Investment Planning of an Integrated Petrochemicals Complex & Refinery A Best Practice Approach

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1 Investment Planning of an Integrated Petrochemicals Complex & Refinery A Best Practice Approach RPTC, Moscow, 19 September 2012 David Gibbons Principal Process Consultant Foster Wheeler. All rights reserved.

2 Agenda Introduction Technology - Integration options Feed options Refinery / Petrochemical integration options Investment planning Case study Conclusions 1

3 Introduction Two main building blocks for petrochemicals Olefins Ethylene global market ~ 140 million tonnes/year (MTPA) Propylene global market ~ 80 MTPA Aromatics Benzene global market ~ 42 MTPA Paraxylene global market ~ 33 MTPA Growth has declined in recent years but overall trend is still upward Polyolefin market (approx. 2 / 3 of olefin supply) now ~ 130 MTPA Stand-alone petrochemical plant Petrochemical building blocks Steam cracker for olefins (ethane, LPG, naphtha, gasoil feeds) Naphtha reformer for aromatics (+ steam cracker pyrolysis gasoline) Refinery can produce feed for petrochemicals, or be integrated with petrochemicals production 2

4 Technology Refinery C3, C4 Naphtha Gasoline Jet/Kero Gasoil C2 Integration Options Steam Cracker Naphtha Reformer C2=, C3= C4= Pyrolysis Gas Pet Chems (olefins) Complex Pet Chems PE, EO, EG PP, PO, EG Acetic/Acrylic acid Polyols VAM, PVC C4== EBSM ABS, SBR Cumene, Phenol Polycarbonate Polyurethane Fuel Oil Aromatics Benzene Toluene Xylenes Heavy Aromatics Pet Chems (aromatics) PTA, PET Fibre, Film Bottles 7

5 Technology Refinery C3=, C4= C3, C4 Naphtha Gasoline Jet/Kero Gasoil C2 Integration Options Steam Cracker Naphtha Reformer C2=, C3= C4= Pyrolysis Gas Pet Chems (olefins) Complex Pet Chems PE, EO, EG PP, PO, EG Acetic/Acrylic acid Polyols VAM, PVC C4== EBSM ABS, SBR Cumene, Phenol Polycarbonate Polyurethane Fuel Oil Aromatics Benzene Toluene Xylenes Heavy Aromatics Pet Chems (aromatics) PTA, PET Fibre, Film Bottles 8

6 Technology Refinery C3=, C4= C3, C4 Naphtha Gasoline Jet/Kero Gasoil C2 Integration Options Steam Cracker Naphtha Reformer C2=, C3= C4= Pyrolysis Gas Pet Chems (olefins) Complex Pet Chems PE, EO, EG PP, PO, EG Acetic/Acrylic acid Polyols VAM, PVC C4== EBSM ABS, SBR Cumene, Phenol Polycarbonate Polyurethane Fuel Oil Coke Aromatics Benzene Toluene Xylenes Heavy Aromatics Pet Chems (aromatics) PTA, PET Fibre, Film Bottles Gasification Synthesis Gas Hydrogen, steam, power Ammonia, Methanol Olefins Gas-to-Liquids 9

7 Feed Options Heavier feeds give heavier products Yields for steam cracker feeds vs FCC and CCR for petrochemicals ethylene propylene butenes BTX C2 C3 nc4 ic4 LN AGO FCC CCR

8 Integration Options Steam cracker opportunities Surplus hydrogen to refinery for hydrotreating Common gas recovery section (refinery light ends to cracker complex) Provides improved recovery Processing of mixed C4 streams to give MTBE/Alkylate for gasoline Recover aromatics from Pygas (or blend to gasoline) Refinery FCC opportunities Refinery Petrochemicals No longer just a gasoline machine Increasingly used for olefins and even aromatics, especially high severity FCC (hydrotreated feed) and recycle (FCC Light Naphtha) cracking Propylene yields of wt% on feed, recovery of ethylene viable FCC Heavy Naphtha can contain 50-80% aromatics Needs more severe hydrotreating due to high olefins, sulphur, nitrogen Liquid-liquid extraction of aromatics, raffinate is good reformer feed 11

9 Integration Options Other Petrochemicals Opportunities Propane dehydrogenation Use refinery propane product High yield 80%+ to propylene, and produces hydrogen Route propane dehydrogenation overheads stream to steam cracker C4 processing Butadiene extraction, or Hydrogenation Selective hydrogenation for alkylate Total hydrogenation for steam cracker feed Metathesis Olefin conversion: ethylene + butene 2 propylene C4 s require selective hydrogenation and isomerisation Combine ethylene and butenes from steam cracker and (R)FCC 12

