Eni slurry technology and biorefinery: two different refining paradigms

Giacomo Rispoli, Executive Vice President of Research, Technological

Development & Projects, eni Refining & Marketing Division

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The crisis of EU Refining System 1

Focus eni’s new technology initiatives 3

The role of Innovation 2

Conclusions 4

Highlights

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The “Panta rei” of EU refinery

For many years the European Refinery has been a solid source of profit, but starting from 2008 the scenario has changed dramatically towards lower profits or losses.

Panta rei os potamos (the whole flows as a river)

Heraclitus Since the scenario changes now appear to be structural, the refinery system can not remain (be) as it was to mantain profitability. Therefore it is important to understand if this industrial sector can evolve in some way to become again economically attractive.

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The scenario

North America Region: Positive refinery margin. The discovery and production of shale-gas has reduced the cost of energy.

East and Far East: Positive refinery margin driven by the growing demand and by the large size of the new refineries

Europe: Low or negative refinery margin due to: • decrease of the demand and unbalanced offer • high energy cost • environmental constraints • old refining system constituted by many

medium-small size refineries

About 100 Mln ton overcapacity in Europe driven by volume drop

EU refined products drop and margins under pressure

decrease of the demand and unbalanced offer

Fuel economy increased by nearly 60% from 1980 to 2006 and continuous improving

Source: MIT Study, Jan. 2012

0

20

40

60

80

100

120

1993 1996 1999 2002 2005 2008 2011-I

Oil Price Escalation Crude oil prices trend ($/bl)

Dubai

Ural CIF Med

Brent Dated

Source: Platts 2011

* Passenger light-duty vehicles

environmental constraints Climate and energy package:

renewable energy to reach 10% share of transport energy demand in 2020

CO2 emission standards for PLDV* by 2020 (95g CO2/km)

ETS to include aviation from 2012

Source: IEA-WEO 2011 Scenario

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Lower crude quality with higher quality fuel request

Source: Woodmackenzie

Mbl/d

EU Refinery rationalization process is on going since 2009

6

More than 9 Refineries already closed (about 1Mb/d) and further 11 at risk

A total of 1.7 million bpd of refining capacity has been mothballed since 2008 (International Energy Agency).

Capacity rationalization (additional closures) would reduce the structural gasoline surplus, but cause also the Middle Distillates deficit to increase in

the medium term.

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The crisis of EU Refining System 1

Focus eni’s new technology initiatives 3

The role of Innovation 2

Conclusions 4

Highlights

Refining is a technologically mature sector

Effort

Adv

ance

men

t

1900 1920

1980 2000

1925: Thermal cracking

1927: Coal hydrogenation

1929: Delayed coking

1930: 1° Hydrorefining

1938: Alkylation

1940: Catalytic reformer

1941: Butane isomerization

1942: Fluid catalytic cracking

1940

1949: Platforming

1962: Modern Hydrocracking

1963: Ebullated bed hydrocracking

1960

Effort/Advancement curve for technology innovation in refinery

Last significant development back in the ’60s

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Europe must be “re-industrialized” in a different way to survive non-EU competition

In our view, technology innovation will be the breakthrough for the future of the EU Refining System, enabling a current technology curve shift

A paradigmatic change is

required towards new

breakthrough technologies

Effort

Adv

ance

men

t in

te

chno

logy

2010

1900 1920 1940

1960

2000 1980

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The high energy cost and environmental constraints call for new technologies to support competitivity of EU refining system

The search for a discontinuity

The eni approach

The answer: Eni Slurry Technology

The answer: Green Refinery

project

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Problems: Low or negative refinery margin due to: • decrease of the demand and unbalanced offer • high energy cost • old refining system constituted by many

medium-small size refineries • environmental constraints

• old refining system constituted by many medium-small size refineries

• environmental constraints

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The crisis of EU Refining System 1

Focus eni’s new technology initiatives 3

The role of Innovation 2

Conclusions 4

Highlights

: EST

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EST is a hydrocracking process based on two unique features: 1. Nanodispersed (slurry) non ageing catalyst

2. Homogeneous & isothermal slurry bubble column reactor

The recycle of unconverted heavy ends

allows the total conversion of the bottom of the barrel to good

quality middle distillates (feedstock conversion >97%)

H2

Refined products

(SCO)

Gas

Slu

rry

Rea

ctor

Feed

Purge

Frac

tion

atio

n

Sys

tem

Cat prec

Catalyst & Residue Recycle

H2 Rec.

Reaction Products

EST can: easily handle very heavy feedstock; lower energy costs; balance diesel vs gasoline.

