February 2012


HP Insight: Government, environment and taxes, oh my!

In this issue of HPInsight, the global hydrocarbon processing industry (HPI) still battles some very familiar and present day challenges, such as economic cycles, feedstock spikes, government over reg..

In this issue of HPInsight, the global hydrocarbon processing industry (HPI) still battles some very familiar and present day challenges, such as economic cycles, feedstock spikes, government over regulation, construction material shortages and more. The times may be different, but the HPI must continue to evolve and innovate to resolve its problems and hurdles.

Headlines from Hydrocarbon Processing, February 2002:

For the first time in a decade, total US consumer petroleum product demand declined in 2001. The US consumed about 19.6 million bpd of crude oil, according to the American Petroleum Institute. Demand for most oil products weakened during the year except for gasoline, which showed a 1.4% rise over 2000 levels. Among the causes for the decline were sharply reduced air travel after the September 11 attacks, continued lackluster economy, fuel switching to natural gas, weak demand for petrochemical feedstocks and abnormally warm winter temperatures.

Revised EU directive poses plant upgrades. The EU oil refining industry will face new challenges due to revisions to the 1988 Large Combustion Plant directive (88/609/EEC). It will limit the processing of heavy residuals from the refining processes. New guidelines further limit emissions of carbon dioxide, nitrogen oxide and particulates.

US process catalyst demand to grow 4.4%/yr. Demand for process catalyst (which excludes environmental applications) is forecast to increase 4.4%/yr to $3.3 billion in 2006. Demand is being driven by the refining sector and continued strength in new polymerization technologies.

Headlines from Hydrocarbon Processing, February 1992:

Key issues identified by refining execs. A survey of US refining executives lists tops concerns for the industry; they include: 1) Clean Air Act (CAA), 2) public intervention in environmental matters, 3) use of more oxygenates, 4) government intervention on CAFE and taxes, 5) safety, and 6) processing heavier crudes. Leading environmental issues were prioritized as: 1) CAA, 2. ROI of capital expenditures, 3) corporate strategies and profitability, 4) alternative fuels, 5) public environmental pressures, 6) government intervention in CAFE and taxes, and 7) use of new catalysts.

TAME is a ‘forgotten’ oxygenate. The forgotten oxygenate is tertiary amyl methyl ether (TAME) according to the European Fuel Oxygenates Association. TAME is produced by reacting FCC isoamylenes with methanol. Only a few TAME units are in operation because of octane-component investments and marginal economics for such units.

Natural gas prices ‘to be up 5%’ in 1992. Natural gas (NG) prices will be about 5% higher in 1992 than 1991 levels, while crude oil prices will face significant instability as the world’s supply picture changes. In 1992, the US energy demand is forecast to grow slightly as the economy strengthens. NG will assume a larger market share of the new energy demand in the industrial and utility sectors. However, a large-scale movement to NG by the transportation sectors is not in the immediate future. NG wellhead prices will hover around $1.45/MMBtu in 1992, up slightly from 1991 prices of $1.38/MMBtu.

Headlines from Hydrocarbon Processing, February 1982:

Europe’s refining industry continues stagnation, but there is hope. There is new cracking capacity coming online from 1980 to 1985. Here is how the countries line up for capacity increases, in million tpy (MMtpy): Austria, 1 MMtpy; Belgium, 3.7 MMtpy; Denmark, 1.5 MMtpy; France, 6.7 MMtpy; West Germany, 8.8 MMtpy; Italy, 11.6 MMtpy; the Netherlands, 11.3 MMtpy; Spain, 7.6 MMtpy; and the UK, 10.6 MMtpy, according to Folger & Co., Boston.

Sell alcohol as an octane booster, not a fuel. That is Texaco’s approach. The company will redirect its marketing program for alcohol-enhanced motor fuels to emphasize the value of ethanol as an octane improver. Federal and state tax programs will play a key role in alcohol fuel’s future.

World styrene consumption forecast to grow. From 1982 to 1990, annual global styrene consumption should average a 5.1% increase. Styrene demand will have double-digit growth in developing nations such as Algeria, South Africa and Turkey. In contrast, demand consumption by industrial regions of North America and Western Europe are expected to average a 3.9%/yr increase. In 1981, world styrene capacity was only at 71% of nameplate capacity. New project announcements will keep ahead of future demand growth through 1990.

Headlines from Hydrocarbon Processing, February 1972:

Forecast 10% growth for synthetic rubber. Synthetic rubber production in the US and Canada will increase 10% to reach 2.65 million long tons in 1972, according to the International Institute of Synthetic Rubber Producers Inc. Increased production is based on a predicted 6% increase in rubber demand for autos and tires. Styrene-butadiene rubber (SBR) will hold the largest share of synthetic rubber produced and reach an all-time high demand of 1.63 million long tons.

