IBP1316_12 BECOMING A REFINERY LEADER BY CHANGING OPERATIONS TO MATCH NEW PRODUCT QUALITY REGULATIONS Maryro P.

Mendez1

Copyright 2012, Brazilian Petroleum, Gas and Biofuels Institute - IBP

This Technical Paper was prepared for presentation at the Rio Oil & Gas Expo and Conference 2012, held between September, 1720, 2012, in Rio de Janeiro. This Technical Paper was selected for presentation by the Technical Committee of the event according to the information contained in the final paper submitted by the author(s). The organizers are not supposed to translate or correct the submitted papers. The material as it is presented, does not necessarily represent Brazilian Petroleum, Gas and Biofuels Institute opinion, or that of its Members or Representatives. Authors consent to the publication of this Technical Paper in the Rio Oil & Gas Expo and Conference 2012 Proceedings.

Abstract
Global environmental concerns have forced the automotive and oil industries to increase efficiency and reduce emissions, which has led to the tightening of fuels specifications around the world. The implementation of ultra-low sulphur transport fuels has become a worldwide trend with growing momentum. Compliance with these standards requires the refiner to make decisions in advance of the implementation date. Therefore, in order to make changes on time, refiners are currently assessing options and changes required to comply with regulations by 2016. Similar regulations have been implemented in Europe already and KBC has the methodology and experience to assess the existing refinery configuration, unit capability and facility infrastructure to provide the basis for decision making. This paper focus on KBCs methodology which looks at the molecular management needed to produce the low levels of sulfur and toxics required in todays refined products. A key element to the study is the use of Petro-SIM for development of a representative detailed non-linear model, of the refinery which has been used to test ideas and configurations and help confirm the Refinery LP development activities. Using a Petro-SIM representation, KBC is able to make an assessment of the impact of imposing Tier 3 gasoline (sulphur to < 10 ppm) on the refinery, examining critical blending constraints, unused stream qualities and quantities and likely type and scale of capital investment that would be required while optimising unit operations and maximising margins. This paper illustrates KBCs current thinking based on studies done to date to review clean fuels and Tier 3 specifications options for specific refinery configurations.

1. Introduction
The closing of the light/ heavy crude spreads and generally high crude prices have made production of very heavy crudes economically attractive. The next challenge refineries will face is converting heavy, sour into high quality transportation fuels (e.g. Euro V, US EPA Tier 3 Gasoline regulations). US EPA is promulgating regulations on a wide range of environmental issues. The key drivers for the new upcoming regulations are: Reduce criteria pollutants (SOx, NOx, CO) Reduce gasoline sulfur (Tier 3) Reduce Marine fuel sulfur (Marpol Annex VI) Reduce air toxics (Benzene, VOCs) Reduce benzene levels in gasoline (MSAT 2) Remove ethanol 1 psia waiver (Tier 3) Reduce GHG Increase Ethanol usage from 10 to 15% (Renewable Fuels Standards) Increase vehicle mileage (Cafe Standards)

______________________________ 1 Master of Engineering in Chemical Engineering, Senior Consultant - KBC ADVANCED TECHNOLOGIES, INC.

Rio Oil & Gas Expo and Conference 2012 For instance, it has been proposed to implement, Tier 3 which involves 10 ppm sulfur average, 25-30 max per gallon on gasoline; removal of 1 psi ethanol waiver on gasoline. Proposed regulations are due out at the end of 2011/beginning of 2012; regulations would take effect in Fall 2016; in time for 2017 engine model year. Compliance with these standards requires the refiner to make decisions in advance of the implementation date. Therefore, in order to make changes on time, refiners are currently assessing options and changes required to comply with regulations by 2016. Each of these regulations requires some level of investment for most refiners and for some the transition might be more than can be economically justified. Splitting of major oil companies into separate producing and refining businesses is partially driven by the requirements of these regulations. Addressing these wide ranging regulations in the most cost effective way sets the lowest cost production and will allow a specific organization to become a refinery segment leader. Figure 1 attempts to put them into a reasonable timeline to allow the refiner to make decisions for future compliance.
July 1, 2012 MSAT Phase 2 gasoline benzene standards (average 1.3 vol% without credits) effective (except for small refiners. Biodiesel (5%) mandate effective in new Mexico All No. 2 heating oil to have sulfur content no higher than 15 ppm in NY.

Disclaimer: KBC is providing this for information only

U.S. Regulatory Time Line Updated: October 2011

July 1, 2014 Revised fuel oil sulfur limits effective in NJ (500 ppm for No. 2; 2,500 ppm for No. 4; 5,000 ppm for No. 5 and 6 if it is not already 3,000 ppm.) Sulfur limit for No. 2 heating oil in CT drops to 15 ppm. The maximum sulfur content for heating oil drops to 500 ppm in VT. July 1, 2016 MSAT Phase 2 gasoline benzene standards (average 1.3 vol% without credits) effective for small refiners Sulfur limit for No. 2 and lighter fuel oil drops to 15 ppm in NJ. 37.5 MPG for
Model year 2017

January 1, 2018 The maximum sulfur content for distillate fuel oil (except for manufacturing uses) is lowered to 0.0015% by weight and for residual fuel oil to 0.5% by weight in ME. The maximum sulfur content for heating oil drops to 15 ppm in VT.

