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

                 

World Oil Production and Consumption

As stimulating as petroleum refining is (please discreetly stifle the yawns please), it’s even more interesting to think about where oil geographically comes from.

World Oil Production

http://www.eia.gov/countries/index.cfm?view=production

You can see in red the largest oil producers in 2009 were Russia at 9.9 million barrels per day, followed by Saudi Arabia with 9.8 million barrels a day, and finally the United States with 9.1 million barrels per day.  But that’s production.  With high oil prices constantly flashed across newspaper headlines, we’ve all learned it’s not about what you’re producing today but what you can potentially produce tomorrow-the supply side of supply and demand.  Below is a map of the World’s Oil Reserves.

World Oil Reserves

http://www.eia.gov/countries/index.cfm?view=production

As you can see Saudi Arabia has the largest proven oil reserves at 266.7 billion barrels, followed by Canada and their booming Oil Sands at 178.1 billion barrels, Iran at 136.2 billion barrels, and Iraq and Kuwait at 115 and 104 billion barrels respectively.  Interesting that the United States and Russia are the highest on the list of oil producing countries but lowest in terms of proven reserves. 

World Oil Consumption

http://www.eia.gov/countries/index.cfm?view=consumption

Above is a map of World Oil Consumption.  The United States is the world's top oil consumer at 18.8 million barrels.  Hmmm…the US produces 9.1 million barrels…and consumes 18.8 million barrels.  Clearly the United States is a net importer of crude oil which, considering its lowly status among holders of world oil reserves, explains the US Oil Industry's complicated relationship with Washington, especially since 40% of US energy need is met by Petroleum.

2009 US Energy Consumption by Type

http://www.npr.org/templates/story/story.php?storyId=113080237

Distillation Crash Course

                Last time we talked about the separation of crude into its various components by essentially boiling the crude.  Every undergraduate book I ever read on the subject of distillation began with distilling alcohol…probably with the hopes of engaging beer swigging early twenty-something college students.  I spent many hours in bars on Manhattan’s Upper West Side during undergrad (Columbia-go Lions) and that never inspired me. 

                Crude Distillation is actually very simple.  Crude is first heated in a crude furnace and partially vaporized. The gas and liquid phase crude is then directed to a trayed distillation column where the smallest, lightest molecules boil first, rise through the perforated trays (trays with holes) to the highest point in the tower, and then leave said tower through a side draw.  Same goes for the second lightest components, except they exit through a slightly lower draw in the tower, and the third all the way down the tower until you get to the heaviest components of the crude which do not boil at atmospheric pressure and 750-800F, typical crude tower feed inlet temperatures.  Certainly, we could continue heating this heavy material, referred to as “raising heater coil outlet temperature”, until the non-boiling components reach their vaporization temperature. However, these heavier crude components would undergo thermal cracking (breaking apart of large molecules into smaller under high temperatures) or coking (polymerization of hydrocarbon molecules to form a “burned” or charcoal like substance) prior to vaporization-and both are really bad scenarios for a crude column-and the unit’s engineer…firing…

Crude Distillation Unit

http://en.citizendium.org/wiki/Petroleum_refining_processes

Instead, this heavy material, referred to as Atmospheric Gas Oil (AGO), is pumped from the crude or atmospheric (atmospheric pressure-get it?) tower to a vacuum distillation column.  In the vacuum column the exact same phenomenon happens except under a negative or vacuum pressure to allow heavier material to boil before cracking or coking.  Vacuum distillation gives a little assistance to molecules transitioning from the liquid to the vapor phase by lowering the pressure, liberating these molecules.  I’ll cover Vacuum Distillation in more detail in another post.

