities. Today, petrochemicals are driving the bulk of worldwide investments within the HPI. Two major challenges are decarbonization and singularity. A linear production model that generates waste materials through single use (singularity) will move to circularity by reusing those waste products in order that they never leave the worth chain and should not produce much emissions. These factors must be considered for the integrated facility.

Balancing risks and rewards

Building and operating a grassroots facility may be a complex undertaking,5 but the economics related to modifying or revamping a couple of units in an existing plant are often even tougher. Many factors critically impact the investment: plant location, available feed stocks, outcome mix, petroleum pricing, environmental issues (local, national and global) and licensed processing technologies, among others. How should a corporation considering such an investment decide to properly balance project risks and therefore the potential rewards of latest investment, or retrofitting current production assets to integrate with new petrochemicals units?

Typical refinery configuration

The key to optimizing refinery margins is usually the technology wont to upgrade rock bottom of the barrel. within the past few decades, new technologies, including both carbon rejection and H2 addition processes, have emerged. Several options are available that convert heavy residue to valuable products. FIG. 1 shows a typical “zero residue” refinery configuration.

The main purpose of this configuration is to supply clean transportation fuels (gasoline, jet and diesel) that suits the newest environmental regulations. To avoid any residue, a gasification unit that produces H2 for hydroprocessing units, steam and electricity for refinery internal use is incorporated. the surplus H2 and electricity are often exported to the demand marketplace for cell and electric vehicle use, respectively. during a decarbonization scenario, this refinery can capture CO2 from flue gas employing a suitable carbon capture and storage (CCS) technology.

The fluid cat cracker unit (FCCU) may be a sort of secondary unit operation that primarily enables gasoline production in petroleum refining processes. Refineries use this unit to take care of the balance between market demand for gasoline and heating oil. The FCCU are often operated in high-severity and selective petrochemical mode with a choice of appropriate catalyst to supply more propylene when gasoline demand declines. FCC produces most of the world’s gasoline, also as a crucial fraction of propylene for the polymer industry.

Integration scenarios

Integration is more complex and greater than simply the sum of its parts. Controlling as many of the variables as possible within the integration process is important to maximise system efficiency and profitability. Several integration scenarios are possible in an existing refinery.

Installation of a steam cracker to supply ethylene, propylene and other derivatives

• An aromatics complex to supply BTX

• A gasification unit to supply chemicals through the syngas route

• Petrochemicals through the recovery of propylene from FCC/coker units.

• The first three are very capital-intensive compared to the last one.

The integrated complex should provide optimum molecule management for better ROI. Traditionally, refining operations are aimed toward maximizing various grade of transportation fuels as final products. However, this underutilized opportunities for extracting higher-value products. for instance, the naphtha stream is reformed to supply reformate and FCC unsaturated components (e.g., propylene processed with isobutane), which are wont to produce alkylate. Both products are blended within the gasoline pool for octane improvement. Optimally, reformate that's rich in aromatics are often wont to produce BTXs, and therefore the propylene stream are often further processed to supply higher value petrochemicals. Similarly, naphtha and refinery offgas streams are often used as feedstock for a steam cracker unit to supply petrochemical base materials or other polymers to get higher profitability.

More than 500 FCCUs are operational globally. quite 30% of the world’s propylene is supplied by refinery FCC operations: approximately 45% is co-produced from ethylene steam cracking of naphtha and other feedstocks, and therefore the remaining from propane dehydrogenation (PDH) and other processes.

More than 60% of U.S. refineries have one or more FCCUs, and approximately 75% of them are within the U.S. Gulf Coast (USGC) and Midwest regions. Half of U.S. propylene is produced as a byproduct of FCC operation, and investment spending goes into FCC revamp to supply low-sulfur, high-octane gasoline. the bulk of U.S. refineries are often integrated to petrochemicals supported current gasoline producing configuration by adding propylene recovery and other propylene-based petrochemical units, like propenoic acid and acrylates. The demand for propenoic acid and acrylates may be a steadily growing market in both the U.S. and developing countries.

Key factors

Deciding whether and where integration is acceptable requires careful consideration. Many factors critically impact the investment, including:-

Availability of internal feed stocks (propane, propylene, butane or naphtha, etc.)

Synergies of utility streams (water, steam, power, hydrogen, etc.)

Complexity of configuration

Proximity of both plants

Market demand and competition

Ability to leverage staffing for maintenance, operation, management and logistics benefits.

Integration road map

The economic feasibility of a project are often established through proper master planning.

