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NB: 1. I have authored this based on my own experience & knowledge of petroleum refining. 2. The pictures used in this, have been taken from internet research for this solely academic purposed presentation with due respect to their respective copyright owners, if any.
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Introduction to Petroleum
What is Petroleum?
The word petroleum came from a Greek word

Petra meaning rock and a Latin word Oleum meaning oil.


The word Oleum came into Latin from a Greek

word Elaion meaning an olive orchard.


So Petroleum means rock oil.
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Why is Petroleum a Rock Oil?


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Large quantities of zooplankton and phytoplankton

like algae get buried underneath sedimentary rocks and undergo metamorphosis under intense heat and pressure over long periods of time (around 600 years or more) to form petroleum, a flammable oil and a fossil fuel.
Thus petroleum forms below and between rocks

and hence the name rock oil.


The

name Petroleum covers both naturally occurring unprocessed crude oils and refined petroleum products that are made up of processed crude oils.
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How is a Petroleum brought out of the rocks?


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Deep wells are drilled in areas (onshore or offshore) where geoscientists predict the existence of petroleum. As the required depth is reached, Natural Gas, Petroleum, Water, Mud, etc. come out of the well. These are then collected & processed through

mechanical and other process equipments.


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Now,

different equipments separate the components of this collected fluid. The activities, from drilling till here, comprise the Upstream Petroleum Industry.

The cleaned & separated components are then

send to their respective places of requirement through marine barges, tankers or pipelines. The activities, for distribution of the upstream products, comprise the Midstream Petroleum Industry. Often the Upstream & Midstream activities are collectively referred to as Upstream.
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Crude oil is one such component which is sent to

refineries for refining into finished petroleum products.


The activities from receipt of crude oil, refining of

crude oil, marketing & delivery of refined products comprise the Downstream Petroleum Industry.
So,

Petroleum Refining Downstream activity.

is

essentially

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A Brief History of Petroleum


According to Herodotus, a famous ancient Greek

historian, there were oil pits near Babylon and asphalt (a petroleum product) was used in the construction of walls & towers of Babylon, more than four thousand years ago.
In ancient Greece, Romania & Persia petroleum

products were used in medicines & in lightings.


However, no details of oil well drilling could be

found in the history of that time in those countries.


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A Brief History of Petroleum


The earliest known oil wells were drilled in China

with bamboo poles around 347 AD.


Subsequently oil wells were drilled in Russia, Iraq,

UK, USA, Saudi Arabia, etc.


In India, the first oil well was dug in Digboi, Assam,

in 1889 and the first refinery named Assam Oil Company started in 1901 under British Petroleum. This is now owned by Indian Oil Corporation Ltd.
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A Brief History of Petroleum


The earliest known oil wells were drilled in China with bamboo poles around 347 AD.
Edwin

Drakes oil well near Titusville, Pennsylvania, is considered as the first modern & commercial oil well, drilled in 1859.

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A Brief History of Petroleum


Subsequently oil wells were drilled in Russia, Iraq, UK, USA, Canada, Saudi Arabia, etc.
In India, the first oil well was dug in Digboi, Assam, in 1889 and the first refinery was started

at Margharita, Assam. In 1901 this was converted to Digboi Refinery under Assam Oil Company (AOC formed in 1899) with technical leadership of British Petroleum. This is now owned by Indian Oil Corporation Ltd.
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World Petroleum Scenario


Until the mid 1950s, Coal was the preferred fuel throughout the world. But, soon after, Petroleum took over and today it is the most sought after fuel in the world.
Today, about 90% of vehicular fuel needs are met by oil. Petroleum also makes up 40% of total energy consumption in the United States, but is

responsible for only 2% of electricity generation.


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World Petroleum Scenario


The petroleum industry is the largest industry in the world.
The top three oil producing countries are Saudi Arabia,

Russia, and the United States.


About 80% of the world's readily accessible reserves

are located in the Middle East, with 62.5% coming from the 5 Arab countries of Saudi Arabia (12.5%), UAE, Iraq, Qatar & Kuwait.
1 barrel of oil = 42 US gallons = 35 UK gallons =159 liters
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World Petroleum Scenario

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World Petroleum Scenario


According to an estimate of BP, total oil

reserves left in the world is around 1.1 trillion barrels, which will last till 2045.
Total gas reserves are estimated at 175 trillion

m3, which will last till 2070.

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India Energy Scenario


India is the fourth largest energy consumer in the

world, after the United States, China, and Russia.

