Hydrocarbon Processing had the opportunity to meet with Dr. Rajeev Gautam, president and CEO of UOP, a Honeywell company, and discuss several high-level factors impacting the global hydrocarbon processing industry and technology development and licensing.
HP. What is UOPs viewpoint regarding natural gas for the petrochemical industry and other industry segments? What are the areas of opportunity in shale gas for the US and elsewhere?
RG. Many believe that we have entered the golden age of gas. Not too long ago, natural gas was merely a byproduct of producing crude oil in some parts of the world and was often flared off at the wellsite. Other regions were reducing natural gas consumption because production was declining. Technological advancements that enable the economical development of shale, offshore and lower-quality gas resources have been a game changer.
Today, natural gas is widely projected to become the worlds fastest-growing fossil fuel energy source, with applications across many industries, including refining, petrochemicals, transportation and power. Global gas resources are estimated to have the potential to provide 250 years of supply worldwide. In the US, nearly half of the natural gas supply over the next 2025 years may come from shale gas. In North America, the same production processes developed for shale gas are being applied to produce light crude from tight shale, yielding some changes to the product mix and creating the need for new technology to rebalance the mix, as well as to produce high-value-added petrochemicals from these hydrocarbons. But additional innovations in technology will be required for the potential to be met in other regions.
The world still flares about 5% of the natural gas produced. To reduce this percentage, the cost options of getting associated gas to market need to be lowered. The technologies used to efficiently extract shale gas in North America will need tailoring in other regions faced with tough geological and logistical challenges and limitations on water supplies required for hydraulic fracturing. Some offshore and lower-quality gas resources will remain stranded until lower-cost options enable their development. China has the worlds largest shale gas potential, so we can expect to see a shift away from coal toward natural gas feedstocks for power, to some degree, if this potential is realized. The Middle East will strive to increase its production to meet growing demand, and Latin America will incorporate natural gas into its fuel mix as a lower-cost option for power generation.
Natural gas has become a prominent energy source not only because of its abundance, but also because it is a low-cost feedstock that emits fewer pollutants and less carbon dioxide than other fossil-fuel energy sources, including coal and crude oil. In many ways, using natural gas supports global trends and directives to use cleaner fuels. However, the production cost of unconventional and sub-quality conventional resources in China, Eastern Europe, the Middle East and many other regions is still double or triple that of North American shale gas and technology.
Global demand for petrochemicals derived from hydrocarbons, such as propylene, is rising due to population growth. UOPs Oleflex and Methanol-to-Olefins (MTO) processes produce on-purpose propylene and ethylene from low-cost feedstocks, such as natural gas liquids or coal, to help meet this increased demand.
The world is shifting from large, centralized processing of clean, conventionally produced natural gas to smaller-scale, distributed production of gas with more processing challenges. Our new UOP Russell product line offers modularized packaged plants that enable producers of conventional and unconventional gas to remove contaminants and recover high-value natural gas liquids (NGLs) used for petrochemicals and fuels, monetizing natural gas resources for our customers worldwide. There is no one-size-fits-all solution for managing hydrocarbons from wet shale gas and shale oil resources. As a result, an agile portfolio of solutions is required. Packaged solutions deliver faster onstream time, lower installed cost, highest feed gas flexibility and the ability to relocate plants as processing requirements change because of their modular construction.
HP. What is UOPs viewpoint for the global hydrocarbon processing industry for the next 10 to 20 years? Where are the growth opportunities?
RG. The mix of hydrocarbon feeds is changing. Declining conventional crude production and the need for regional energy independence will continue to drive demand to use lower-cost, alternate feedstocks such as coal, shale oil and heavy crude. To use alternate feedstocks in existing refineries, many processes will need to be modified.
The increase in diesel demand and stricter fuel specifications will cause refiners to look for ways to produce higher yields from existing assets. There will be an increase in residue conversion; hydrocracking will evolve as a primary conversion process; and hydrotreating will increase as a way to treat virgin and cracked middle distillate streams. Developing technology that enables the use of cost-advantaged, abundant feedstocks for power, transportation and chemicals production will continue to be of high priority over the next few decades.
