China s Refining Industry: History and Technology Evolution Rob Tufts, BRSI Inc., Cochrane Alberta, Canada rtufts@brsi-ca.com +1 403 630-0789
This presentation will highlight: 1. The increased utilization of Residue Desulphurization Technology (RDS) and correspondingly the reduced dependency on Delayed Coking Units (DCU) 2. The role of the small independents refineries and the potential impact of tighter clean fuel specifications
Introduction Principal at BRSI Inc. Company located in Alberta Canada Have worked for over 30years in the refining industry Specializing in Heavy Oil processing (CDU -VDU / Delayed Coking / Visbreaking) Have provided consulting services around the world First project in China was for CNPC Daqingin 2001 Subsequently have worked in refineries operated by Sinopec / PetroChina/ ChemChina
Refining industry can be classified into three categories: Majors Sinopec / PetroChina ~65 refineries with 460 470mTPA Crude capacity Intermediates CNOOC / ChemChina/ SinoChem ~30 refineries with 80 90mTPA Crude capacity Independents Teapot 100 to 150 refineries with 135mTPA 200mTPA Crude capacity
Total installed refining capacity: 680 760mTPA Sinopec / PetroChina market share >60%
Major and intermediates typically run to a high utilization Most Sinopec / PetroChinarefineries are integrated with chemical production and run to a high load factor Intermediates base loaded for fuels production 2014 Refinery Utilization Major / Intermediates 81% Teapots 23% Utilization of independents typically very low Refineries generally have reduced complexity, poorer energy efficiency and run as swing facilities to meet incremental gasoline / diesel demand
Sinopec / PetroChinaimport foreign crude from diversified locations Individual refinery crude slate and unit operation LP optimized for high value products (chemicals, gasoline, jet fuel) Translates to a stable GPC yield / quality
Traditionally the independent refiners processed local crudes / bunkers / fuel oil. Ability to import crude oil restricted Operated only when margins were favourable Led to a variable yield / quality of GPC Limitations on crude imports are easing based on meeting qualifying conditions Imported Crude displaces bunkers/fuel oil Refinery feed slate typically sourced from the cheapest available feedstocks Variability of GPC yield / quality remains high
Major & Intermediates Throughput, mtpa Installed Coking Capacity GPC Yield, mtpa Market Share 80 90 21 23 70% Independents 30 50 7 13 30% Total 110 140 28 36 The base load GPC variability (amount / quality) should be no different than that of Western Refineries Incremental GPC from independents variable (amount / quality)
The residue cat cracker (RFCC) is at the centreof the high conversion gasoline based refinery CDU Maximum heavy feed to DCU with incremental residue to RFCC to meet required Crude run VDU RFCC DCU Typical Crude Required Coker Capacity (wt% of Crude) ~20wt% Heavy Crude 30 35%
Gasoline and Diesel Sulphur Specification Current China IV New China V Implementation Gasoline 50wppm max 10wppm max Jan 2017 Diesel 50wppm max 10wppm max Jan 2017 General Diesel 350wppm max 50wppm max July 2017 10wppm max Jan 2018 GPC Policy Statement Impending restrictions on GPC Coke >3% Sulphur No importation allowed Domestic production permitted Buyers/end users require an environmental compliance certificate Market appears to be responding as if implemented
The Challenging Refining Environment Over installed refining capacity Postponed projects represent ~15% of current capacity Falling diesel demand / increasing gasoline demand Increased hydrotreatingcapacity required to meet clean fuels specification Potential for refinery closures in environmentally sensitive regions
Refining Trends New CDU / VDU designed to world scale of 10mTPA (older units 2-5mTPA) Less focus on very heavy /sour crudes in favour of slightly lighter/sweeter crudes 26 to 32API vs20 to 22API Crude / Vacuum / Coker Units revamped and designed for maximum liquid yields Increasing RDS hydrotreating capacity
Increasing trend to include RDS capacity in refinery revamps and planned refineries Half of the installed RDS capacity is in Coker based refineries
In a Coking refinery feed to the RDS unit is a blend of atmospheric and vacuum residue CDU DCU feed rate set to meet crude run balancing CCR / Metals not processed in RDS VDU RDS RFCC DCU Revamps have installed RDS unit in parallel to RDS (no examples of DesulphurizingDCU feed)
Inclusion of the RDS unit into the refinery flow scheme has advantages and disadvantages Ability to process heavy crude oil decreases So far using fixed bed units, the use of online catalyst replacement technology would minimize/eliminate the impact Reduces post RFCC treatment required to meet product specifications Improves refinery yield profile (increased high valued products)
As RDS capacity has been installed in existing coking refineries the following has occurred Required coking capacity is reduced In facilities with multiple cokerunits the oldest unit is shut down Slightly sweeter / lighter crude processed Net GPC production decreases due to the combined impact of reduced coking capacity and the change in crude slate 10% to 40% reduction in coking capacity GPC Sulphur content decreases
Concluding Remarks RDS increasingly being used to meet more demanding clean fuels specifications Refineries ideally suited for RDS due to RFCC Reduces required coking capacity Sulphur content of produced GPC reduced In a refinery with RDS the cokeris only required to maintain heavy crude processing flexibility New projects will most likely utilize RDS with a smaller coker Installed capacity of 10-15% on crude vs20 30%
Concluding Remarks Pressure to increase refining complexity, improve efficiency, and produce cleaner fuels creates environment for rationalization of independent refineries Transition to intermediate status running at a higher utilization Directionally stabilize GPC supply and quality
Concluding Remarks Domestic demand for GPC>3wt% S linked to capacity of compliant downstream facilities Small coking refineries with minimal HTU capacity will shutdown to balance market Low probability that new refineries producing significant amounts of high S GPC will be built
China s Refining Industry: History and Technology Evolution Rob Tufts, BRSI Inc., Cochrane Alberta, Canada rtufts@brsi-ca.com +1 403 630-0789