Extract from 3/8/2015 CAP Communications (See full Chemical Week Magazine article here)

Refinery catalyst makers say demand has been solid. The future outlook for refinery catalyst demand is mixed, with tailwinds such as population and economic growth, low-sulfur regulations, and cheaper feedstocks being mitigated by higher fuel economy standards, biofuels, and, eventually, increased penetration of electric and hybrid vehicles. Refinery catalyst makers expect positive demand drivers to more than offset headwinds in the near-term. “The population around the world continues to grow, and GDP continues to increase. So demand for transportation fuels continues to rise,” says Mike Cleveland, global senior business director/catalysts, adsorbents and specialties, refining at Honeywell UOP. But while demand for refined petroleum products remains tied to macro trends such as how quickly economies are growing and trucking miles driven, there is a big “externality” surrounding the penetration of electric and hybrid vehicles, says John Murphy, president of The Catalyst Group Resources (TCGR; Spring House, Pennsylvania). “So the question becomes, when does this cause demand for liquid fuels to stop growing at 1–2% per year and hit 0–1% or less?” Forecasts for EV and hybrid penetration vary. Shell expects demand for gasoline could peak by the 2030s due to fuel-efficient cars and EVs. BP expects this to happen sometime in the 2040s. Many studies peg penetration at around 7.5% of the automotive pool by 2025. “It’s not going to happen as fast as some of the wild forecasts you see out there, for some simple reasons,” says Clyde Payn, CEO at The Catalyst Group. “There will be individual countries, like Sweden, where it might be higher, but the charging infrastructure for these vehicles is not in place, and is not easy to put in place.”

Marine Fuels
Meanwhile, the International Maritime Organization’s Marpol regulations—which aim to reduce sulfur content in marine fuels—will continue to be a driver of hydroprocessing and hydrotreating catalyst demand. “IMO implementation of MARPOL’s 0.5% [sulfur limit in] marine fuels on a broader basis globally means that you’re going to see more resid upgrading and more hydrotreating to get down to those low-sulfur limits,” Payn says. “This will have some impact on the transportation fuel sector globally, but we are already seeing decisions by some, particularly Middle Eastern refiners like Kuwait Refining and Adnoc, announcing investments to specifically address it,” Payn says. This isn’t surprising, given the region’s high export activity in fuels and chemicals. “They are going to have to meet these standards for lighter fuels faster than most,” he adds. There are several approaches seafaring vessels can use to address MARPOL, but adding scrubbers to a ship’s exhaust stack or retrofitting its engine to substitute for liquid natural gas are both capital-intensive, The Catalyst Group’s Murphy notes. “Switching to low-sulfur fuel is going to become the preferred route to addressing MARPOL,” he adds.

Crude Oil Alternative Conversions
A recent report by TCGR also revealed that increased interest in producing chemicals like olefins and aromatics directly from crude oil could blur the line between refiner and chemical producer. Aramco and SABIC are developing a $20-billion fully integrated crude–to–chemicals manufacturing complex in Saudi Arabia. It will be based at Yanbu and will process 400,000 b/d of crude oil and include a vacuum gasoil platform with capacity to produce approximately 9 million metric tons/year of chemicals and base oils. It is expected to start operations in 2025. Aramco has also signed a three-party joint development agreement with CB&I and Chevron Lummus Global for the development, commercialization, and marketing of crude-to-chemical technologies. “This is a disruption in the typical relationship that a refiner would have to serving the petrochemical markets,” Payn says. “You could have a chemical company who may not be back-integrated into refining considering the possibility of going direct oil-to-chemicals without being dependent on naphtha relationships upstream. That does have an indirect and a direct impact on how a refiner operates, and therefore, an impact on refining catalyst demand.” Source: IHS Chemical Week, 2/26-3/5/2018, p.19.

TCGR Note: For more information on how these trends will shape the catalysis industry in the medium-term, look for the 17^th Biennial Edition of “The Intelligence Report: Business Shifts in the Global Catalytic Process Industries, 2017-2023.” For more information on the developments in the area of crude oil conversion directly to chemicals see TCGR’s new multi-client study, completed late last year, entitled “Oil-to-Chemicals: Technological Approaches and Advanced Process Configurations”.