Non-US sector leads in petroleum investment. Capital expenditures by the global petroleum industry, at an all-time high of $20.1 billion in 1970, must increase substantially in the future to allow for costs associated in controlling the environment, according to a Chase Manhattan Bank (CMB) report. CMB stressed the need for well-planned capital investments over environmental protection projects. The petroleum industry invested more money in capital projects in 1970 than in any other single year. Nearly $11.9 billion was spent in the “Free Foreign” nations in 1970—an increase of $1.7 billion over 1969. The US industry invested $8.2 billion over the same period. An unattractive investment climate is cited as the reason for less spending on US projects in 1972.

New sulfur recovery technology unit startup. With the September 1971 startup of the world’s first IFP sulfur-recovery unit at the Nippon Petroleum Refining Company’s (NPRC’s) Negishis refinery, the company concluded it has proved that atmospheric pollution can be dramatically reduced. In the IFP process, tail gas from a one-, two- and three-reactor Claus unit is catalytically converted in a liquid-phase reactor to yield high-purity liquid sulfur. In Japan, the atmospheric pollution problem became so acute, that Idemitus, Kyokuto Petroleum and Shows Oil decided to construct the IFP sulfur-recovery units in their refineries.

Shell Oil completes first orthoxylene unit in the US. The facility is located at Shell’s Houston, Texas, refinery and has an annual capacity of 200 million lb. The new unit is the second expansion with the construction of a paraxylene unit in 1967. With the new orthoxylene unit, Shell will become an important manufacturer of xylene isomers.

Headlines from Hydrocarbon Processing and Petroleum Refiner, February 1962:

Esso reports new HDDV process. Esso R&D has developed a hydrogen-donor-diluent-visbreaking (HDDV) process that involves mild hydrocracking to aid visbreaking operations that are limited by fuel oil quantities.

Remedies for road antiknock. New methods for calculating antiknock performance were developed by a joint Ethyl-Standard Oil study on the feasibility of using “road blending numbers” of gasoline components to predict road performance of finished gasoline blends. One method predicts the road octane number when combining particular components with base gasoline. This method could be useful in process planning and refinery control.

Polypropylene fiber breakthrough. Motecatini has developed the first dyeable-type polypropylene (PP) fiber for commercial production. The PP fiber can be stock, yard or piece-dyed, alone or in blends with dyestuffs in use by the textile industry. The dyeable fiber in no way alters the PP’s properties, but affords many new applications for PP fibers.

New acetic acid process available. The Soviet Union claims to have found an easy, economical solution for using butane for acetic acid manufacturing. A Moscow refinery has successfully used the new process, which liquefies butane at 140°C at 750 psi. A catalyst is added to initiate a violent oxidization reaction that yields acetic acid and substantial quantities of solvents. The new process is claimed to be more cost-efficient than present acetic-acid manufacturing technologies.

Japan increasing petrochemical production. Japan is planning to expand petrochemical production through 1970. A new forecast claims ethylene capacity to reach 4 billion lb/yr by 1970 and require more naphtha cracking capacity. Propylene capacity will climb to 2.8 billion lb/yr, which will be supported by offgas from refineries and byproducts from naphtha cracking.

Headlines from the Petroleum Refiner, February 1952:

Steel for refinery expansions. Additional steel to spur construction of needed refining capacity may be possible in later 1952 based on a recent Petroleum Administration for Defense (PAD) statement. The agency is developing a new refinery expansion program to permit the construction of 475,000 bpy of new refining capacity. The new projects will consume 44% more than the present steel allocation program.

Shale oil production and refining today. The US Bureau of Mines recently announced that it will build a much larger plant for the production and refining of shale oil. This project, together with the recent dangerous development in Iran, has again moved shale oil into the limelight. The amount of US shale oil is tremendous, and it is estimated to be in excess of 225 billion bbl. Many new processes are under consideration for recovering shale oil. The ultimate objective in refining shale oil is the production of gasoline and diesel fuels. Refining operations applied experimentally to refine shale oil include crude distillation, visbreaking, recycle cracking, coking and reforming. One of the most promising techniques that maximizes gasoline yield from shale oil is hydrogenation.

