WORLDWIDE REFINERS MAKING BIG MOVE INTO MODERNIZATION

Anne K. Rhodes
Refining/Petrochemical Editor

Worldwide crude oil refining capacity has decreased by about 1.3 million bbl, or 1.8%, since Jan. 1, 1992, according to the Journal's most recent refining survey.

In contrast to distillation capacity, downstream cracking, conversion, and treating capability increased in 1992 in most major categories. More capacity apparently is on the way as major projects appear in the Asia/Pacific region and the Middle East.

In addition, as a sign of the environmental times, the OGJ survey shows a huge increase in worldwide oxygenate capacity.

Looked at on a regional basis, the survey reveals the following developments in the refining industries in the United States, European Economic Community (E.E.C.), and in the Asia/Pacific:

U.S. -Overall conversion capacity is continuing to increase, despite a slight decline in crude capacity.
E.E.C.-Crude capacity is up, with conversion processing remaining about even.
Asia/Pacific-Crude and conversion capacities are continuing to increase.

The most noteworthy change in this year's survey is the addition of crude and downstream capacities for 47 individual refineries in the Commonwealth of Independent States (C.I.S.) or former Soviet Union. Increased flow of information from the C.I.S. countries has enabled the Journal to report much more detailed data on those refineries than in previous years (see the table, beginning on p. 52).

More information is also available this year on refineries in Albania, Bulgaria, China, Lithuania, Macedonia, Croatia, and Slovenia.

The table on the left shows for the first time a list of the world's top 10 refiners.

The table below shows regional and worldwide capacities of crude and major downstream processes.

The region with the most obvious changes in this table is Eastern Europe/C.I.S. What appear to be huge increases in capacity in this region, however, are in most cases simply reflections of newly available data.

The Asia/Pacific region showed moderate gains over the past year in most categories. North American, South American/Caribbean, and African refineries, however, showed gains in some areas and losses in others.

Western Europe's refining configuration remained about even with last year, while refineries in the Middle East weakened markedly as a result of war damage.

The only change in reporting requirements this year was that U.S. refiners were asked to report all downstream capacities in b/cd, rather than b/sd. Capacities that were not converted by respondents, or that were reported as "unchanged," were converted using factors of 0.95 for atmospheric and vacuum distillation and 0.90 for all downstream processes.

REFINING REGIONS

Table 1 shows changes in crude and downstream capacities for three major refining regions: the U.S., E. E. C., and Asia/Pacific. The E.E.C. and Asia/Pacific countries covered are listed at the bottom of Tables lb and 1c, respectively.

The U.S., with its high conversion capacity, remains the world's strongest and most complex refining region (Fig. 1).

Figs. 1 and 2 show the conversion capabilities of the U.S. and the E.E.C countries. A comparison of the two graphs shows that U.S. refiners are continuing to increase their ability to convert crude to transportation products, while E. E. C. refiners' conversion capacity has remained about even over the past 3 years.

A look at the construction portion of Table lb, however, shows that E.E.C. refiners are planning increases in all four conversion processes reflected in Figs. 1 and 2.

It should be noted that there are high-conversion refineries in nonE.E.C. European countries, such as Austria, Finland, Norway, and Sweden, that are not covered in Table 1.

The Asia/Pacific region, on the other hand, is continuing to increase its processing capability. This can be seen by the significant increases in catalytic cracking, hydrotreating, alkylation, and aromatics/isomerization capacities (Table 1c).

U.S. INDUSTRY

The U.S. has had five refinery shutdowns since the survey was last published. Two additional small refineries-Leal Petroleum Corp. and Liquid Energy Corp.-were determined to have been shut down in the past, though not reported in the survey.

Even with these shutdowns, however, U.S. capacity fell only about 117,000 b/cd (less than 1%) over the year, because of incremental capacity increases at operating refineries.

At 15.2 million b/cd, U.S. crude distillation capacity is at its lowest reported level since the Journal's 1985 refining survey. An all-time high of 18.5 million b/cd was recorded in 1980.

U.S. refiners reported significant gains in the following categories:

Hydrotreating capacity increases by about 428,000 b/cd, or 6.5%.
Catalytic cracking capacity increased by almost 250,000 b/cd, or 5%.
Hydrocracking capacity increased by about 45,000 b/cd, 3.8%.
Aromatics/isomerization capacity increased by almost 33,000 b/cd more than 4%.
Alkylation capacity increased by more than 38,000 b/cd-almost 4%.
Asphalt capacity increased almost 60,000 b/cd, or 8.5%.

