Petrochemicals - The Growth Area That Refiners Will Need

Tecnon OrbiChem Marketing Seminar at APIC 2019

Shaking the Tree – Alternative, Disruptive, Sustainable Solutions
Taipei, 16 May 2019

Roger Lee
APIC 2019
REFINERIES ↔ PETROCHEMICALS
Petrochemicals emerged in the 1940s and 1950s and expanded massively in
the 1960s and 1970s and later.
One of the driving forces was the need for petroleum companies to find outlets
for light cuts from crude oil refining, since the heavy end of the barrel was in
greatest demand, for fuel oil and gas oil.
Petrochemicals, especially olefins, were an ideal outlet for surplus naphtha,
especially paraffinic naphtha, which was undesirable as a gasoline
component.
At first, petrochemical operations were mostly undertaken by subsidiaries of
the major oil companies. But once the refinery balance had been achieved,
oil companies started spinning off petrochemicals as independent companies.
Now this process is going into reverse.
Oil companies are examining ways to increase their involvement in
petrochemicals, one option being to reconfigure refineries to make more
olefins or aromatics.
Source: Tecnon OrbiChem
APIC 2019
CONSUMPTION OF LIQUID FUELS
GROWING UNTIL 2030, THEN PLATEAUING
mmbpd
120
Power

Non- transport
100 Buildings

Industry
80 Non- combusted
(mostly Chemicals)

60 Aviation, marine, rail

Trucks
40

Transport
Cars

20

0
2010 2015 2020 2025 2030 2035 2040

Source: BP Energy Outlook 2019 edition

APIC 2019
CHANGE IN GLOBAL OIL DEMAND 2017-2040
PETROCHEMICAL USE SHOWS THE HIGHEST GROWTH
mmbpd
6

5 Advanced
Economies
4
Developing
3
Economies
2
International
1 Bunkers
0

-1

-2

-3

-4

-5

-6
Power Buildings Others Cars Industry Shipping Aviation Trucks Petchems

Source: International Energy Agency -- New Policies Scenario

APIC 2019
MOVES DOWNSTREAM BY OIL COMPANIES

Saudi Aramco acquired a 70% stake in SABIC in March 2019. Aramco

and SABIC are building a crude oil to petrochemicals refinery, due to come on
stream in 2025.
Aramco is negotiating to buy a 25% stake in Reliance Industries (a third of
whose turnover is in petrochemicals).
Petronas, Malaysia, is expanding its involvement in chemicals through
Petronas Chemical Group, which includes a joint venture with BASF producing
acrylics, oxo alcohols and BDO, and construction of the Refinery and
Petrochemical Integrated Development (RAPID) project at Tanggerang, a
300,00 bbl/day refinery together with a 3 million tpa ethylene plant. RAPID is
a joint venture with Saudi Aramco. The refinery started trial runs in early 2019
and many downstream units are due to come on stream during 2019.
PTT, Thailand, has a petrochemicals division, PTTGC, that is expanding into
a wide range of chemicals, often via joint ventures, and plans to build a 1,500
ktpa ethylene plant in the USA, in a joint venture with Daelim Industrial Co.

Source: Tecnon OrbiChem

APIC 2019
GLOBAL OIL DEMAND
THE PRODUCT MIX IS GETTING LIGHTER 2040
106 mmbpd
2017
2000 95 mmbpd
77 mmbpd

Petrochemicals Industry

Aviation and shipping Growth Power

areas Declining
Trucks Buildings areas

Other
Cars No growth

Source: International Energy Agency -- New Policies Scenario

APIC 2019
CONVENTIONAL REFINING
Simple distillation gives a distribution of refinery products that does not meet
market requirements. Most refineries are more complex, with the output of motor
gasoline often increased by installation of fluid catalytic crackers (FCC units).

LPG 1.5%
LPG 5%
Naphtha 23% Naphtha 7%

Kerosene 11%
Gasoline 29%
Gasoil 25%
Kerosene 11%

Gasoil 28%
Fuel 38%
Remainder =
Fuel Use & Losses Fuel 14%

Simple Complex
Distillation Upgrading

Source: Tecnon OrbiChem

APIC 2019
CRUDE TO CHEMICALS - HENGLI REFINERY
Attempts have been made over many years to convert crude oil directly to
chemical feedstocks, such as olefins or aromatics, but with limited success. A
new approach is for oil or chemical companies to build crude oil to
chemicals refineries, including extensive hydrocracking operations, making
predominantly olefins and/or BTX.
LPG 8% 1.5 mtpa
Benzene 3% 0.6 mtpa

Hengli Petrochemical P-Xylene 23% 4.5 mtpa

in China wishes to
maximise production of Naphtha 15% 3.0 mtpa
paraxylene, and is
building a refinery + Gasoline 23% 4.5 mtpa
chemicals complex that
will convert an Kerosene 10% 2.0 mtpa
unprecedented 42% of
the crude oil input to Gas Oil 13% 2.5 mtpa
chemical feedstocks. Fuel Use
+ Coke 5% 1.4 mtpa
(→ Syngas) 20.0 mtpa

