Transcript Document 7510807

The Role of Innovation in US Gulf
Coast Competitiveness
The Future of the Gulf Coast
Petrochemical Industry
Global Energy Management Institute
University of Houston
April 29, 2005
James H. D’Auria
UOP LLC
Agenda
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

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
The competitiveness gap
Potential for technology innovations to
improve competitiveness
Key technology innovations
Examples of options for the USGC
The integration conundrum
Final thoughts
The USGC Cost of Production Gap:
Ethylene Example
North American Ethane Crackers
Have Become the High Cost Producers
How Can Technology Innovation Help?

Technology can be developed to:
– Make use of lower cost and/or unique
feedstocks
– Create feedstock or product flexibility
—Hedge
—Reduce volatility
– Reduce required capital investment
– Make existing assets more efficient
Competitive
advantage
– Integrate existing
assetsis
togained
increase
whenefficiency
technology innovations are
– Improve
quality
linked
withproduct
the right
market or
business circumstances
Alternative Feedstocks to Consider

Low Value Refinery/Cracker Streams
–
–
–
–
–

Light Gases
By Product Olefins
Pentanes
Light Cycle Oil
Resid
Basis for US Industry Advantage:
Remote Gas
 Coal ?
 Biomass ???
• GC Refining Concentration
• Atlantic Basin Stranded Gas
• Coal Reserves
• Biomass potential
Key Technology Innovations

Use of Alternative feedstocks
– Stranded Gas to Olefins/Polymers
— “Mega-Methanol” Plants
— Methanol to Olefins
– Clean Coal

Refinery- Petrochemical integration
–
–
–
–

Petrochemicals from FCC
Olefins Conversion
LCO Conversion
Naphtha optimization
Longer term Breakthrough Technologies
Methanol/MTO Economies of Scale
Methanol Price Required for
Target IRR
Constant IRR
MeOH Plant
MTO Plant
0
2,500
5,000
7,500
10,000
Methanol Capacity, MT/d
Mega Methanol Plants Enable Gas to Olefins Projects
Lt Olefins Cash Cost of
Production, $/MT
MTO on the USGC
$800
$600
$400
$200
$0
$20
$30
$40
$50
Crude Oil Price, $/BBL
US EP Cracker
Naphtha Cracker
ME Ethane Cracker
Lt Olefins Cash Cost of
Production, $/MT
MTO on the USGC
$800
$600
$400
$200
$0
$20
$30
$40
$50
Crude Oil Price, $/BBL
US EP Cracker
Naphtha Cracker
MTO*
MTO**
ME Ethane Cracker
* Based on $85/MT methanol from Atlantic Basin Stranded Gas
** Based on $100/MT methanol
USGC MTO Becomes Attractive At High Oil Prices
Coal
Clean Coal Technology
Gasification
Synthesis Gas
Methanol
Alternative Gasification
Feedstocks:
Petroleum coke
Resid
bio-residue
Power
F-T Liquids
Steam, H2
Chemicals
Coal to Olefins in the US
Cash Cost of Production, $/MT
Ethylene
(@ $40/BBL Crude)
$600
$500
$400
$300
$200
$100
* Based on correlation
of ’97-’05 CMAI data:
weighted avg. feedstock
$0
Historic US Avg*
CTO**
ME Ethane
** Assumes $125/MT
methanol from coal
High Oil Prices Improve Attractiveness of Coal To Olefins
Key Technology Innovations

Use of Alternative feedstocks
– Stranded Gas to Olefins/Polymers
– “Mega-Methanol” Plants
– Methanol to Olefins
– Clean Coal

Refinery- Petrochemical integration
– Petrochemicals from FCC
– Olefins Conversion
– LCO Conversion
– Naphtha optimization

Longer term Breakthrough Technologies
Propylene from Refineries
Crude
Column
C4 and Lighter
PRU
Propylene
Straight Run Gasoline
Fuel Gas
Kerosene
LPG
AGO
Crude
Oil
FCC
Downstream
Processing
VGO
Gasoline
Diesel
Vacuum
Column
Vacuum Residue
Heavy
Fuel Oil
Refinery FCC is an Important Source of Propylene
UOP 4288K-4
Petrochemicals from FCC
Propylene Yield
PetroFCC
20 + wt%
Enhanced
Propylene
5 – 7 wt%
Max. Gasoline
3 - 5 wt%
Gasoline
C3=
High-Severity
FCC
10 -16 wt%
C2=
C2=
C3=
Aromatics
C3 =
Gasoline
Gasoline
Unit Design and Operation
Challenge: Manage Across Traditional Boundaries
UOP 4399A-7
Olefins Conversion Technology
Naphtha
Naphtha Crackers
Furnace
Product
Recovery
C4/C5
Olefins
C5/C6
Paraffin-Rich
Olefin
Cracking
C2
=
Refineries
Gas
Oils
Gasoline
Cycle Oils
FCC
FCC
C2=
C3=
C3=
C4-C8
Olefin
Cracking
Olefin
Olefin
Recovery
LPG
Light
Olefins
• Metathesis: Converts ethylene + C4 olefins to propylene
• Olefin Cracking: Converts C4 – C8 olefin streams to propylene + ethylene
• Utilize USGC refinery & liquid cracker capacity
UOP 4399A-22
Ring Opening to Upgrade LCO

New catalysis selectively
opens rings to upgrade Light
Cycle Oil to produce:
– Clean fuels
– BTX Aromatics
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Environmental Benefits:
LCO
LCO Ring
Opening
ULSD
Petrochemicals
High Octane
Gasoline
– Reduces HSFO production
– ULS Diesel co-product
– ULS Gasoline co-product
USGC Opportunity: Pool LCO Streams
UOP 4288A-18
Naphtha Optimization
C5-C11 n-paraffins
Full
Range
Naphtha

Ethylene yield 30%
higher than with
conventional naphtha
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Same propylene yield
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Increased octanebarrel production
Naphtha
Cracker
Iso/normal
separation
C7+
Catalytic
Reformer
• Economic value of ~ $30 MM/year
• Requires close integration of olefins & gasoline production
UOP 3994J-10
The Integration Conundrum

Concentration of refining capacity in USGC
provides basis for competitive advantage
 Technology innovations that cross traditional
boundaries can create economic value and
cost advantage - “On Paper”
 Barriers to integration are many:
– Increasing complexity/Limiting flexibility
– Conflicting objectives
– Mixing
cultures enablers
Need todisparate
develop integration
– Difficult
technical
issues practices
•Business
management
•Advanced
process
technology
– Diffusing
business
focus
(What business
•Information
technology
are we
in?)
Longer Term Technology Outlook
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
Continuing investments are needed to develop
new chemistries
Example areas of focus:
– Catalytic Naphtha Cracking
– Paraffin Activation
— Ethane + Benzene to EB
— Direct Propane to PO, CAN, Acrylic Acid
— Pentanes to Higher Value Chemicals
– Direct Methane to Methanol
– Renewables as Feedstocks (carbohydrates,
biomass)
The Role of Technology:

Final Thoughts
Technologies are available today to take advantage of
lower cost feeds
– Remote gas, coal, refinery by-products

Future technology advances will continue to come via
process engineering & catalysis innovations
 New technology needs to be matched with the right
situations to provide a competitive advantage. For
USGC:
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Integration with refining, power
Ability to increase propylene production
Pooling of by-product streams
Access to Atlantic basis remote gas, US coal
Can we improve the risk-reward balance?
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Cost to develop & commercialize new technology
First user risks & rewards
Government regulations & incentives
Market uncertainties
THANK YOU