1

Conversion Options forClean Fuel Production

Jean-Paul Margotin

2Petrofed - Petroleum Refining Technologies Seminar - April 2012

Agenda

• Market Outlook

• Conversion options to squeeze most of bottom of the barrel

• Grassroots case studies

• Economic comparison

3Petrofed - Petroleum Refining Technologies Seminar - April 2012

2010-2030 AAGR by Product

Global Oil Product Demand Outlook

Source: Axens & Other sources (2011)Other* = Kerosene (≠ Jet Kerosene), Refinery Gas, Petroleum Coke, NGL, Lubricants, Bitumen, Paraffin Wax, Refinery Losses, …

Market Structure2010 vs. 2030

-0.5%0.4%1.7%1.9%0.8%2.2%0.5%0.7%

Jet/KeroseneOn-road dieselOff-road diesel

Fuel Oil

Motor GasolineNaphtha

LPGOther*

10%

13%

16%5%

27%

7%9%

13%

7%11%

19%

6%

26%

9%8%13%

0%

20%

40%

60%

80%

100%

2010 203088.2

Mbdoe104.7

Mbdoe

Global 2010-2030 AAGR: 0.9%

• Demand growth driven by transportation fuel• mainly middle distillates• Gasoline: lower growth than middle distillates, but main contributor by 2030

• Naphtha growth driven by petrochemicals• Heavy fuel oil demand = only 7% of the global demand by 2030

4Petrofed - Petroleum Refining Technologies Seminar - April 2012

0

100

200

300

400

500

600

700

800

Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan.11

Conversion Incentive

Price Differential with HSFO (3.5%S), US $ / ton

On-Road Diesel - HSFO

LSFO (1%S) - HSFO

• Since 2010, (HSFO - On-Road Diesel) price differential increases improving the profitability of conversion projects

• (HSFO - LSFO) price differential is constant • Fuel oil market tightening due to lower available volume on the market

5Petrofed - Petroleum Refining Technologies Seminar - April 2012

Glossary

• Hyvahl = Resid hydrotreating

• R2R = Resid (R)FCC

• DC = Delayed Coker

• H-OilRC = Ebullated bed technology for resid hydrocracking

• Mild HCK = Mild conversion hydrocracking

• HyK = High conversion hydrocracking

• HDT = Prime-G+, Prime-D

6Petrofed - Petroleum Refining Technologies Seminar - April 2012

40 27

6

177

46

278

Option 1: Hyvahl + R2R

Hyvahl R2R

AT

FGLPGHDT

AR

NaphthaGasoline

649 t/h

LPG and C5+ throughput Total: 574 t/h t/h

Diesel

LSFO

C3=

7Petrofed - Petroleum Refining Technologies Seminar - April 2012

RDS: Hyvahl Characteristics

Feed AR / VR

Hydrogen

GasTreatment

FractionationSection

PRSGuard Reactors

R1A R1B

• Fixed bed RDS process from AR to 100% VR

• Can process feeds with high metals content using “PRS” technology (permutable Reactors system

• Low to medium diesel production: 20-25%

• Hydrotreated resid applications:• Ultra low sulfur (S< 0.3 to 0.5 %) and stable fuel oil• Excellent feed for resid FCC unit (R2R)

• New HDM & HDS catalysts further improve economics• HF 858, HM 848 and HT 438

8Petrofed - Petroleum Refining Technologies Seminar - April 2012

Hyvahl + R2R Commercial Project n°1

• Location: Middle East

AR feed quality

90Ni+V, wtppm3.9S, wt%17.5°API

Project Context

• Crude: Middle East• Feedstock: Atmospheric resid

• Capacity: 40,000 bpsdin one train

• Objectives:• Maxi gasoline production• No market for high sulfur

coke

9Petrofed - Petroleum Refining Technologies Seminar - April 2012

Option 2: H-OilRC + Mild HCK + FCC

H-OilRC

FCC

HDT

VTMildHCK

AT

VR

VGOAR

32 15

48

126

240

146

649 t/h

LPG and C5+ throughput Total: 607 t/h

FG

Diesel

LPG

NaphthaGasoline

t/h

C3=

HSFO

Slurry

10Petrofed - Petroleum Refining Technologies Seminar - April 2012

Axens Ebullated-Bed Technologies

Settled Catalyst Level

Expanded Catalyst Level

Distributor Grid Plate

Hydrogen + Feed

Catalyst Addition

Recycle Cup

Ebullated Bed

Ebullating Pump

Gas / LiquidSeparator

Recycle OilCatalyst Withdrawal• H-OilDC characteristics

• Distillate HydroCracking• Heavy VGO and DAO feedstock• Low S and N conversion products

• H-OilRC characteristics• Ebullated bed Vacuum resid

HydroCracking• 40 - 80% VR conversion• Constant product properties• Unconverted resid application

