Sunday 14 August 2011

Refinery Overview

         The purpose of a refinery is to separate and upgrade crude oil to useful products like gasoline or diesel fuel.  In the diagram below, each block represents a refining technology that separates or reshapes the various crude oil components to be blended (mixed) in order to meet various product specs like octane for gasoline or sulfur content for diesel. 
                To understand what’s going on per a refinery flow diagram remember three things: 1) The crude enters the refinery through the Crude (Atmospheric) Column, 2) Any unit entitled Treating/Treater means sulfur/nitrogen/metals removal, 3)Any unit with Cracking in the title means breaking heavy material into lighter, more valuable products.  Given these rules of thumb and the unit glossary below you can understand the layout of any refinery.  For example, follow the heavy naphtha cut from the crude column (referred to as straight run naphtha because it comes directly from the crude unit) to a hydrotreater where organic sulfur and nitrogen are removed from the naphtha.  After hydrotreating, the naphtha goes to a catalytic reforming unit where it is reformed into higher octane material.  After reforming, the naphtha is directed to product blending where it is blended into the gasoline product pool.


 
Atmospheric Distillation
As we covered in the “Crash Course to Distillation” entry, the Crude Unit, also referred to as Atmospheric Column, is the first entry point for crude oil into the refinery.  In the Crude Unit, salts and other debris from the oil well or gained during transport are removed in the Desalters.  After desalting, the crude is heated to 700-800F in the Crude Furnace before entering the base of the Crude Column.  In the crude column, the crude is separated by distillation into various products: Fuel Gas, LPG, Naphthas, Kerosene/Jet Fuel, Distillate (Diesel), and Atmospheric Gas Oils.
Vacuum Distillation
Crude oil has a boiling range from -257.8F (boiling point of Methane) up to 1400-1500F.  The Crude Unit Furnace Outlet temperature is a maximum of 800 F; this means any 800-1500F range material cannot be vaporized and distilled in the Crude Unit.  Raising Crude Furnace outlet temperature to vaporize the entire boiling range of crude is impossible because these heavy components coke or polymerize (basically burn) before reaching their boiling points at atmospheric pressure.  Therefore, Atmospheric Gas Oil is directed to the Vacuum Tower, which operates under vacuum conditions (negative pressure), in order to distill heavy components without coking.  Typical Vac Tower products are Light Vacuum Gas Oil (LVGO-diesel range material), Heavy Vacuum Gas Oil (HVGO), and Vacuum Residue.
Gas Processing
Light components typically C4- and some naphtha from the crude units (and typically other units downstream of the Crude Tower) are directed to the Gas Processing Plant to separate these components into various light end products: fuel gas, LPG, butanes, and gasoline (naphtha).
Amine Treating
Many of the hydroprocessing and catalytic reforming processes have the byproduct hydrogen sulfide, H2S. H2S is a poisonous gas that is a danger to operating personnel as well as suppresses some refining unit operations.  As such, this gas is removed from refinery gas streams in an Amine Treating Unit.  Basically this unit works by allowing sour (H2S contaminated) gases to flow counter currently to amine rich caustic (basic) streams in an “Amine Contactor”.  The sour gas is essentially stripped of H2S which is carried away with the countercurrent caustic stream.
Merox Treating
In Merox Units, mercaptans, organic sulfur compounds in LPG, naphtha, and kerosene streams are removed.  First the feed is contacted with a countercurrent stream of caustic which captures the mercaptans.  The sweetened product stream then flows through a caustic settler to remove any remaining caustic followed by a salt bed to remove any water.  The caustic itself is then regenerated by contacting it with a liquid catalyst and oxygen to convert the mercaptans to disulfides and then later allowing them to settle out in a separator.
Claus Sulfur Plant
Sulfur Plants remove sulfur from H2S contaminated refinery streams by first burning the H2S and then sending it to a condenser which results in some elemental sulfur precipitating out.  In addition to elemental sulfur, SO2 , a combustion byproduct,  and unconverted H2S remain in the stream.  To complete the sulfur removal process, H2S and SO2 are passed over catalyst where they react to form elemental sulfur and water.