Incremental gains were primarily responsible for these increases.

The only process categories to show losses over the past year are thermal operations, which fell by 1.2%, lubes, which are down less than 1%, and hydrorefining, which dropped by almost 3%, or more than 60,000 b/cd.

Table 2 shows changes in hydroprocessing capacities for U.S. refineries. The U.S. experienced incremental losses in many categories, including FCC and cycle stock pretreatment, resid and heavy gas oil hydrorefining, and lube oil polishing.

Responsible for the decrease in hydrorefining capacity were:

The loss of 11, 000 b/cd of capacity from Shell Oil Co.'s Wilmington, Calif., refinery, parts of which were sold to Unocal Corp.
The reported shutdown of two units totaling 36,500 b/cd at Shell's Wood River, Ill., and Anacortes, Wash., refineries.
The conversion of a 14,000 b/cd unit at Cenex's Laurel, Mont., refinery to a straight-run distillate hydrotreater.

Table 3 ranks U.S. companies with 200,000 + b/cd of crude capacity, in decreasing order of capacity. There are 20 companies qualifying for the list this year vs. 19 last year.

Amoco and Shell, now ranked third and fourth, have switched places since the last survey, as have Citgo and Sun, now ranked ninth and tenth. Phibro has dropped from seventeenth to nineteenth place because of the closing of its 28,300 b/cd St. Rose, La., refinery.

Coastal has moved up one spot to seventeenth, and Lyondell is now on the list, in the eighteenth position. Unocal drops from nineteenth to twentieth.

Table 4 shows the portion of U.S. refining capacity held by large (200,000 b/d) and small (< 200,000 b/d) refiners. Large refiners hold a lower percentage of capacity this year in all crude and downstream categories listed. And in the arena of construction projects, strong gains are projected in U.S. cracking and hydroprocessing capacity over the next year (Table 1 a).

EUROPEAN INDUSTRY

Crude distillation capacity at E.E.C refineries increased by more than 222,000 b/cd, or almost 2%, in 1992. And the region reported no shutdowns for the period. In fact, the Beta Group recommissioned the former Mobil refinery at Wilhelmshaven, Germany, this year (OGJ, Apr. 27, p. 31).

In downstream process gains, E.E.C. refiners added more than 100,000 b/cd each of hydrorefining and hydrotreating capacity in 1992. Modest increases were also reported in hydrocracking, alkylation, aromatics/isomerization, and asphalt capacities. The largest percentage increase, however, was in coking capacity, which expanded from 8,300 tons/day to 9,700 tons/day -an increase of more than 16%.

The only processing categories to decrease in the E.E.C. countries over the past year were thermal operations and lubes, which fell by 2.0 and 5.9%, respectively.

Table 3 lists E.E.C. refiners having capacities of more than 200,000 b/cd. Exxon Corp., with its many Esso affiliates, has replaced Royal Dutch/Shell in the number one position. Elf Aquitaine and BP, now ranked sixth and seventh, have switched places since last year. These comparisons do not include capacity in joint venture operations.

Petrofina has dropped from ninth to thirteenth, and Sarpom has moved up from twentieth to fourteenth.

Netherlands Refining Co., which was inadvertently omitted from the list last year, comes in eighth this year, The company, owned 65% by BP and 35% by Texaco, integrated BP's Europoort refinery and Texaco's Pernis refinery in 1990.

This addition to the list, combined with the removal of four companies that were incorrectly placed on this list last year (Motor Oil [Hellas] Corinth Refineries SA, Ertoil SA, Irish Refining Petroleum Corp. Ltd., and Eastham Refinery Ltd.), has caused the list to shrink from 21 companies to is.

Future plans call for E.E.C. refiners to increase aromatics/isomerization capacity by as much as 14%, and hydrocracking capacity by about 8%, over the next year.

ASIA/PACIFIC INDUSTRY

Crude capacity in the Asia/Pacific region-one of the world's fastest growing-increased by more than 200,000 b/cd since Jan. 1, 1992. Six more refineries are listed in the region this year because of previously unavailable information from China. Downstream capacity information, however, was not available for these refineries.

Even more impressive than the crude capacity increase is that this region shower double-digit percentage gains in three categories:

Alkylation capacity increased almost 28%.
Aromatics/isomerization capacity increased more than 20%.
Lubes capacity increased by about 18%.

