Driving Octane in an Ultra‐Low Sulfur Gasoline Market

Driving Octane in an Ultra‐Low Sulfur Gasoline Market

A recent survey, illustrates how North America refiners are meeting the Tier 3 regulations. The majority of refiners are meeting the regulations by increasing hydrotreating severity either with pre-treating FCC feed or post-treating FCC naphtha. This option increases the refinery H2 consumption and reduces the run length of these hydrotreaters. For some refiners, pre-treating FCC feed is still not sufficient and can sometimes present a heat balance challenge for the FCC unit. While post-treating is effective for reducing the sulfur content, it saturates aromatics and olefins resulting in octane loss in the FCC naphtha. This can be exacerbated at refineries that consume an increased diet of shale‐derived crudes, which are naturally light and produce low sulfur, but also low octane, gasoline This paper examines case studies to highlight a few different options around the FCC units for maximizing overall refinery octane: Case 1) Feed and operational changes to maximize LPG olefins to Alkylation Unit and improve octane; Case 2) Undercutting FCC naphtha to reduce post-treat requirement and improve octane; Case 3) Catalytic solution to maximize LPG olefins to Alkylation Unit and improve octane; Case 4) Additives to boost LPG olefins to Alkylation Unit and improve octane; Case 5) Gasoline Sulfur Reduction (GSR®) Technology to reduce post-treat requirement and preserve octane ; and Case 6) Combining multiple approaches. Source: Grace Catalagram, Fall 2017, p.8.

Image: Industry Survey on Meeting Tier 3 Regulations

TCGR Note: Interestingly, the demand for 93 octane has risen from 7.8% back to 11.3% market share since 2008 in the U.S. (EIA). To meet CAFÉ (mileage) standards, has been for automobile have to use smaller turbocharged gasoline engines. Each refiners solution will likely be site specific but the two (2) best options are using could be a butylene C4= specific FCC catalyst to boost alkylation production and additives such as Grace’s D-Prism to reduce sulfur.

World Energy Outlook 2017

Four large-scale shifts in the global energy system set the scene for the World Energy Outlook 2017: the rapid deployment and falling costs of clean energy technologies, the growing electrification of energy, the shift to a more services-oriented economy and a cleaner energy mix in China, and the resilience of shale gas and tight oil in the United States. These shifts come at a time when traditional distinctions between energy producers and consumers are being blurred and a new group of major developing countries, led by India, moves towards centre stage. How these developments play out and interact is the story of this year’s Outlook. With the US accounting for 80% of the increase in global oil supply to 2025 and maintaining near-term downward pressure on prices, the world’s consumers are not yet ready to say goodbye to the era of oil. Up until the mid-2020s demand growth remains robust in the New Policies Scenario, but slows markedly thereafter as greater efficiency and fuel switching bring down oil use for passenger vehicles (even though the global car fleet doubles from today to reach 2 billion by 2040). Powerful impetus from other sectors is enough to keep oil demand on a rising trajectory to 105 mb/d by 2040: oil use to produce petrochemicals is the largest source of growth, closely followed by rising consumption for trucks (fuel-efficiency policies cover 80% of global car sales today, but only 50% of global truck sales), for aviation and for shipping. Once US tight oil plateaus in the late 2020s and non-OPEC production as a whole falls back, the market becomes increasingly reliant on the Middle East to balance the market. There is a continued large-scale need for investment to develop a total of 670 billion barrels of new resources to 2040, mostly to make up for declines at existing fields rather than to meet the increase in demand. Even greater upside for US tight oil and a more rapid switch to electric cars would keep oil prices lower for longer. We explore this possibility in a low oil price case, in which a doubling of the estimate for tight oil resources, to more than 200 billion barrels, boosts US supply and more widespread application of digital technologies helps to keep a lid on upstream costs around the globe. Source: International Energy Agency (IEA), 11/14/2017.

TCGR Note: In general, TCG/TCGR agrees with the trend factors surrounding IEA’s analyses. However, as well as with all forward looking analyses the devil is in the details of the assumptions used. For instance, the rate of EV/hybrid penetration into the transportation sector will have a large influence on the supply/demand picture. Will 900 million electric cars be sold by 2040? For more information on how these trends will shape the catalysis industry in the medium-term, look for the 17th Biennial Edition of “The Intelligence Report: Business Shifts in the Global Catalytic Process Industries, 2017-2023.”