Hydrotreater
The purpose of a hydrotreater is to remove sulfur, nitrogen, oxygen compounds, organic halides (R-Cl), and metals compounds in order to 1) Prevent the poisoning (deactivation) of catalyst in downstream units and 2) meet environmental regulations for SOX and NOX.  Hydrotreaters work by passing hydrocarbon streams, e.g. naphtha, over a bed of catalyst in the presence of hydrogen. 
Isomerization
In isomerization, C4-C6 material is passed over a bed of catalyst in the presence of hydrogen.  The purpose of isomerization is to convert straight chain paraffins to branched paraffins which have higher octane for blending. 
Catalytic Reformer
Catalytic Reforming units accomplish two purposes: 1) increase the octane of naphtha feeds and 2) produce hydrogen to be used in other hydrogen consuming units in the refinery e.g. hydrotreaters. In fixed bed reformers, naphtha passes through multiple beds of reforming catalyst.  Several reactions occur that result in higher octane product molecules: straight chain paraffins become branched or form rings, naphthenes dehydrogenate to aromatics (generating hydrogen), and so on.  Octane increasing reactions compete with cracking reactions which consume hydrogen and reduce reformate yield.
Hydrocracker
Hydrocrackers provide both contaminant removal and upgrading of lower value products.  In the refinery above, heavy vacuum gas oil is directed to the hydrocracker where it typically first encounters a bed of hydrotreating catalyst where sulfur, nitrogen, oxygen, organic halide compounds and well as metals are removed in the presence of hydrogen.  After the treating section, several beds of hydrocracking catalyst follow in order to crack the treated HVGO to lighter material.  Hydrocrackers operate at incredibly high temperatures and pressures and are major consumers of hydrogen in refineries.
Alkylation
Alkylation Units allow the refiner to upgrade light end material to gasoline range material.  In the presence of Hydrofluoric Acid or Sulfuric Acid, isobutane is reacted with C3-C4 olefins to form C7-C8 naphtha range products.   
FCC Feed Treater
FCC Catalyst is very susceptible to metals poisoning, especially vanadium.  To prevent deactivation of FCC catalyst as well as removing sulfur and nitrogen to meet environmental specs, FCC feed is treated in a FCC Feed Treater.  The Cat Feed Hydrotreater works much like other hydrotreaters, gas oils pass through a series of catalyst beds at elevated temperatures and in the presence of hydrogen.
Fluid Catalytic Cracker (FCC)
FCC Units are referred to as the heart of the refinery because they are able to convert heavy gas oil material to more valuable gasoline, kerosene, and distillate products.  It does this by cracking the gas oil in the presence of a catalyst that selects for increased gasoline and distillate yields. FCC’s are considered the more complicated units in the refinery because instead of a fixed bed, the unit’s catalyst is fluidized and circulated throughout the reactor and regenerator sections.    
Delayed Coker
Delayed Coking is one of the thermal cracking (heat only-no catalyst) processes in the refinery.  Vacuum Tower Resid is heated in a furnace at incredibly high temperatures, typically 1000F, before entering large coke drums where the resid is allowed to coke or polymerize (burn).  Any material not burned in the drums rise as vapors and flow to the base of the coker fractionator where they are distilled to gas oil and lighter products.  The key to coking is that resid material is prevented from coking in the furnace tubes by achieving high velocities through the furnace tubes.  Once the drums are filled with coke, they are taken off line and the coke is cut out of the drums and sold as product depending on the grade of coke.
Asphalt Blowing
The Asphalt used to pave roads comes from the heavy vacuum residual material from the bottom of the vacuum tower.  This reside serves as a binder and is mixed with gravel and used in road construction.  Roads and highways face the stress of daily car use as well as changing weather conditions.  As such, the material used to pave roads must meet certain viscosity and strength tests in order to be used in asphalt.  To meet highway specification, asphalt is blown by exposing it to oxygen and heat in order to meet required viscosity specs in an Asphalt Blowing Unit.

