SPECIAL REPORT: Global refining catalyst industry will achieve strong recovery by 2005

Table 1 shows worldwide energy demand, oil demand, supply, and consumption data for 1997-2001.2-7 Total energy demand is forecast to increase to 230 million boe/d by 2010 and 280 million boe/d by 2020, which is a growth rate of 2.9%/year.

For regions that are experiencing accelerated economic growth, energy demand will increase; Asia Pacific and South America will experience growth of about 3.4%/year and 2.5%/year, respectively.⁸

World oil demand increased by about 7 million b/d from 1993 to 1997. In 1997-98, however, worldwide demand grew by only 0.5 million b/d. From 1999 to 2000, demand growth averaged more than 1 million b/d/year and remained steady during 2000-01.^{1 3-7}

Oil demand, despite losing 2% of the world's energy market share in the next 20 years, will increase to 115 million b/d in 2020 from 76 million b/d in 2001. Oil will remain the world's primary energy source, retaining about 40% market share in the forecast period.^{1 9 10}

World oil supply and consumption underwent an increase of about 0.57 million b/d/year (0.6%/year) and 0.67 million b/d/year (0.7%/year), respectively, during 1997-2001. In 1999, oil supply decreased by 1.1 million b/d because most Organization of Petroleum Exporting Countries (OPEC) members voluntarily curtailed production. Table 2 shows historic oil consumption data during 1997-2001.²

In 1999, world oil production decreased by 1.7 million b/d (1.2 million b/d from OPEC members). Since 2000, oil production has recovered and increased to 66 million b/d in 2001.

During 1997-2001, world oil production increased by 1.4%/year and average oil production from OPEC members was 27.5 million b/d. This represents 42% of the average world oil production (65.3 million b/d) for the same time period.

Worldwide refining capacity

Global refining capacity grew by 1.62 million b/d/year (2.05%/year) from 1997 to 1999 (Table 3).

The biggest average growth rates were in Asia Pacific, North America, and the Middle East.

There are currently 732 refineries in 116 countries; most are in Asia Pacific. The number of refineries there has increased to 203 in 2001 from 141 in 1997.

Refinery shutdowns have occurred every year in all regions. The more significant changes occurred in North America, South America, and Western Europe. Although the number of refineries decreased in these regions, refining capacity increased, which indicates that the remaining refineries are larger and have improved processing capacity efficiency.

The US has maintained its position as the largest and most-sophisticated oil refining region. About 23% of the refineries in the world are located in the US and 25% of the world's crude is processed in these refineries.

Table 4 shows refining capacities corresponding to the main catalytic processes. Catalytic refining processes represent about 82% of total crude capacity: 17% is FCC, 45% is hydrotreating (HDT), 5% hydrocracking (HCK), and 14% naphtha reforming (N-REF). These proportions remained steady from 1997 to 2001.

New construction

In 2001-05, 14 new oil refineries are planned: one in W. Europe, one in the Middle East, nine in Asia Pacific, one in South America, and two in Africa. These refineries will add 2.29 million b/d to worldwide refining capacity.

Revamps and expansions of current units and construction of new process units will occur in 2001-05 with this distribution: 75 HDT units, 22 HCK units, 27 FCC units, and 17 N-REF units.¹¹

Annual processing capacity will increase by 6.25 million b/d in HDT, 2.25 million b/d in HCK, 0.80 million b/d in FCC and 1.70 million b/d in N-REF during this period (Table 5).

Worldwide catalyst industry trends

Catalyst companies have responded to refinery margin pressures and to the increased outsourcing demands of their customers. Some have increased their service offers, while others have dissolved alliances or left the business.

Catalyst companies also experienced many mergers and acquisitions in the past 5 years. Of the 31 catalyst companies in 1997, 27 remain. Table 6 shows some of the changes in catalyst companies. Some products were reallocated from one company to another as a result of acquisitions.

The OGJ 2001 catalyst survey shows 781 catalyst formulations as compared with 825 in the 1999 survey.^12-14

In 2000, W.R. Grace & Co. acquired a Crosfield Co. business unit. The hydroprocessing catalyst business (excluding hydrocracking catalysts) of W.R. Grace combined with Chevron Products Co.'s hydroprocessing catalyst business in March 2001.

The resulting joint venture, Advanced Refining Technologies LP (ART), has focused on new catalyst development for distillate hydrotreating heavy vacuum gas oil and demetallized oil to light naphtha applications.

Mergers between oil companies reduced the market base for catalyst producers. Large players benefit from strong buying power, which makes it difficult for catalyst manufacturers to raise prices.

