Bitumen to Finished Products Presented by: Gerald W. Bruce Jacobs Canada Inc. Canadian Heavy Oil Association Technical Luncheon Calgary, Nov 9, 2005
Overview Why all the interest? Value chain Adding value to bitumen Finished products Refining challenges Typical US refinery configurations Complexity range Market for Oil Sands production Conclusions Fit the market
Life is Good for Now Source: CAPP May 2005 Comment: remember 1999
Light / Heavy Differential Source: CAPP High differentials make upgrading. Very attractive
Adding Value to Bitumen Production through refining 100% 90% 80% 70% 60% 50% 40% 27% 18% 12% Refining Secondary upgrading Primary upgrading 30% 20% 10% 42% Bitumen production 0% Production through Refining Source: Petro-Canada
Upstream vs Downstream Source: Petro-Canada
Global Decline of Light Sweet Crude Historical production vs. reserves Source: Valero Energy Company Observation: Crude is getting heavier, refineries were designed to run mostly light sweet crudes
Upgrading / Refining Incentives Capturing the Light/Heavy differential is real $$$ Example: refinery capacity = 100,000 bpd Heavy/light differential: $ 20 per barrel Assumption: bitumen blend = nominal 50% of the refinery feed Savings = 20 x 50% x 100,000 = $ 1,000,000 per day or $ 365 million/year Availability of low cost reliable feedstocks is attractive to US Refiners (with money to spend) Availability, pipeline infrastructure, price Bitumen is cheap for a reason Significant investment required in upgrading/refining required to be able to capture the margin
Upgrading? Synthetic Crude Oil (SCO) trades at a premium to WTI Current: $ 1US/bbl Bitumen Blends trade at a discount to WTI Current: $ 23 US/bbl Upgrading bitumen to SCO moves production up the value chain Example: production of 100,000 bpd of bitumen Assumption: SCO yield of 85% vol on bitumen SCO/bitumen differential: $ 23 per barrel Additional revenue: 23 x 85% x 100,000 $ 1,955,000 per day or $ 715 million/yr Upgrading to SCO is not for the faint of capital $ 40k per barrel of SCO product (upgrading only)
All the Way to Finished Products Gasoline Crude oil Jet fuel Diesel
Gasoline Gasoline: 120 330 F boiling range material Primarily for light transportation purpose Property Sulfur (ppmw, max) Benzene Content (vol. %, max) Octane (min) ASTM D4814-96 Canadian Environmental Protection Act, 1999 30 1 87
Jet fuel Jet fuel: 300 500 F TBP material Primarily for commercial aviation jet engines Property Aromatics Content (vol. %, max) Canadian Specification: Jet A/A-1 25 Smoke Point (mm, min) (mm, min and < 3 vol% naphthalenes) Sulfur (wt%, max) Flash Point ( F / C, min) Freeze Point ( F / C, max) Net Heat of Combustion (MJ/kg) 25 18 0.3 100 / 38-47 / -43.8 42.8
Diesel Diesel: 350 650 F TBP material. Primarily used for heavy duty transportation and industrial purposes Property Canadian specification Diesel fuel Sulfur (wt ppm, max) Cetane Number (min) 15 (2006) 40 Aromatics Content Cetane Index Aromatics (vol. %, max) Cloud Point ( F / C, max) Flash point ( F / C, min) 40 30-34 / -37 40 / 4
US Refinery Configurations Gasoline Crude oil Jet fuel Diesel
Fitting the Pipes - Typical Yields 100% 80% Naphtha and lighter (IBP to 330 F) Yields (vol) 60% 40% Jet fuel (330 to 480 F) Diesel (480 to 650 F) 20% Vacuum Gas Oil (650 to 1000 F) 0% Residue (1000 F+) Brent WTI Cold Lake SCO Typical refinery output
Low Complexity Refinery 100% 90% 80% 70% Yields (vol) 60% 50% 40% 30% 20% 10% 0% Crude Products
High Complexity Coking Refinery 100% 90% 80% 70% Yields (vol) 60% 50% 40% 30% 20% 10% 0% Crude Products
High Complexity Cracking Refinery 100% 90% 80% 70% Yields (vol) 60% 50% 40% 30% 20% 10% 0% Crude Products
Processing Bitumen Blends The bitumen portion of the blend is nasty Bitumen characteristics: Heavy, tar like crude oil. Gravity and viscosity are high Challenging Chemistry Contains significant aromatic and asphaltene compounds. High in sulfur, nitrogen, and metals Also contains highly corrosive organic acids. Must be diluted or upgraded in order to ship.
