Direct Oil and Gas to Ethylene - Conference · PDF file · 2018-02-13Direct Oil and Gas to Ethylene - The Search for the Holy Grail - MERTC Annual Meeting, January 2017, Manama, Bahrain

© 2016 IHS Markit. All Rights Reserved. © 2016 IHS Markit. All Rights Reserved.

Direct Oil and Gas to Ethylene - The Search for the Holy Grail -

MERTC Annual Meeting, January 2017, Manama, Bahrain

Dr. Richard Charlesworth

Managing Director, Middle East

[email protected]

mailto:[email protected]

https://www.vopak.com/


© 2016 IHS Markit

Acknowledgment

2

King Arthur:

Go and tell your master that we have been charged by God with a sacred quest.

If he can provide us food and shelter for the night he can join us on the quest for the Holy Grail.

French Soldier:

Well, I'll ask him, but I don't think he'd be very keen. He's already got one you see!

© 2016 IHS Markit

Agenda

3

• Ethylene market trends

• Why are direct routes relevant?

• Who are using direct routes?

• What are the difficulties?

• Are direct routes competitive?

• Conclusions

© 2016 IHS Markit

Agenda

4



• Difficulties, incentives and players?


• Conclusions

© 2016 IHS Markit

The market for ethylene is expected to grow at above GDP levels driven by polyethylene

5

HDPE 29%

LDPE 14%

LLDPE 19%

Ethylene Oxide 15%

Vinyls 9%

Styrenics 6%

Alpha Olefins

3% VAM 1%

Other 4%

Demand = 146.5 million metric tons

Uses of Ethylene 2016

© 2016 IHS Markit

The global feedstock mix has become lighter but is still dominated by naphtha cracking

6

Ethane 36%

Propane 9%

Butane 6%

Naphtha 43%

Gasoil 3% MTO

1%

CTO 1%

Other 1%

Production = 146.4 million metric tons

Sources of Ethylene, 2016

© 2016 IHS Markit

However world ethylene supply growth is expected to be dominated by North American ethane

7

-2-101234567

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Naphtha+ LPG Ethane Methanol Coal Other

World Ethylene Supply Growth

Mill

ion

Met

ric T

ons

© 2016 IHS Markit

Nevertheless liquids cracking is needed to fill the C3/4/6 supply gap

8

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

Ethane Propane n-Butane Pentane

LP Hydrogen Methane Ethylene Propylene C4 Pyrolysis Gasoline Fuel Oil

© 2016 IHS Markit

Agenda

9





• Conclusions

© 2016 IHS Markit

Since 2010, the Gas-to-Crude ratio favours N. America gas investments and therefore direct methane-to-olefins

0%

20%

40%

60%

80%

100%

120%

0.0

3.0

6.0

9.0

12.0

15.0

18.0

90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20

Crude (WTI) Natural Gas Gas-to-Crude Ratio

USGC Natural Gas Versus WTI Crude Oil Pricing (US$ / MM BTU)

Source: IHS

Gas

-to-C

rude

10

© 2016 IHS Markit

In the Middle East, feedstock availability drives petrochemical industry evolution, not the market

11

C1/C2 based feedstock Projects

Downstream Industry Development?

Mixed feedstock C1/C2/C3/C4/ Light Naphtha based Projects

Projects with Specialty /Differentiated Products

Refinery/ Petchem Integrated Naphtha Based (non-discounted) projects

Key Objectives: Monetize Gas, Diversify Local Economies, Downstream Industry and Job Creation

Direct Oil to Chemicals

© 2016 IHS Markit

Propylene

Energy at the extremes has catalyzed a “New Era” in light olefins production

12

• Light olefins supply based on refinery & naphtha cracker integrated sites in past.

• Ethane crackers emerged where ethane was advantaged.

• Propylene was a byproduct of refining and heavy or flexible steam cracking.

• Light olefins can now be made on purpose via a variety of technologies beyond refining and steam cracking: PDH, CTO/P, MTO/P, Metathesis, GTO/P, OCM(methane).

