麻豆传媒

Refinery operators were already facing mounting challenges in 2019: declining demand for gasoline and diesel in some markets, new and very efficient capacity coming on-stream, and increasing regulatory requirements, to name a few. Then, 2020 brought even more difficulties with the unprecedented challenges to operations brought on by the COVID-19 pandemic.

Global economic challenges prompted a dramatic fall in product demand and skewed product slates 鈥� sales of gasoline and diesel fell steeply, and jet fuel sales fell by as much as 90% at one point. Recovery will probably be prolonged, and the repercussions will be long-lasting.¹

All of these factors present refiners with a dilemma: how to make smart investments while preserving cash in order to maintain their competitive position, when failing to invest could mean competitive vulnerability.

1 _{https://www.ft.com/content/b956c056-b22f-4db7-96e1-be0035c743a1}

The case for refinery revamps

At Shell Catalysts & Technologies, we have always advised customers to consider revamping, repurposing, or upgrading their existing assets. In our experience, this can be more capital efficient than adding new units and offer a better return on investment.

The benefits of a refinery revamp and this smarter, more focused investment are discussed below.

The cost can be as low as a few million dollars to generate higher upgrade margins within single units up to $100鈥�500 million, realising significant changes in refinery configuration.²

The cost per tonne of the capacity installed during a revamp is about 20鈥�50% of that for a grassroots facility.³ Such projects are therefore even more relevant in the new reality.

This is not an easy transition. Current market challenges may not be temporary setbacks from demand decline in many regions, and refinery operators may not be able to simply wait out the current circumstances and expect to return to 鈥渘ormal鈥�. It may not be reasonable to expect all our operations to return to the way they were before 2020.

Rather, we see how existing challenges are accelerating action around energy transition conversations that have been ongoing for decades, as well as accelerating the change in product demand slates.

The energy transition is about decarbonising our society and reducing the amount of greenhouse gas molecules in our atmosphere. The carbon chain is everywhere in our society, making it a very diverse and complex challenge that will require many types of solutions.

We see this as a time for reinvention, and we鈥檙e applying this philosophy forward to help our partners adapt and modernise their facilities.

Through revamps, we can help refiners optimise their facilities to meet changing product demand slates. For example, we鈥檝e helped refiners upgrade equipment to process crude oil into higher yields of petrochemicals feedstock, which can help them adapt to changing regional market conditions.⁴

We see revamps as one strategy among many that refiners, in particular, can use to transform operations and thrive through a long-term journey.

Read how Shell Catalysts & Technologies revamped Hyundai Oilbank Refinery to increase refinery capacity

2 _{https://www.digitalrefining.com/article/1002358/respond-to-changing-markets-with-revamps}

3 _{https://www.digitalrefining.com/article/1002358/respond-to-changing-markets-with-revamps}

4 _{https://www.iea.org/news/global-oil-demand-to-decline-in-2020-as-coronavirus-weighs-heavily-on-markets}

Starting the journey with revamps

Revamping, repurposing, or upgrading existing units is one feasible strategy for refining operators to retain their competitive advantage while adapting to changing market conditions.

Revamps often require small, incremental investments, which can be highly appropriate in today鈥檚 market, as they carry low investment risk, generate credibility with investors, and provide ongoing flexibility as market conditions change.

Such projects are, by definition, low in capital expenditure because we seek to repurpose existing refinery equipment. We try to minimise capital requirements for major equipment; the kit that needs to be acquired is usually limited to items that have a modest capital cost such as new reactor internals, additional heat exchangers, and furnace modifications. Furthermore, we seek synergies with the units already on the ground, which helps to enhance the return on investment.

Discover 

However, these projects are also more complex in the implementation phase than grassroots initiatives. Project planners must ensure that they do not disrupt the continuing operation of an existing facility. Projects must be carefully planned to meet a fixed implementation date and within shutdown time constraints.

Fortunately, these issues can be mitigated by working with an experienced, strategic licensor that has a strong history of delivering such projects, both internally and externally. Our experts at Shell Catalysts & Technologies have delivered a wide variety of value-adding revamping and upgrading projects around the world.

In this series, we will explore ways to succeed in the new reality by focusing on low capital requirement, high impact projects and revamps. We鈥檒l cover six technology applications with case studies and interviews with our global revamps experts. We hope they provide insights that help you optimize your margins and excel despite market challenges.