2igi2021 ‘Shape the refinery ofthe future through itegration—Part 2 HYDROCARBON PROCESSING’ COPYING AND DISTRIBUTING ARE PROHIBITED WITHOUT PERMISSION OF THE PUBLISHER October 2020 (/magazine/2020/october-2020) REFINING TECHNOLOGIES (/MAGAZINE/2020/OCTOBER-2020#REFINING-TECHNOLOGIES) Shape the refinery of the future through integration-Part 2 Part 1 ofthis article, which appeared inthe September issue, discussed various aspects of evaluating options that enable an existing refiner to make investment decisions to optimally diversify into petrochemicals through integration, Part 2 will detail a case study that ilustrates the synergies of refinery-petrochemical integration through a propylene recovery unit from an FCC-based refinery as well as financial, configuration and sensitivity analyses, Nal. Usthass/nenetnne mtn, SNCL aan oe Part 1 (https://wwwchycrocarbonprocessing.com/magazine/2020/september-2020/specialfocus-refining-technologies/shape-the refinery-of-the-future-through-integration-part-1) of this article, which appeared in the September issue, discussed various aspects of ‘evaluating options that enable an existing refiner to make investment decisions to optimally diversity into petrochemicals through integration. Part 2 will detail a case stucy tha ilustrates the synergies of refinery-petrochemical integration through a propylene recovery Unit from an FCC-based refinery, as well as financial, configuration and sensitivity analyses. Case study This case study illustrates the synergies of rehnery-petrochemical integration through a propylene recovery unit from an FCC-ased refinery. The Base Case is a 100,000-bpd fuel refinery (FIG. 4) to produce naphtha, jet/diesel (Euro 5) and IMO 2020 fuel oll using Basrah Light crude (°API = 28.9, 2.93 w1% sulfur) for a client in the Middle East. The feed cost and product prices considered are an average of 2Q and 3Q 2018, USGC as shown in TABLE 1. The inflation rate forthe projected time horizon for net present value (NPV)/internal rate of return (IRR) calculation is considered as 2.63% based on average historical values ofthe last 30 yr of inflation rates in the US. (Umedia/12795/mait-par2table-01 pa) The integration cases considered in this study are presented in TABLE 2. tps: hydocarbonprocessing com/magazine!202d/october-2020irefining-technologies/shape-the-efinery-ofthe-uturethrough-integraton-.. 1152igi2021 ‘Shape the refinery ofthe future through itegration—Part 2 (Umedia/12796/mait-par2-table-02 pg) ‘= Case 1: Base Case configuration with crude unt, DHDS, ARDS, SGP, SRU/ARU and HMU + Case 2: Case 1 plus RFCC (23,000 bpd) with a propylene recovery unit (9,200 bpd) ‘+ Case 3: Case 2 plus polypropylene unit (9,200 bd) © Case 4: Case 3 plus acrylic acid unit (1,100 ted) ‘+ Case 5: Case 4 plus n-butyl acrylate unit (1,800 tpd) + Case 6: Case 4 plus 2-ethyl hexyl acrylate (2,600 tpd). These cases are considered as grassroots investment. The technical data (product yield utility requirement, ISBL investment cost, etc.) for various open art process units are developed in-house, and those for icensed units are laken from lcensor’s information, as well as an in house data bank, Cost estimation The cost estimates of alloptions are developed with an accuracy level of +/~ 30% (Class 3 estimate) using a proprietary software too? with inputs from various engineering depariments. The total project cost (TIC) includes both cirect and indirect costs: the direct cost includes process equipment, associated bulk and installation labor costs; and the indirect cost tems are installation equipment rental, EPC contractor's cos, licensors fees and royalties, ners cos, taxes, etc. The EPC contractor's cost includes all costs involved in preparation of basic (for open art units such as CDU, SGP, SWS, ARU) frontend and detailed engineering, procurement and construction ofthe facility The owner's costs include startup and commissioning, intial charge of catalyst and chemicals, spare parts inventory, general and administrative (G & A) overheads, contingencies, ete Other associated costs (site development, offsites, etc.) are not considered since they are common facilities forall configurations. The ‘economic life and the depreciable Ife of investments