These capacity increases were moderate, however, in real terms.

Other increases in Asia/Pacific capacity include catalytic cracking, hydrorefining, and hydrotreating. Showing decreases over the last year were asphalt and hydrocracking capacities.

Losses in the hydrocracking category can be attributed to Nippon Mining Co. Ltd., which reported no hydrocracking capacity this year at its third and Mizushima refineries, which had previously had a combined hydrocracking capacity of 58,500 b/cd.

Also of importance in this region is the former Kainan Petroleum Refining Co. Ltd. listing, which can be found under the name Wakayama Petroleum Refining Co. Ltd. in this year's survey.

OTHER REGIONS

The Eastern Europe/C.I.S. region lists eight additional refineries this year, all of which are in the C.I.S. states. In spite of these added refineries, crude capacity is down about 2,049,000 b/cd-almost 14%. This could be the result of more accurate information which reflects moribund demand and the toll taken by a lack of maintenance funds.

Vacuum distillation capacity is up 2,594,000 b/cd, while hydrorefining increased 1,021,000 b/cd, and catalytic cracking, 328,000 b/cd. Catalytic reforming and hydrocracking capacities are each about 30,000 b/cd higher than last year.

In the Middle East, three additional refineries are listed this year, all in Iran. Of these three, the refinery at Arak is the only new plant to come on stream in 1992. The addition of the other two refineries to the survey is the result of obtaining newer, more complete information on the country.

Despite this, crude capacity has decreased in the region by about 50,000 b/cd-a relatively minor loss, considering the scope of damage from the war. (Kuwait alone has 451,000 b/d less crude capacity than it did on Jan. 1, 1991, including the complete shutdown of its 187,000 b/d Shuaiba refinery.)

In downstream processing, hydrocracking is down by about 136,000 b/cd and hydrorefining, by 117,000 b/cd. Coke is also down 950 tons/day, to 1,480 tons/day.

These decreases are primarily caused by war damage, which is responsible for the shutdown of Getty Oil Co.'s Mina Al-Zour refinery in Kuwait, and Kuwait National Petroleum Co.'s Shuaiba refinery.

Crude capacity in African refineries is up 73,000 b/cd-almost 3%. Capacities in most other categories have remained about even, with the exceptions of catalytic reforming, which has increased almost 5%, or about 16,000 b/cd, and vacuum distillation, which is up 14,000 b/cd (3.7%).

In North America, a loss of 10 refineries-7 in the U.S., 2 in Canada, and I in Mexico-decreased crude capacity in the region by about 200,000 b/cd. Low profitability in the face of rising environmental investments was a common cause of the U.S. shutdowns, while falling oil demand and a surplus of refined products forced the Canadian closures.

The South America/Caribbean region has increased crude capacity by 69,000 b/cd and vacuum capacity by 38,000 b/cd. Hydrocracking capacity is down 35,000 b/cd and hydrorefining capacity, 87,000 b/cd.

OXYGENATES

With the U.S. marketplace now in the era of oxygenated fuels, refiners and petrochemical producers have greatly increased their capacities to produce these oxygenates. Table 5 lists both refinery-integrated oxygenate capacities and capacities at stand alone facilities.

Worldwide oxygenate capacity has more than doubled in the past year, increasing from 162,735 b/d as of Jan. 1, 1992 to 340,401 b/d as of Jan. 1, 1993. And there are regional changes since last year's survey:

U.S. capacity has increased from 95,710 b/d to 153,884 b/d.
Western European capacity has more than doubled, from 51,825 b/d to 108,727 b/d.
South American capacity has increased from 11,600 b/d to 14,550 b/d.

Among those regions who had no reported capacity in last year's survey:

Asia/Pacific now has 26,650 b/d capacity.
Middle East now has 15,250 b/d capacity.
Canada now has 12,500 b/d capacity.
Eastern Europe/C.I.S. now has 5,960 b/d capacity.

CONSTRUCTION PLANS

Many refinery construction projects, both grassroots and expansion, are under way all over the world. And the deluge of environmental regulations and increased use of heavy crudes play big roles in these projects.

According to a recent study by Arthur D. Little Inc., with more sulfur in the crude slate and less in the product output, refiners in Western Europe, the U.S., and the Far East will need to invest more than $35 billion by the year 2000, and an additional $30 billion by 2010, to meet projected supply and demand qualities. The study cites hydrocracking and middle distillate desulfurization as the primary processes used for reducing product sulfur.

