November 2016


Refining: High-impact challenges in today’s global refining market

To stay competitive and thrive in today’s uncertain and volatile energy market that is characterized by major shifts in supply and demand dynamics, refiners must find ways to increase operational efficiencies, maximize productivity and produce refined products at lower costs.

Zurlo, J. A., GE Water & Process Technologies

To stay competitive and thrive in today’s uncertain and volatile energy market that is characterized by major shifts in supply and demand dynamics, refiners must find ways to increase operational efficiencies, maximize productivity and produce refined products at lower costs. Most importantly, they must address crucial operational challenges to reduce risks that can impact profit and safety.

While each refinery across the globe is configured differently and may serve different markets—making each facility distinctly unique—there are several common, high-impact challenges that refiners face in relation to variability, quality and reliability.

For many refiners that transform feedstock into high-quality fuels and other refined products, profitability can depend on how these challenges are managed. Refiners must ensure that key process units are kept running, regulatory requirements are effectively met, and systems are responsive and highly adaptive to changes in feedstock properties.

Challenge 1: Increasing crude and feedstock variability

As recoverable crude oil is discovered in new areas around the world, and production techniques continue to evolve—driving greater volumes of crude oil extraction by unconventional methods and broadening the sources of crude oil supplies by all production methods—crude oil blending is becoming increasingly more common. As a result, refiners must work with a greater amount of raw material supplies that do not have fixed-quality parameters. To a refinery, the element of variability in crude oil and feedstock supplies can represent a substantial cost burden.

In recent years, significant progress in enhanced oil recovery strategies has enabled oil extraction from formations that historically were too cost prohibitive to produce. As a result, unconventional resources have become economically recoverable. One of many examples is the rapid expansion of light tight oil production seen in North America.

However, the characteristics of unconventional oil resources can exhibit a substantial amount of batch-to-batch variability, which, from a refining standpoint, presents a number of processing challenges. Feedstock variability forces refiners to continually adapt their process systems to accommodate different crude qualities. This requires constant fine-tuning and leads to inefficiencies and higher operational costs, which ultimately impact profitability. Experience has shown that increasing variability is not limited to only unconventional production: many conventionally produced crudes are deviating significantly from their historical assay properties, and contaminant levels are becoming more complex.

Variability can also result from transportation logistics. Due to a lack of pipeline infrastructure for many unconventional sources, these oils are generally delivered in significantly smaller batch sizes, such as rail car and truck tank car, as compared to conventional crudes. Any variations from short-term oil production in a single well, or variations between different wells producing the same “name” of crude oil, are passed on to the refinery process instead of being leveled in large cargo pools, as occurs with conventional production.

Even crudes transported by conventional sources, such as pipelines and large seaborne crude carrier vessels, are subject to increasing variability in supply compared to the past. Finally, the increasing trend of producing blends of crude oils to the refining market instead of crude oils sourced from individual locations also lends itself to increased variability, as there is sometimes significant flexibility in the blend recipe while still meeting sales specification.

Crude variability can affect product quality and unit reliability, and hinder refiners from achieving process optimization, making efficient refining operations difficult to sustain. With the continued variability in oil supplies, operational issues are anticipated to intensify. Escalations in crude oil quality and variability appear to be progressing unabated by the recent plunge in crude oil prices.

To cope with these challenges, refiners must find ways to quickly identify and interpret changing crude oil properties and efficiently respond to new parameters. Determining how a new crude oil supply can affect a refinery operation requires thorough knowledge of that feedstock’s specific properties, characteristics and contents.

The refiner that can better understand the quality of the crude oil it is processing, as well as the impact of blending potentially incompatible oils together, has an advantage by anticipating and better adapting to changing operating conditions and impacts. Failing to do so can result in unexpected shutdowns, short run lengths and production losses through increased system corrosion, fouling, catalyst poisoning and quality issues.

The ability to detect and predict impacts resulting from variability and blending is a focus of industry research today, and has led to advancements in detection technologies and solutions that help mitigate variability-related impacts.

Challenge 2: Tightening environmental and product quality regulations

To reduce the environmental impact of refining processes, refiners must comply with increasingly stringent air and water quality regulations. They are also required to address tighter product quality specifications.