The road map of this planning incorporates three major steps, identifying and agreeing on the project objective; economic evaluation of varied configurations; and selection of feasible optimum configuration. Pre-project planning is vital to success for minor revamps to a posh multi-billion-dollar investment. The evaluation stage requires an experienced task force comprising several engineers from disciplines like engineering, cost estimation, financial analysis and, of course, the owner’s engineers. A collaborative and transparent approach is important for better understanding, to scale back project risks, to get optimum profitability and to support strategic decisions.

Profitability drivers

Profitable operations that deliver adequate ROI are a function of a posh set of variables underpinned by basic supply and demand dynamics and by global competition. Refiners must strive to maximize their profit margins by optimizing variety of variables, including the sort of crude feed stocks and products, energy requirements, plant complexity and efficiency, logistics and transportation, while responding to an increasingly stringent regulatory agenda. The operational business environment is dynamic and comes with varying levels of economic, technical, regulatory and economic risks.

The financial success of an integrated complex depends on various key parameters, like input costs, optimum processing configuration, system reliability and efficiency, and merchandise market price. All profit drivers are important, but not all have an equivalent impact on profitability. In fact, input costs and merchandise prices will always have more impact than other drivers. the most factors determining product values are market demand and competition, plant location, available inventory, seasonal shifts in demand, and geopolitical and natural risk in selling (e.g., the Covid-19 global outbreak has reduced energy demand).

The economics of the HPI business are complex and capital-intensive. the value of inputs and therefore the price of outputs are both highly volatile, influenced by global, regional and native supply and demand changes. Operating between these two related but independent markets for raw materials and finished products may be a challenging business. Also, a refinery’s ability to supply high-margin specialty products that generate higher revenue increases profitability.

Since refineries have little or no influence over the worth of their input or output, they need to believe operational efficiency to stay competitive. To be economically viable, the refinery must efficiently operate to stay operating costs (OPEX), like energy, labor and maintenance, to a minimum. additionally, they need to keep the facilities at maximum utilization through efficient maintenance. Minimizing unscheduled downtime is vital to maintaining an optimal utilization rate. Since operating a refinery entails high fixed costs, utilization rates are one among the main factors influencing profitability.

The configuration and complexity of every facility determines the kinds of feed stock it can process and therefore the products it can produce. A refinery’s level of complexity is usually supported what proportion secondary conversion capacity it's. The complex refinery is more flexible and may process a wider range of Crudes into a far better yield of value-added products. The increased flexibility enables them to quickly adapt to constant changes in market conditions for both inputs and outputs. A refinery’s ability to regulate its product slate to satisfy changes in demand features a huge impact on its profitability and reduces risk. However, adding more complexity comes at a high investment cost and entails higher operating costs. Economies of scale is another important factor contributing to profitability. Larger facilities are more efficient and better ready to withstand cyclical swings in commercial activity, and that they even have lower fixed costs per volume processed.

The location of a refinery directly affects the value of bringing feeds to the power and getting products to the market. Typically, products leaving a refinery cost more to move than the petroleum coming in. So, the refinery’s location must balance crude transportation costs and proximity to markets. Integrated refinery and petrochemical facilities should be located as close as possible to attenuate transport costs of varied streams.

Integration economic feasibility

The economics of the integrated facility are extremely complex. Major steps involved to determine economic feasibility include data generation, configuration optimization (LP modeling), cost estimation and financial analysis.

The source of feed stocks supply, market demand of finished products and associated economic data are generally available from market surveys, which may be administered by the engineering contractor, a third-party analyst or provided by the owner. the info on various process units (yield, intermediate streams properties, utilities, catalyst and chemical consumption's, etc.) are generally available from licencors and a few are taken from the engineering company’s in-house data bank. The LP modeling exercise requires these data as input, along side all constraints concerning supply, processing (unit capacity, product specifications), selling, etc.

The accuracy of LP results depends on the validity of the input file. the info associated with process units are generally accurate enough; however, data of feed stocks cost, product prices, market demand, etc., are forecast numbers. Hence, data accuracy should be high to urge a sensible comparative results of different options. The LP model feasible solution for every option optimally allocates various intermediate streams from process units to destination product pools, satisfying all specifications and constraints. It generates an overall material balance, utility requirement figures and a profit objective value, which may be used for screening and ranking various configurations.

The engineering department develops preliminary data, like offsites and utilities facility, site selection, environment studies and construct-ability studies, which are required for cost estimation. Based on the LP model’s profit function ranking, one or two of the simplest options, or all options, could also be selected for further analysis. an in depth cost of capital estimation is performed with an accuracy level counting on the project stage, which incorporates a mixture of kit factored estimating, semi-detailed methods and vendor quotations.

#yusufbhandarkar Multiedia Studio Mumbai India +917977231537 Email:multimediastudio9@gmail.com