EST: What and Why

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Construction and running of a

0.3 bpd Pilot Plant

Completion and start-up

of a 1200 bpd demo

plant

Early 90’s Start up of the R&D activity

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Eni Slurry Technology (EST) Development Phases

Start-up of a 23000 bpd industrial

plant

At the end of 2008 after more than 10 years of Research & Development, eni decided to build the first industrial unit in its refinery of Sannazzaro dè Burgundi in Pavia province, about 60 Km west of Milan.

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Schedule of the main EST Project steps Engineering (Front End)

started Jan 2009. Detailed engineering 9 months later Site Activities (earth

movement and civil works) started in Nov 2010 Steam Reforming unit and

relevant utilities started-up in Jan 2013 Pre-commissioning of EST

started in Apr 2013 Commissioning of EST

started in Jul 2013 Oil in: Oct 14th, 2013

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Perspectives

The completion of the new plant start-up will open the possibility to radically modify the existing refinery schemes through the conversion of the oil barrel over 97 % to LPG, kero, naphtha and diesel fuel.

Reducing:

Feedstock costs

Investment

Energy consumption

Increasing: Light products

yields

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In the European context, the application of the new scheme would enable the transformation of the middle size refineries, orienting them to the main production of diesel, simplifying the processing cycle and decreasing the specific energy consumption.

Hydroskimming refinery scheme

(1900-1950)

3-4 %

Simplex total conversion refinery scheme

(2013 on)

5-6 %

Complex refinery scheme

(1945-2010)

8-10 %

Ene

rgy

cons

umpt

ion/

Com

plex

ity

Conversion

Perspectives

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The crisis of EU Refining System 1

Focus eni’s new technology initiatives 3

The role of Innovation 2

Conclusions 4

Highlights

: Green Refinery

From Venice conventional Refinery to Biorefinery Overcapacity: use existing facilities for doing new business

Livorno

Porto Marghera

Milazzo

Gela

Taranto

Wholly owned In partnership

Sannazzaro

Green Refinery project at Venice refinery

The use of existing facilities allows an important reduction of capital costs

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Substitute FAME with in-house produced HVO

Biofuels process: conventional vs new generation

Green Diesel: high quality product obtained by means of hydrotreating (HVO) with paraffinic composition (oxygen free).

Feed Process Product Biodiesel FAME (Fatty Acid Methyl Esters)

Glycerine

Biodiesel Methanol

Transesterification

Green Diesel (HVO) Green Jet (HEFA-SPK) Green Naphtha Green GPL

Biological feedstocks

H2

HYDROTREATMENT

CO2/H2O

Biological feedstocks

Feed Process Product

BIODIESEL CONVENTIONAL PROCESS:

ECOFININGTM PROCESS :

LOW QUALITY LOW CAPEX

HIGH QUALITY

HIGH CAPEX

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From conventional FAME to high quality Green Diesel

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In first phase of the project the EcofiningTM unit will operate in balance with the hydrogen provided by the existing catalytic reforming unit.

Venice project

The final configuration of the Green Refinery will be achieved after the completion of the new Steam Reforming unit for H2 production, by end of 2016: bio-fuels production will reach 560 kt/y .

2Q 2014 start up 1Q 2016

Green Refinery scheme

The Green Refinery project is the first example on world basis of conversion of an existing petroleum refinery into a Biorefinery. In a difficult time for refining margin in Europe, eni considered to reuse existing equipment, facilities, utilities, offsite and ancillaries, commonly installed in a petroleum refinery, to convert them into an innovative Biorefinery, utilizing the eni/Honeywell UOP proprietary EcofiningTM technology.

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Perspectives

Venice Biorefinery, originally forecast to close, will be maintained in operation thanks to the Green Refinery Project. Instead of grass root investment for a new EcofiningTM plant, the Green Refinery project requires minor CAPEX, thanks to the integration with existing facilities (patent filed MI2012A001465).

The Green Refinery will produce Green diesel and also some high value by-products which will used as new green fuels, such as Green Naphtha, Green LPG and Green Jet.

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The crisis of EU Refining System 1

Focus eni’s new technology initiatives 3

The role of Innovation 2

Conclusions 4

Highlights

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Conclusions

Only a strong innovation resulting from frontier research can create the conditions for the maintenance and development of industrial activities in this field in Europe. The EU should make the utmost effort to support and promote innovation in this field, as a prerequisite for the maintenance of employment and growth.

The crisis in European refining has become a structural feature that will not allow a return to the condition existing before 2008.

To avoid this industry disappearing from Europe it is necessary to identify the pathways that constitute an evolutionary breakthrough practices compared to the previous knowledge.

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“It must be remembered that there is nothing more difficult to plan, more doubtful to happen, or more dangerous to manage than the creation of a new system. To him who proposes it that produces the enmity of those who have profit to preserve the ancient and only lukewarm supporters in those who would benefit from the new “ Niccolo Machiavelli (1469 – 1527)