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India Petroleum Scenario

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India Petroleum Scenario


As we can see in the preceding graph, Indias

crude oil production is much less than consumption. Hence, India imports a lot of crude oils from different countries.
Indias

crude oil reserves are around 3,74,00,000 barrels (0.0015% of that of Saudi Arabia), only enough for two weeks of consumption.

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India Petroleum Scenario

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India Refining Scenario


In India, refining capacity is expressed in Million

Metric Tons Per Annum or MMTPA, whereas the world expresses it in Barrels per standard/commercial day.
1 MMTPA = 19787 Barrels/day
Indias total refining capacity as of today is 213.07 MMTPA

that is = 1539 million barrels / year

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India Refining Scenario


Indias total refining capacity as of today is 213.07 MMTPA, against a country requirement of ~ 160 MMTPA. So, the remaining products are exported. Indias refining capacity is around 22% of that of USA. Country wise, USA has the highest refining capacity of ~ 7000 million barrels per year.

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India Refining Scenario


In India, Indian Oil Corporation Limited is the largest

refiner controlling 10 out of the total 22 refineries and having a group capacity of 65.7 MMTPA.
IOCL ranks as the largest company in India & 83rd in

the world.
IOCLs capacity is ~23% of the worlds largest refiner

Exxon Mobil Corporation which has a capacity of 56,57,500 barrels per day.
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Crude

oils around the world vary in their characteristics, thus requiring varying refining processes to produce the desired products.

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The basic refining processes include -

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Why is separation needed ? Crude oil is a mixture of Hydrocarbons (compounds of Carbon &

Hydrogen), Sulfur, Nitrogen, Oxygen, Metals & Salts. Also Water & Sediments are present in varying amounts.
On average, crude oils are made of the following elements or

compounds: Carbon - 84% Hydrogen - 14% Sulfur - 1 to 3% (hydrogen sulfide, sulfides, disulfides, elemental sulfur) Nitrogen - less than 1% (basic compounds with amine groups) Oxygen - less than 1% (found in organic compounds such as carbon dioxide, phenols, ketones, carboxylic acids) Metals - less than 1% (nickel, iron, vanadium, copper, arsenic) Salts - less than 1% (sodium chloride, magnesium chloride, calcium chloride)
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Hence, the components need to be separated in

order to convert them into useful products.


The water & sediments are filtered and separated

initially.
Then, Fractional Distillation is employed to separate

the components.
Different fractions or components of crude oil have

different boiling points & condensation or dew points.


This principle is employed in fractional distillation.
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The crude oil mixture is heated to a temperature that

is equal to the highest boiling point of any of the component in a number of stages & units.
The different components start evaporating at their

respective boiling points and get separated out by the respective collecting arrangements.
The components thus separated, are again condensed

back for refining in the different process units.


This is the basic principle of refining operation.
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Fractional Distillation yields

a) Light Distillates:

i) Naphtha - Made into gasoline/petrochemicals ii) Kerosene


b) Middle distillates:

i) Light gas oil - made into jet/diesel furnace fuels ii) Heavy gas oil - further processing to produce naphtha and other products.
c) Residue:

Tar, heavy fuel oil, waxes, greases & asphalts - further processed into refinery fuels
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Chemistry
The hydrocarbons in crude oil vary in their types,

lengths & complexities.


Upto

6 types of chemical compounds of hydrocarbon may be present in a sample of crude oil.


are Alkanes or Paraffins, Aromatics, Cycloalkanes or Napthenes, Alkenes, Alkynes & Dienes.
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These

Chemistry
Alkanes or Paraffins general formula: CnH2n+2 (n is a

whole number, usually from 1 to 20) straight- or branched-chain molecules: can be gasses or liquids at room temperature depending upon the molecule, examples: methane, ethane, propane, butane, isobutane, pentane, hexane

Aromatics general formula: C6H5 - Y (Y is a longer,

straight molecule that connects to the benzene ring) ringed structures with one or more rings, rings contain six carbon atoms, with alternating double and single bonds between the carbons, typically liquids, examples: benzene, napthalene
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Chemistry
Cycloalkanes or Napthenes or general formula: CnH2n (n

is a whole number usually from 1 to 20) ringed structures with one or more rings, rings contain only single bonds between the carbon atoms typically liquids at room temperature, examples: cyclohexane, methyl cyclopentane a whole number, usually from 1 to 20) linear or branched chain molecules containing one carbon-carbon doublebond, can be liquid or gas examples: ethylene, butene, isobutene

Other hydrocarbons Alkenes general formula: CnH2n (n is

Dienes and Alkynes general formula:CnH2n-2 (n is a whole

number, usually from 1 to 20) linear or branched chain molecules containing two carbon-carbon double-bonds, can be liquid or gas examples: acetylene, butadienes
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Chemistry