European synthetic catalyst plant built to meet increasing demand for high-octane gasoline. Growing European demand for high-octane gasoline is reflected in the construction of a new synthetic catalyst plant in Warrington, Lancashire, England. With a capital cost of $2.8 million, the new facility will manufacture sodium silicate catalysts, using a process developed by The Davison Chemical Corp. The new catalyst unit will supply catalyst to several oil companies including Esso Petroleum Co., Anglo-Iranian Co., Shell Refining & Marketing Co. and Bahrein Petroleum Co.

Headlines from The Refiner and Natural Gasoline Manufacturer, February 1942:

Liquefied petroleum gas in 1941. The year 1941 was a most unusual year for the liquefied petroleum gas (LPG) industry. This industry experienced demand increases due to defense work and growing demand for synthetic rubber and plastics. Growing demand for aviation fuels has fostered greater need for isomerization and alkylation process capacity. Refiners will convert n-butane to isobutene for alkylation processes, thus directing more n-butane from LPG applications.

Oil will supply synthetic rubber. “The petroleum industry will play a role in providing materials for synthetic rubber production,” said Robert H. Colley, president of the Atlantic Refining Co. “When the US is freed of its dependence on natural rubber imported from overseas, it (the US) will owe no small part of this freedom to the American petroleum industry ... In cooperation with the national government, the rubber and petroleum industries are preparing to embark on an ambitious program for the manufacturing of synthetic rubber. The new facilities that will be built by the middle of next year will have an annual production of 400,000 tpy of synthetic rubber. (Total estimated cost for the new synthetic rubber capacity is $400 billion.)”

Stocks reduced under war demand. Inventories of crude and refined oils appear to be very close to minimum requirements. The inventories are smaller than desired, as the industry must supply petroleum products for the war effort. The light stocks are low despite the fact that refiners have been operating at 90% rated capacity. Oil stocks in December 1941 were 553 million bbl down from 563 million bbl in 1940. However, demand for petroleum has increased sharply.

Headlines from The Refiner and Natural Gasoline Manufacturer, February 1932:

First refining technology handbook published. Editors (of The Refiner and Natural Gasoline Manufacturer) published the first edition of the refining technology handbook. It featured 84 processes from 55 technology providers and licensors. (Several of those companies continue to license refining processes in the present day.) Major technology submissions addressed distillation (atmospheric and vacuum), cracking (liquid, vapor and combination of phases along with catalytic), lube plants, gasoline plants and treating (clarification).

Refined product exports decline more than imports. Refined oil exports for 1931 declined more than imports levels. Data showed an 11% drop for oil imports, while exports dropped 26%. Approximately 99 million bbl of refined oil were exported against a total of 132 million bbl exported in the previous year. Gasoline exports declined 30% in 1931, while imports dropped 20%.

Wholesale gasoline prices down. The average wholesale US gasoline price slumped in 1931 to 47% below average pricing in 1930. The average refinery price of the motor fuel class in 1931 was 3.5¢/gal compared to 6.25¢/gal in 1930.

New unit for Compagnie Française de Raffinage. The manufacturing and distributing subsidiary of Compagnie Française de Petroles awarded a contract to The Arthur G. McKee & Co. to construct a primary crude oil distillation unit. Approximate cost for the new unit is $1 million; it will be constructed at Le Havre, France.

Startup of German refinery. Elwerath Gewerkschaft will start operating its new refinery near Hanover, Germany. The $1 billion refinery was constructed by The Arthur G. McKee & Co. The refinery has a rated gasoline capacity of 2,600 bpd and consists of a crude distillation unit, redistillation equipment and Dubbs cracking facilities.

Headlines from The Refiner and Natural Gasoline Manufacturer, October 1922:

Imperial Oil Co. to build plant at Calgary. Imperial Oil Co., a subsidiary of Standard Oil Co., is making arrangements for the construction of a small refinery near Calgary. The facility will cost approximately $2.5 million. The new refinery will use a sweet feed from Montana until sufficient local oil supplies are developed. The refinery will have a processing capacity of 3,000 bpd.

New refining organized at Corpus Christi (Texas). The Corpus Christi Refining Co. is being organized and will operate a refinery at Corpus Christi, Texas. This refinery will process a mix of coastal crudes and will conduct business by water, thus avoiding paying high freight rates. The facility will operate three stills, two gasoline receiving tanks, three agitators, two lube distillate tanks, two finished lube tanks, three lube storage tanks, one kerosine distillate tank, one finished gasoline tank, one heavy crude tank, one light crude tank, one fuel oil tank and necessary chemical tanks and boiler house, a pump house and a warehouse.

Cushing refinery now using Dubbs process. The Shaffer Oil and Refining Co., at Cushing, Oklahoma, has increased capacity by installing four Dubbs stills. The expansion will cost approximately $500,000 and increase gasoline output.