• Low sulfur (up to S< 1%) and stable fuel oil

• Feed for coker, SDA or gasification units

• On-line Addition / Withdrawal of catalyst

• Availability > 96%• 2 to 4 years between turnarounds

11Petrofed - Petroleum Refining Technologies Seminar - April 2012

H-OilRC Process Scheme Improvements

H-OilReactors

Make-Up H2

Resid Feed

Heater

Heater

HP Air Cooler

HP HT Separator

HP LTSeparator

Inter Stage Separator

MP HT Separator

MP LT Separator

MP AbsMP Abs

HP AbsHP Abs

HP MemHP Mem PSAPSA

Fuel Gas1st

Stage1st

Stage3rd

Stage3rd

Stage2nd

Stage2nd

Stage

Atmospheric& Vacuum

Fractionation

Atmospheric& Vacuum

Fractionation

NaphthaGasoilVGOVR

Sour Gas

• Optimized catalyst systems• Max Train Size• New Reactor Internals Design

• H-OilRC design features:• IS²: Inter-Stage Separator• Optimized Hydrogen management• C²U: Cascade Catalyst Utilization

12Petrofed - Petroleum Refining Technologies Seminar - April 2012

`̀

FCC / RFCC - Propylene Solutions

• Go for Propylene with Cat Cracking• High Propylene (HP) FCC for VGO• Resid to Propylene (R2P) for resid• PetroRiserSM for LCN Recycle• FlexEneTM for Higher Flexibility between Propylene

/ Gasoline and Distillate production

13Petrofed - Petroleum Refining Technologies Seminar - April 2012

Integrated H-OilRC + Prime-D Commercial Project n°2

• Location: Eastern Europe Inland

• Feedstock: Ural• VR capacity: 60,000 bpsd• Objectives:

• On-road Diesel EURO V• LSFO @1 wt% S demand • No market for high sulfur

coke• Partial upgrading of heavy

cycle oil required • Existing refinery (VB, FCC)

VR feed quality

214Ni+V, wtppm2.7S, wt%11.0°API

Project Context

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Option 3: H-OilRC + HyK

H-OilRC

HDT

HyK

UCO

VT

AT

FG

Jet

LPG

Naphtha

HSFO

VR

VGOAR

15127

62

144

183

102

649 t/h

LPG and C5+ throughput Total: 632 t/h

t/h

Diesel

15Petrofed - Petroleum Refining Technologies Seminar - April 2012

Axens VGO Hydrocracking Keys Features

• Full set of Process configurations• HCK Single stage W/Wo recycle, Two Stages• Very good knowledge of Difficult feedstock as Licensor of SDA,

RDS and H-Oil Technologies

• Top level set of catalysts: HRK, HDK and HYK series• Single Source Supplier: R&D, Design, Catalyst, Start-up,

Services• Complete reference list from VGO HDT to MHC and HCK

• High Reliability: 100 % of Guarantees Met

16Petrofed - Petroleum Refining Technologies Seminar - April 2012

Integrated H-OilRC + HyKCommercial Project n°3

• Location: Eastern Europe Inland• Feedstock: Siberian• VR capacity: 47 000 bpsd• VGO capacity: 37 000 bpsd• Objectives:

• 70% VR conversion• Maximize diesel Euro V

production• LSFO @1 wt% S demand • No market for high sulfur coke

VR feed quality

348Ni+V, wtppm2.9S, wt%8.3°API

Project Context

17Petrofed - Petroleum Refining Technologies Seminar - April 2012

Option 4: DC + HyK

DC

HDT

HyK

Coke

AT

VT

UCO

FG

LPG

VR

VGOARNaphtha

649 t/h

LPG and C5+ throughput Total: 625 t/h

t/h

Jet

Diesel

21

135

61

88

100222

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Option 5: HyK + Hyvahl + R2R

Hyvahl R2R

FG

VT

AT

HyK

VR

VGOAR

LPG

NaphthaGasoline

649 t/h

LPG and C5+ throughput Total: 596 t/h

t/h

HDTC3=

LSFO

Jet

Diesel

21 1129

172

48

232

81

19Petrofed - Petroleum Refining Technologies Seminar - April 2012

VR feed quality

11.0C7 Asph., wt%160Ni+V, wtppm5.5S, wt%6.4°API

Hyvahl+R2R Commercial Project n°5

• Location: Middle East, Coastal

Project Context

• Feedstock: Al Shaheen

• VR capacity: 51,000 bpsd• Refinery: Grassroots

• Objectives:• Supply domestic demand• Produce export grade fuels EURO V• Maximize synergy with petrochemical industry

20Petrofed - Petroleum Refining Technologies Seminar - April 2012

Options Overview Bases for Economic Comparison

• Feedstock: 100,000 b/d (649 t/h) of atmospheric residArabian Medium Crude

• Arabian Medium Crude: API= 31.2, S= 2.56 wt%, CCR= 5.73 wt.%, Ni = 10.3 wppm, V = 34 wppm

• AR (4.4 wt %S) price was adjusted for viscosity content

• Investment location: Middle East• Vacuum distillation, HDT, SMR, PPS, SRU Amines and

alkylation units included• Hydrogen produced by SMR only

Note: HDT = hydrotreating, SMR = steam methane reformer, SRU = sulfur recovery unit, SWS = sour water stripping, PPS = propane-propylene splitter