54.5 MPG for Model year 2025

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2025

June 1, 2012 Federal LM ultra-low (15 ppm cap) sulfur diesel effective at refineries

June 1, 2014 Federal small refiner 15 ppm sulfur cap for NRLM diesel effective. Federal 1,000 ppm sulfur cap for ECA marine fuel effective at refineries

Fall 2016 Tier 3-10 ppm sulfur average, 25-30 max per gallon on gasoline; removal of 1 psi ethanol waiver on gasoline proposed regs due out end of 2011/beginning of 2012; regs would take effect in Fall 2016; in time for 2017 engine model year. June 1, 2015 Federal 500 ppm sulfur NRLM diesel credits expire. Max sulfur content for distillate fuel oil (except for manufacturing uses) is lowered to 0.005% by weight in ME. January 1, 2015 MSAT Phase 2 gasoline benzene standards (average 0.62 vol% with credits) effective for small refiners The RFG and anti-dumping toxics standards cease to be effective for small refiners (per MSAT Phase 2 rule).

Biofuels: Ethanol1: Diesel %

15% 1.28bg May 1, 2012 10 vol% biodiesel required April-October in Minnesota; 5 vol% in winter. July 1, 2012 Biodiesel (5%0 mandate effective n New Mexico

Renewable Fuel Standard (RFS)

May 1, 2015 20 vol% biodiesel required AprilOctober in Minnesota; 5 vol% in winter MARPOL Annex VI

Marine Fuel Sulfur, W% 4.5 NOx:

3.5

Engine

0.05

MARPOL Strategy Tier3/MSAT 2 Strategy 2012 Tier3/MSAT 2 Decision

Refinery Decision Points

MARPOL Decisions Tier3/MSAT 2 In place Tier3/MSAT 2 Compliance

MARPOL In Place

Notes: 1 Ethanol Testing: RVP 0.85 psi E15% 1.7 psi , Blend well

PROPRIETARY INFORMATION

References: 1. NPRA Fuels Line 2. KBC

Figure1. U.S. environmental compliance timeline

2. Methodology
The major source of sulfur in the U.S. and European gasoline pools, by far, originates from the FCC gasoline fraction, which contributes from 90 to over 99 % of the total pool sulfur content. Thus, strategies involving sulfur reduction will focus on this source. Addressing these wide ranging regulations in the most cost effective way will set the lowest cost production and will become a refinery segment leader. KBC has the methodology to assets the existing refinery configuration, unit capability and facility infrastructure to provide the basis for decision making. This methodology looks at the molecular management needed to produce the low levels of sulfur and toxics required in todays refined products. The overall objective is to determine steps needed to be taken to allow 10 ppm sulphur gasoline to be produced at a Refinery, while maintaining or increasing margins. 2

Rio Oil & Gas Expo and Conference 2012 The program covers several areas such as crude oil diet, operations, blending, storage, logistics, trading and any other solutions that may be necessary to reach the target. The steps taken are: 1. Analyze different crude feed mix options. For this task it is important to have involvement of the LP department in the task force as the LP model needs to be utilized together with the Petro-SIM model. 2. Identify and assess operational changes. For example optimization of FCC gasoline splitting, change of cut points, increase Reformer severity of Octane make up, etc 3. Identify and assess minor capital modification. For example make-up gas compressor revamp, catalyst selection and replacement, use of octane booster additives like ZSM5. 4. Model the hydrogen balance including the producers and consumers to make sure any recommendations will be practical. 5. Rank alternative scenarios on an economic basis 2.1 Tools A key element to the study is the use of Petro-SIM for development of a representative detailed non-linear model, of the refinery which has been used to test ideas and configurations and help confirm the Refinery LP development activity. A rigorous simulation gives the refiner the opportunity to test ideas and to understand the constraints and challenges and costs of the new operation. The Petro-SIM reactor models bring: Detailed hydrocarbon chemistry Carbon number PIONA First-principles Kinetic Modeling Heat and Material Balances Incremental effects Key Feed quality Changes in operating conditions Validated by technical alliances & field use Once a refinery wide model is developed and following agreement that the process model was representative of the current refinery, preliminary studies are undertaken of the pre and post treatment routes. These studies come in the form of changing and optimizing operations of existing units in the model, commercial options (blending of imported components) and implementing the potential new assets required for either post of pre treatment.

Figure 2. Refinery wide flowsheet The representative case reflects assumptions, in this case, for the 2016 product slate for the refiner, volumes and qualities, agreed maximum/minimum and fixed rates. In order to assess the performance of the FCC Naphtha HDS, a standalone, rigorous representation of the FCC Gasoline Treater unit is developed and is then imbedded in the Petro-SIM refinery flowsheet. The model will allow the refiner predict the impact on Octane as the severity is increased and the impact of changing operations upstream the unit. During the initial phase of the Tier 3 gasoline study the feed to the unit (cracked naphtha) could be simulated in two different ways, either by synthesizing the feed from plant data or by the resultant effluent from a FCC model upstream. 3

Rio Oil & Gas Expo and Conference 2012 The Sulphur distribution of the feed stream is key for obtaining a close match between the model and unit performance. Petro-SIM uses an FCC template. KBC Intellectual Property (IP) curve-fits sulphur for FCC Naphtha boiling range according to this template (based on KBCs accumulated knowledge from simulating refinery performance data since early 1980s).