Top US Refiners by Name Plate Capacity

The top ten US Refiners by name plate capacity are Exxon, ConocoPhillips, Valero, BP, Marathon, Chevron, Koch Industries (Flint Hills Resources), PDV America (Citgo), Motiva Enterprises (Shell/Saudi Refining), and Sunoco.  The top ten refiners control 64.4% of the refining capacity in the United States.  The top two companies, Exxon and ConocoPhillips, own 10.17% and 9.8%, respectively.

Rank
Corporation
 BBLS/Day 
% US Capacity
1
EXXON MOBIL CORP
        1,855,240
10.17%
2
CONOCOPHILLIPS
        1,787,000
9.80%
3
VALERO ENERGY CORP
        1,682,300
9.22%
4
BP PLC
        1,302,350
7.14%
5
MARATHON OIL CORP
        1,142,000
6.26%
6
CHEVRON CORP
        1,027,271
5.63%
7
KOCH INDUSTRIES INC
           771,578
4.23%
8
PDV AMERICA INC
           757,800
4.16%
9
MOTIVA ENTERPRISES LLC
           753,500
4.13%
10
SUNOCO INC
           673,000
3.69%
11
TESORO CORP
           657,300
3.60%
12
WRB REFINING LLC
           508,000
2.79%
13
HOVENSA LLC
           500,000
2.74%
14
ROYAL DUTCH/SHELL GROUP
           436,400
2.39%
15
DELAWARE CITY REFINING CO LLC
           342,200
1.88%
16
DEER PARK REFINING LTD PTNRSHP
           327,000
1.79%
17
HOLLY CORP
           285,350
1.56%
18
ACCESS INDUSTRIES
           280,390
1.54%
19
TOTAL SA
           232,000
1.27%
20
ALON ISRAEL OIL COMPANY LTD
           231,500
1.27%
21
WESTERN REFINING INC.
           226,200
1.24%
22
CHALMETTE REFINING LLC
           192,500
1.06%
23
FRONTIER OIL REFINING & MKTG
           185,000
1.01%
24
MURPHY OIL CORP
           159,300
0.87%
25
HUSKY ENERGY INC
           155,000
0.85%
26
CHS INC
           145,100
0.80%
27
BP HUSKY REFINING LLC
           131,400
0.72%
28
ERGON INC
           118,000
0.65%
29
CVR ENERGY INC
           115,700
0.63%
30
SUNCOR ENERGY INC
           103,000
0.56%
31
PETROLEO BRASILEIRO SA
           100,000
0.55%
32
SINCLAIR OIL CORP
             98,500
0.54%
33
NUSTAR ENERGY LP
             98,000
0.54%
34
CALUMET LUBRICANTS CO
             78,320
0.43%
35
TRANSWORLD OIL USA INC
             78,000
0.43%
36
ARCTIC SLOPE REGIONAL CORP
             74,700
0.41%
37
NORTHERN TIER ENERGY LLC
             74,000
0.41%
38
GARY WILLIAMS CO
             70,000
0.38%
39
UNITED REFINING INC
             65,000
0.36%
40
DELEK GROUP LTD
             60,000
0.33%
41
PLACID OIL CO
             57,000
0.31%
42
HUNT CONSLD INC
             47,000
0.26%
43
COMPAGNIE NATIONALE A  PORTEFEUILLE
             38,800
0.21%
44
FJ MANAGEMENT INC
             29,400
0.16%
45
COUNTRYMARK COOP INC
             26,500
0.15%
46
KERN OIL & REFINING CO
             26,000
0.14%
47
SAN JOAQUIN REFINING CO INC
             15,000
0.08%
48
AGE REFINING & MARKETING INC
             14,021
0.08%
49
WYOMING REFINING CO
             14,000
0.08%
50
SILVER EAGLE REFINING INC
             13,250
0.07%
51
VENTURA REFINING AND TRANSMISSION LLC
             12,000
0.07%
52
AMERICAN REFINING GROUP INC
             10,000
0.05%
53
CONNACHER OIL & GAS LTD
             10,000
0.05%
54
GREKA ENERGY
               9,500
0.05%
55
WORLD OIL CO
               8,500
0.05%
56
MARTIN RESOURCE MANAGEMENT GRP
               7,500
0.04%
57
MIDSOUTH ENERGY LLC
               5,500
0.03%
58
GOODWAY REFINING LLC
               4,100
0.02%
59
GARCO ENERGY LLC
               3,600
0.02%
60
OIL HOLDING INC
               2,800
0.02%
61
FORELAND REFINING CORP
               2,000
0.01%

