Transcript clean fuels upgrade at P-a-P

CLEAN FUELS UPGRADE at PETROTRIN’S
POINTE- A-PIERRE REFINERY
Mendoza, Argentina
October 31, 2006
Steve Hilaire
1
OUTLINE









Introduction
Business Background
Scope
Economics
Capital Expenditure
Results & Benefits
Project Risks
Status
Financing Template
2
LOCATION MAP OF TRINIDAD
90 W
80 W
70 W
60 W
INSET
N
TOBAGO
Caribbean Sea
Gulf
of
Paria
30 N
ID A
OR
FL
TRINIDAD
Columbus
Atlantic
Ocean
30 N
Channel
Gulf of Mexico
Atlantic Ocean
20 N
ME
YU
WE
ST
CUB
A
N
TA
CA
IN
DI
ES
20 N
XIC
O
JAMAICA
HISPANIOLA
PUERTO
RICO
GUATEMALA
HONDURAS
EL
SALVADOR
NICARAGUA
Caribbean Sea
SEE INSET
COSTA
RICA
10 N
TOBAGO
TRINIDAD
PANAMA
COLOMBIA
90 W
80 W
10 N
VENEZUELA
70 W
60 W
Geostar1-lmot.cdr-1996
3
Introduction – About Trinidad & Tobago




Access to emerging & developed
markets
Highly skilled and trained workforce
Stable economic/political environment
Global leader in



Export of Methanol
Export of Ammonia
Export of LNG to USA
4
Introduction – PETROTRIN History










1917:
1940/41:
1952:
1956:
1958:
1960/62:
1964/66:
1972:
1985:
1992/96:
Commence Operations of P-a-P Refinery
Eastern Refinery Established
FCCU Installed
Acquisition by Texaco
No 1 CRU – Gasoline Upgrade & BTX
No 8 CDU, No 1 HTU, No 2 CRU
Lube Oil & Normal Paraffins
No 4 VDU & No 2 HTU –Fuel Oil Desulf
Acquisition by State
Refinery Upgrade – Phase 1





Increased Conversion & Full Refining Capacity
Partial Revamp of FCCU
Rehab of No 2 HTU, No 2 CRU,
New Units: VBU, Hydrogen, Sulfur, MTBE
DCS Controls
5
Introduction – PETROTRIN OVERVIEW



Fully State-owned
Commercially operated
Integrated
 Exploration
 Production
 Refining
 Marketing
6
Introduction – Crude Oil Supply




Crude capacity – 168 MBPCD
Current conversion capacity 150 MBPD
Local crude 40 – 45 % (low cetane gas oil)
Imported crudes





Venezuela
Brazil
Columbia
Ecuador
West Africa (high cetane)
7
Introduction – Product Supply

Markets





Local 100 %
Regional 75 %
Extra regional 5 %
International
-
18% of Volume
30% of Volume
20% of Volume
32% of Volume
Approx 10 % volume- unfinished/low value products



CRU naphtha
Low octane mogas
FCCU feed (VGO)
8
Introduction: Operational Performance – R&M
Performance Factors
Market Price
Sales
Revenue
Mix +
Volumes
Direct Cost
Financial
Performance
OPEX
Profitability
Other
Cash Flow
ROACE
Sustaining
CAPEX
Growth
Petrotrin is highly sensitive to
market price because it is a
merchant refiner
High fuel oil cut & low value
products reduces profits
Lacks clean fuels capacity
High unit operating costs
compared to peers
Indigenous crude only
supplies 40% of needs
High spend on maintaining
competitiveness of old
infrastructure
Project delays / deferrals have
led to missed opportunities
There are multiple areas where changes could improve future financial performance
9
Introduction: Operational Performance – R&M
Current and Planned R&M Improvement Initiatives
Market Price
Sales
Revenue
Mix + Volumes
Direct Cost
Performance
OPEX
Profitability
Other
Cash Flow
ROACE
Sustaining
CAPEX
Growth
Clean fuels upgrade – in progress
Bottom of Barrel Upgrade
(conceptual stage)
Refinery business improvement
project (SGSI)
E&P oil winning projects (halt
production decline)
Infrastructure upgrade (planning
stage)
Gasoline upgrade (implementation
stage)
A mixture of upgrades and operational changes to improve performance
10
BUSINESS BACKGROUND – Driving Forces

Gasoline Optimisation Program

Equipment Integrity



Sale of Unfinished Low Value Product




No 1 CRU: 3 of 4 Rxs Changed – Expect 3 years Max
No 2 CRU: Remaining Life Estimated at 6 – 8 years
Reformer Feed
Low Octane Gasoline
VGO as FCCU Feed
Tighter Specifications




Elimination of Lead & MTBE– Octane & Volume Loss
Lower Benzene, Sulfur, Olefins and RVP
Increased Octane Demand
Shortfall of Premium Gasoline to some markets
11
BUSINESS BACKGROUND
– Driving Forces (Cont’d)

Tighter Diesel Specifications




Sulfur Reduction
Cetane Increase
Decrease in aromatics
Phase II - BOB Upgrade


High Fuel percent of Product Sales
Shrinking Fuel Oil Market
12
BUSINESS BACKGROUND
– Options
1.
Discontinue Refining Operations