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Refining
Crude processing in the different units of a refinery

include the breaking of these compounds, making reactions between these compounds, using chemical catalysts to achieve some desired results in reactions, combining the broken compounds, mixing, etc. besides fractional distillation.
Processing is done in order to remove impurities,

convert to lighter hydrocarbons and to give some desired properties to the products.
C1 to C5 (Methane, Ethane, Propane, Butane &

Pentane) are considered light & others are considered heavy hydrocarbons.
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Refining
Heavier (high C, wax, tar, etc.) & more impurity (high

Ni, S, etc.) containing components cannot be used as usable products because they produce more pollution but pollution has to be limited by environmental laws. Also they damage equipments & so must be kept minimum.
The more heavy and impure a component is, the more

refining & processing it needs in order to convert to lighter hydrocarbons that can be used as finished products.
Hence, the lighter the product or the heavier or the

more impure the crude, the higher the processing cost.


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Products
Typical Petroleum Products & their Uses: Liquefied

Petroleum Gas Automotive & Industrial Fuel

(LPG)

Domestic,

Gasoline or Petrol Automotive Fuel

Diesel Automotive Fuel (HSD for high speed

engines, LDO for low speed irrigation purpose engines)


Kerosene Domestic & Commercial Fuel
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Products
Aviation Turbine Fuel (ATF) or Jet Fuel Aviation

Fuel
Fuel Oil Industrial Fuel Lubricating Oils Lubricants for Machines Asphalt/Bitumen Road Making

Tar Road Making & in Sealants


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Products
Paraffin Wax Electrical Insulation, Wax Castings,

etc.
Petrochemicals

Engine Coolants, Resins, Nylons, Polyesters, Fertilizers, Detergents, Plastic Items, etc.

Today, we find more & more items around us, that

are being manufactured from petroleum products.

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Specifications
Each of these above products require different

physical & chemical characteristics in order to suit its uses and applications.
Hence, irrespective of the quality of the crude oil

being fed, a refinery needs to produce the product with the same minimum specifications.
These specifications are governed by Codes &

Standards, varying from country to country.

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Specifications
The

physical & characterized by

chemical

properties

are

Crude Sourness or Sweetness upto 0.5%

Sulphur is sweet & above that is sour


Reid

Vapour Pressure - defined as the absolute vapour pressure exerted by a liquid at 100 F (37.8 C) as determined by the test method ASTM-D-323.

API Gravity = (141.5 / Sp. Gr. At 60 deg. F) 131.5


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Specifications
Pour Point - The temperature at which the oil

becomes immobile (due to wax settling), is termed as Pour Point.


Viscosity Is defined as resistance to flow.
Flash Point - It is the minimum temperature at

which the sample gives sufficient vapour which forms an explosive mixture with air giving flash when a flame is applied to it under conditions of the test method.
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Specifications
There are many other specifications, some of

which we will discuss in the following slides.


Note

the common specifications

standards

governing

the

Volatility ASTM D86 Salt Content ASTM D3230

Sediments ASTM D96


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Specifications
LPG IS 4796 MS IS 2796 ATF IS 1571

HSD IS 1460
Kerosene IS 1459

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Specifications
Flash Point:- It is the minimum temperature at

which the sample gives sufficient vapour which forms an explosive mixture with air giving flash when a flam is applied to it under conditions of the test method. Each country has its own legislation with respect to flash point depending upon the climatic conditions of country.
Pour Point: - When Heavy petroleum oils containing wax are allowed to settle (like in storage tanks), wax separates out from them making the oil immobile. The temperature at which the oil becomes immobile, is termed as Pour Point
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Specifications
Copper Corrosion: - The fuel product comes on

contact with metal parts such as transfer pipe from storage tank, body of storage tank, pumps, vessels, etc., if the product is corrosive; it will corrode these products and reduces their life. Copper corrosion test indicates whether the product is corrosive to copper containing alloys or not. This is applicable to all fuels.