• A high crude oil prices in the long term will enable more on-purpose, leaving C4= & higher hydrocarbons with future supply issues

Ethylene CTO = Coal to Olefins MTO = Methanol to Olefins GTO = Natural gas to Olefins OCM = Oxidative Coupling of methane to ethylene

PDH = Propane Dehydro CTP = Coal to Propylene MTP = Methanol to Propylene GTP = Natural gas to Propylene

Presenter

Presentation Notes

Light olefins supply based on refinery & naphtha cracker integrated sites in past. Ethane crackers emerged where ethane was advantaged; USGC, Mexico, Alberta, Middle East; other areas where liquids rich gas was “trapped”. Propylene was a byproduct of refining and heavy or flexible steam cracking. Light olefins can now be made on purpose via a variety of technologies beyond refining and steam cracking: PDH, CTO/P, MTO/P, Metathesis, GTO/P, OCM(methane). A high crude oil prices in the long term will enable more on-purpose, leaving C4= & higher hydrocarbons with future supply issues

© 2016 IHS Markit

Agenda

13





• Conclusions

© 2016 IHS Markit

Why hasn’t crude oil been steam cracked in the past?

14

• Residual content of crude oil will quickly

coke up in furnace radiant tubes.

• Crude consists of many fractions, there is no one “optimal set of conditions”

• Optimum steam-cracking temperature changes with feedstock composition (800–850°C, higher temperatures for lighter feed).

• Optimum dilution steam to oil ratio also changes with feedstock composition (0.3–0.5, higher ratio for heavier feed).

Presenter

Presentation Notes

kg steam per kg HC ------------------------- Ethane : 0.2 to 0.4 Naphtha: 0.4 – 0.8 Gas oil: 0.8 – 1.0

© 2016 IHS Markit

Why would anyone want to steam crack whole crude oil rather than refined oil products? • By-passing refinery saves US$5–10/barrel processing costs and saves 5–14 days

processing time in refinery.

15

LPG Fuel Oil

LPG Ethylene

Crude Oil CRUDE OIL REFINERY Naphtha STEAM CRACKER PropyleneGas Oil C4/Pygas

Fuel Oil

Gasoline DieselJet/Kerosene

B,S & W*

PRE-TREAT Crude Oil Refinery By-Pass *BS&W: Bottoms, solids, and water

© 2016 IHS Markit

Three companies have announced crude oil steam-cracking programs

16

• ExxonMobil has been reported to be

cracking crude oil at its Singapore complex since January 2014.

• Saudi Aramco announced an operational demo plant.

• SABIC suggested a “Crude Oil to Chemicals” project for Yanbu (KSA).

• Aramco and SABIC announced a JV in 2016.

ExxonMobil Steam Cracker in Singapore

Presenter

Presentation Notes

The ExxonMobil process feeds crude oil directly to a set of modified cracking furnaces. The key modification is a flash pot system located between the convective and radiative sections of the furnace. The crude is partially vaporized, and the vapor is steam cracked. The liquid is a by-product. The economics of the ExxonMobil process are driven in part by market conditions specific to Singapore. They feed Tapis Light, a locally available Malaysian light, sweet crude that has characteristics close to those of a heavy condensate, which allows operation without costly feed pretreatment steps. Taking advantage of the price spread between naphtha and this crude, the ExxonMobil process shows a production cost advantage of $100 to $200/ton over traditional naphtha cracking. This is a remarkable increase in margin for a relatively small incremental capital cost investment. We have not analyzed the potential for retrofitting existing naphtha crackers. We also present capital and production cost estimates for a facility in Saudi Arabia using the integrated Aramco crude-to-olefins process. The Aramco route benefits from a significant by-product value uplift and an advantageous feedstock price spread, the sum of which results in a cash cost advantage of over $200/ton compared with conventional naphtha cracking. Capex is significantly higher, however. These two factors largely cancel one another out. We conclude that the Aramco process shows equivalent to slightly advantageous economics compared with naphtha cracking. SABIC has publicly discussed preliminary studies examining the feasibility of building a crude-to olefins complex. SABIC does not appear to have developed any proprietary technology to tackle this problem. Rather, its approach appears to be to use “off-the-shelf” refining processes to generate the steam cracker feedstocks. SABIC’s discussions do not appear to have gone beyond the feasibility study stage. Given the unclear nature of any potential approach they might take, we have not attempted to analyze their efforts in detail. We believe that the capital intensity of their approach is likely to be significantly higher than that of Aramco’s. Given the headwinds described above, we do not believe implementation of such a project to be likely in the near future. Aramco has also partnered with JX Nippon Oil in developing a new FCC technology that shows a high yield to light olefins. A semicommercial unit of 3,000 BPD capacity is currently in operation in Japan. SABIC has publicly discussed preliminary studies examining the feasibility of building a crude-toolefins complex. SABIC does not appear to have developed any proprietary technology to tackle this problem. Rather, its approach appears to be to use “off-the-shelf” refining processes to generate the steam cracker feedstocks. SABIC’s discussions do not appear to have gone beyond the feasibility study stage. Given the unclear nature of any potential approach they might take, we have not attempted to analyze their efforts in detail. We believe that the capital intensity of their approach is likely to be significantly higher than that of Aramco’s. Given the headwinds described above, we do not believe implementation of such a project to be likely in the near future.

