recently sat down with Dick Heusinkveld, Vice President of New
Equipment at Dresser-Rand to discuss emerging trends in the
downstream market, and the approach Dresser-Rand is taking in
Q: How did the downstream industry in general fare
in 2011? Where is the industry heading?
A: The downstream market has not yet fully
recovered from the global recession of 2008. Projects that were
underway at that time have continued to be built, but at a
slower pace. Many are only now nearing completion.
New projects in Brazil, India, China, and the Middle East
have been delayed pending the startup of this backlog. Late in
the year, we saw renewed activity in China. Refineries continue
to be closed in Europe and the United States in the face of
lower cost fuel imports, declining motor and jet fuel demand in
those markets, and increasingly costly environmental
compliance. The U.S. also saw ownership changes as integrated
companies spun off their downstream assets into standalone
companies or sold individual refineries to third parties.
Refining projects elsewhere, particularly in
Latin America and Iraq, did not proceed due to the
unavailability of financing, or of financing on reasonable
terms. There is an expectation that many of these projects will proceed in 2012 and
beyond, especially as Iraq alone has a goal to reach 12 million
barrels per day of new refinery capacity within the next
On the brighter side, the petrochemical and chemical markets
were active. Middle East producers continue to seek to capture
more of the value chain rather than merely exporting crude.
China remains a net importer of primary petrochemicals and continues to
build integrated refining/petrochem complexes to improve
efficiency and reduce imports.
The explosion of production from shale formations has driven
North American gas prices through the floor, and opened an
enormous gap between the energy value of natural
gas and crude oil. This appears likely to persist for some
years, and has resulted in proposals to restart moth-balled
fertilizer plants, build new fertilizer plants, build new
gas-liquids based petrochemical facilities, and convert LNG
receiving terminals into liquefaction facilities to export LNG, all
enabled by the seismic impact of shale development over the
past 2-3 years. While no substantial projects broke ground in 2011,
prospects are good for 2012 and beyond.
Q: What are some specific advances in technology and in the industry that
you are seeing in the refining segment?
A: In general, process runtimes between
turnarounds are increasing, which results in greater demands on
equipment suppliers to design products that can operate without
scheduled or unscheduled outages for these longer periods. To
some extent, this is facilitated by improvements in condition
monitoring technology, which allows operators to better
evaluate the health of their machinery and predict whether it
can survive to the scheduled turnaround date.
Pollution concerns in Asia, and the desire of Russian and
Middle East refiners to export low sulfur gasoline and diesel
to Europe, are driving investment in hydro treating capacity in
those regions. Concurrently, the increasing spread between the
prices of light, sweet crude oil and heavy sour, are driving
investments in cokers, hydrocrackers and hydro treaters. Other
than cokers, these all require massive volumes of hydrogen,
which is driving the industry to produce ever larger
Focus continues on health, safety and environmental
improvements from noise reduction and efficiency
improvement to waste energy recovery and utilization.
Q: What is Dresser-Rand doing to meet those key
trends/challenges in the refining segment? What products have
been developed to meet these challenges?
A: We continue to extend the upper range of
our reciprocating product line to meet the needs of the larger
hydrogen plants. As machine size has grown, the energy loss
associated with the traditional 3- or 5-step capacity control
has also increased. Dresser-Rand has responded with its full
suite of control technology including infinite step capacity
control (ISC) that was originally developed for the midstream
gas transmission market. This allows the compressor to follow
load requirements with much less energy waste.
We have also invested in reciprocating compressor valve and
wear part technology and application improvement to extend run
times between overhauls. At some facilities, operators can routinely
achieve three years of uninterrupted operation of these
machines, and now no longer specify a standby unit. Unspared
operation of turbo compressors has been the norm for decades,
but now it is coming to reciprocating compressors too.
Our Dresser-Rand DATUM® line of centrifugal compressors
leads the industry in efficiency and operating range, making
them the ideal solution for clients focused on maximizing their
operating efficiency. We continue to invest in product
development to maintain our lead in this area.
In refineries, turbo compressors are often driven by steam
turbines. Here too, investments are being made to reduce flow
path leakage and improve turbine efficiency, reducing overall
steam consumption per unit of load.
Turbocompressors are among the noisiest pieces of equipment
in a refinery. Dresser-Rand has developed
proprietary technology, marketed as D-R
Array, which reduces noise emanating from the compressor
by 10dBA or more. The technology can also be applied to suction
and discharge piping.
Our investment in Echogen provides a platform to recover
waste heat from a variety of low quality sources prevalent in
refineries, and convert it into rotating power to drive
Investments that have been made in technologies to support
subsea compression will eventually come to be applied in
downstream as well. The urgency in downstream is less, but as
the technology becomes proven and costs come down, the value of
high-speed motors and drives, oil-free systems, and elimination
of gearboxes will become evident in that market as well.
Q: What are some specific advances in
technology/industry that you are seeing in the distribution
A: We are going to start to see some
dramatic changes in the retail and distribution segment,
especially in the United States. The substantial difference
between the prices of natural
gas and gasoline or diesel is driving plans for a massive
build-out of natural gas fueling capacity along Americas
interstate highways and in fleet hubs. It is unclear whether
this will be in the form of CNG or LNG,
or both. Much of Asia already has a CNG infrastructure for
heavy truck fleets, so essentially what is going to happen in
the United States has been done in Asia and other places
The recent focus on natural gas fueling has taken attention
away from another trend, which is the increasing potential of
diesel fuel instead of gasoline in North America. This is
driven by the superior fuel economy of diesel engines, and by
the substitution of light crude slates by lower-priced heavy
ones at the refineries. Heavy crudes produce proportionately
less gasoline and more distillate. As with CNG, the preference
for diesel due to fuel economy is well-established in the rest
of the world.
Q: What is Dresser-Rand doing to meet those key
trends/challenges in the distribution segment?
A: Dresser-Rand is currently evaluating CNG
technologies to determine whether we want to participate in
what is essentially a retail market. Our interest is primarily
in the installation and servicing of the equipment in this
space; similar to what we already do in India.
Q: What is Dresser-Rand specifically doing for energy
efficiency in the downstream market?
A: Our value proposition to the market has
always included leading edge efficiency, and we continue to
invest in product improvements to maintain our position across
our entire portfolio of reciprocating, centrifugal, and axial
compressors, steam and gas turbines, and hot gas power recovery
units for refinery FCC units and nitric acid
plants. In many cases, these technologies can also be
retrofitted into our legacy machines, or into machines of other
OEMs, to improve their performance. Efficiency improvements of
10 percent or more are not uncommon.
In addition to improving rated operating point efficiency,
we have also developed or applied technologies to permit more
efficient load following by our equipment. Examples include our
infinite step capacity technology for reciprocating
compressors, and the application of variable speed systems to
turbo and reciprocating compressors.
And finally, our investment in Echogen technologies provides
a strong foundation to capture the energy in waste heat streams
prevalent throughout the downstream market, and convert it into
electrical power. This reduces the need for purchased power,
improving overall plant efficiency.
Q: Anything else youd like to add?
A: Downstream market activity will continue
to increase in the developing world, as GDP growth remains
strong. In the developed world, there will be further shrinkage
and consolidation. The big game changer in North America will
be the long term availability of vast volumes of natural
gas at very low prices. This will impact the motor fuels
market and shift investment in fertilizer and petrochemicals to North America that
would once have gone elsewhere.