Silver Corrosion: - This test is done for Aviation

Turbine Fuel (ATF),-Jet A1, and type. Some aircrafts and defense use a silver lining in the fuel transfer lines. In order to protect this lining, the fuel should not be corrosive to silver. This is done for ATF and only for Indian region only. Western countries and USA do not use this test any more
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Specifications
Viscosity: - It is the resistance to flow. The unit of

absolute or dynamic viscosityis Poise and that of kinematic viscosity is Stoke. It is the important property for lube oils. This is required to prevent wear and tear in the moving parts of a machine on account of metal to metal contact. For fuel oils, it gives flow properties which are needed for pump selection .Kinetic viscosity is measured in centistokes and Saybolt University measured in seconds.
Potential Gum:- Motor gasoline contains unsaturated

hydrocarbons called Olefins, are oxidized atmospheric oxygen to a gummy material which sticks to the carburetor jet of the vehicle in turn results in the malfunction of engine. This Gum is characterized by Potential Gum Test. The unit is mg per Liter.
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Specifications
Existent Gum: - If Motor gasoline contains any

soluble solid residue; the residue gets deposited in the carburetor and other parts after the gasoline is vaporized. Such deposit may clog the jet and prevent fuel flow due to which the engine stops. That is why this test is done on MS. The specification is 40 mg per liter max.
Some material is added to MS deliberately for some purposes. E.g. Dye to identify the MS from others. These types of residues are excluded from the specifications.
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Specifications
Octane Number: - It is defined as the percent volume of

isooctane in mixture of iso octane and normal heptane that gives the same knocking as that of fuel when tested under defined conditions. Iso octane is assigned a value of 100 and normal heptane 0 octane number. Normal paraffins have the lowest octane Number, Next comes naphthenes followed by iso paraffins, olefins and aromatics (unsat. HC & have excellent knock resistant quality) for the same carbon number. Eg. Cyclohexane 83, Hexene-2 90, Benzene 100, Toluene 107, etc. hydrocarbons behave in some way and when used in a mixture, they behave in another way. Toluene has a RON 107 WHEN it is a single component system. But when it is mixed with other hydrocarbons, it behaves as if its octane number is >120
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Octane Number is not truly additive. When used singly, the

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Specifications
Research Octane Number: - The most common type of octane rating

worldwide is the Research Octane Number (RON). RON is determined by running the fuel in a test engine with a variable compression ratio under controlled conditions, and comparing the results with those for mixtures of iso-octane and n-heptane.
Motor Octane Number: - There is another type of octane rating,

called Motor Octane Number (MON), or the aviation lean octane rating, which is a better measure of how the fuel behaves when under load, as it is determined at 900 rpm engine speed, instead of the 600 rpm for RON. MON testing uses a similar test engine to that used in RON testing, but with a preheated fuel mixture, higher engine speed, and variable ignition timing to further stress the fuel's knock resistance. Depending on the composition of the fuel, the MON of a modern gasoline will be about 8 to 10 points lower than the RON, however there is no direct link between RON and MON. normally; fuel specifications require both a minimum RON and a minimum MON.
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Specifications
AKI (Anti Knock Index):- It is defined as the average of

RON and MON. AKI = (RON +MON)/2. AKI is regarded as more critical for engine performance than RON alone.

Cetane Number: - This is applicable for diesel fuels. It is

defined as the percent of Volume of n-cetane in a mixture of n-Cetane and alpha methyl naphthalene that would give the same knocking as that of fuel under test. n-Cetane is assigned a value of 100 and alpha methyl naphthalene a value of 0. This test has reverse characteristics of octane number. Normal paraffins (sat. HC) have highest cetane number & antiknock qualities, followed by naphthenes, iso praffins, olefins, and aromatics in general but the order may vary depending upon the chain length of iso paraffins.
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Specifications
Cetane Index:- It is an alternative to cetane Number. It is

nearly equal to cetane number but not an actually determined value required cetane engine. Cetane Index is not applicable to fuels containing cetane improves.
Smoke Point: - This is defined as the maximum length of

flame which does not give smoke when tested under prescribed conditions using the prescribed apparatus. Smoke point shows the hydrocarbons nature of the fuel. Paraffins have high smoke points followed by naphthenes and then by aromatics (since petrol has higher aromatics than diesel, so petrol engines give less smoke). Smoke point is related to hydrogen content of fuel. The higher the hydrogen content, the higher will be the smoke point. E.g. Smoking point of kerosene is 18mm minimum
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Specifications
Aniline Point: - It is the point minimum temperature at

which equal volumes of sample and aniline are miscible. It gives the hydrocarbon nature of oil. Aromatics hydrocarbons have lower aniline points and paraffinic hydrocarbons have higher aniline points. Naphthenic hydrocarbons have intermediate aniline points. Aniline point in combination with density/specific gravity/API gives a quick idea of some important properties like Diesel Index, Aniline-Gravity Product which are important properties for diesel and ATF. Aniline gravity product is an alternative to calorific value.
Carbon residue: - Carbon residue test gives an indication

of the amount of carbon that would form when the oil is pyrolysed and burned
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Specifications
Color: - Two types of tests are applicable for petroleum products 1. Say

bolt color and 2. ASTM color. Saybolt test is used for while oils like kerosene, naptha, MTO, etc., the ASTM is used for diesel, vacuum distillation, etc., The color gives indication of the degree of refining or contamination with foreign bodies.