More U.S. Distillate is Being Exported

U.S. distillate exports have continued to increase in 2017, both in volume and as a share of total distillate production. Domestic distillate demand has remained relatively stable, increasing slightly from January through July 2017. Distillate exports from the U.S. reached a record high in July 2017 of 1.7 million barrels per day (b/d). Based on data through August, distillate exports have accounted for 28% of the total distillate produced in the United States in 2017. U.S. distillate exports in 2017 have been destined primarily for countries in Central and South America, Europe, and North America. In addition to increased export demand, the difference between distillate prices and crude oil prices encouraged relatively high refinery runs. The largest single recipient of U.S. distillate exports from January through July 2017 was Mexico (228,000 b/d), followed by Brazil (183,000 b/d) and the Netherlands (102,000 b/d). Source: U.S. Energy Information Administration (EIA), 11/7/2017.

Saudi Aramco Sees Progress on Chemical Project Plan with SABIC by Year-End

Saudi Aramco expects to decide by the end of 2017 on plans for a joint oil-to-chemicals project with Saudi Basic Industries Corp (SABIC), according to Saudi Aramco Chief Executive Officer Amin Nasser. The project, known as COTC, is a key to plans for a chemicals complex costing $20 billion or more. It is the first major scheme involving the two state giants. “We finished the feasibility. We are at a stage where we need to work together and make some decision about proceeding with the project with SABIC,” said Nasser. He added that a decision was expected “before the year-end”. Source: Reuters, 10/24/2017.

TCGR Note: The topic of “oil-to-chemicals” is a hot subject area within industry today. The trends supporting the notion that chemical plants do not need to run a refinery naphtha feedstock are growing and include, but are not limited to, the fact that the world is awash with light crude oil and condensates that can more easily be converted into chemicals and crude oil is, and likely will continue to be, relatively cheap. Also, direct ethane cracking to ethylene is even more common, which changes the dynamic, and there are new or adapted catalytic process technologies that can now swing from 60 wt% olefins to 60 wt% aromatics that make crude to chemicals production more attractive. For more information, see TCGR’s multi-client study entitled “Oil-to-Chemicals: Technological Approaches and Advanced Process Configurations”.


Major Boost for On-Purpose Propylene

A new catalytic process from Dow Chemical will increase the efficiency of transforming shale gas-derived propane to propylene, satisfying a much-needed market. The Dow-developed fluidized catalytic dehydrogenation (FCDh) technology selectively produces propylene from shale gas feedstocks. The design uses robust reactor/catalyst regenerator technology that allows the process to scale as needed. The design prompts more than 20% capital savings versus alternative commercial processes, while reducing energy requirements per pound of propylene produced, resulting in lower CO2 emissions. Propane dehydrogenation (PDH) chemistry is endothermic and heat must be applied to drive the conversion. “We applied a concept of using the catalyst to carry heat to the reactor,” comments Matt Pretz, one of Dow’s principal FCDh technology developers. “This approach really improves the energy efficiency, but makes very little coke. To satisfy the required energy balance in FCDh, we use the catalyst to independently control the reactor temperature and add supplemental fuel to the regenerator.” Existing PDH technologies slowly move deactivating catalysts between reactors and a regenerator. The FCDh technology takes a very different approach, using more-active catalyst with shorter periods between regenerations. This leads to lower overall capital investment, fewer limitations on increasing scale, higher efficiency and better operability. Frequent catalyst regeneration creates higher effective catalyst activity while in service. FCDh technology is moving toward implementation in Dow hydrocarbon facilities as part of the company’s strategy to strengthen its feedstock flexibility. The company is not only using this technology, but is also commercializing it as part of its growing intellectual property (IP) portfolio – with favourable interest from the market. Dow is now examining opportunities for next generation catalyst and process improvements, with the goal of delivering additional operational benefits. Source: ICIS Chemical Business, 10/13-19/2017, p. 9.

TCGR Note: The new technology from Dow was recently awarded “Best Process Innovation” by ICIS. After validation from its commercial demonstration, the technology may become popular due to the increased feedstock flexibility.