Take a look at the diagram of a typical crude distillation tower above.   Try to trace the path of the crude oil through its separation into products and the right hand side of the page.  First, the crude is pumped from a pipeline or storage (ever driven by a refinery and seen those huge tanks with the name of the refinery on the side?  The largest ones are typically the Crude Tanks if the refinery has crude storage capacity) and is preheated through a series of heat exchangers which allow heat to be transferred from a hotter material to a cooler material.  The crude preheat train serves two purposes:

1)      Preheats the crude for the desalting process and ultimately the Crude Furnace

2)      Saves energy costs-instead of preheating the crude with a smaller furnace prior to desalting, the crude is preheated via heat exchange with products

Desalting

Once the crude has been preheated, it enters the Desalter.  Chemical Engineers aren’t that clever when it comes to coming up with names for various unit operations-a Desalter does just that.  It “De-Salts.”  Crude comes from all over the world, through a variety of deposits-some crudes are pumped from the ground, others from thousands of feet under the ocean, others and mined from the Canadian Oil sands.  Wherever the crude was derived from, it comes along with a variety of contaminants that would wreak corrosion havoc on a carbon steel refining facility.  So the desalting unit serves to remove salts and other contaminants from the feed by a) washing it with fresh water and b) passing an electric current through the crude to coalesce dissolved water droplets for easy removal before the crude leaves the Desalter.

Crude Furnace and Column Flash Zone

After desalting and additional preheat, the crude enters the furnace where it is heated to the desired feed temperature, say 750F degrees.  The crude is partially vaporized when it enters the crude column’s flash zone.  Here the vaporized material flashes or rises up the column’s tray, the lightest material reaching the top of the tower the heavier reaching the lower intermediate trays.  Material that does not flash instantly flows to the bottom of the tower where it is steam stripped, to remove any entrained lighter material, and then pumped from the bottom of the tower.

Distillation Baby!

You’ll notice the crude column has two sources of heat-heat from the furnace at the feed entrance to the tower and heat from stripping steam at various points along the column. The temperature profile of the column (fancy way of saying the temperature from the top of the tower to the bottom) is maintained by these heat sources as well various heat sinks (heat removal).   Examples of column heat sinks are the condenser at the top of the tower that cools top product before refluxing (returning) material back to the tower as well as column pumparounds which, in this case, remove heat from the column by exchanging it with cooler incoming crude.  The temperature profile of the column is coolest at the top and hottest at the bottom near the furnace outlet.  So vaporized material moves up the column it reaches a certain height until it cools and returns to its liquid phase.  This liquid material collects on the “collector” (clever Chem-E’s) portion of a perforated distillation tray and is drawn off at that same height in the tower.  So for example, kerosene is drawn off the tower, flows to a stripping column (where lighter materials are steam stripped out of the kerosene product) and goes to product.  That Kerosene is drawn off at the point where kerosene cools and collects.  Same for the naphtha, light gas oil, and heavy gas oil. 

The naphtha cut seems unique because it leaves the top of the tower, is cooled in a condenser, and collects in a reflux drum before being drawn off to product but the exact same phenomenon is happening here.  So what is reflux?  The top reflux, in this case, returns cooled gasoline range material to the top of the column and condenses any heavier material thus purifying the overhead product.  Pumparounds are similar to top column reflux except they are lower in the tower-they are also used to control the temperature profile of the tower and controlling product quality.

In addition to external reflux, there’s internal refluxing happening on each tray of the column.  Each tray has perforation or hole in them to allow vaporized hydrocarbon to flow up the column.  As material reaches the point where it condenses and falls back down on the tray, a liquid level is formed on the tray. Typically these holes have bubble or valve caps to allow vapor to move through the liquid on the tray.  As the liquid vapor moves through the liquid some of the heavier material in the vapor is condensed by the liquid and at the same time some of the lighter material in the liquid is vaporized and joins the vapor up the column. 

What is Crude Oil?

So what is crude oil? Crude oil is a viscous, dark mixture of a variety of hydrocarbons of different shapes and sizes.  What’s a hydrocarbon?  Ok organic chemistry scholars out there-take a quick break-get coffee, run some errands, take a nap.  For the rest of us, hydrocarbons are molecules composed of carbon and hydrogen atoms…with, in the case of crude oil, a few miscellaneous atoms thrown in like nitrogen, oxygen, and sulfur, for example.   Sophomore/junior chemical engineering students and curve demolishing premeds originally encountered these molecules defined by chemistry professors the world over as alkanes, alkenes, cycloalkanes, and aromatics…you’ll be happy to know that the term aromatic is still used.  Unfortunately, the refining industry dumped the rest.  Alkanes are referred to as paraffins, alkenes as olefins, and cycloalkanes as naphthenes.  Examples of these are shown below to jog your memory coupled with a very cheesy overview of organic chemistry.  Ugh, bear with me.