© 2016 IHS Markit

ExxonMobil’s approach to steam cracking crude oil

17

• Preheat crude oil (Tapis Light) in cracker furnace convection section.

• Partially vaporize heated crude in flash pot outside furnace.

• Flash pot overhead vapor (76%) fed to cracker furnace radiant coils.

• Dispose of 24% flash pot bottoms liquid (resid) which is not suitable for steam cracking in refinery.

Presenter

Presentation Notes

A light, sweet Malaysian crude oil feedstock (Tapis Light) is passed to five parallel specially modified cracking furnaces plus one common spare. Each of the modified furnaces includes a flash pot for the separation of light, crackable crude oil components from heavier components that are not suitable for steam cracking. We present a schematic of the modified furnace configuration in Figure 2.1 below. Crude oil is fed at 77°F and 80 psia to heat exchange coils at the top of the convective section of the furnace. Dilution steam is added at a steam-to-feedstock ratio of 0.5 ton per ton. The feedstock/steam mixture is further heated in the convective section to 455°F. The hot mixture, now at 70 psia is flashed in a flash pot to 35 psia and 443°F. (This flash pot is described in detail in Section 4 of this report.) Roughly 76% of the hydrocarbon flashes, the remainder, exits the bottom of the flash pot as a heavy gas oil by-product. The hydrocarbon vapor is further heated in the convective section of the furnace to 1,050°F. The hot vapor is then passed to the radiant section of the furnace, where the hydrocarbon is cracked.

© 2016 IHS Markit

ARAMCO’s approach has significantly different yield than conventional cracking

18

• ARAMCO crude oil-to-ethylene process

integrates hydrocracking, FCC and steam cracking processes.

• ARAMCO proprietary high-severity FCC makes 20% propylene + FCC naphtha.

• FCC naphtha is not suitable for steam-cracker feed unless hydrogenated.

• CAPEX is 40% higher than conventional steam cracking due to Hydrocracker/FCC.

• Feed rate 80,000 barrels per day of Dubai crude to make 935 thousand tons per year of ethylene (0.93 stream factor)

ARAMCO USPA 2013/248419

Presenter

Presentation Notes

low in aromatics, high in paraffins, and low in polyaromatic compounds that have a tendency to coke. The Saudi Aramco crude oil-to-ethylene process integrates three well-known refinery and petrochemical processes—hydrocracking, fluid catalytic cracking, and steam cracking. Here, crude oil is fed directly to a hydrocracker. It is hydroprocessed to remove metals, saturate aromatics, remove nitrogen and sulfur, and be hydrocracked. This processing step produces a feedstock that is optimally useful for steam cracking— low in aromatics, high in paraffins, and low in poly-aromatic compounds that have a tendency to coke. The hydrocracker also converts the bottom of the crude oil barrel to material well-suited for feed to a fluid catalytic cracking (FCC) unit. The output from the hydrocracker comprises four main streams: C1-C5, naphtha (C6-430°F), atmospheric gas oil (430°F–700°F), and vacuum gas oil (700°F+). The output from the hydrocracker comprises four main streams: C1-C5, naphtha (C6-430°F), atmospheric gas oil (430°F–700°F), and vacuum gas oil (700°F+).