Changes in HDT market share occurred in 1997-2001. In 1998, the HDT market share distribution was: Criterion Catalyst Co. 35%, AkzoNobel NV 30%, Haldor Topsøe AS 15%, Synetix 10%, and Procatalyse 10%.

Today's HDT catalyst market is roughly divided among Criterion, AkzoNobel, and W.R. Grace, and 5 smaller players including Haldor Topsøe, Orient Catalyst Co. Ltd., Catalysts and Chemicals Industries Co. Ltd., and Axens-Procatalyse.¹⁵

FCC, which accounts for 30% of the refinery catalyst market, is still affected by poor profit margins. Oil companies and refiners have a huge influence with FCC catalyst pricing.

Catalyst makers benefit from attractive pricing relative to lighter crudes because heavier feeds require more catalyst consumption. The FCC market is led by Davison Catalysts (a division of W.R. Grace) with a 40% share, followed by Engelhard Corp. with 28%, and Akzo Nobel with 25%.15

Catalyst producers and research centers use accelerated methods of catalyst synthesis and testing to discover new materials with improved catalytic activity. Combinatorial chemistry and high-throughput experimentation (HTE) techniques accelerate new product development and eliminate many intermediate catalyst preparation steps.

Combinatorial chemistry consists of producing libraries of compounds that represent permutations of a set of chemical and physical variables. The technique can help identify the catalysts to be tested.

HTE is a key technique for decreasing catalyst development time, which is used in two different ways for catalyst research. Screens can identify new lead compounds with the objective to discover a new generation of catalyst materials. Screening also leads to formula optimization and identifies the optimal conditions for a given reaction.

Both techniques require new methods of catalyst synthesis, reactors, instrumentation, rapid online analysis, and computer systems for managing large quantities of generated data.

About 30 firms now have active combinatorial programs for chemical and catalytic materials. UOP LLC has developed proprietary combinatorial programs to accelerate the development and production of new zeolites and heterogeneous catalysis.^15-19

Catalyst producers leverage their expertise through joint ventures with would-be competitors or by setting up broad-based alliances with refinery customers and allied process engineering firms.

These cooperative research and service ventures have provided a short-term strategy for reducing catalyst development costs and shortening the time to market.

World catalyst market behavior

The catalyst market has been depressed by the regional economic difficulties; however, there are signs for a recovery in the next 5 years.

Global catalyst spending has increased to $9 billion in 1999 from $7.4 billion in 1997 and will reach around $11.3 billion by 2005, with a growth rate of 4.2%/year. The refining catalyst market increased by about 2.4%/year from 1997 to 1999.

The refining catalyst market will experience an increase of about 3.9%/year until 2005, at which time it will account for about 24% of the global catalyst market. Environmental catalysts, chemical catalysts, and polymer catalysts will account for 29%, 27%, and 20%, respectively.^{15 20-22}

HDT and FCC catalysts will continue to be important commercial products, given the constraints of gasoline and diesel-fuel quality that will require performance improvements in these units.

HDT has overtaken FCC as the largest market for refinery catalyst makers. By 1999, the FCC catalyst market decreased from 45% to 30% due to excess of inventory and downward price pressures. HCK catalyst accounts for 5%, N-REF for 6%, and others for 25% of the total refinery catalyst market.^{15 21-25}

During 1999-2001, HDT catalyst growth was lower than expected. Some of this was a consequence of pricing pressure due to industry overcapacity. Companies expect a substantial increase in HDT catalyst demand in 2003-04 when a new sulfur fuel standard will be imposed. The HDT market is projected to grow at a about 5%/year, FCC about 3.8%/year, and HCK about 1.8%/year (Table 7).

Future refining catalyst demand

Estimates for the refining catalyst market for 2001-05 take into account:

• Average refining capacity increases for the different catalytic processes in 1997-2001 (Table 4).
• Additional refining capacity that will be added in 2001-05 (Table 5).
• Past refining catalyst market behavior (Table 7).

One can estimate an average factor, which represents the barrels of oil refined per dollar of catalyst for the different catalytic processes, from data in Tables 4 and 7. Calculated factors are: HDT=17.0 bbl/$, FCC= 7.0 bbl/$, HCK= 12.0 bbl/$ and N-REF= 33.0 bbl/$.

From 1997 to 2001, world refining capacity experienced average annual increases of 887,000 b/d (1.39%/year), HDT increased 560,000 b/d (1.60%/year), FCC increased 157,000 b/d (1.16%/year), HCK 188.000 b/d (5.08%/year), and N-REF decreased 17,000 b/d (-0.15%/year).