10 Integration Options Residue upgrading Carbon rejection, hydrogen addition or solvent deasphalting Carbon rejection Visbreaking or coking Coke can be used for steam/power generation (circulating fluidisedbed boiler) or gasified Offers opportunity for phased investment Residue FCC Hydrogen addition Residue desulphurisation Residue hydrocracking (range of severities) Solvent deasphalting Other Refinery Opportunities Can be combined with other technologies (coking, hydrotreating) 13

11 Investment Planning Generic feasibility study Agree Objectives Market Analysis (including Integration / Synergy Potential) Plant Configuration Study More detailed reviews Site Selection Develop Offsites / Utilities / Marine Facilities Concept Cost Estimate Constructability Economic / Financial Analysis Recommend Configuration Development Roadmap 14

12 Investment Planning Configuration Optimisation Feedstock Availability Feedstock Prices Product Demands Product Prices Product Specs Available Processes Capital Costs LP MODEL Synergy Opportunities Hydrogen & Utility Consumptions Operating Costs OPTIMUM CONFIGURATION 15

13 Investment Planning Typical Practice Linear Programming with off-line screening of options Many different configuration cases are run LP optimises unit capacities based on maximising revenue LP considers operating costs but not capital costs Economics Screening Capital costs estimated using curve costs based on unit capacity Cash flow model created, considering design/construction phase, plus longer period of operation Calculate economic indicators Net Present Value, Internal Rate of Return (and others) Comparison to select most favourable option for further development 16

14 Investment Planning Best Practice Linear Program with Investment Modelling Includes Capital (Investment) costs and Operating Costs ISBL capital costs using same curve costs based on unit capacity OSBL costs estimated using factors applied based on type and size Multiple time periods with all investment in first period Can utilise changing prices and product demands over time Even changes in product specifications over time can be included Cash flow model calculates NPV to give alternative optimisation target LP optimises unit capacities based on maximising return on investment Advantages of this approach Fewer cases to investigate Time and cost savings for study True economic optimum for a given set of conditions 17

15 Investment Planning Best Practice Generic feasibility study Agree Objectives Market Analysis (including Integration / Synergy Potential) Site Selection Develop Offsites / Utilities / Marine Facilities Concept Plant Configuration Study Cost Estimate Constructability More detailed reviews LP Investment Model Economic / Financial Analysis Recommend Configuration Development Roadmap 18

16 Case Study Comparison of optimisation with and without investment modelling Petrochemical complex: gas feed for polyethylene and polypropylene Gas feed rate, feed and product prices are the same for both options Investment modelling considers 20 years operation, 15% annual discount Unit Capacity TPSD without investment modelling Capacity TPSD with investment modelling Steam cracker 1,934 1,588 Polyethylene 2,832 2,430 Polypropylene 2,423 1,222 Propane Dehyrogenation 1,890 1,180 Gas separation 32,590 32,590 C4 hydroisomerisation Metathesis

17 Case Study Comparison of products with and without investment modelling Previous unit capacities give following product slates Unit TPSD without investment modelling TPSD with investment modelling LPG 0 2,022 Naphtha Polyethylene 2,832 2,314 Polypropylene 2,423 1,164 Sales Gas 12,640 12,265 Metathesis 18,726 18,399 Without investment modelling, unit capacities (particularly for polyolefins units) are larger With investment modelling, some additional technologies are no longer viable when return of investment is considered 20

18 Case Study Economic comparison of results with and without investment modelling Comparison on simplified basis Unit without investment modelling with investment modelling incremental investment Investment (M$) 3,490 2,330 1,210 NPV (M$) 977 1,294 (166) Net Margin M$/yr IRR % Without investment modelling, maximum margin gives higher investment and apparently acceptable IRR With investment modelling, maximum NPV gives lower investment but better IRR Incremental investment shows poor return (less than discount rate) 21

19 Investment Planning - A Best Practice Approach Conclusions Refinery units such as FCC, coker and other residue upgrading processes can provide a source of petrochemicals As refinery and petrochemical integration opportunities increase, optimisation of the configuration becomes more complex Investment modelling can reduce the number of cases, and hence save study time and cost Investment planning can be improved by using investment modelling 22

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