The following sections delineate major refinery construction projects by region.

ASIA/PACIFIC

This region is one of the world's fastest growing, in terms of refining capacity, with new refineries planned in Thailand, India, Pakistan, and the Philippines.

A unit of Royal Dutch/Shell will construct Thailand's fourth refinery, a 145,000 b/d plant at Map Ta Phut in Rayong Province. The facility, geared to middle distillate production, is scheduled for start-up by early 1996. Crude slate will be 75% Middle East/25% Far East. And Caltex Petroleum is planning the country's fifth refinery, also in Rayong. That 120,000 b/d plant is scheduled to start up later in 1996.

In the area of expansion, Esso Standard Thailand Ltd. is increasing crude capacity at its Sriracha, Thailand, refinery from 63,000 b/cd to 145,000 b/cd, with potential for a further increase to 185,000 b/cd. Several conversion and desulfurization units are also being added.

A major downstream project is also under way in Thailand. Caltex Trading & Transport (Thailand) Ltd. is planning a 37,000 b/d resid FCCU at the Map Ta Phut industrial complex in Rayong.

India's new refinery, a $705-million, 60,000-b/d plant to be built at Numaligarh, will be the product of a joint venture of the Assam state government and Indo-Burmah Petroleum Co.

And in Pakistan, a 50/50 joint venture of state-owned Petroleum Refinery & Petrochemical Corp. (Perac) and National Iranian Oil Co. is planning a 120,000 b/d refinery at Port Qasim, Karachi.

Perac is also planning a hydrocracker to upgrade 28,000 b/d of resid to middle and lighter distillates. The project is a joint venture with Crescent Petroleum of Sharjah, and will use resid from its 46,300 b/d Karachi refinery and the 44,175 b/d National Refinery Ltd. (NRL) refinery, also at Karachi.

In the Philippines, Shell is planning a 38,000 b/d refinery at Batangas, and Caltex will boost capacity of its 65,400 b/d Batangas refinery by about 25%.

Japan and Korea are also planning major expansion and upgrade projects. Saudi Aramco and Nippon Oil will expand crude capacity at Nippon's mothballed Kudamatsu, Yamaguchi, Japan, refinery from 150,000 b/d to 450,000 b/d. And in a change of hands, Nippon Mining's 85,000 b/d Chita, Japan, refinery will come under the ownership of a joint venture of Saudi Arabian Oil Co., Nippon Oil Co., Nippon Mining, Caltex and Arabian Oil Co., who will expand capacity to 150,000.

South Korea's Honam Oil Refinery Co. Ltd. is constructing a 50,000 b/d grassroots resid FCC plant at its Yocheon, refinery. The plant will utilize Stone & Webster's technology and will include a desulfurization unit and catalyst cooler. The cracking unit is scheduled to start up in January 1994, and the desulfurization unit in January 1996.

MIDDLE EAST

In what might be the largest refinery upgrade program ever planned, Saudi Aramco plans to spend approximately $12 billion over the next 6 years to repair and expand its Ras Tanura refinery. The company ultimately plans to increase crude capacity at Ras Tanura to 1,000,000 b/d, easily making it the world's largest refinery.

Saudi Arabian Marketing & Refining Co. (Samarec) is also upgrading its refineries at Yanbu, Riyadh, and Jeddah. Visbreaking and distillate desulfurization capacity will be added at all three facilities, and Yanbu's crude unit will be debottlenecked from 170,000 b/d to 240,000 b/d.

Upon completion, Yanbu will have sizable vacuum gas oil conversion capacity with all the ancillary gasoline producing facilities (continuous catalyst regeneration reforming, isomerization, alkylation, and MTBE). The first phase of Samarec's program at these three refineries is expected to come on stream by early 1996 at an estimated cost of $2 billion.

Kuwait, on the other hand, is continuing its postwar recovery process. Kuwait National Petroleum Corp.'s severely damaged Shuaiba refinery-currently shut down-will undergo a 3-year repair project, and should be back on-line within that period.

In the grassroots arena, a consortium comprising Saudi Arabian Oil Co., Nippon Oil Co., Nippon Mining, Caltex and Arabian Oil Co. plans to construct a 300,000 b/d export refinery at Jubail, Saudi Arabia.

