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The refining industry remains in a difficult competitive environment. Fixed cost commodity crude oil feedstocks are dictated by open market forces, e.g., OPEC, which can fluctuate wildly from $10 to more than $30 a barrel. Open-market commodity wholesale fuel prices quickly arbitrage any unusual margins in the market. In addition, investments globally in the $20-30 BIL range to meet legislated low sulfur fuels specification by 2004-6 are significant. Traditionally, return-on-investment (ROI) has remained below market average (relative to other industries), making it difficult to obtain financial market access.
The refining industry is, therefore, reacting to these issues by consolidating, outsourcing where it can reduce costs, and taking advantage of procurement options which lead to opportunities for lowering operating costs. This is occurring at a time when the need for more sophisticated process and catalyst technology is being demanded to meet both legislative and market dynamics, placing a considerable strain on process licensors, technology developers, E&C companies, and catalyst manufactures alike. It is clear in these circumstances, during the next decade, that suppliers, technology providers, and refiners will need to get leaner, meaner, and more automated.
Other observations worthy of note include:
- Significant North American refinery consolidation has occurred but is probably not yet complete; European refining industry has called for assistance in closing 9-13 refineries
- New environmental regulations will offer a boom in the area of hydrotreating processes and catalysts (e.g., US FCC gasoline desulfurization; Europe: middle distillate desulfurization and aromatics removal and FCC feed pretreatment)
- Emergence of near-zero residue, low emissions consolidated refiners may be expected
- Residue hydroconversion (ARDS, VRDS, Ebullated-bed) will become key technologies
- Beyond their traditional business of licensing technological innovations, technology suppliers will seek to expand alternative services into more of a partnership role, i.e.: cradle to grave catalysts, maintenance, process control, energy, feedstock, and product management through optimization.
For clients in the refining and petrochemicals industries, The Catalyst Group offers a variety of services and studies:
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