Platts Refining Sept Stephen Bowers

Transcription

1 Platts Refining Sept Stephen Bowers

2 Disclaimer This presentation contains forward-looking statements and opinions concerning the general global economic condition and that of the oil, gas and light olefines industry. Evonik Industries AG does not warrant the reliability, accuracy or completeness of any information contained in this presentation and, to the extent permitted by the applicable law, disclaims any and all responsibility for any loss or damage (including without limitation consequential, indirect or economic losses and damages) arising in any way, including by reason of negligence for errors or omissions in this presentation. You should therefore seek independent verification of any information presented herein that you intend to rely on, and consult your professional advisors to determine the course of action appropriate to you. Where possible this information has been gained from public sources that are widely available free of charge and to the best of our knowledge has not infringed any terms of use or copyright. Sept 2016 Refining Page 2

3 Refining 2016 Today s Topics Crudes types in European refineries US crude oil reaches Europe After 40 year absence Lower crude prices = lower energy costs Tomorrow s Issues for European refineries Falling product demand in Europe Ageing assets and refinery configuration Competing against imports Sept 2016 Refining Page 3

4 Typical EU Refinery Product Slate and Demand Source: Fuels Europe Statistics 2016 Sept 2016 Refining Page 4

5 EU product demand Sept 2016 Refining Page 5 Source: Fuels Europe +IEA OMR

6 Gasoline and Diesel Crack Spread Europe Sept 2016 Refining Page 6 Source: IEA OMR

7 Northwest Europe Refining Margins Sept 2016 Refining Source: IEA OMR Page 7

8 Main Crude types in EU crude Slate - IEA Crude mbd Q mbd Q API Sulphur % Saudi Light Iraq Basra Light Kuwaiti Blend Iranian Light Iranian Heavy Venezuelan Heavy Mexican Maya Canadian Heavy BFOE (Brent, Forties,Oseberg, Ekofisk) Russian Urals Kazakhstan Libya Light and Medium Nigerian Light Total Sept 2016 Refining Page 8

9 US crude Imports to EU Jan Jun 2016 kb/month 2016 Jan Feb Mar Apr May Jun Total France Italy Netherlands Switzerland UK US crude reaches the EU after a 40 year absence Volumes are modest at 13 mb after six months or 70 kb/d equivalent 13 mb is just one day of EU crude demand In same period Russia Urals crude was about 300 mb or 23x US. Total Source: EIA Petroleum Report Sept 2016 Refining Page 9

10 Yield % volume Crude Yields CDU Yields Selected Crude Yields 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% LPG naphtha jet diesel at. residue By carefully selecting crude type refiners can optimise product slate to match demand Urals can under certain market conditions yield better margins due to higher middle distillate yield vs Brent Lower sulphur crudes require less hydrotreating Less complex refineries can often achieve same margins as more complex refineries 0% Arab Lt Arab Hvy Urals Brent Crude Type Sept 2016 Refining Page 10

11 From the Fuels Europe Archive Europia (Fuels Europe) analysis 2008 of refining margins ETS carbon cost will add further burden to EU refiners A typical EU refinery of 143 kbd on a $5 gross margin would make about $261 million gross per year. More than $120 million can be expected to be for energy costs at $50 per bbl. (4.7% crude charge as fuel) Carbon taxes will bite into the net cash margin under the ETS. Source : Fuels Europe Average EU refinery carbon emissions = 0.21 mt CO 2 /mt crude (0.35 max) Sept 2016 Refining Page 11

12 Cost of EU Legislation - Concawe Concawe view of ETS on refiners Red bars denote ETS compliance under high and low scenarios $/bbl Green bars shows cost od sulphur $/bbl to compy with Sulphur in Liquid Fuels. Sulphur removal is a major refining cost Sept 2016 Refining Page 12

13 Selected EU country refining statistics kb/d Country Refineries CDU VDU FCC CCR HCR HT Average Capacity Austria Belgium Finland France Germany Italy Netherlands Poland Portugal Spain Sweden UK Sub total Total EU Average EU refining capacity is about 143 kb/d (7 million mta) New world scale capacity is kb/d (15-20 million mta) FCC + HCR capacity is 28.7% of CDU capacity- low Complexity of EU refineries is low compared with new Asian refineries EU refineries are 40+ years old with a gasoline centric (FCC) configuration. Sept 2016 Refining Page 13 Source. Oil and Gas Journal

14 Energy Use in Refineries - indicative LPG 180 Crude C D U FRN 150 Jet -kero SR Diesel 100 NS KHT DHT 200 Reformer 290 Reformate Alkylate Alkylation FCC gasoline LCO Naphtha Gasoline Jet- Kero Diesel Gas Oil V D U VGO 80 Residue 120 FCC Slurry Oil 350 Fuel Oil # energy use MJ/barrel 150 # embedded energy MJ/ barrel product (+ 30 MJ/barrel added for other processes) Source : Szklo & Schaeffer 2007 Sept 2016 Refining Page 14

15 Energy Bandwidth Refinery Processes Process Min MJ/b Max MJ/b Mean MJ/b Crude Distillation CDU Vacuum Distillation VDU Delayed Coking DCU Fluid Catalytic Cracking FCCU Hydrocracking HCU Hydrotreating HT Catalytic Reforming Alkylation Sulphuric Acid Alkylation hydrofluoric Acid Etherification Isomerisation -pentane Isomerisation - butane Lube-oils production Sept 2016 Refining Page 15 Source : Szklo & Schaeffer 2007

16 Relative Rate of Reaction Sulphur a high cost contaminant ULSP and ULSD have greatly increased refiners cost. ULSD (10 ppm S) has posed a great challenge Cutting the diesel end point to minimise dibenzothiophenes reduces hydrotreating costs Dibenzothiophenes are pushed down into gas oils and require more time, pressure and temperature to remove. Sept 2016 Refining Page 16 Source: Myers Handbook of Refining

17 Scope for Energy Minimisation Relative to other regions EU refineries are amongst the best in terms of energy use High energy costs and carbon taxes have placed an emphasis on energy minimisation for years Careful selection of crude can minimise deep hydrotreating for sulphur removal Optimisation of process units can dramatically reduce energy use especially avoiding off spec material that has to be re-run Typical EU refinery fuel use 2015 was about 4.7% of crude charge Highly complex refineries can consume 8%+ of crude charge More complex the refinery = more energy consumed. Sept 2016 Refining Page 17

18 Summing Up Outlook for EU refining is at best mixed potential for further rationalisation Margins have fallen in past six months to around $5 per barrel and could fall more EU ETS will not help margins especially if carbon costs increase EU refiners are already fairly good in energy use per barrel throughput and little scope for significant improvement exists Lower crude prices have lowered energy costs which has boosted net cash margin - but for how long Extension of SECA will increase refiners costs still further Sept 2016 Refining Page 18

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20 Solomon Associates 2014 analysis Solomon Associates 2014 analysis of EU refining margins In the period energy costs have increased as % of gross margin, partly due to ULSP and ULSD implementation Current refining margins are little better than a decade ago Scope to increase margins is limited as EU has surplus gasoline Sept 2016 Refining Page 20 Source. Solomon Associates

21 EU states gasoline diesel demand and trade flows Sept 2016 Refining Page 21