BMCI (Bureau of Mines correlation Index):- It is an indication of

predominant nature of Hydrocarbons in a product. All normal paraffins have BMCI zero or less than zero.
BMCI = (48640 / K) + (473.7 * G) 456.8 Where, K = 50% Boiling Point in o K G = Specific Gravity @ 20 0 / 4o C

A high BMCI indicates predominantly paraffinic nature. And BMCI

more than 100 indicates presence of condensed rings. BMCI of some hybrocarbons N-Paraffins 0 , Iso Paraffins <15, Cyclohexane 50 and Benzene 99
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Specifications
Bromine Number: - It is defined as the grams of

bromine that react with 100 grams of the sample. Bromine number gives the olefinity of the sample.
Benzene content: - This is used for motor gasoline. Benzene is carcinogenic. Its limit in MS is recognized by all nations. The specification for benzene in India is 5%v for general supplies and 1%v max for supplies to NCR.

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Specifications
KUOP It is a measure of parafinity vis--vis aromaticity of

crude. High KUOP is desired for high conversion in FCC, aromatic molecules cannot be cracked in FCC. They will simply take a ride through the plant. KUOP : Cube root of average boiling point(R) divided by specific gravity Hydro carbon Classification based on KUOP factor Paraffinic : >12.1 Mixed based : 12.1 - 11.5 Naphthenic :<11.5
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Specifications
Crude Assay A crude oil assay is essentially the chemical evaluation of crude oil

feedstock by petroleum testing laboratories. Each crude oil type has unique molecular, chemical characteristics. No crude oil type is identical and there are crucial differences in crude oil quality. The results of crude oil assay testing provide extensive detailed hydrocarbon analysis data for refiners, oil traders and producers. Assay data help refineries determine if a crude oil feedstock is compatible for a particular petroleum refinery or if the crude oil could cause yield, quality, production, environmental and other problems.
can include crude oil characterization of whole crude oils and the various boiling range fractions produced from physical or simulated distillation by various procedures. Information obtained from the petroleum assay is used for detailed refinery engineering and client marketing purposes. Feedstock assay data are an important tool in the refining process. Without crude evaluations, there is potential for loss in crude investments and/or disruptions in the refining process leading to revenue and production loss affecting the customers business.
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The assay can be an inspection assay or comprehensive assay. Testing

Specifications
Crude

assay includes characterization, and determination of boiling/freezing fractions through physical distillation. Some important results obtained are sulfur content, nitrogen content, viscosity measures, metal content and cold property measures. However, a detailed hydrocarbon analysis is of primary importance to clients. Each type of Crude oil differs in properties, this increases complexity and difficulty of crude oil assays. Usually, crude oil assay are presented on a variety of formats and differ in evaluation approach used.
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Specifications
The importance of evaluation report lies in the fact that

for every petroleum product there is only one type of crude oil suitable. This means that refinery owners and oil producers need this information for production and processing purposes. There are many laboratories all over the world, which provide this facility. However, a few high tech, famous laboratories maintain major clientage. Crude oil assays are a very complicated yet important process. It requires expertise and experience to do this job efficiently. Even a slightest mistake is unforgiving and this is why, only a few laboratories and experts have maintained their positions in the market. For a consumer crude oil assay might seem unimportant; but in reality they indirectly influence our lives too.
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Specifications
Methods for determination of salt content

Analysis of the Salt (chloride) content of crude oil is important because this allows the oil to be evaluated for potential to corrode equipment and pipelines. Salt measurements are taken along the supply line from well head to Refinery; rapid sample determination allows prompt corrective action when unacceptable levels of salt are present.

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Specifications
Salt is not desirable in the refining plant due to formation of

deposits on the equipment / vessel walls, and also corrosion of equipment / vessel walls. The salts that are most frequently present in crude oil are calcium, sodium and magnesium chlorides. If these compounds are not removed from the oil several problems arise in the refining process. The high temperatures that occur downstream in the process could cause water hydrolysis, which in turn allows the formation of corrosive hydrochloric acid. Sand, silts and salt cause deposits and hence foul heat exchangers. The need to supply heat to vaporize water reduces crude pre-heat capacity. Sodium, arsenic and other metals can poison catalysts. Hence, almost all of the salt content in crude oil is removed using a desalting unit. Salt in crude determination in accordance with ASTM D3230, IP265 and equivalent test methods requires the user to calibrate a suitable meter using standards of known conductivity; only then can measurement of the crude oil sample be taken.
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Specifications
Crude Oil Composition varies widely: By geographical location

