Becht experts (Scott Sayles, Mel Larson, Robert Ohmes, Roberto Tomotaki, and Gordon Lawrence) published in the PTQ Q4 2022 issue, ptq&a section PTQ Q4 2022 Issue (digitalrefining.com). Topics discussed include: refinery closures, coke market, CDU, increased fouling from UCO’s, waste gasification alternatives, refinery revamps, and staffing challenges.
Below are excerpts of our contributions to the issue. To view the full list of questions and contributions visit PTQ DigitalRefining | Refining, Gas and Petrochemical Processing, Hydrocarbon Processing Q&A.
In view of the recent wave of refinery closures, including 5 in the USA during 2021 and others closing (on a cash cost basis), what technologies and market strategies are emerging to keep these plants operating?
Scott Sayles, Mel Larson, and Robert Ohmes – The US capacity lost by the refinery shutdowns or conversions will approach 1.5 MMBPD by 2024. The capacity increases in Asia will exceed these closure capacities, as well as planned closures / conversions in the EU market. For those assets that have been repurposed, their focus is on producing Renewable Diesel and/or Sustainable Aviation Fuel (SAF) blendstock, often at lower capacity. Hence, the product mix is shifted more towards distillate fuel products plus renewable co-products and away from traditional transportation fuels and byproducts.
From a market strategy perspective, remaining refiners are concentrating on several possible scenarios. The first strategy is to focus on their existing operation and configuration to continue to produce transportation fuels and petrochemicals and delay decisions on energy transition related investments. For those entities, maintaining safe and reliable operation is at the forefront. Hence, their focus from a technology perspective is to bring to bear advanced analytics and decisions making tools and processes to ensure the asset meets reliability targets while achieving production requirements. In particular, operating companies are applying artificial intelligence and machine learning techniques to “bad actor” pieces of equipment to help address root cause failures and meet on-stream availability. Other entities are examining ways to improve their crude / feedstock selection process by enhancing their entire crude decision making work process throughout the value chain by streamlining data flows, analysis, and decision rights throughout the Planning, Scheduling, Trading, Operations, Maintenance, and Engineering organizations. Advancements in predictive models for understanding Sulfidic Corrosion (via Becht’s CorrExpert tool) and Stream Compatibility (via Becht’s Stream Compatibility tool) are available to help expand, narrow, and / or clarify the potential crude blends that are processed in a facility and adding this layer of analysis within the current crude selection and processing process. Fundamentally, these refiners are focusing on maximizing margin within the existing assets to generate cash for potential future transformations of their business.
The second strategy involved active pursuit of projects and investments in energy transition. For many of the “closed” refineries in the US, these assets are in the process of or have been converted and reconfigured into renewable feedstock processing service. Though many sites have much of the hydroprocessing and utility infrastructure for such a conversion, we are observing that many sites are being challenged by the ability to secure sufficient feedstock to operate a technically and economically viable asset. Hence, refiners are already examining more challenging waste feeds, such as Used Cooking Oil (UCO) and Animal Fats (Categories 1, 2, and 3).
A key focus is on understanding feedstock qualities, contaminants, and downstream processing requirements, such that many entities are either building their own pretreatment facilities or going into partnerships with 3rd party entities to provide pretreated feeds. Though pretreatment technology have existed for many years within the food and waste processing industries, these are relatively new technologies for refiners and require an expansion of knowledge and capabilities within their organization to ensure the pretreatment asset is properly designed and operated to meet up with a more traditional refining asset. Other refiners are examining ways to decarbonize through reduction of their energy requirements as well as investment in external renewable power production and carbon capture. Still others are taking a very long term perspective and examining processing of used plastics and novel biomass feedstocks to further decarbonize their products, all of which involve a combination of known technologies and new / novel technologies. Given the number of options available, along with technology, market, and operating risks, a holistic analysis early in the project cycle is critical to define the right investment pathway and clarify the market and regulatory incentives to monetize the investment. For these refiners, a careful balance must be struck between engaging internal resources in investigating these longer term opportunities and ensure their existing assets meet safe, reliable, and profitable operation to generate the funding needed for energy transition efforts.
With the needle coke market expected to register a Compound Annual Growth Rate (CAGR) greater than 10% between 2022 – 2027, to meet growing demand for lithium-ion batteries and graphite electrodes, do you seen scope for reconfiguring underutilized fuel-grade cokers to needle coke production?