Dabbling in Orgo

Paraffins

http://alevelnotes.com/Alkanes/138

Paraffins are straight chain or branched (iso-paraffins) molecules examples of which are butanes and isobutanes.  Paraffins are considered fully saturated molecules because they have single bonds between carbon atoms and each carbon’s remaining outer octet shell is completed by bonding with hydrogen.  This is unimportant other than the fact that this molecular arrangement makes paraffins more stable, and less reactive than other unsaturated molecules.

Olefins

http://alevelnotes.com/Alkanes/138#/?id=139

Olefins are similar to paraffins except they have one or more unsaturated, double carbon bonds.  Per the discussion above, this means that olefins are typically more reactive than paraffins.    

Naphthenes

http://www.chemguide.co.uk/basicorg/conventions/draw.html

Naphthenes, or molecules formerly known as cycloalkanes, are fully saturated ring compounds.  They are also very stable not only because of they are saturated but because their ring structure allows them to balance charge around the molecule…too much?  Ok I’ll stop.

Aromatics

Toluene

http://www.pactox.com/library/article.php?articleID=21

Aromatic compounds are unsaturated ring compounds are fairly stable because of their ability to balance charge around the ring.  However, they are still more reactive than their sister naphthenes because they are unsaturated.

Enough of that!

Crude Oil Quality

So crude oil is composed of paraffin, olefin, naphthene, and aromatic hydrocarbon compounds of various sizes and shapes all lumped together.  Hmmm…lumped together, different sizes and shapes?  Does this mean there different types of crudes?  Yes! How does that affect the type of products that can come from crudes? So glad you asked! 

                Because of the variability in the composition of crudes, chemical engineers have come up with different ways of defining the quality or the degree of difficulty refineries have to create various products from gasoline and diesel fuels to petrochemical derivatives used in plastics and detergents.  Typically, crude oil quality can be superficially determined by examining API Gravity and sulfur content.  API Gravity describes the density of the crude.  Sulfur is important because it is related to both the quality of products that can be derived from the crude as well as the cost to upgrade that crude to meet environmental regulations.

                API Gravity varies inversely with the density or specific gravity of the crude.  So heavy Oil Sands Bitumen, rock like crude, may have an API Gravity of 10 where a sweet Nigerian Crude or West Texas Intermediate may be in the mid-40’s.  API Gravity is related to specific gravity by the formula below:

where SG is specific gravity or the density of a substance divided by 62.4 lbs/ft^3 or 1000 kg/m^3 (the density of water in English and Metric Units).

                A crude’s sulfur content determines whether it is described as sweet or sour. Sour is any crude with greater than .5 weight percent sulfur content.  High sulfur content is typical of heavier crudes.  Not only will these crudes have to undergo expensive sulfur removal processing but, because sulfur atoms are typically part of heavier hydrocarbon compounds, this means that the crude most likely has lower quality, heavier components that will need to be cracked into the smaller, higher quality lighter molecules that make up gasoline and diesel.  Remember, the lower the quality of a crude, the greater the degree of processing required, the higher the cost to refine a crude, therefore, the lower the price of the crude relative to others.

                In addition to the API Gravity and Sulfur Content of the crude, refiners examine the crude’s distillation curve to understand its value.  Another brief chemistry rule of thumb: the weight of a molecule is directly proportional to its boiling point.  Lighter, smaller molecules vaporize (go from the liquid to gas phase or boil) more easily than heavier molecules.  It’s like me when I gain a little weight; it’s a bit harder for me to get off the couch or up the stairs.