Source: Elaboration of Published Data

APIC 2019
HENGLI TO MAKE 4.5 MILLION TPA OF PARAXYLENE
Hengli Petrochemical (Dalian) Co. Ltd. (HPDC) started commercial operation in March
2019 of a grassroots crude-to-paraxylene complex on Changxing Island in Dalian,
Liaoning Province, China.
The refinery will process 400,000 b/d of crude oil, mostly into naphtha, leading to an
aromatics plant that will maximize output of high-purity paraxylene to serve as feedstock
for HPDC’s existing PTA plants.
The refinery is designed to maximise production of paraxylene, with accompanying co-
production of gasoline and diesel fuels. Downstream of the crude atmospheric and
vacuum distillation towers are the following units:
• Two vacuum residue hydroconversion units, together with a deasphalting unit
• Two hydrocracking units for processing straight-run vacuum distillate, as well as
hydroconverted distillate and deasphalted oil
• Two FCC hydrocracking units to process atmospheric gas oil to naphtha
• One naphtha hydrotreating unit
• Three parallel catalytic regenerative-reforming units to produce aromatics from naphtha
• Two parallel aromatics chains with units for isomerization of C8 aromatics and isolation
and purification of paraxylene

Source: Public Announcements, Hengli Website

APIC 2019
FLUID CAT CRACKING PLAYS A MAJOR ROLE

FCC has long been used to convert heavy feed, such

as vacuum gas oil, into lighter fractions. FCC plays a
major role in increasing the output of motor gasoline
from refineries. A major problem with cracking by
pyrolysis is the build-up of coke on the catalyst and the
reactor walls. FCC solves this problem by use of a
fluid bed for the catalyst, which is circulated to a
regenerator where the coke is burned off. This works
well with high naphthenes feeds, but paraffinic
naphtha causes problems.

Oil companies have tried for many years to develop a design of cracker
that could use crude oil itself as the feed and produce predominantly
olefins and aromatics. They have been thwarted by the coking
problems. The basic approach to a crude oil to chemicals refinery today
is consequently to use an FCC to crack the heavier feeds at high
severity, and to crack the lighter feeds in a steam cracker.

Source: Tecnon OrbiChem

APIC 2019
CRUDE OIL CRACKING TO PETROCHEMICALS BY
STEAM CRACKING + BOTTOMS UPGRADING

Light olefins,
Steam LPG
cracking
BTX Aromatics
Distillation

Crude oil Hydro-

Diesel
desulphurisation

Catalytic Light olefins

Atmospheric residue pyrolysis
Vacuum gas oil Fuel oil
Vacuum residue

Source: Tecnon OrbiChem

APIC 2019
CRUDE TO CHEMICALS TECHNOLOGY
Many companies have researched steam cracking crude directly. Esso patented a
process of cracking a crude oil and heavy feedstocks. The crude is vaporised and
heavier materials are removed by flashing of liquids.
ExxonMobil Singapore’s steam cracker is believed to be using this approach in
which naphtha and heavy gas oil fractions are fed into a steam cracker with cracking
sections optimised for those fractions.
Saudi Aramco patents focus on de-asphalting processes and upgrading the residual
fractions. Based on patent information one Saudi Aramco COTC configuration will be
hydro-treating and/or de-asphalting the crude stream to produce a higher quality
stream which can upgraded in a FCC type process.
An FCC or enhanced FCC will be involved to increase olefins, typically these are fed
with vacuum gas oil and vacuum residue and atmospheric residue. The challenge
associated with heavy metals or other materials in crude are treated in a Resid FCC-
type technology.
Enhanced FCC units designed to maximise lighter olefins have been developed and
licensed by several companies, offering Indmax, Deep Catalytic Cracking and
Superflex technologies, optimised for specific feeds all designed around FCC model.

Source: US Patents 3617493B2; 7566394B2 and references contained within

APIC 2019
SAUDI ARAMCO JV WITH SABIC - COTC REFINERY

Saudi Aramco and SABIC will build a fully integrated crude oil-to-
chemicals (COTC) complex at Yanbu. The COTC complex will process
400,000 b/d of oil to produce about 9 million tpa of chemicals and base
oils, and is scheduled to start operations in 2025.
The COTC project is designed to fulfil Saudi Vision 2030 goals for the
downstream sector. Among the objectives will be:
• Maximising value from the kingdom’s crude oil production via integration
across the hydrocarbon chain;
• Enabling the creation of conversion industries to produce semi-finished
and finished goods to help diversify the economy.
A FEED study is under way for the project. Details of the complex have not
been announced, but the following slide illustrates a possible configuration.

Source: Tecnon OrbiChem

APIC 2019
CRUDE OIL TO CHEMICALS
MAXIMUM PRODUCTION OF LIGHT OLEFINS
PSA unit
hydrogen
Separator
methane
Hydrotreater

Crude Steam
generator De-methaniser
Oil Purification

Quench +
Vapour - Convection Vapour- cryogenic
liquid section liquid Steam unit
separator separator cracker
methane

Fractionation
ethylene
propylene
butadiene
mix crack butenes
hot fresh pygas
catalyst spent

Catalyst

Extraction
B
regeneration
T
X

Source: Adapated from World Patent WO 2013/142609 to Saudi Aramco

APIC 2019
FUTURE OF THE COTC REFINERY
• Oil companies are aware that growth in consumption of gasoline and diesel is
slowing and may even go negative in future.
• The one area where growth of petroleum derivatives is assured is in
petrochemicals.
• Many oil companies are considering the way to integrate downstream into
chemicals so as to diversify and protect demand for petroleum products.
• The route that some oil companies are taking is the building of huge refineries
that are designed to maximise conversion of crude oil to chemicals -- so-called
COTC refineries.
• Conversely some consumers of chemical products, like polyester fibre
producers, are integrating upstream into COTC refineries.
• Owners of COTC refineries, and therefore producers of petrochemicals on a
vast scale, will have a large effect on chemicals international trade.
• Owners having access to cheap crude oil, or having a large domestic market
for chemicals, will have a significant competitive advantage.
• This is one of the most significant developments in petrochemicals in the last
few years.

Source: Tecnon OrbiChem

www.orbichem.com