An agile portfolio of solutions will also be required to optimize gas treating and cleanup. New sources of gasincluding coalbed methane; tight gas; shale gas; associated gas from shale oil; biogas; synthetic natural gas (SNG) from coal gasification; and lower-quality, previously stranded conventional gasvary widely in terms of the levels of contaminants and heavier, valuable NGLs. The desired product gas quality also varies, depending on whether the gas will be transported by pipeline, converted into liquefied natural gas (LNG) or used locally. Gas resources are often located in remote regions challenged by limited water, infrastructure and other logistical challenges requiring innovative solutions. These factors increase the complexity of the gas value chain and put new demands on gas transport infrastructure. The role of technological innovation to meet these challenges with economic and environmentally sustainable solutions continues.
HP. UOP began as a refining technology licensor. What new developments is UOP currently researching?
RG. As a technology licensor for nearly 100 years, UOP has always been at the forefront of innovation for the refining industry. Moving forward, we will continue to enhance our technology developments in refining, which will be oriented toward the changing product mix and changing feeds to produce high-demand materials. This will require the modification of many existing processing steps, as well as the development of new, breakthrough technology.
In addition to being a leading technology supplier for the refining and petrochemicals industry, weve also become prominent in the gas processing industry, with a full suite of solutions to address single-unit operations, along with highly integrated, multiple-technology operations.
To help meet worldwide demand for lower emissions and cleaner-burning transportation fuels, we expanded our portfolio with a business dedicated to renewable technologies and have developed landmark renewable transportation fuel processes. Looking ahead, we will focus on developing technologies that are highly efficient, use cost-advantaged resources and provide environmental benefits.
HP. How does the MTO process fit into the global petrochemical industry? What are the advantages with the MTO for licensees?
RG. MTO provides a profitable, low-cash cost of production pathway to light olefins compared to traditional naphtha-based steam cracking. MTO also provides product slate flexibility between ethylene and propylene to most effectively address market demands and maximize profitability. UOP has announced three MTO projects in China, where MTO is now commercially proven. The application of MTO in locations outside of China, with access to cost-advantaged natural gas or coal, is expected in the coming years.
UOPs advanced MTO process allows petrochemical producers to tap into abundant and low-cost feedstocks to produce high yields of valuable petrochemical building blocks at lower cash cost of production than conventional routes. The MTO process converts methanol derived from noncrude-oil sources, such as coal or natural gas, to ethylene and propylene. The process, based on proprietary UOP catalysts, is proven to provide high olefin yields with minimal byproducts. MTO also offers flexibility in the quantity of propylene and ethylene produced, so producers can adjust plant operations to most effectively address market demands.
HP. What challenges must refiners address in the near term?
RG. As the global economy continues to grow, demand for oil-derived transportation fuels, lubricants and petrochemicals rises. Diesel, in particular, is in high demand. Refiners will need to find ways to efficiently maximize finished products from each barrel of oil and to upgrade the value of their products by increasing petrochemicals production. Although much attention has been focused on the increase in light sweet crude production, heavy crude production will also continue to grow, and demand for low-value residual fuels and petcoke will decline.
Refining challenges differ depending on the region. In the US, refiners are looking to efficiently process shale oil, which is much lighter, and to take advantage of low-cost feedstock to produce high-value petrochemicals for domestic markets and for export. In other regions, such as India and China, better technologies are needed to reduce petcoke and residual fuel oils.
UOPs newest residue upgrading technology, the Uniflex process, achieves a maximum conversion of 90% at a modest cost, producing an attractive feedstock for high-quality diesel production. UOPs Oleflex process produces on-purpose propylene from propane with the lowest cash cost of production and the highest return on investment, allowing refiners to participate in the growing propylene market.
HP. What are the major refining developments for green fuels?
RG. There will always be new, more efficient alternative energy resources on the horizon, and it is our goal to identify these renewable resources to develop fuels and chemicals that will support growing energy needs globally, while also addressing environmental concerns. A significant achievement was the development of our technology to produce jet fuel from renewable resources. Our Renewable Jet Fuel Process converts a range of natural oils and animal fats to Honeywell Green Jet Fuel, which, when used as part of up to a 50% blend with traditional jet fuel, requires no changes to the aircraft technology or fuel infrastructure.