are considered as 20 yr. Financial analysis Cone ofthe most important deliverables of a feasibly study i the establishment ofa quantitative basis for understanding the project's abiliy to secure financing, repay debt and provide adequate returns for candidate equity investors, The discounted cashfiow method, such as IRR, is widely accepted and used in industry for all types of capital investment evaluations as a measure of profitability. IRRis the discount rate (or minimum interest rate of capital) at which the NPV is zero. If the NPV is positive and IRR is greater than the minimum interest rate, then the project can be accepted for further analysis, The higher a project's IRR, the more desirable itis to undertake, IRR can also be used to rank multiple prospective projects under consideration on a relatively even basis Configuration analysis The LP models ofa six cases wee developed based on avilable input data Proprietary software? was used forthe model development The incremental lave economies foreach othe integration stops were evaluate. FIG 5 shows the economi urmaryo al grassroots investment cases (Umedia/12739/mait-i¢ 05 pa) ‘Tho Base Case fuel rehnery configuration yields an IRR value af 8 55%. The installation ofa propylene recovery unt requires 20% mare capital without resulting in any economic benefit compared to the Base Case. Integrating a polypropylene unit (Case 3) wil enhance IRR marginally, but the incision of an acrylic acid or an acrylates unit willbe much better (Cases 4 5 and 6), Case 6 with a2-EHA unit hups:nwwchydeocarbonprocessing com/nagazine/2020/ectober-2020tetning-echnologiesishape-theefnery-tthe-futurechroughintegraton=.. 252aigi2021 ‘Shape the refinery ofthe future through itegration—Part 2 generates a return as high as 21% and a payback period of 5.3 yr The overall product summary of Cases 1, 4, 5 and 6 is shown in TABLE. (Umedia/12797/mati-par:2-table-03 pg) Expansion add-on scenario Itis assumed thatthe existing refnery has the same FCCU unit as most ofthe gasoline-araducing refineries globally. For example, the ‘expansion add-on Case 2-X is added with a propylene recovery unit (PRU), Case 3-X includes a PRU and a polypropylene unit (PPU), and soon ‘The relative incremental investment and the economic summaries are shown in FIG. 6 As in Case 2-X, installation of a PRUis a very profitable proposition, and the payback period is only 25 yr witha high IRR of approximately 45%. Similar results are observed in other ‘expansion add-on cases, The installation of a PPU reduces the profitability compared to PRU (Case 3-X vs, Case 2-X). However, installation of an acrylic acid (Case 4-X) or acrylates (Case 5-X and Case 6-X) unit is generating acceptable return (Umedia/12740/mait-ig 0809) ‘The existing refiners with FCCUs can go for any one ora combination ofthe expansion ade-ons options to improve their proftabily Sensitivity analysis As previously discussed, the accuracy of input data is very important to get a meaningful poftabilty model. However nt al input data can be obtained accuatelyespecially feedstocks cost and product prices, which are prected data based on certain assumptions-and market dynamics change frequenly. Therefore, itis very important atest the profiailly modell the assumed daa varies from the base values ‘Sensibility analysis measures the impact on prohtability of a project-and therefore on returns—when key inputs and assumptions take on diferent values to those used in the Base Case financial analysis The grassroots investment best configuration (Case 6) has been analyzed for its sensitivity to key variables and assumptions. FIG. 7 shows the effect of variation of these key factors on the IRR. The projects highly sensitive to feedstocks cost and product pricing, ‘moderately sensitive to investment cost and ess sensitive to operating cost. Vimedia/12741/mal-49-07 09) 07. Sanay fC) Takeaway Uncertainty in te traditional fuel market leads to integration, Integration is a natural choice, and a petrochemical refnery can best respond to high competition and changing market dynamics on refning margins. Such integration not only adds high-value products but also ‘optimizes the cost of utilities and generates better profitability and sustainability. Standalone refineries willbe struggling inthe near future, Ethe-futur-toughinegration-.. 