© 2016 IHS Markit

Siluria has a demonstration OCM plant

19

• Oxidative coupling of methane (OCM) into

ethylene truly is a Holy Grail

• Methane is a cheaper and more plentiful raw material than ethane

• There would be the considerable energy savings over ethane steam cracking because methane conversion would be exothermic

• Siluria has taken OCM further than any of its predecessors • Lower reaction temperatures

• Substantially higher pressures

• Catalyst lifetimes measurable in years rather than months

Presenter

Presentation Notes

At the heart of Siluria’s process is a reactor that is divided into two sections. One is the OCM section, where Siluria’s catalyst converts methane into ethylene and ethane. The coproduct ethane drops down into a second section that cracks it into ethylene. Unlike in conventional ethane cracking, which uses furnaces to generate the heat needed to break bonds, the exothermic OCM reaction itself provides the energy needed. Operators are also free to add ethane as additional feedstock. Others have taken notice of Siluria’s results. To date, the company has raised more than $xxx million from investors. Siluria hooked up with the Brazilian petrochemical maker Braskem to deploy the technology at Braskem facilities in Texas

© 2016 IHS Markit

Agenda

20





• Conclusions

© 2016 IHS Markit

Design basis for ExxonMobil economic evaluation

21

• 1.0 million tons per year ethylene

production from Tapis Light 43 °API crude oil

• AACE Class-3 process design

• PFDs, stream-by-stream MatBal, equipment list with duty specs, itemized and fully loaded CAPEX estimate (+/- 25%).

• Yields simulated using commercial cracking simulation software

• Singapore project site location

• IHS PEP report #29J (by Mike Arne).

Presenter

Presentation Notes

Association for the Advancement of Cost Engineering . Class 5 being the lowest , class 3 is 10-40% of complete definition for budgetary reasons

© 2016 IHS Markit

0102030405060708090

100

ExxonMobil Wide RangeNaphtha

% m

ass

yiel

d Fuel Oil

Pygas

C4 Fraction

Propylene

Ethylene

Methane

Hydrogen

Yield comparison with naphtha steam cracking shows some differences

22

• ExxonMobil’s process produces a little

more ethylene, and a lot more fuel oil.

• Wide-range naphtha produces more propylene, C4 fraction, and pygas

Presenter

Presentation Notes

Ethylene is 1% more Fuel is 6% more xom wide range naphtha c3 c4 pygas 51.44 55.71 difference is 4%

© 2016 IHS Markit

ExxonMobil approach has advantages versus naphtha steam cracking

23

• Assuming a Brent Oil price of $50/bbl, the

high level parameters are:

0100200300400500600700800900

1000

ExxonMobil Wide Range Naphtha

$US/m

etric

ton

Net raw materials UtilitiesPlant operating costs DepreciationCorporate SG&A

C2= $789 FOB S’pore

Presenter

Presentation Notes

The feedstock is the Malaysian light, sweet crude Tapis Light. We set the value of the Tapis Light at $50/bbl, based on Tapis selling in September 2015 for roughly a $1/bbl premium to Brent, which itself is valued at $49/bbl. The specific gravity of Tapis Light is 0.8123. There are 7.75 barrels of Tapis per metric ton. Thus, the crude value is $388/MT. By-product values are based on September 2015 prices and have been taken from IHS Chemical’s Market Advisory Service “Asia Light Olefins Monthly.” The heavy gas oil by-product ($435/MT) is valued at the average of 0.05% gas oil ($58.50/bbl, or $441/MT) and naphtha ($49.35/bbl, or $429/MT). The gas oil and naphtha prices have been taken from Argus’ “Asia-Pacific Products.” Cash cost is $474/MT of ethylene. Net production cost is $722/MT. Product value, including 15% pretax ROI, is $1,018/ton. The September 2015 value of ethylene in Southeast Asia is $789/MT.