One can estimate the future catalyst market by projecting increases in refinery capacities for the different catalytic processes, accounting for added capacity (Table 5), and using the calculated catalyst factors.

Table 8 shows the projected refining capacities and catalyst market results. The estimate of world crude capacity in 2005 assumes that refining capacity corresponding to the four catalytic processes represents 80% of the total world crude capacity.

According to these estimates, world crude processing capacity will rise to 95.4 million b/d in 2005 from 81.3 million b/d in 2001. Catalytic processes will grow at about 5.8%/year for HDT, 2.6%/year for FCC, 17.4%/ year for HCK, and 2.3%/year for N-REF.

The global refining catalyst market will increase to about $2.78 million in 2005 (4.9%/year), which is consistent with a forecast from the Catalyst Group, Spring House, Pa. (Table 7). There are, however, small differences in the catalyst market distribution between the two estimates.

For example, our forecast of an 8% market share for HCK catalyst is higher than the Catalyst Group's forecast. We also estimate 28% FCC catalyst market.

North America will continue as the main catalyst consumer with a market of about $1.02 billion by 2005. Asia Pacific and Western Europe will maintain the same market distribution in 2001-05.

One can estimate an average catalyst factor (bbl/$) for each region from projected world crude capacity (Table 8), current crude capacity distribution, and distribution of the worldwide catalyst market.

Table 9 shows that North American refineries process the least amount of crude for every dollar spent on catalyst, followed by W. Europe refineries. This is a consequence of the strict environmental restrictions imposed for these two regions.

Conversely, Asia Pacific and other regions invest less money in catalyst per barrel of processed feedstock because, in these regions, the permitted emission limits are lower than more-developed countries. The hydrotreating units in these regions can operate with longer production cycles.

Impact of environmental restrictions

Since 1989, government agencies have imposed strict environmental restrictions on transportation fuels, which provided an impetus for a new market for the refining catalyst industry.

Transportation fuel represents about 52% of total worldwide oil consumption. In the past, boiling point range and combustion performance were the primary measures of fuel quality. At present, the molecular composition of these fuels is more important.

Refiners must improve air quality by delivering products that minimize emissions of toxic and hazardous hydrocarbons; more selective processes are needed. Fuel regulations are increasing in severity and are forcing refiners to define how best to minimize heavy fuel oil production.

Gasoline and diesel formulations have already changed in several countries and will change even more in 2000-10. The worldwide refining industry is faced with huge investments to meet 2004-06 sulfur regulations. These limits will increase the need for hydrotreating catalysts.

Additionally, the US Environmental Protection Agency (EPA) is developing heavy-duty highway diesel-fuel standards for 2008-10. This represents a 90% reduction in emissions from the 2004-06 heavy-duty-vehicle standards.^26-29

New fuel regulations will significantly affect refinery operations. Catalytic reforming will continue to be an important process unit in refinery operations for gasoline production and to link refining and petrochemical operations further.

New catalyst developments

New catalyst development is an important aspect of the petroleum refining catalyst industry. The demand for more-sophisticated processes and catalytic technologies is increasing to meet both environmental restrictions and market dynamics.

Catalyst manufacturers are under pressure to reduce costs and speed product development. Customers are demanding complete technical and engineering solutions. This encourages acquisitions and alliances among catalyst manufacturers as they strive to expand their expertise and lower costs.

These companies continuously invest in research and development to improve their catalysts and catalytic technology. Some companies have tried to raise catalyst prices to offset research and development investment costs.^{16 30 31}

New products introduced by catalyst manufacturers are specifically designed to meet environmental and safety concerns or to improve performance and cost. New catalysts often do both. Table 10 summarizes current research activities for improving existing refining catalysts.

Acknowledgments

The author thanks the Direction Générale des Technologies, de la Recherche et de l'Énergie de la Région Wallonne (GREDECAT) for financial support, and M. Saenen for her contribution in the preparation of the manuscript.

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The author

Ricardo Prada Silvy is the research manager at the Université catholique de Louvain, Belgium. He has previously worked for Petroleos de Venezuela SA (PDVSA), Procter & Gamble Co. and Intevep SA. He also served as a graduate school professor in the chemical engineering department at the Universidad Central de Venezuela. Prada Silvy holds a BS (1981) in chemistry from Universidad Central de Venezuela and an MSc (1984) and PhD (1987) in catalysis and material science from Université catholique de Louvain. He is a member of Venezuelan Catalysis Society and Venezuelan Chemistry Society.