Mix of individual wells


Variance of wells with time

Chemical Composition of Crude oil


Carbon 83.0 to 87.0% Hydrogen 10.0 to 14.0 % Sulphur 0.05 to 6.0 % Nitrogen 0.1 to 2.0 %

Oxygen 0.05 to 1.5 %


Metals 0.00 to 0.14 %
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Specifications
PARAFFINIC BASE Waxy, less asphaltic, low sulphur, high pour

NAPHTHENIC BASE
Naphthenic base stocks, less wax, less asphaltic, low pour ASPHALTIC BASE High sulphur, nitrogen, suitable for base oils

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Specifications
Weathering Test: - This is applicable to LPG. It

indicates the amount of non vaporizable matter in LPG.


See Indian Product Specifications in file. Note that ATF is only a superior form of kerosene made by mixing some additives in kerosene, the only main difference lies in the lower freezing point of ATF (-47 deg. C) compared to that of Kerosene (-30 deg. C).
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A Few Important Discussions


Reid vapour pressure (RVP) is a common measure of

the volatility of gasoline. It is defined as the absolute vapour pressure exerted by a liquid at 100 F (37.8 C) as determined by the test method ASTM-D-323. The test method applies to volatile crude oil and volatile nonviscous petroleum liquids, except liquified petroleum gases. function and operation of gasoline powered, especially carburetted, vehicles. High levels of vaporization are desirable for winter starting and operation and lower levels are desirable in avoiding vapour lock during summer heat. Fuel cannot be pumped when there is vapour in the fuel line (summer) and winter starting will be more difficult when liquid gasoline in the combustion chambers has not vaporized. Thus, oil refineries manipulate the Reid Vapour Pressure seasonally specifically to maintain gasoline engine reliability.
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The matter of vapor pressure is important relating to the

A Few Important Discussions


TAN

TAN is actually Total Acid Number. It is a measure of Naphthenic Acid (NA) contents in crude. This leads to corrosion in various sections of the unit. Over 1,500 known NA species are present in crude. All naphthenic acids are not corrosive. Latest research indicates that TAN is not a complete Corrosion Index. TAN with 2.5 may corrode at higher rate than TAN with say 6. Detailed metallurgical reviews and monitoring mechanisms must be put in place.
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A Few Important Discussions


Gross Refining Margin ANS: It is the difference between the total value of

petroleum products and price of crude. the difference in dollars per barrel between its product revenue (sum of barrels of each product multiplied by the price of each product) and the cost of raw materials (primarily crude, but also purchased additives like butane and ethanol). For example, if a refinery receives $80 from the sale of the products refined from a barrel of crude oil that costs $70/bbl, then the Refinery Gross Margin is $10/bbl. The Net or Cash Margin is equal to the gross margin minus the operating costs (excluding income taxes, depreciation and financial charges). Continuing the example, if a refinery experiences operating costs of $2 per barrel, then the Net Margin is $8/bbl.
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A Few Important Discussions


Net Margin = Gross Refining Margin Operating

Cost
Any refinery project obeys the following basic

structure and hence, the operating cost of the refinery also comes from these areas.

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A Few Important Discussions

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A Few Important Discussions


Net back estimation The estimated realisation is

calculated on the basis of expected yield from a particular refinery for a specific crude.

Find out the operating cost of a refinery if the Net back estimation is Rs. 200 crore, crude cost is Rs. 80 crore and the net margin is Rs. 5 crore.

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A Few Important Discussions


We know, Net Margin = GRM Operating Cost

&
GRM = Expected value of products i.e. net back

estimate Crude Cost


So, Net Margin = Net Back Estimate Crude Cost

Operating Cost
Or, 5 = 200 80 Operating Cost

Or, Operating Cost = 115 crore.

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A Few Important Discussions


Crude oil received from ports or warehouses

are accounted on FIFO (First In First Out) basis.


Crude oil only attracts the basic customs

duty, other imported items attract additional customs duty.

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A Few Important Discussions


The additional duty of customs levied under the

Central Excise Tariff Act are allowed to be set-off as duty credit by the refineries under the Cenvat Credit Scheme of central excise.
During discharge of excise duty obligations arising

on the removal of finished petroleum products from the refineries on duty paid basis, the refineries use this accumulated cenvat credit in lieu of cash payment.

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A Few Important Discussions


Q: When is it desirable to

export/import any product based on custom/excise duties prevailing?

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A Few Important Discussions


A: When accumulated cenvat

credit is sufficient so as to pay in lieu of cash & when specific concessional notifications are issued by govt.