2.
New refinery

3.
Huge economic impact on country and South in particular.
Grassroots facility US$3-4 Bn
Upgrade Current refinery

Performance and Technology
13
Scope Identified

Gasoline Optimisation Program

FCCU: Upgrade



Pre-Fractionation



Capacity from 26,000 BPSD to 35,000 BPSD
Product Octane from 81 MON to 83 MON
Remove Benzene from CRU feed
Provide feed for Isomerisation
Isomerisation


New 7,400 BPSD using C5/C6 Naphtha Feed
Improve Octane from 70 MON to 80 MON
14
PROGRAM SCOPE (Cont’d)

CCR Platformer



Alkylation




Replace Fixed Bed Platformers
Improve product Octane from 86 MON to 90 MON
New using C3/C4 ex FCCU
New Acid Regen Plant
Optimize LPG Production
Offsites & Utilities





New Boiler & Water Treating
Tanks, Transfer Systems
Power Supply
Control equipment
Flare System
15
PROGRAM SCOPE (Cont’d)

New ULSD Hydrogenator




35,000 BPSD unit
8 – 9 point cetane lift
< 25% aromatics
8 ppm S
16
Economics & Approval

LP model Runs

Delta economics




Capex Estimates



Base case vs enhanced
Price/markets scenario forecast
Optimum configuration determined
Published/licensor data
Inflated for time/location/experience
Economics developed




Increased margin
DCFROR
NPV
Payback
17
Economics & Approval



Income statement/Cash Flows
generated
Sensitivity/ Risk Analyses developed
Approval Process



Executive management
Board
Shareholder - Cabinet
18
CAPITAL EXPENDITURE


New Units ISBL
OSBL, Project Mgmt
Other
630 MM
TOTAL (2006)
800 MM
ORIGINAL ESTIMATE
(2005)
650 MM
170 MM
19
PROGRAM BENEFITS

Gasoline Optimisation Program

Increase Gasoline Quantity



Improve Gasoline Quality




Total from 24% to 30%
Eliminate Unfinished Products (Naphtha & VGO)
Increase MON from 83 to 86
Reduce Benzene from 1.6% to 0.7%
Reduce sulphur fron 41 ppm to 8 ppm
Customer Satisfaction


Lower Olefins in LPG
Ability to eliminate MTBE
20
PROGRAM BENEFITS (Cont’d)

ULSD HTU

Improve Gas Oil Quality



Improved Operations of the P-a-P Refinery




Increase Pool Cetane
Reduce Aromatics/ Pool Sulfur
Energy Efficiency & Environmental Compliance
Increase full refining capacity to 168 MBPCD
Ability to process sour, low cetane crudes
Petrocaribe (New)


Products displaced from regional market
Improved Quality can be marketed elsewhere
21
COUNTRY BENEFITS

Local Content:20% or US$ 160 million






Maximize local sub contractors
Offsite Works by Petrotrin
Construction Labor:
14million hours
Peak Site Labor: 2,800
Corp Tax / UL:
US$ 375 million
Sustained Operations of P-a-P Refinery


Security of Fuel Supply / Prices
Economic Activity
22
PROJECT RISKS

Market / Product Pricing


Capital Cost Overrun



Delay in Tighter Specs / Conservative Prices Used
Scope of Work
EPC Contracts – Hybrid vs Lump Sum
Schedule Delays




Statutory Approval
Experienced EPC Contractors
Industrial relations problems
Skilled sub-contractor labour
23
PROJECT RISKS

Technology:


Environmental:



Well Proven / State-of –the Art
No new type of effluent
Refinery systems (current and proposed)
adequate
Funding:

Current Market Conditions Ideal for Loan
24
Status

Pre Frac/Isomerization




FCCU upgrade



Discussions on EPC award – Hybrid contract
Project completion date April 2008
CCR Platformer



EPC awarded
Piling commenced
Commercial production Dec 2007
EPC Negotiations complete
ETC December 2008
Alky / Acid

Hybrid contract


Lump sum for services
Re imbursable for Equipment/materials
25
Status – Points to Note






Get Project Manager on board early.
Licensor estimates normally low.
Don’t forget infrastructure and services
Industry quite busy – Innovative bid
requests required.
Fast track procurement on long lead
items
Monitoring and control essential
26
GAS OPT PROGRAM- FINANCING PLAN
MAJOR FINANCING OPTIONS
MAJOR OPTION
COMMENTS
Bank Loan
Corporate Bond
Structured Commodity Finance
Pre-export loan
Note: Fixed Rate funding with minimum 10 Year tenor and minimum 2 Year
moratorium is preferred.
27
FINANCING SCHEDULE
TASK
START
DATE
END
DATE
Approvals from Government
Credit Rating Review by Moody’s and Standard & Poors
Approvals from IADB, JBIC, EIB, CDB, MBIA
Engagement of Financial Advisor
Expressions of Interest from, and short-listing of financial
institutions
Tendering, Selection & engagement of placement
institution
Engagement of Lawyer
Loan Sourcing, Negotiation and Conclusion
28
Muchas Gracias
29