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refinery-petrochemical integration

Will the Middle East catch up with refinery-petrochemical integration?

At the interface between refinery production and petrochemical feedstock supply, the real complexity of integrating production can be observed.  In an optimized situation, both facilities operate to maximize profitability making use of by product streams from the adjacent facility to their individual and eventually overall economic benefit.  Stream transfers are established in both directions for mutual commercial and operational benefit.  Often complex pricing relationships control value transfer.

Refinery-petrochemical integration

The extent to which any of the technically feasible integration options can be implemented and produce economic benefit is a complex discussion.  Regional trends for feedstock availability, process economics and product demand as well as ownership issues all potentially play a role. As a result, the extent of refinery petrochemical integration is not uniform across regions.

A number of factors give rise to the varying level of integration; however, some inferences can be drawn.  Petrochemical feedstock is an important driver in the large majority of cases.  Availability of NGL feeds, such as ethane, reduces the dependence on refinery based liquid feedstocks.  The result is a lower degree of refinery petrochemical integration, i.e. in the Middle East.  The converse situation is also true in which reduced availability of NGL’s forces increased levels of integration, i.e. in Western Europe.  The analysis shown is for ethylene; although propylene and aromatics production have different levels of integration than ethylene, similar trends can be drawn.

The Middle Eastern ethylene production

The Middle East is a large ethylene producing region, with a total capacity of almost 30 million tons per year, more than Western Europe.  As much as 40 percent of the world’s crude oil reserves are believed to be located in the Middle East.  Historically, petrochemical production in the Middle East has been predominantly based on ethane as a feedstock which represents approximately 13 million tons per year.  This is followed closely by 9 million tons per year of ethane/propane cracker capacity and 5 million tons per year from mixed feed crackers.  Only about 12 percent of the ethylene production is based upon refinery-integrated sources.

Some of the main reasons for the large share of ethane-based crackers in the region include:

  • Large amounts of ethane production – the Middle East produces a significant amount of ethane and NGLs as a by-product. The Ju’aymah NGL fractionation plant in Saudi Arabia is the world’s largest at 1.1 million barrels per day
  • Lack of commercial trade in ethane – ethane requires cryogenic transportation for marine purposes, which is expensive. It is generally required to be used indigenously
  • Cost advantaged feedstock – historically most ethane produced in the Middle East was flared. Ministries within the Middle East developed policies to allow the ethane to be used at low cost to boost and develop cost-advantaged downstream petrochemical industries
  • High selectivity for ethylene – Ethane has a high selectivity for ethylene producing, approximately 1 ton of ethylene from each 1.2 tons of ethane processed

For some of the above reasons, mainly due to the high selectivity and low cost of ethane cracking, naphtha cracking is less competitive under these market conditions.  Refinery-integrated complexes processing naphtha or mixed feeds have often not produced convincing business cases over ethane-based complexes in the region.

The above holds true for most of the Middle East and certainly for the GCC nations. However, a slightly different picture is observed outside the GCC.  Petkim in Turkey operates a 520,000 tons per year cracker in Turkey which receives naphtha from the nearby Tupras refinery.

The above picture becomes different when the production of different products is considered.  For example, PetroRabigh refinery is an integrated refinery and petrochemicals facility in Saudi Arabia, although its ethylene production is based almost solely on ethane.  Orpic’s Sohar Refinery has an FCC for propylene production.  The recently started Saudi Aramco–Total JV, Satorp, is integrated for para-xylene production.

Economic benefit

Petrochemical integration does improve overall process economics for both the component refinery and petrochemical facility.  Assessing the overall economic benefit is important in the planning stages of any such project.  Nexant’s economic analysis addresses the overall profitability gains for a refinery-integrated petrochemical complex by comparing it to a standalone refinery.  The refinery model is based upon a 200,000 BPSD FCC/visbreaking refinery capable of processing light sweet to medium sour crude oil, ranging from Brent crude oil for Western Europe and up to Arab Light for Asia and the U.S. Gulf Coast.

For the case of a refinery-integrated petrochemical complex, a steam cracker with 650,000 tons per year of ethylene is added to the configuration. The model has been developed to select the economically optimum cracker feedstock between light and medium naphtha, allowing both or either to be processed.

Integration of steam cracker by-products with refinery production is modelled so as to reflect commercial practice.  Methane from the steam cracker is used by the refinery fuel system.  By-product hydrogen of high purity is used within the refinery for hydroprocessing and other hydrogen consuming processes, reducing the requirement from reforming of natural gas.  Ethylene and propylene are sold as final products on a polymer grade basis.  Butadiene is extracted from the C4 fraction and sold, with the remaining C4 sold as Raffinate 1.  Most integrated naphtha crackers extract valuable benzene from the pygas. This is advantageous as it recovers a valuable product as well as enables more of the pygas to be blended back into the gasoline pool without reaching the maximum benzene limit.  The remaining fractional product, pyrolysis fuel oil or the C10+ stream, is allowed to be blended into the fuel oil pool as a cutter stock, reducing viscosity and sulphur content.

Availability of NGLs has provided impetus for the development of the Middle East petrochemical industry to date.  Except for Qatar, gas supplies in the GCC countries are now approaching full domestic utilization until further new fields are discovered.  Ethane availability for new projects is limited and has been reduced with specific conditions being applied to new feedstock allocations.  Thus liquid feedstock have started to be used in the region. Future petrochemical growth in the Middle East will likely require further consideration of liquid feedstocks and therefore increased refinery and petrochemical integration.  Future investments within the petrochemical industry within the GCC are likely to be based on LPG, mixed feed or naphtha cracking.

Another recurring theme throughout the GCC is the need to use indigenous hydrocarbon reserves for diversification of the domestic economy.  Liquid feedstocks produce a wider range of products enabling a more diverse downstream derivative portfolio.  A good example of this is the 1.5 million tons per year mixed feed cracker that is part of the Sadara complex, which produces many derivatives for the first time in the Middle East.  Another comparable example is the planned 615,000 BPSD Refinery Integrated Complex at Al Zour in Kuwait which would produce olefins and aromatics.

Source of the article

Nexant PERP report – Refinery-Petrochemical Integration

This report analyses the integration of refineries and petrochemical facilities considering integration of steam cracking and aromatics.  Regional variations in the extent of integration and the underlying reasons are analysed. The economic benefits are quantified for three producing regions.

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