Weve also used nonedible, second-generation oils, animal fats, green algae, forest residuals and other biomass to produce Honeywell Green Diesel. This fuel is chemically identical to petroleum-derived diesel, and can be used as a drop-in replacement for traditional diesel. The first commercial facility using our UOP/Eni Ecofining Process will come online in 2013, providing nearly 300 million gallons of Honeywell Green Diesel to supply sustainable, low-emissions diesel throughout the US and Europe.
While weve seen great success with these developments, we continue to work toward new solutions for renewable transportation fuels. In 2013, our Rapid Thermal Processing (RTP) technology will be used to upgrade forest residuals, algae and other cellulosic biomass feedstocks into renewable diesel, gasoline and jet fuel. As biofeedstocks become more readily and economically available, and producers become more incentivized to make renewable fuels, we expect the use of renewable technologies to increase over time. As usage rises, UOP is well-positioned to meet demand.
HP. For what upcoming challenges is UOP directing R&D efforts?
RG. Over the next decade, diesel and middle distillate consumption will represent the primary driver for oil consumption growth. Sulfur content in diesel fuels will continue to drop, and gasoline-to-diesel ratios will decline in established markets. UOP is continuing to develop technologies to address these shifts in product demand. We are working on new hydroprocessing technologies and catalysts that will give higher diesel yields and improved cetane index. Refineries that use fluid catalytic cracking (FCC) technology are looking to increase light-cycle oil (LCO) quality and petrochemicals yields, and we are working on maximum-diesel and propylene FCC designs with flexibility to also produce aromatics. Renewable fuels continue to be an important way for refiners to respond to pressure on carbon emissions, and we are looking forward to the startup of our first commercial-scale plants for making drop-in green diesel and green jet biofuels.
We will also continue to focus R&D efforts on petrochemicals. Demand for polyester, plastics and detergents is on the rise, especially in developing economies. New, low-cost feedstocks are entering the supply picture, offering an opportunity for new petrochemical players to enter the market. We are working on refining and petrochemical integration strategies to exploit these low-cost feedstocks to make high-value petrochemicals. For example, we have made improvements in our Oleflex process for light paraffin dehydrogenation to increase the yield of propylene and butenes, and we are working to extend this product line to other high-value olefins. We are also working on new catalysts and processes to further increase the efficiency of fuel and petrochemicals production.
The natural gas sector is evolving rapidly in North America, and, through our acquisition of Thomas Russell, we have become a significant player in NGLs recovery. We are looking at improved techniques for gas treating and contaminant removal to ensure that the gas can be cleaned up to pipeline or LNG specifications. Our Separex membranes are also seeing more use in rejecting carbon dioxide from natural gas, and we are working on the next generation of membranes with higher flux and methane selectivity. We believe gas will be a game-changer for the US petrochemicals industry, and we are looking at several new processes for making chemicals from methane and NGLs.
We are proud of the progress weve made toward the development of industry-leading technologies that are changing the way the world thinks about and consumes energy, and we are committed to continuing our efforts in that direction. HP
Dr. Rajeev Gautam serves as president and chief executive officer of Honeywells UOP, a strategic business unit of Honeywell Performance Materials and Technologies. Honeywells UOP is a leading international supplier of process technology, catalysts, engineered systems, and technical and engineering services to the petroleum refining, petrochemical, chemical and gas processing industries.
Before being named to his present post, Dr. Gautam served as vice president and chief technology officer of Honeywell Performance Materials and Technologies. During the last 30 years, he has held key positions within UOP, spanning research and development, engineering, and marketing, including vice president and chief technology officer of UOP; director of the Process Technology and Equipment business; technology director for Platforming and Isomerization Technologies; product line manager for the Aromatic Derivatives business; senior manager of Adsorption Technology; and manager of Molecular Sieve Process Technology.
Dr. Gautam began his career with Union Carbide in 1978, which became part of a joint venture with UOP in 1988. Throughout his career, he has championed innovative solutions for industry needs and has been responsible for the development and commercialization of a broad range of catalytic and separations applications for the refining, petrochemical and gas processing industries. Dr. Gautam earned a BS degree in chemical engineering from the Indian Institute of Technology and an MS degree in chemical engineering from Drexel University. Additionally, he holds a PhD in chemical engineering from the University of Pennsylvania and an MBA from the University of Chicago.