Scott Sayles, Mel Larson, and Robert Ohmes – “Needle coke or graphite is about 70 to 80 wt% of the lithium battery’s mass, such that the growing market for batteries for EV vehicles and other battery systems for storing off-peak “green” power is promising. That said, redefining of a coker’s operation to produce needle grade or graphite electrodes can be a significant challenge. Several entities are examining this opportunity, but limited firm plans for conversion have been announced.
Fundamental to producing needle coke is access to a highlight aromatic feedstock, such as decant / slurry oil from an FCC, thermal tar vacuum gasoil, coal tar, or lube extracts. Given shifts in crude slates to light tight oils, impacts of IMO 2020 implementation, further decarbonization efforts in the fuel oil market, and continued efforts to convert fossil feed refineries to renewable processing, these potential feedstocks are becoming more difficult to secure. In addition, depending on the capacity of the existing coker, finding sufficient material from local sources will be a challenge, such that the costs and systems associated with feedstock logistics could significantly limit this possibility. Some refiners are examining use of renewable feedstock as a potential feed source, especially in the area of plastics recycling. Finally, the feedstock may need processing in a dedicated hydroprocessing unit, such that a candidate refiner will need to repurpose a unit for this processing arrangement, as well as understanding the impact of changing to needle coke service for the upstream and downstream units, crude processing optionality, and modified product mix.
In addition, the following considerations should be addressed:
- Fundamentally the requirement for needle coke yield will lower the delayed coker feed as this requires a higher combined feed recycle ratio of 1.15 to 1.25.
- Additionally needle coke feed sources are low in metals (500 ppm combined max) and low is sulfur, thus moving the cost of crude sources higher and challenging refinery economics
- Economically needle coke contributes less than 5% of the overall refinery margin when all factors are considered thus moving to needle coke will required other advantages.
- Tight oils crude sources are not conducive for needle coke production as noted the need for aromatic feed stock to produce the needle structures
In summary, without the necessary infrastructure of specific crude, sweet decant oil, and market potential, the benefit competing with existing producers and providers can be a challenge.”
Considering the enormous amounts of thermal energy and stripping steam required for crude distillation unit (CDU) throughputs, Are there any new crude oil processing schemes for reducing CDU operating costs?
Roberto Tomotaki – “Maintaining the crude preheat exchanger train at optimum performance. Third party monitoring tools such as HTRI’s SmartPM or Hexxcell’s Studio are two examples of industry available tools which help identify the exchanger(s) and optimum timing of the cleanings to optimize train performance. Once a cleaning decision has been made, the cleaning method is also very important. There have also been advancements in cleaning technology such as ultrasonics and robotics which return the exchangers to a rarely achieved near clean design condition.
Becht’s Bundle Technology Upgrade (BTU) program, help identify the bundle technology best suited for the current operation. Exchangers designed decades ago most likely are not the optimum design. Bundle design upgrades such as helical baffles or enhanced tubes can significantly increase the exchanger performance with relatively small incremental investment. This is especially applicable when replacing a bundle that is at the end of its life.”
Increasing hydrocracker reactor heater temperature is a typical strategy when upgrading heavy feedstocks through the hydrocracker, but has to be balanced against higher energy costs and emissions. Complicating matters is fouling and corrosion of the unit heat exchangers by unconverted oils (UCOs). What trends do you see in resolving increased fouling from UCOs?
Roberto Tomotaki – “For existing exchangers, the most immediate performance improvement is to clean them with the most effective cleaning methods. Advancements in cleaning technologies such as Ultrasonics and Thermal cleaning have allowed the return of the exchanger’s performance to near clean design conditions.
The exchanger fouling can be reduced by redesigning the bundles with new technology. Becht’s Bundle Technology Upgrade (BTU) program can help identify the bundle technology best suited for the service. Recent advancements in thin film anti-foul exchanger coatings has led to reports of significant fouling reduction.”
Pyrolysis-based technology can convert plastics-rich refuse derived fuel into extractor-ready BTX product, but the substantial energy input and processing challenges compels the petrochemical industry to consider waste gasification alternatives. How do you see this evolving?