Crude Distillation Curve

http://pavementinteractive.org/index.php?title=Image:Distillation-curve.jpg

     Above is an example of a crude distillation curve.  It relates boiling point on the y-axis to percent volume of crude on the x-axis.  Butane and lighter products make up maybe 5% of this crude and boil below 60 degrees Fahrenheit.  Gasoline and Naphtha combined make up another 15% and Kerosene approximately 10%, with boiling ranges between 100-350F and 350-450F, respectively.  As you can see, lower value gas oils and residuum make up the bulk of this crude.  To be economical, the refinery upgrades this material to the lower boiling range, lighter products gasoline and kerosene (jet fuel).  Below is another view of the refinery product slate as it might be derived from a crude distillation column, the first unit in a refinery.

Crude Oil Assays

Crude Oil Assays are detailed laboratory analyses of crudes e.g. API Gravity, Sulfur, Nitrogen, and Metals Content, Distillation Curve, Viscosity, etc. Assays are typically described by crude boiling range.  See Chevron’s Bonny Light Assay properties below (see full assay).

Nigerian Bonny Light Assay Properties

Assays are used by the refinery’s planning and scheduling department to determine the most profitable product mix the refinery can produce for a given crude slate.  Refinery Planners input assays into LP (Linear Programming) Models which simulate how all of the refinery's or a group of refineries process units work together.  The LP Model is used to find the optimum operating mode of the refinery per the required feed and product qualities and prices and various operating constraints.  No modern refinery can be efficiently run without the use of an LP Model.

An Introduction

I remember my first assignment loading a PSA, Pressure Swing Adsorption, unit for a Gulf Coast Refinery.  I barely knew what a refinery was let alone the purpose of a PSA-isn’t that terrible?  I managed to get through the assignment and received an outstanding review from company’s client.  Loading a PSA isn’t that difficult-you just dump the adsorbent in there!  But at the time I was intimidated because I only vaguely understood that it allows refiners to purify hydrogen, the life’s blood of many refinery technologies, or other gas streams.

                This blog is intended to be a crash course in refining.  A sort of “things I wished I’d known then”, if you will.  Who am I and what do I know about refining you may ask? I’m, Audrey, a refinery process engineer and never enough is the answer to the latter question.  As anyone in the business will tell you, there’s always something more you can learn.   I began my career starting up various technologies, e.g. hydroprocessing, adsorptive separation, and isomerization units, at refineries around the world.  That means after a refinery technology is built by a Foster Wheeler, Bechtel, or a Technip (the engineering design contractors or EPC’s as they’re referred to-Engineering, Procurement, Construction), I went onsite as the Commissioning Engineer to help refiners cut in feed (begin processing crude oil or, if further downstream, a crude oil derivative like naphtha or distillate in the unit).  Essentially my job was to technically assist refinery staff in getting the unit up and in operation to ultimately produce on specification product(s).   I did that for a few years until I realized I was about to be disowned by friends and family because they only saw me 2 days out of the year.  Now I work as a process engineer for an engineering consulting firm in Houston.

http://www.kitmondo.com/ViewListing.aspx?lid=200465&prodName=mini_refinery

Petroleum refining is the upgrading or manufacturing of crude oils or crude oil derivatives into lighter, more useful products like gasoline and plastic soda bottle precursors.  I call this blog “Boiling Oil” because that is exactly what petroleum refiners do-separate a mixture of multiple types hydrocarbon molecules via distillation (boiling) or other processes such as thermal cracking (heating up molecules until they break apart), catalytic reforming (passing hydrocarbons over catalysts to get them to change their shape or react with other molecules), or other separation techniques like adsorptive separation or liquid-liquid extraction.

                Refineries at first seem to be these huge complicated industrial complexes that are difficult to understand.  Actually, most refining processes are fairly easy to gain a working knowledge of and after your first few technologies you’ll realize that all refining processes are arranged and behave quite similarly.  There’s a feed preparation section to clean up or preheat the feed, followed by the heart of the process reforming or thermal cracking for instance, and a fractionation (distillation) section to separate the newly created products. 

                Anyway, that’s a just a brief introduction to this blog.  I’ll try to keep it fairly tech light for the laymen curious but accurate for professionals so please let me know if I head in the wrong direction or put complete and utter crap out there.  As I said-I’m always learning.