8 7 6 5 4 3 2 1 0 0 200 400 600

TBP (F)

Relative S wt%

800

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1200

Figure 3. FCC Naphtha sulphur distribution prediction from Petro-SIM In addition to this, the model KBC has the flexibility to further adjust the sulphur distribution with tuning factors at the pseudo-component level to allow a close match to plant data. The model is enhanced to allow the investigation of the impact of potential diesel streams eliminated from the gasoline pool and the potential impacts on the gasoline and diesel/fuel oil blenders. Through the development of the model, additional test run(s)/sampling and laboratory analysis work that would enhance the modelling definition / understanding, are identified. A number of opportunities are evaluated, using the enhanced Petro-SIM model, to optimize the gasoline pool to reduce the pool sulphur to < 10 ppm and potentially increase profitability e.g., elimination of heavy cat naphthas from the gasoline pool such as the HDS bottoms stream. As refiners are looking at processing more sour and heavier crudes the study is carried out using the worst case in terms of sulphur loading or the crude with the highest sulphur content that the refinery would be running, as a basis. A sensitivity case with a sweet crude diet is performed as part of the economic evaluation: octane vs. crude differential vs. feasibility. Based on these results, a preferred route is identified for more detailed study and estimating. The representative case is modified to reflect assumptions for the future product slate, volumes and qualities, agreed maximum/minimum and fixed rates. KBC undertakes a number of non capital or small capital opportunity step-out case studies, which include: Feasibility and Cost of HCCG Cutpoint change. This is assessed by making changes on the FCC model upstream the HDS unit. The impacts of these changes are evaluated both at the HDS and at the distillate blending pool.

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Figure 4. FCC kinetic reactor model with main fractionator column DISTOP model has the flexibility of easily adjusting cut points Feasibility and Cost of LCN cut point change. Mercaptan/thiophene cut point is crucial to minimizing LCN sulphur content, so laboratory testing together with simulation work is required when analysing this option. Routing heavier naphtha cuts into the distillate pool Catalytic Cracker Gasoline 95% point and end-point optimisation. This has a significant impact on total FCC gasoline sulphur. This opportunity includes evaluation of an addition FCC naphtha splitter if the refinery doesnt have the asset. MCN/HCN cutpoint Optimisation. Poor cutpoint selection may result in octane loss through olefin hydrogenation in the more severe operating regime in the bottom half of the HDS column. Upgrade of HDS capability. When the refiner is not able to achieve the project objectives by low or no capital options, FCC feed pretreatment is evaluated as a solution to achieve < 10ppm sulphur gasoline. Standard representative models of appropriate new process units are tested within the flowsheet to generate a full definition of yields and product blending and qualities.

3. Strategy for the control of gasoline octane

Depending on the refinery configuration, in the basic Ultra Low Sulphur gasoline there is very little flexibility in the gasoline pool. On one of the studies done recently high octane, low aromatic, imported components (such as alkylate ) were needed to make up for the Octane destruction as a result of the more severe desulphurization. The octane balance could be improved by increasing severity on the reformer but it comes to the expense of yield destruction. In the current environment when the price of oil is around $100/BBL that may not be the optimum option. Therefore, other options may become attractive. The potential future optimization investments to improve the octane balance can be summarized: major revamp of the alkylation unit ZSM-5 or similar in FCC catalyst formulation to boost LCN octane (up to RON 94 has been reported elsewhere) However availability of import blend components alkylate, reformate provide solutions which allow investment decisions in this area to be deferred and will allow time for future detailed study of the options. Petro-SIM blender model is integrated within the refinery wide flow sheet and allows the assessment of such options. Any given number of new imported streams can added without major structural changes. The blender solves by looking add feeds available, constraints and prices. 5

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Figure 3. Petro-SIM gasoline blending model

4. Strategic Considerations
The road to 10 ppm gasoline should not be restricted to the refinery fence: Explore alternative markets. Export intermediate high sulphur gasoline components. Export high sulphur finished gasoline. Look at alliances with other refineries to find mutually beneficial opportunities A refinery may excess treatment capacity Or a better quality intermediate stream like VGO These synergies and opportunities could be included as part of the step up simulation cases, when stream qualities and prices are known. During these cases, commercial options will be evaluated like buying or selling intermediate streams that the Refinery typically doesnt export or import. An example but not limited to, is to export of an appropriate stream from the refinery, with processing off-site. Define the appropriate processing, and allow the processed products to go to a terminal for blending with purchased components. The idea is from this to define an estimate of the volume and type of stream that would need to be exported from the refinery to avoid processing investment within the refinery.