© 2016 IHS Markit

Strategic implications for considering ExxonMobil’s process

24

• Makes economic sense where the naphtha

price is significantly greater than the price of whole crude oil

• Makes economic sense when selecting a light crude oil with low resid content

• Likely to replace conventional naphtha steam cracking where lower-cost NGL feedstocks (ethane, propane) are not available

• Disposition and value of flash pot bottoms are an important economic consideration

Presenter

Presentation Notes

2015 tapis is $52.90 per bbl Nearby supply point ExxonMobil Singapore steam cracks Malaysian Tapis crude (43ºAPI light and sweet) Integration benefits Adjacent refinery processes flash pot bottoms (flash pot CAPEX: US$47 mil.) Market Factors Naphtha in Southeast Asia sells at a premium to Tapis light crude. In other regions, naphtha and crude oil are at price parity Location advantage Lower Singapore location factor compared with US Gulf Coast

© 2016 IHS Markit

Design basis for Aramco economic evaluation

25

• 935 KTPA tons per year ethylene

production from Dubai crude oil.

• AACE Class-3 process design.


• Yields simulated using commercial cracking simulation software.

• Kingdom Saudi Arabia (KSA) project site location

• IHS PEP report #29J by Mike Arne.

Presenter

Presentation Notes

In our design case, the naphtha and atmospheric gas oil are co-cracked in a liquids steam cracker. Two C1-C5 streams bypass the cracking furnaces and quench and are sent to the olefins separation portion of the steam cracker. The vacuum gas oil is fed to a proprietary Aramco high-severity FCC unit. This process produces significantly more propylene than does a conventional FCC unit. A propylene-rich stream from this unit is passed to the olefins separation portion of the steam cracker. The other major product from the FCC unit is an aromatics-rich gasoline-boiling-range stream. Production capacity of the integrated facility is 80,000 BPD of crude oil feed at a stream factor of 0.93. This corresponds to 935,000 MT/yr of polymergrade ethylene.

© 2016 IHS Markit

Yield comparison with naphtha steam cracking is significantly different

26

• ARAMCO process produces 13% more

pygas + fuel oil.

• Traditional naphtha steam cracking produces 3% more ethylene + propylene.

• ARAMCO produces much more hydrogen

0

20

40

60

80

100

120

ARAMCO Wide RangeNaphtha

% m

ass

yiel

d

Fuel Oil

Pygas

C4 Fraction

Propylene

Ethylene

Methane

Hydrogen

Presenter

Presentation Notes

Larry, Actually, the process is a net H2 consumer. But this happens internally. You generate H2 from methane and use it for hydrocracking the feedstock. This gives an H-rich liquid that yields an above normal H2 by-product make post steam cracking. Also, there is an H2 purge from the hydrocracker vapor loop. These add up to give a higher than you might expect H2 by-product make compared to conventional naphtha cracking. (It's more than twice the size for Aramco vs. our base case from PEP 29I). But the overall H2 makeup feed to the hydrocracker is bigger than this as you were probably thinking. It's just hidden inside of the process behind the methane-to-hydrogen unit. All the best,

© 2016 IHS Markit

Aramco approach has advantages versus naphtha steam cracking

27

• Assuming a Brent Oil price of $50/bbl, the

high level parameters are:

0100200300400500600700800900

1000

ARAMCO Wide Range Naphtha

$US/m

etric

ton

Net raw materials UtilitiesPlant operating costs DepreciationCorporate SG&A

ARAMCO Wide Range

NaphthaCapex ($US billions) 3.062 2.177

Feedstock Consumption (mt/mt C2=)

4.248 3.487

Feedstock Price ($US/mt) 331 429

Presenter

Presentation Notes

331/7.22 conversion = $45.80

© 2016 IHS Markit

Strategic implications for considering ARAMCO’s process

28

• Production cost is higher than

ExxonMobil’s process at Singapore, but slightly below conventional naphtha steam cracking.

• ROI for US$1 billion of additional CAPEX in hydrocracker + high-severity FCC is questionable.

• It is probably a better idea to place HK bottoms into an existing FCC, given its low flow rate (12,000 barrels per day).

• Economic viability in KSA depends upon availability and price of historically much-lower-cost NGL feedstock.