21Petrofed - Petroleum Refining Technologies Seminar - April 2012

Refinery in the Middle

East

Middle Distillates exported to Europe

Gasoline, Naphtha &Fuel Oil exported to

Asia

Product Exportation & Pricing Considerations

• Grassroots refinery located in the Middle East• Brent price scenario: 112 $/bbl (Brent 2011)• Estimated Arabian gulf Prices

= Prices in the export area – freight cost

22Petrofed - Petroleum Refining Technologies Seminar - April 2012

1 406 US $/tPropylene

892 US $/tFOD

991 US $/tGasoline

115 US $/tPetcoke628 US $/tHSFO

(n°6, S cont. <3.5 wt%)

646 US $/tLSFO

931 US $/tDiesel1 006 US $/tKerosene

906 US $/tNaphtha

590 US $/tonsAR Arabian Medium Crude

7 US $/MMBtuNatural Gas

Price Considerations

857 US $/tLPG

Product Price Considerations2011 Scenario – Base Case

Included transport cost: ME Europe = 29 US $/tME Asia Pacific = 19 US $/t

Brent 112 $/bbl Scenario

23Petrofed - Petroleum Refining Technologies Seminar - April 2012

LPG and C5+ Liquid Yield

Liquid Yield *, wt%

N°2H-OilRC

Mild HCK + FCC N°3

H-OilRCHyK

N°1Hyvahl + R2R

N°4DC HyK

N°5Hyvahl + R2R

HyK

* Including LPG

88.4%

93.5%

97.4%

82.8%

91.8%

70%

75%

80%

85%

90%

95%

100%

24Petrofed - Petroleum Refining Technologies Seminar - April 2012

00460

173

4

278

62740

0

146

00

238

2

126

481532

0

144

062

183

102

3

124

015

8800

61

222

1002

133

021

0

0

480

232

81

173

291121

0

100

200

300

400

500

600

700

LPGC3=NaphthaGasolineJetDieselFODLSFOHSFOCoke

Production Capacity, t/h

LPG, C5+ and Petcoke Throughput

N°2H-OilRC

Mild HCK + FCC N°3

H-OilRCHyK

N°1Hyvahl + R2R

N°4DC HyK

N°5Hyvahl + R2R

HyK

25Petrofed - Petroleum Refining Technologies Seminar - April 2012

Economic Assumptions & MethodologyArabian Gulf

• Economic evaluations based on:• Discounted Cash Flow (DCF) analysis • Profitability index comparisons

(NPV, IRR, NPV/TCI, POT)

• Discounted Cash Flow (DCF) analysis• 10% contingencies• Depreciation period: 15 years• Project duration: 20 years• Discount rate: 12%• Tax Rate: 20% (construction duration 3 years)

26Petrofed - Petroleum Refining Technologies Seminar - April 2012

Total Capital Investment2011 Scenario

TCI includes:• ISBL investment

• Off sites

• Engineering fees

• Contractor fees

• Interest on construction loan

• Start-up costs

• Working capital

Billion US$

N°2H-OilRC

Mild HCK + FCC

N°3H-OilRC

HyKN°1

Hyvahl + R2RN°4DC HyK

N°5Hyvahl + R2R

HyK

3.22.9

2.6 2.3

3.1

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

27Petrofed - Petroleum Refining Technologies Seminar - April 2012

US$/ bbl AR

Total OPEX Comparison Arabian GulfBrent 112 $/bbl Scenario

N°2H-OilRC

Mild HCK + FCC

N°3H-OilRC

HyKN°1

Hyvahl + R2RN°4DC HyK

N°5Hyvahl + R2R

HyK

0.9

6.3

5.2

1.4

7.0

4.6

1.4

9.3

4.1

0.2

7.7

3.7

0.8

8.5

5.0

0

2

4

6

8

10

12

14

Manpower +Maintenance,Taxes,Insurance &Overheads Utilities (incl.Natural Gas)

Catalyst &Chemicals

28Petrofed - Petroleum Refining Technologies Seminar - April 2012

Product Revenues Arabian GulfBrent 112 $/bbl Scenario

Product Revenues (US $/bbl AR)

N°2H-OilRC

Mild HCK + FCC N°3

H-OilRCHyK

N°1Hyvahl + R2R

N°4DC HyK

N°5Hyvahl + R2R

HyK

7

39

1

66

198

22

53

1

30

1057

22

13

41

25

1

27

3

213

50

24

1

29

4

8

52

20

41

644

0

20

40

60

80

100

120

140

LPGC3=NaphthaGasoline Jet Diesel FOD LSFO HSFO Coke

29Petrofed - Petroleum Refining Technologies Seminar - April 2012

Conclusion

• Axens has an extensive experience on upgrading schemes and offer a unique conversion technologies portfolio • Covering all market demand type from maxi gasoline to

maxi middle distillate• Integrated solutions (HCK, HDT, etc…) reducing the

overall investment cost• With a Brent price scenario at 112 $/bbl, all 5 options

studied are profitable (IRR > 20%)

• Optimum solution depends on refinery specific constraints• Conversion path selection depends on the market

demand

30

Conversion Options forClean Fuel Production