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Significance of bonded warehouse: Actually it is customs bonded warehouse. The bonded

warehouse acts as customs agent. Party can take out part of his consignment by paying part duty & rent to the bonded warehouse who will pay the duty to customs. So the party gets the benefit of not paying the whole duty at once.
Also stored goods from a bonded warehouse can

exported back to supplier but under some conditions.


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The term "off-sites" refers to equipment and facilities

that support the processing units and utilities plant and can be broken down as follows: Cooling Water Plant. Tank Farm, Waste Water Treatment, Fire Water System, Sulphur and Coke Handling, and Flares.
COOLING WATER PLANT Cooling requirements of the process plants are

accomplished by using cooling water to remove the heat from the equipment in cooling jackets or coils. The warm water is then collected and returned to a cooling tower where direct contact with air transfers the heat to the air which is discharged to the atmosphere. The cool water from the cooling tower is then pumped back to the equipment to complete the cycle.
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REFINERY TANKAGE / TANK FARMS Tanks are required in refineries for storage of crude, blend stocks, and products for shipping. Tanks are also required as charge tanks for many

secondary processing units. In a refinery, the cost of tanks alone roughly equals that of all the process units in it. From an operational point of view, refinery tankage can be divided into the following categories: crude storage tanks, charge tanks for secondary processing units, base stock or component storage tanks for product blending, and shipping tanks.
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SHIPPING TERMINALS AND SEA LINES

Blended products are stored in shipping tanks away from the process area. From shipping tanks, the products are pumped by high-capacity shipping pumps through dedicated sea lines to loading arms at the piers and finally by hoses to individual tankers. The terminal product transfer lines sizes and pumping capacities are designed to achieve the required loading rates for different product groups.

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REFINERY FLARE SYSTEM Flaring is used as an effective and safe method of hydrocarbon vapor

disposal whenever excess hydrocarbons must be controlled due to equipment failure or major emergencies, such as instrument malfunction, power failure, or plant fire. Before the utilization of flares, the gaseous waste streams were vented directly to atmosphere. This created two problems. The first is personnel and neighborhood safety. There was always the possibility of combustible vapor reaching the ground in sufficient concentration to be ignited. The result would be an explosion and fire, with devastating consequences for the operating personnel. The second problem was that the hydrocarbon discharges produced a major strain on the environment, and their emissions had to be controlled. Flaring provided a good solution to these problems but not without its own problems of heat, smoke, light, and noise. By burning the hydrocarbon vapor, the pollutants are converted to safe, less-noxious components: carbon dioxide and water vapor. The combustion process, however, generates a lot of heat, and thermal radiation from the flame must be reduced to levels safe for nearby operating personnel and equipment.

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FLARE SYSTEM DESIGN The flare system is designed to provide safe receipt and disposal

of combustible, toxic gases and vapors released from process equipment during normal operation and during upset conditions. The safe disposal is achieved by knocking down the heavy ends and condensables in the flare knockout drum and burning the gases through an elevated stack. A controlled amount of steam is used to ensure smokeless burning and easy dispersion of combustion products. The process helps maintain an acceptable level of pollution at ground level. A flare facility, particularly the flare burner, must have a stable flame capable of burning the hydrocarbon vapor released during a major operational failure. Also, the vapor must be sufficiently free from liquid droplets before entering the stack. Smoke is minimized by the injection of steam into the flame. The stack is located remote enough from operating units to provide safety for operating personnel and equipment. The flare system is purged with inert gas to prevent flame flashback.
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REFINERY STEAM SYSTEM Roughly 10% of the crude throughput of the refinery ends up as refinery

fuel. Steam generation alone accounts for about one third of the refinery total fuel consumption. The generation and distribution of steam and electrical power constitute a major part of a refinery's utility system. There are three broad categories of usage of steam in the refineries: 1. Heating loads. These are usually well defined. Included in this category is steam for heat exchangers, re boilers, steam tracings, and off-site and utility plant heating. Variation in feedstock quality and throughput can sometimes result in maximum and minimum loads. 2. "Process" or open steam loads. These loads include fractionators, stripping steam, vacuum jet ejectors, spargers, smokeless flares, fuel atomizing steam, and the like. Included in this category could also be heating steam in remote areas where condensate return is not justified. 3. Power loads. These loads are represented by turbine drivers on pumps, compressors, generators, and so forth. Loads include turbines driven for reasons of reliability, economy, control, emergency coverage, and so on. These can be termed fixed requirements.
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STEAM GENERATION AND DISTRIBUTION Steam for refinery use can be generated from one or more of

these following sources: fired steam or unfired steam generators, turbine exhaust or extraction. The steam system consists of steam generators and a distribution network at different pressure levels for process and utility requirements. The feed is a mixture of condensate and de-mineralized water which is deaerated before being fed to the boilers. The product is high-pressure steam, typically at 900 psig, depending on the end use of the steam. Many process units, such as hydrogen and sulfur plants, have waste heat boilers; and these also generate high-pressure steam. Only boiler feed water is supplied to these unfired steam generators. The product HP (900 psig) steam is sent to an HP steam header.
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REFINERY FUEL SYSTEM