Processing Bitumen Blends Not a good fit with refineries designed for light sweet crudes Need conversion capacity to handle bottoms Significant hydroprocessing of converted material Bitumen is H2 deficient Never seems to be enough H2 around Byproducts are plentiful and nasty Sulphur, Coke SCO works well in refineries designed for SCO
Processing SCO Level of upgrading Premium SCO vs Sour SCO Bottoms? Yes or no Fit with refinery Processing objectives Anode grade coking business? Opportunities to fit the SCO Asphaltene reduced SCO
SCO Challenges Quality Fit. % volume 100 80 60 some ideal properties Jet Fuel smoke point >21 Diesel Cetane >45 Conventional Light/Heavy Crude Blend naphtha 24 50 Synthetic Sweet Crude Today 15 35 some questions on hydrocarbon mix poor quality distillates limit many refiners to 10% or less of crude diet 40 20 0 Gas Oil to conversion units UOP > 11.75 11.9 residue 11.3 high volume of low quality feedstock for cat cracking refineries Courtesy Alberta Chamber of Resources
Hydrogen Content Bitumen is hydrogen deficient SCO has is better The hydrogen to carbon ratio is a good indicator of how much work needs to be done on the molecules More hydrogen. Paraffins > Naphthenes > Aromatics For aromatics, the more rings, the lower the H/C ratio Heavier fractions have less hydrogen, with large multi-ring aromatics (like those found in bitumen). Lowest H/C
Hydrogen Content 2.9 2.7 H/C ratio 2.5 2.3 2.1 Gasoline Jet fuel Diesel Vacuum Gas Oil Residue 1.9 1.7 1.5-250 -50 150 350 550 750 950 1150 1350 Boiling Point (F) Crude: Brent Blend
Hydrogen Content The hydrogen content sets the refinery friendliness of a crude FCC units (the main gasoline producing machine in a refinery) are sensitive to the hydrogen content of the feed: Less hydrogen means heavier or more multi-ring aromatic feeds), gasoline yield decreases and coke yield increases. Getting hydrogen into the molecules is what really happens in upgrading and refining: Carbon rejection : coker units, followed by hydrotreating Hydrogen addition: hydrocracking units
Other Key Properties Sulphur: tight new environmental regulations sulphur at ppm levels on final products Nitrogen: causes NOx emissions and catalyst poisoning Metals: causes catalyst poisoning. New environmental concerns around mercury and selenium Conradson Carbon (CCR): coking tendency (yield losses) on conversion units High TAN: naphthenic acids may require special metallurgy on fractionation columns, furnace tubes, piping, etc.
Other Key Properties Crude West Texas Intermediate Cold Lake Blend (Dilbit) MacKay River (Synbit) Syncrude Synthetic Sulphur (wt %) 0.44 3.79 2.72 0.1 Nitrogen (ppm, wt) 1900 2915 700 Nickel (ppm, wt) 3 61.6 43.10 0.3 Vanadium (ppm, wt) 3 159.4 111.9 Mercury (ppb, wt) 6.8 6 <1 CCR (wt %) 1.5 9.33 6.80 0.5 TAN (mg KOH/g) 0.09 0.88 1.63
Diesel Range Properties Sweet Conventional Bottomless SCO Bitumen Sulfur (mass %) 0.25 0.03 1.79 Aromatics (vol. %) 24 41 43 Aniline Point ( o F) 166 140 125 Cetane Index (D-976) 50.6 39.4 --- Cetane Index (D-4737) 55.8 44.5 39 Cloud Point ( o F) 4-20 <-45 Pour Point ( o F) 0-31 <-40
Jet Range Properties Sweet Conventional Bottomless SCO Bitumen Aromatics (vol. %) 16.4 32.8 22 Naphthenes (vol. %) Paraffins (vol. %) 44.9 39.7 38.2 28.7 76 Aniline Point ( o F) 144 118 122 Smoke Point (mm) 24 15 16 Sulfur (mass %) 0.1 0.001 0.83 Freeze Point ( o F) -33-63 <-50
USA Refinery Limitations Conversion capability Bitumen blends vs SCO You need serious hydroprocessing capability Existing refineries unlikely to have required hydroprocessing severity or hydrogen. Metallurgy upgrades required. Environmental limitations Air, water, Byproduct disposal
Target Markets Current US Midwest (PADD II) US Rocky Mountain Region (PADD IV) Extended and New Markets US West Coast (PADD V) US Gulf Coast (PADD III) Offshore (Export from Kitimat BC Terminal)
Existing Markets - Relative Volumes Source: CAPP
Existing and New Markets are Key Shell Canada Imperial Petro-Canada Edmonton Hardisty Husky-Lloydminster Vitol ChevronTexaco-Burnaby BP-Cherry Point ConocoPhillips-Ferndale Tesoro-Anacortes Shell-Anacortes Montana Ref-Great Falls Coop-Regina Shell PetroCanada Ultramar Irving Imperial ConocoPhillips Billings ExxonMobil Cenex Tesoro-Mandan Murphy-Superior ChevronTexaco Tesoro Valero Shell Shell ChevronTexaco BP Paramount Valero Source: BP ExxonMobil Shell ConocoPhillips Sinclair-Casper Salt Lake City Sinclair-Rawlins Tesoro ChevronTexaco Frontier-Cheyenne Flying J Holly Valero Suncor Western MAP-St.Paul NCRA-McPherson ConocoPhillips-Wood Frontier-El River Dorado Farmland-Coffeyville Valero ConocoPhillips-Ponca ConocoPhillips - BorgerCity Sinclair-Tulsa Gary Williams Valero Navajo Crown Flint Hills-Pine Bend Citgo-Lemont ExxonMobil-Joliet Lion BP-Whiting MAP-Robinson Premcor Hunt Alon Placid Shell Valero ChevronTexaco ExxonMobil ExxonMobil Fina Motiva Shell Premcor ConocoPhillipsMAP Murphy LCR Motiva ConocoPhillips Valero Valero ExxonMobil Motiva CITGO Crown Chalmette ConocoPhillips MAP Shell Coastal BP Valero CITGO Valero Flint Hills Valero Imperial Shell Suncor PetroCanada-Oakville Sarnia Imperial-Nanticoke MAP-Detroit United- BP-Toledo Warren Sunoco -Toledo MAP-Canton Premcor-Lima MAP-Catlettsburg ConocoPhillips Sunoco Valero ConocoPhillips Motiva SunocoSunoco Sunoco Giant Core Extended New
New Markets - Comparison Source: CAPP
Conclusions The time is right for significant oil sands development. Upgrading or not.. Depends on the market Security of supply will fuel the expansion of bitumen derived feedstocks in current and extended US markets. Refineries need to be reconfigured to make them bitumen friendly. Start to look much like an upgrader New markets provide the opportunity to tailor production to meet market needs.