Texas Oil Products Co. operates model plant. The Texas Oil Products Co. at Waxahachie, Texas, operates a modern refinery. This refinery now operates the latest vapor-phase cracking process. Gasoline is the only product shipped, residue from the stills is used plant fuel, and byproduct gas is used locally for heating. The plant capacity will increase from 1,200 bpd to 6,000 bpd. HP

  BP and Petrofina constructed a new catalytic
  cracking unit with a capacity of 500,000 tpy
  at the Antwerp Refinery. The new unit
  enabled this refinery to increase motor spirit
  production, July 1955.  

  Early construction of an Orthoflow catalytic
  cracking unit at Atlantic Refining’s
  Philadelphia, Pennsylvania, refinery,
  December 1953.  

  Aerial view of the Petrochemicals Inc.’s
  olefins facility at Lake Charles, Louisiana.
  The site has processing a capacity of
  200,000 lb/yr, January 1959.  

  Installation of a preheater on Esso Standard Oil’s catalytic cracker, March 1960. 

  The two-train liquefied natural gas (LNG) unit
  of Nigeria LNG Ltd. was completed in fall
  1999. The $3.8-billion facility will load and
  ship LNG to Europe and Turkey, January 2000.

  Angola LNG facility under construction near
  Soyo, Angola. The site will have a processing
  capacity of 5.2 Mtpy. It is expected to come
  onsteam in early 2012, July 2010.

  The Marathon Oil Corp. refinery is located in
  Detroit, Michigan. The refinery was upgraded
  to process heavy oil, such as oil sands and
  has an extended crude processing capacity
  of 115,000 bpd, February 2009.

HPI and aviation fuel needs of the 1940s

The Allied forces of WWII depended on aviation fuel to conduct their operations on several continents in two very different regions. Consequently, the newer military air force needed much higher octane fuels than in the pre-1940s era to meet their mission goals and to transport soldiers and supplies throughout Europe and the Pacific region.

Role of technology.

The refining technology of the pre1940s included using alkylation processes for octane goals, and the average refinery blending pool was about 65 octane. However, the new engines for the military air force needed 100 octane. The US government, in cooperation with domestic refining companies, embarked on a massive construction program to expanding the processing capability and to produce more gasoline and diesel along with higher octane aviation fuels for the military. This program involved applying new refining technologies to reach 100 octane for the blending pool. A new process, fluid catalytic cracking (FCC), became the foundation to meet this fuel goal. Several licensing companies joined in the effort. Refining technology leaders participating in the 100-octane program included The M. W. Kellogg (now KBR), Universal Oil Products (UOP, a division of Honeywell) and the Standard Oil Co. The push was to produce aviation- grade alkylate.

The program involved construction of catalytic cracking capacity, along with new alkylation and isomerization units. The core of the program involved the construction of 94 plants that would support the blending of 100-octane aviation gasoline. The cost for the US government sponsored construction program exceeded $900 million. With completion of the program, 60 refineries were equipped with FCC units (FCCUs).

This month’s cover is a photo of the dedication ceremony for The Texas Co.’s FCCUs, held Feb. 29, 1944, at Port Arthur, Texas. This refinery installed two FCCUs. The first FCCU came onstream in March 1944, and the second FCCU became operational on April 1944. After startup, both FCCUs began shipping butylene to the Neches Butane Products Co., another project sponsored by the US Petroleum Administration for the War in the Golden Triangle area of Texas. Neches Butane used butylene streams from the surrounding refineries to produce butadiene—a feedstock for the government-sponsored styrene-butadiene rubber (SRB) manufacturing facilities. By the end of 1945, The Texas Co.’s Port Arthur refinery was producing more than 1 million bpd of aviation gasoline. HP


“Aviation gasoline plant construction will be completed in 1944,” Petroleum Refiner, January 1944.
Gish, E. N. Gish, Texaco’s Port Arthur Works, A legacy of Spindle Top and Sour Lake, www.texacohistory.com
“Role of natural gasoline industry in the 100-octane gasoline program,” Petroleum Refiner, May 1943.

  New catalytic cracking unit constructed at
  The Texas Co.’s Port Arthur, Texas, refinery.
  The facility was part of a US government
  sponsored effort to produce 100 octane
  aviation fuel for the WWII effort. Approximately
  60 catalytic cracking units were constructed
  at US refineries at a total cost of $900 million
  over a four-year period, according to the
  Petroleum Refiner, January 1944.  

  Dedication ceremony of The Texas Co.’s
  two FCCUs on Feb. 29, 1944. 


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