Heating may be required in the refinery at a number

of places for various process applications and steam generation in its utility plant. Burning fuel provides the necessary heat. The refinery fuel system includes facilities for the collection, preparation, and distribution of fuel to users. The commonly used refinery fuels are fuel oil and gas. On average, for every 100 barrels of crude processed in the refinery, 10 barrels are used as refinery fuel.

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FUEL SELECTION

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Fuel gas and residual fuel are the most commonly used fuels in the refinery. Other refinery products of low monetary value, such as heavy pitch residues,

visbreaker tars, FCCU decanted oil, vacuum tower bottoms from certain crudes, lube extracts, and waxes are also used as fuel in the refinery itself. The majority of these materials would be difficult to blend in a commercial fuel of acceptable specifications because of high viscosity, chemical aggressiveness, high contaminant level (sulfur, metals, etc.), and associated environmental problems in their use. Gaseous streams diverted to the refinery as fuel are those gases that cannot be processed to saleable products economically. These include H2, CH4, C2H6, and frequently C3 and C4 gases. In a refinery of average complexity, approximately two thirds of refinery fuel requirements may come from refinery gases. The rest of the fuel requirement is made up from a natural gas supply, if available, or residual fuel oil produced in the refinery. In many refineries, both gaseous and liquid fuels are used simultaneously. Furnaces and boilers are equipped with combination burners, suitable for both gas and oil firing. Exceptions to this are certain refinery units, such as cat reforming, where only gas firing is permissible because of the need for precise temperature control. Furnaces that are operated when no gaseous fuel is available as during refinery startup must be equipped with oil burning capability.
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REFINERY FUEL OIL SYSTEM The purpose of refinery fuel oil system is to ensure a constant, regular

supply of oil to burners of steam boilers and to process furnaces. The system includes facilities for storage, pumping, heating, and distribution of oil at suitable pressure and viscosities so that the atomization and burning of oil is possible. The aim of the fuel oil system design is that operational changes to one furnace will not cause fluctuation of supply to another portion of the refinery.
least 5 days supply at normal firing rate of the furnaces and boilers, which are usually oil fired. This may require one or more tanks for storage. If the refinery fuel is obtained from more than one source, it may be necessary to store the blended material, too, and so more than one tank may be required. It is often possible to line blend the various fuel components as these leave their units without the need for intermediate storage. Precise blending control is not required.

Storage is an essential need, which must be met with availability of at

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REFINERY FUEL GAS SYSTEM The refinery fuel gas system is designed to supply fuel gas to steam

boilers, process furnaces, gas engines, and gas turbines at a regulated pressure and reasonably constant heating value. The system includes mixing drum controls and distribution piping. Wherever necessary, a stand by storage of liquefied petroleum gas (LPG) is included.
for delivery of gas at burners approximately 15-20 psig. For refineries with an operating gas turbine, the drum pressure is much higher, at 125 psig. The mixing vessel is fitted with mixing baffles and a steam coil for vaporizing any liquid carryover or LP gases. Refinery gas burners are designed for a particular heating value and gas density. The composition of gas to the gas mixing drum is so adjusted that large changes in calorific value or density of gas to various refinery furnaces are avoided. For example, it may not be possible to replace refinery gases with high calorific value and density totally with natural gas with lower calorific value and density without affecting performance of the furnaces using them.
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The mixing gas drum is typically operated at 30 to 40 psig, which allows

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WASTE WATER TREATMENT In compliance with environmental standards and to recover water

contaminated by solids or oil, potentially contaminated water is directed to waste water treatment. Settling, filtration, floatation and biological treatment are methods used to separate and re-use water and hydrocarbon products, render all solid products sate for disposal and keep liquid waste disposal to a minimum. Oily solids are disposed of in the delayed coking unit, biodegradable solids by land farm, and liquid waste (water containing high levels of dissolved solids) by deep well injection.

FIRE WATER SYSTEMS Underground fire water piping system supplies strategically

positioned hydrants and monitors throughout the site. The distribution system is fed by a combination of electric and diesel driven pumps situated at two separate water ponds.

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For Today, Thats All Folks!

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