Unwanted Diesel Production Vexes Europe’s Oil Refiners

Oil refiners had pinned their hopes on European diesel as the Continent’s fleet of personal diesel-powered vehicles grew to 45% by 2015, compared with 2% in the U.S., according to the International Energy Agency. Total had poured more than $2.4 billion into diesel-friendly upgrades at its two largest European refineries. Repsol and CEPSA invested $4.76 billion and $2.4 billion, respectively, on similar upgrades and modernization projects. Even independent refiners like Saras that aren’t tied to big oil-exploration companies shelled out hundreds of millions of dollars. However, a backlash against diesel sparked mostly by the Volkswagen AG emissions scandal has upended Europe’s big oil refiners. Sales of diesel vehicles are plummeting. “Diesel was the darling and has become the devil,” said Dario Scaffardi, executive vice president at Saras. To be sure, Europe still remains one of the world’s biggest consumers of diesel. European demand is estimated at 6.4 million barrels a day this year, over a fifth of global diesel consumption, according to the IEA. “Refineries that invested in complexity will have the ability to modify output toward heavier distillates [like marine and jet fuel]. They are well prepared,” said John Cooper, the head of refining industry group Fuel Europe. Switching to shipping fuel or jet fuel is easier for upgraded refineries because they are diesel-related distillates. By pumping out shipping fuel, the refiners can take advantage of new emissions curbs that cut the amount of sulfur allowed to be used in marine fuel starting in 2020. Source: The Wall Street Journal, 9/30/2017, p.B1.

TCGR Note: So where to from here! European refiners are already under intensifying competition from Asian and particularly Middle Eastern refiners. More Russian fuel exports are anticipated in the future. Between 2009 ─ 2016 about two dozen older refineries closed. Recent announcements like banning diesel vehicles from certain cities and increasing diesel taxes in France are now forcing big car makers like BMW, Daimler and even VW to scramble to increase their electric vehicle (EV) programs and Volvo/Geely has even announced all of their production vehicles will be either electric or hybrids by 2022. All of this brings serious revamp questions – more chemicals? For more information, see TCGR’s recently launched multi-client study “Oil-to-Chemicals: Technological Approaches and Advanced Process Configurations”.

EIA Projects 28% Increase in World Energy Use by 2040

The U.S. Energy Information Administration’s latest International Energy Outlook 2017 (IEO2017) projects that world energy consumption will grow by 28% between 2015 and 2040. Most of this growth is expected to come from countries that are not in the Organization for Economic Cooperation and Development (OECD), and especially in countries where demand is driven by strong economic growth, particularly in Asia. Non-OECD Asia (which includes China and India) accounts for more than 60% of the world’s total increase in energy consumption from 2015 through 2040. Although liquid fuels—mostly petroleum-based—remain the largest energy source throughout the IEO2017 projections, the liquids share of world marketed energy consumption is projected to fall slightly, from 33% in 2015 to 31% in 2040. As oil prices rise, energy consumers are expected to turn to more energy-efficient technologies and switch away from liquid fuels where possible. Source: The U.S. Energy Information Administration (EIA), 9/14/2017.

TCGR Note: EIA also released this week on 9/21/17 a report detailing the changing quality mix of crude oil since 2016. This is an important aspect to the growing interest of evaluating more chemicals production within and outside of the refining complex. For more information, see TCGR’s newly launched multi-client study “Oil-to-Chemicals: Technological Approaches and Advanced Process Configurations”.

DowDuPont Alters Split Plans, Shifts $8 Billion in Revenue to Specialty Products

DowDuPont will shift businesses with $8 billion in annual revenue from its planned material science spinoff to the specialty products spinoff as part of a previously announced portfolio review. Businesses moved to specialty products include: Dow automotive systems’ adhesives and fluids platforms; Dow’s building solutions business; Dow’s water and process solutions business; Dow’s pharma and food solutions business; Dow’s microbial control business; DuPont’s performance polymers business; and several Dow silicones-based businesses aligned with applications in industrial LED, semiconductors, medical, as well as Molykote brand lubricants for automotive and industrial equipment and Multibase, which serves the thermoplastic compounding industry. Materials science will have the “vast majority of its sales aligned to three narrower and deeper, high-growth market verticals; packaging, infrastructure and consumer care,” says Andrew Liveris, executive chairman of DowDuPont. The materials business had 2016 net sales of more than $40 billion with higher than 20% operating EBITDA margin. The only part of DuPont that remains with materials now is a portion of DuPont’s performance materials segment, including its Orange, Texas cracker and ethylene copolymers. The shifts will boost specialty products revenue from roughly $13 billion to $21 billion in annual sales with operating EBITDA margins of 25%. The business will be aligned around four market segments: electronics and imaging; transportation and advanced polymers; safety and construction; and nutrition and biosciences. Businesses shifting over include DuPont’s $4-billion performance polymers business, a leading producer of engineering plastics and elastomers, including nylon, acetal and fluoropolymers that had been slated to move to materials. The business also gains Dow’s automotive adhesives and fluids business; building solutions, including Styrofoam insulation and Great Stuff. In silicones, the business adds medical and trichlorosilanes as well as additional electronic materials. Source: IHS Chemical Week, 9/12/2017.