TOTAL CAPACITY
      18,236,370

Friday 12 August 2011

National Oil Companies Changing the World

                A discussion of the world refining industry must include a distinction between Independent Oil Companies and National Oil Companies.  Everyone is familiar with the Independent Oil Companies the top of which are referred to as the Big Six Oil Majors.  The Big Six include Exxon, Chevron, Shell, BP, Total, and, until the recent announcement of its split, Conoco Phillips.  People may be less familiar with state owned oil companies like Venezuela’s PDVSA, Brazil’s Petrobras, and Mexico’s PEMEX. 
                For decades, independent oil companies held the bulk of the world’s oil reserves and were leaders in exploration, production, and refining technologies.  In 1975, IOC’s held 85% of the world’s oil reserves, today they have access to 10%.  NOC’s now control 94% of the world’s crude oil reserves (Qaddumi).  Considering that crude oil is a country’s natural resource and should, therefore, belong to the people of that country-this trend isn’t necessarily a bad thing.  However, the rise of NOC’s has fundamentally changed oil industry due to evolving geopolitical risks in addition to age old supply and demand.
Governments versus Corporations
                Governments have very different interests than corporations.  Corporations are only responsible for returning shareholder value (let’s not argue about ethical obligations to employees, sustainability, etc.-corporations are in the business of making money-geez I’m Big Oil!).  Governments are accountable to their citizens. Governments are (hopefully) concerned with ensuring their citizens are employed, protected by its laws, and have the general right to the pursuit of happiness (leave me alone-I’m American).  National Oil Companies are revenue, employment, and prestige generators.  Therefore, some, not all, NOC’s have been accused of sacrificing efficiency for the sake of ensuring employment of its employees-citizens.  Where an Independent Company might run its operations as lean as possible to reduce fixed costs and boost profit margin for its annual statement, an NOC might stress maximum employment.  Where an Independent Oil Company might idle a refinery due to reduced gasoline demand, and National Oil Company of a developing nation might build additional refining capacity to demonstrate to the world its arrival as a world power.
Political Stability
As NOC’s have become more prominent, politics plays an even greater role in the stability of the crude oil supply chain and resulting crude oil price.  Civil wars, sanctions, collusion can disrupt world crude oil supplies.
Civil unrest in Nigeria’s, responsible for 3% of world oil production in 2007, oil rich Delta Region causes frequent disruptions in  Nigerian Oil Production and has all but put to a halt the country’s downstream refining industry (mbendi.com).  The US’s sanctions with Iran prevent American Oil Companies with doing business with one of the world’s third largest holder of proven oil reserves.  During the 1973 Oil crisis, OPEC countries colluded to cut off the United States from its member countries’ oil supplies as a result of the United States support of Israel (Wiki). 

Bibliography

Qaddumi, Thora, “International Companies Adapt to Rise of National Oil Companies,”Houston Business Journal, November 16, 2008.  http://www.bizjournals.com/houston/stories/2008/11/17/focus12.html

http://www.mbendi.com/indy/oilg/af/ng/p0005.htm

http://en.wikipedia.org/wiki/1973_oil_crisis