Compliance with these standards—which includes controlling air emissions, reducing the level of toxicity in effluent discharge and managing sulfur concentrations in finished fuels—requires significant adjustments to the refining process and, in many cases, operational reconfigurations that necessitate significant capital investments. Depending on the scope of change required and the conditions that must be met, impacts can be felt across many, or most, of the refinery’s operating areas.

For example, in 2015, the US Environmental Protection Agency (EPA) adopted new air quality rules that are intended to control toxic air emissions from petroleum refineries. The requirements, which will be fully implemented in 2018 and will apply to roughly 150 refiners operating across the nation, mandate that refiners reduce toxic air pollutants by 5.2 Mtpy, and cut 50 Mtpy of volatile organic compounds (VOCs) from the air.

The new rule will virtually eliminate smoking flare emissions and upset emissions events, and will also require refineries to monitor emissions at key emissions sources within their facilities and around their fence lines. In addition to targeting flares, the EPA’s rules will carry tougher standards on storage tanks, coker units and pressure relief devices.

According to the EPA, the new regulations are designed to reduce emissions that cause respiratory illness, increase cancer risk and contribute to smog and global warming, while making refinery operations more efficient. Even so, the American Petroleum Institute (API) believes that the rules are too expensive, and predicts implementation costs will exceed $1 B.

With respect to product quality specifications, new global regulations and fuel standards are driving the production of cleaner and higher-quality transportation fuels characterized by lower-sulfur concentrations. In response, refiners must commit substantial investments toward expansions, process upgrades and new systems to comply with the new requirements.

As part of its Tier 3 program, which is set to take effect in 2017, the EPA has set rigorous vehicle emissions standards that require reduced sulfur content in gasoline. According to the new EPA requirement, sulfur concentration in gasoline will be limited to 10 parts per million (ppm), a reduction from Tier 2 standards that specified 30 ppm sulfur content. Refiners producing greater than 75 Mbpd must meet the new standards by 2017. Refiners producing below that threshold have until 2020 to comply with the new regulations.

As further standards are introduced and required, it will become more and more challenging to economically produce finished products from crude oil supplies. However, refiners can adopt strategies to help cost-effectively manage tighter environmental and product quality regulations, such as minimizing equipment fouling to improve energy efficiency for reduced emissions and operating costs; enhancing reliability to extend run lengths and minimize the impacts of equipment shutdowns; and improving contaminant removal to decrease environmental footprint, better meet product specifications and improve downstream unit operations. Additionally, treatment programs can enable improved blending of finished products to increase fuel quality.

Challenge 3: Maintaining high equipment reliability

A major consideration for boosting a refinery’s profitability and improving operational safety is to keep operating units running and available for service. However, the introduction of certain, difficult-to-detect contaminants can cause mechanical issues, such as corrosion and fouling, and may lead to problems in wastewater treatment systems.

Minimizing equipment fouling, reducing corrosion, removing contaminants and maintaining equipment in top operating condition are excellent ways to reduce these risks and sustain system reliability. These practices ensure peak operating performance and maximize production rates. For the highest degree of efficiency, the independent components, and the refinery system as a whole, should be cohesive.

Equipment reliability is a critical ongoing priority for refiners. Mechanical underperformance can lead to decreased efficiencies, and system failures can result in unplanned downtime and lost production, which can be financially devastating in today’s competitive market.

To enhance refinery equipment reliability, manage uncertainty and effectively minimize risks, refiners can invest in solutions that provide for improved system monitoring, including predictive analytics that allow them to anticipate potential impacts and get out in front of imminent problems. Process control technologies include options that enable compatibility testing of crude oil blends to determine whether or not fouling will be an issue.

Vigilance in operating rigor, quickly determining or even predicting negative impacts, and being able to efficiently correct deviations from the operating process plan are keys to maintaining high equipment reliability. Wisely investing in monitoring tools, training, catalyst and chemical treatment programs is a proven strategy for consistent top performance.

Moving forward

Refining operations require complex machinery and sophisticated processes, and represent a critical link in the global energy supply chain that produces refined products and finished fuels from crude oil. In today’s market, refiners face specific, high-impact challenges that can affect operations, escalate costs and threaten profitability. By focusing on controlling operating costs, minimizing the risks of variability, operating with higher reliability and maintaining a safe and environmentally compliant workplace, refiners can maximize profitability and continue to produce the right mix of on-specification products to satisfy their markets. HP 

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