Scott Sayles – “Pyrolysis is a promising technology to convert cellulous or plastic waste into an oil that allows processing into either fuels or petrochemical. Pyrolysis designs are varied depending on the basis of the process. Some are nearing commercial operations and others are in the pilot stage. The conversion of plastics into feedstock ready for the aromatic extractor tower to produce BTX is an example of pilot stage level development that is showing some promise. The liquefaction of plastic using pyrolysis produces an oil that is the decomposition product of the plastic being introduced. To produce aromatics directly seems to require selective plastic pyrolysis. Gasification is a direct rout converting the plastic into a syngas which can be converted into BTX by Fischer Tropsch followed by cyclization. The gasification of plastic is relatively new but the conversion to desirable products is well proven commercial technology.
Many factors enter into the final plans for plastic conversion into marketable products. The technological risk is a key factor as is the requirements to recover and collect the plastic from the community. The social-economic factors are difficult. Socially plastic recycling are favorable. However, the capital investment and operational factors require a governmental position to ensure a future which will encourage investment.”
Engineering and construction cost indexes remain high according to IHS Markit Insights, along with global increases in shipping and equipment costs, particularly electrical machinery —- how is this affecting refinery revamp planning?
Gordon Lawrence – “We have been seeing astonishing increases in both equipment costs and in their shipping times. This has been affecting our clients across the globe, not just in North America or Western Europe. It has caught a few owners out, leading to project or turnaround budget busts when prices are higher than estimated and schedule busts when shipping times are longer than planned. But in general, the increases in equipment cost and shipping time have been well signaled in advance. This has meant that those project or turnaround owners that continue to follow the time-honored rules of good and timely front-end definition have been able to ensure that their budgets and their lead times reflect the current reality. Developing a good quality estimate, with budget or firm quotes on price and delivery from vendors before going for Final Investment Decision is as important as it always was.
The issues with shipping also bring into focus the value of having in-house procurement and expediting resources, and not leaving those tasks solely to the engineering contractor. It’s important to keep an eye on deliveries and ensure that your orders are not “shunted to the back of the queue” by other customers that are shouting louder for their orders.
However, the area where teams are perhaps not yet fully grasping the implications for the future is the recognition of the impact of escalation. For a Turnaround, with its shorter lead time, this has perhaps a slightly lesser impact. But for large capital projects, trying to take account of the latest inflation figures in the escalation allowance for a project budget is an interesting exercise in ‘crystal ball gazing’.”
Against a backdrop of contractors and subcontractors challenged with staffing up in advance of a refinery or petrochemical facility revamp, can you comment on what’s needed to increase the quantity of well qualified craftsmen in the post-pandemic era?
Gordon Lawrence – “Finding well-qualified craftsmen has been a concern in North America and Western Europe for some time. The recent pandemic has merely increased a pre-existing concern, rather than caused it per se. There seem to be a number of factors in play:
- The societal shift in North America and Western Europe to put less social cachet on manual labor, means fewer young adults are interested in this work. The drop in vocational training and apprenticeships, coupled with the growth in the desire for degree qualifications is one sign of this.
- The societal concern about climate change has led to a situation where (rightly or wrongly) young adults in those regions view the oil/petrochemical industry as being a bad industry to go into, both for personal social standing, and because they don’t view it as having long-term career prospects.
- Then finally, the recent pandemic has awoken a greater desire amongst young adults for work that can be done remotely, from home and does not involve a nomadic existence, travelling from job-site to job-site.
In the European Union, the shortage in skilled labor in Western Europe was, until recently at least, partly covered by migration of skilled labor from Central and Eastern countries within the Union that had not yet de-industrialized. That migration has slowed, as the Central and Eastern economies have grown to the point where the disruption of moving west is no longer offset by a bigger pay packet than could be earned at home.
In the near term, the shortages may be covered by higher wages to encourage existing skilled workers to stay in this line of work, perhaps coupled with loosening of restrictions on migratory labor. In the medium term, companies may find that they need to set up testing and training courses for their contractor workforce and help improve the training of any workers that are not at the right skill level. In the longer term, there may be an opportunity to highlight that the “green” industry will still need craftsmen (albeit perhaps not as many as before).
But unless and until society returns to a situation where skilled manual labor is perceived as having social standing, we are likely to need to begin planning for working with a leaner workforce than we’ve been used to in the past. This may include, for projects, accepting longer construction periods, and for turnarounds, reverting to smaller, more frequent events, to match the size of the available workforce.”
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