3152aigi2021 ‘Shape the refinery ofthe future through itegration—Part 2 if not already. An integrated complex will shape the refinery ofthe future and will have the flexibility to meet rapidly changing market ‘demands. Refiners must diversity anc reset their business models by investing in new processes that create an alternative path to profitably, From some perspectives all refineries might appear tobe the same; however, each refinery has a unique configuration and a complex industrial facilty, with some flexibility in the crude oils it can process and the blend of products it can refine. The complexity of integration arojects depends on the variety of existing process units, whether itis a revamp/expansion or a new grassroots plant, and the optimal solution is highly speci to each company. Also, the combined system is accompanied by reduced operational flexibility as two enlities are now dependent on each other for feedstocks, utilities and so on. Pre-project planning is Key to success for minar revamp to complex multibilion-dollar investments. The evaluation stage requires an ‘experienced consulting company for advisory expertise to support investment, financing and strategic decisions. ‘The case study here shows that the prohtabilty of integration for an expansion add-on facility is better than grassroots plants due to shared infrastructure, storage and utilities, lower logistics and energy costs, decreased overheads and waste, trained workforce, etc. Today's market dynamics require a potential integration business model roadmap and master planning that would allow a refner to take actions to move forward profitably from a standalone fuel rehnery into a fuels-with-petrochemicals complex. HP. NOTES * AspenTech ACCE AspenTech PIMS ‘A short form of this article was published in the AFPM 2020 Annual Meeting Conference Daily, 24 March 2020, by Hydrocarbon Processing ACKNOWLEDGMENT ‘The author is grateful to colleagues in the Downstream Technical Solutions department of SNC-Lavalin Houston and the Mumbai offices for their valuable contributions LITERATURE CITED (PARTS 1 AND 2) United Nations Department of Economic and Social Affairs, "UN Disability and Development Report-Realizing the SDGs by, for anc with persons with disabilities,” April 2019, 2. European Climate Foundation (ECF), "Roadmap 2050: A practical uide to a prosperous, low-carbon Europe," online won roadmap2050.cu 3. United Nations Department of Economic and Social Affairs, “World Population Prospects 2019: Highlights,” online https://population.un.org/wpp/ 4 PricewaterhouseCoopers (PwC), "The World in 2050-Summary Report: The long view, How will the global economic order change by 20507" February 2017. 5. Maiti, SN, J. Eberhart, S. Kundu, P. J. Cadenhouse-Beaty and D.J. Adams, “How to effciently plan a grassroots refinery” Hydrocarbon Processing, June 2001 6. Chen, A, “Process evaluation/Research planning-Propane dehydrogenation technologies,” Nexant report PERP 2016S1, November 2016. The Author Mat, S.N. uthors/4/snelavalin-ine/malt-sn)- SNC-Lavalin In, Calgary Aerts Canada Sachi N. Maiti the Director of SNM Tech Solutions nein Calgary, Carada. Dr Maiti worked with Air Liquide Frankfurt (Lurgi AG), Bantrl Toronto, Amc Foster Wheeler Calgary, Reliance Industries Ltd, Mumbai and SNC- Lavan Mumbai/Calgary He has more than 30 yr of technical experience in process engineering, integration and ‘optimization, techno-economic feasibility, master planning, LP modeling, circular economy and waste-to-chemicas, project cost estimation, and RED sectors inthe ol and ga, retning and petrochemicals, biodiesel and ol sands industries, He as authored several technical publications in process simulation, optimization and advanced control, investment planning and integration of refinery: petrochemicals complexes. He holds a BS degree in chemical ‘engineering from the University of Calcutta, anc an MS degree and PRD in advanced process control and ‘optimization from te Indian Institue of Technology Kanpur (TK). Hes a registered Professional Engineer inthe Province of Alberta, Canada. 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