Vertimass Receives Go from US Department of Energy’s Bioenergy Technology Office (BETO) After Completing Intermediate Technology Validation

Vertimass LLC announced completion of intermediate technology validation from the U.S. Department of Energy’s (DOE) Bioenergy Technology Office (BETO), which verified performance against negotiated milestones, provided progress on scale-up, and reviewed Vertimass’ estimated cost for their transformative catalytic technology. Vertimass believes this BETO verification paves the way for Vertimass to move to the demonstration scale of this important technology for converting sustainable ethanol into fungible gasoline, diesel, and jet fuel blend stocks and the chemical building blocks benzene, toluene, and xylene (BTX).  Source: PR Newswire, 8/21/2017.

TCGR Notes:
Vertimass is offering an oligomerization process from corn ethanol and using Technip FMC as its EPC scale-up partner. It seems a classic variant to methanol-to-gasoline (MTG).  

BIO 2017: Getting Down to Business at World Congress on Industrial Biotechnology

Developers of bio-based chemicals are adapting to market challenges on both the commercial execution and financing fronts, by focusing on higher-performing products, partnerships, and new business models, according to attendees of this year’s World Congress on Industrial Biotechnology, held 23–25 July in Montréal, Québec. “The bio-based chemicals market has become more pragmatic and realistic than five years ago, with a focus on getting things to work,” says Peter Nieuwenhuizen, head of AkzoNobel Chemicals R&D. “Five years ago you had a lot of people who were feeling it out. Now, it’s business-focused. We’re all working on making very specific deals.” “Developing a green drop-in isn’t really a winning strategy,” says Rich Weber, general manager/performance chemicals at NatureWorks (Minnetonka, Minnesota). “We need to be developing products with unique attributes and understand how we translate that into product performance.” NatureWorks is adding to its porfolio of polylactic acid (PLA) by launching a platform of value-added products from its building block, lactic acid. Branded Vercet, the focus will be on providing differentiated lactides, polyols, binder resins, and chemical intermediates into coatings, adhesives, sealants, elastomers (CASE); toners; and fine chemicals. DuPont is currently building a furan dicarboxylic methyl ester (FDME) pilot plant with ADM, and aims to produce polytrimethylene furandicarboxylate (PTF)—a novel polyester made from FDME and 1,3-propanediol (PDO)—which DuPont has produced at commercial scale since 2006. AkzoNobel has finalized its first bio-based polymer application agreement with Itaconix (Stratham, New Hampshire) for coatings and construction applications. Itaconix will contribute its proprietary polymers from itaconic acid. AkzoNobel is also using its Imagine Chemistry startup challenge to identify technologies that can improve the sustainability profile of its portfolio. In June, three winners—Ecovia Renewables (Ann Arbor, Michigan), Renmatix (King of Prussia, Pennsylvania), and Industrial Microbes (Emeryville, California)—were awarded joint development agreements with AkzoNobel’s Specialty Chemicals business to help bring their ideas to market. Rick Eno, senior partner at Roland Berger (Munich, Germany), noted that bio-based chemicals are, on principle, attractive to large chemical companies, but the uncertainty around commercializing the technologies makes them uncomfortable. “The number one issue on chemical executives’ minds today is growth. The chemical industry grew between 1% and 2% in volume last year. Industrial biotechnology is growing 10% per year.” Source: IHS Chemical Week, 7/31-8/7/2017, p.33.

TCGR Note: The biochemicals and biopolymers market development certainly has been hit, due to the lower price of oil, and certainly the funding for startups has been more scarce during the last two years but the important take-away is the realization that being “green” doesn’t buy you a lot. Like the petroleum-based counterparts new chemicals at the molecular level have to add new, better or different performance advantages. If not, they are unlikely to get the market traction needed to be successful.