麻豆传媒

I am the Director of Technology Licensing in the Middle East and North Africa at Shell. I鈥檝e worked in the hydrocarbon industry for more than 25 years, nearly 14 of which have been at Shell. I am currently based in Dubai, UAE, after working for over two decades in the Asia Pacific Region (APR) where I was involved in a number of refinery revamp projects.

While no one can predict how long the global economic downturn will last, or whether the refinery market will return to what it was before 2020, I agree with the energy forecast reports that state how global refineries will continue to see depressed margins and lower utilisation rates through 2021.¹ I think it will be difficult for many refineries to return operations to what they were in the 鈥減re-COVID鈥� era.

The demand for products such as jet fuel has declined significantly because air travel has greatly reduced, while a surplus of this product sits on tankers on the sea.² Many refiners cannot quickly switch off production because of the way their refineries have been configured. Jet fuel continues to be stored, which depresses the market for the product.

However, in the last month or so, we鈥檝e been seeing an increase in demand for gasoline in this segment.³ It will be critical for refineries to have operational and production flexibility to meet fluctuating demand changes going forward.

Explore: How global energy producers can emerge stronger from market challenges

Production flexibility in operations: Residue upgrading and petrochemicals integration

A number of refiners across the globe have implemented residue upgrading projects to minimise the fuel-oil make and increase the refinery margins.

In a refinery, fuel oil is less valuable to the refiner compared to other products, like diesel and gasoline. To reduce fuel oil production, a refinery would typically have to invest in a significant upgrade project, whereas some revamp solutions, like Solvent Deasphalting (SDA)-Hydrocracking, or adding a residue gasifier are available at a significantly lower cost.

In the current scenario, many of the new refinery and petrochemical projects, which can range from ten to twenty billion dollars or more, have been put on hold. There is more interest from Middle East-based refiners in particular around revamps and upgrades due to their lower cost.

Margin improvement opportunities from small to large revamps

I have observed many similarities from my experience working on revamps. Capex is often a constraint for the market 鈥� it is difficult for a refinery to invest in a big, multi-billion dollar project, especially if refiners struggle with margins. Depending on capex investment, or how much a refinery would like to spend, there are a number of margin improvement opportunities available:

Our revamps philosophy at Shell is to first 鈥渟weat the assets鈥� to their maximum capabilities. In other words, we advise operators to first make operational changes to make more margin from existing refinery assets, such as optimising energy efficiency and changing the crude diet or having a matrix of crude diet for the refinery.

Small revamps typically involve new generation reactor internals along with catalysts, a vacuum unit revamp, or adding a dewaxing unit. These revamps cost a few million dollars and could give refiners a significant return on investment in a short time span. We have seen the payback period as short as one to two years.

For a reactor internals revamp, for example, we assess the age and capabilities of existing reactors. We can revamp reactors with the latest generation of reactor internals, which can increase catalyst volume, increase cycle length and produce a higher specification of product. For a vacuum-unit revamp, we can help refiners recover more vacuum gas oil (VGO), which they can use to fill in their hydrocrackers and make more value-added products.

Related reading: Pair hydroprocessing reactor internals with expert-level service for profitable projects and revamps

Refiners can also be interested in debottlenecking their unit to increase its production capacity. Increasing the throughput of a unit, such as a hydrotreater or hydrocracker, to produce more value-added products, can require an investment of around ten to thirty million dollars.

Dewaxing, for example, is a process that improves the cold-flow properties to prepare diesel. A dewaxing unit can be added to a refinery configuration, or a dewaxing catalyst can be loaded within an existing reactor.

The largest revamps include solutions of adding one or more process units in the existing refinery configuration, such as adding an SDA unit to reduce the fuel oil made in a refinery. It is an investment that can run into a few hundred million dollars and can significantly increase the refinery鈥檚 margin once the project has been implemented.

Shell has implemented these kinds of projects not only in our own refineries, but in a number of third-party refiners around the world.

A mindset of vision and flexibility

The three things that make a refinery most competitive are flexibility, complexity and capacity. For a revamp to be successful, refinery operators need to have a vision of what they want to achieve by being best-in-class in terms of energy efficiency or maximising margin.

I think the trick for small, successful refiners to adapt themselves to the changes ahead is to bring more production flexibility to their assets by modernising them and keeping them relevant. I see the refiners who do not optimise their units are the ones getting left behind.

The best refiners I have seen and worked with are the ones who continually look to improve their processes by revamping their units. They are always trying to reach their site鈥檚 maximum potential, either by making operational or energy efficiency changes, or by trying to maximise value by being able to process different types of crude.

Once they have optimised their refining site to the maximum, these operators have then moved on to improve production flexibility by adding crackers to their unit to integrate it with petrochemicals.

Refineries with production flexibility can benefit during market fluctuations by meeting demand for different products. I鈥檝e seen refineries configured with a fluid catalytic cracker (FCC) and a hydrocracker as the ones able to gain a competitive edge because they can better respond dynamically to the market.

These configuration decisions are made early and with a long-term vision in mind, because FCC and hydrocrackers are multi-million dollar investments that cannot be built over night. I see the most competitive refiners as the ones who have a focused, long-term vision, and who plan a type of configuration that allows production flexibility to switch on and off certain products based on market demand.

Discover: 

1 _{https://www.eia.gov/outlooks/steo/pdf/steo_text.pdf}

2 _{https://oilprice.com/Energy/Crude-Oil/Jet-Fuel-Demand-Will-Take-Years-To-Recover.html}

3 _{https://www.argusmedia.com/en/news/2125716-mideast-gulf-gasoline-demand-on-road-to-recovery}