Presenter

Presentation Notes

2015 tapis is $52.90 per bbl

© 2016 IHS Markit

Design basis for Siluria economic evaluation

29

• 1 MMTPA tons per year ethylene

production from Natural gas.

• AACE Class-3 process design.


• Yields simulated using commercial cracking simulation software.

• USGC project site location

• IHS PEP report 2014-07 by Sumod Kalakkunnath.

© 2016 IHS Markit

Siluria comparison with ethane steam cracking is slightly different

30

• xxx

© 2016 IHS Markit

Strategic implications for considering Siluria’s process

32

• CAPEX, omitting the air separation unit

(ASU), is similar to an ethane cracker so is competitive in a low gas price environment

• Oxygen can be supplied via third party provider however it makes more economic sense to have ASU co-located

• With co-located ASU, production costs are similar to ethane cracking at equivalent capacity.

Presenter

Presentation Notes

2015 tapis is $52.90 per bbl

© 2016 IHS Markit

The global ethylene cost curve flattens as crude declines

33

MDE NAM

NEA

SEA

WEP

0 20 40 60 80 100 120 140 160

World Cost Curve: Ethylene World Cost Curve: Ethylene

Cumulative Production - Million Metric Tons

World Cost Curve: Ethylene World Cost Curve: Ethylene World Cost Curve: Ethylene World Cost Curve: Ethylene World Cost Curve: Ethylene World Cost Curve: Ethylene World Cost Curve: Ethylene World Cost Curve: Ethylene World Cost Curve: Ethylene World Cost Curve: Ethylene World Cost Curve: Ethylene World Cost Curve: Ethylene World Cost Curve: Ethylene World Cost Curve: Ethylene

2015

Brent Crude 2014 = 99.4 $/bbl 2015 = 52.3 $/bbl 2014

© 2016 IHS Markit

The three technologies are competitive on the global production cash cost curve

34

0 20 40 60 80 100 120 140 160

World Cost Curve: Ethylene World Cost Curve: Ethylene

Cumulative Production - Million Metric Tons

World Cost Curve: Ethylene World Cost Curve: Ethylene World Cost Curve: Ethylene World Cost Curve: Ethylene World Cost Curve: Ethylene World Cost Curve: Ethylene World Cost Curve: Ethylene World Cost Curve: Ethylene World Cost Curve: Ethylene World Cost Curve: Ethylene World Cost Curve: Ethylene World Cost Curve: Ethylene World Cost Curve: Ethylene World Cost Curve: Ethylene

2015

Brent Crude 2015 = 52.3 $/bbl

Naphtha Singapore

Aramco Crude Saudi

Exxon Crude Singapore

Siluria OCM USGC

Presenter

Presentation Notes

Exxon Singapore: 474 cash plus 51 SGA = 525 Aramco Saudi basis: 434 cash plus 66 SGA = 500 Singapore naphtha: 615 cash plus 58 SGA = 673 2015 siluria from ethylene tech report = 450, 160 less with internal O2, USGC gas at 2.6 $/MMBtu

© 2016 IHS Markit

Agenda

35





• Conclusions

© 2016 IHS Markit

Conclusions

36

• Direct routes through crude oil cracking

and oxidative coupling of methane to ethylene offer a holy grail to certain regions

• Both ExxonMobil and ARAMCO costs are below naphtha cracking

• ARAMCO’s depreciation cost (representing CAPEX) is significantly higher than ExxonMobil or naphtha steam cracking

• Naphtha crackers still required for ethylene and co-products which will drive ethylene prices

© 2016 IHS Markit © 2016 IHS Markit. All Rights Reserved.

Direct Oil and Gas to Ethylene - The Search for the Holy Grail - MERTC Annual Meeting, January 2017, Manama, Bahrain

Dr. Richard Charlesworth

Managing Director, Middle East

[email protected]

mailto:[email protected]



Documents

Direct Oil and Gas to Ethylene - Conference · PDF file · 2018-02-13Direct Oil and Gas to Ethylene - The Search for the Holy Grail - MERTC Annual Meeting, January 2017, Manama, Bahrain