On the other side of the Gulf, National Iranian Oil Co. is constructing a 230,000 b/d export refinery at Bandar Abbas, Iran, with start-up planned for 1994. The company also plans a 70,000 b/d condensate refinery at Taheri, Iran, with start-up targeted for 1995.

SOUTH AMERICA

Venezuela is implementing a number of major projects in South America. Corpoven SA, a unit of Petroleos de Venezuela SA (Pdvsa), is planning a $3 billion, 230,000 b/d refinery in eastern Venezuela to process heavy Venezuelan crudes.

The new refinery will include two 56,000 b/d Flexicoker units, plus atmospheric and vacuum distillation units and desulfurization facilities. Feedstock will be 10 API Hamaca crude diluted with kerosine to aid transportation. The refinery will also process 47,000 b/d of resid from Corpoven's Puerto La Cruz refinery. Start-up is planned for first-half 1997, with a capacity increase to 400,000 b/d planned for year-end 2000.

Maraven SA has begun a $600-million expansion of its Cardon, Venezuela, refinery. Projects include a 60,000 b/sd, six-drum delayed coker with gas plant and caustic treaters, a 45,000 b/sd UOP Platformer with gas plant, and a 15,000 b/sd isomerization unit. Start-up is scheduled for Spring 1994.

Also in Venezuela, Lagoven SA will spend more than $818 million at its Amuay refinery for a delayed coker, MTBE and TAME units, a diesel fuel recovery system, coke combustion system, coke flue gas treating unit, and other projects.

NORTH AMERICA

Among U.S. refinery projects is Chevron U.S.A. Products Co.'s reconfiguration of its Port Arthur, Tex., refinery to cut the costs of environmental compliance. The former 315,000 b/d plant now has a crude capacity of 177,000 b/d.

In addition, vacuum distillation capacity has been cut from 156,000 b/d to 82,600 b/d, and 10,000 b/d of Tubes capacity has been eliminated. Hydrotreating, FCC, and reforming capacities have also been cut.

Foreign state-owned oil companies have also been active in the U.S. picture. Lyondell Petrochemical Co. and Citgo Petroleum Corp., an indirect, wholly owned subsidiary of Pdvsa, are partners in an agreement involving a $500-million upgrade of Lyondell's Houston refinery.

The upgrade will expand heavy crude processing capability at the refinery, making it one of the world's most sophisticated. Heavy oil processing ability will be increased from 120,000 b/d to 200,000 b/d.

Citgo is supplying a major portion of the investment funds in return for a minority interest in the venture upon project completion. Lagoven will supply heavy crude and Citgo will purchase the products from that crude.

And in a surprise move, Petroleos Mexicanos signed an agreement with Shell Oil Co. to purchase half of Shells' Deer Park, Tex., refinery. Shell and Pemex plan to add undisclosed conversion and upgrading units tailored to processing heavy Mexican crude.

The revamp will allow Pemex to place more than 100,000 b/cd of heavy Mayan crude on the U.S. market. Shell, in turn, will sell Pemex as much as 45,000 b/d of unleaded gasoline.

Shell is also planning a 5 year, $1 billion project to produce reformulated gasoline and convert heavy fuel oils to lighter products at its Martinez, Calif., refinery.

Several other U.S. refiners are laying out capital on projects designed to meet environmental regulations and boost conversion capacity:

Ashland Petroleum Co. is planning seven projects totaling $222 million to enable it to produce cleaner diesel and reduce plant emissions at its Catlettsburg, Ky., refinery. The units include a 40,000 b/d distillate desulfurizer, a 16,500 b/d continuous catalyst regeneration reformer, benezene reduction equipment, an electrostatic precipitator for the FCCU, plus distillate storage, landfill upgrades, and an air-assisted flare.
Total petroleum (North America) Ltd. plans to spend about $200 million installing hydrotreaters at its Ardmore, Okla., and Alma, Mich., refineries. The project will enable Total to supply low-sulfur diesel, and the Ardmore refinery to process low-cost crude and convert heavy fuel oil to light products.
Diamond Shamrock is planning a 15,000 b/sd coker at its McKee refinery at Sunray, Tex.

WESTERN EUROPE

A group led by Ste. Nationale Elf Aquitaine, and including the Thyssen group and Deutsche SB-Kauf, plans to modernize the obsolete, former East German 100,000 b/d refinery at Leuna.

The assets, including an associated petrochemical plant and the 73,700 b/d Hydrienwerk Zeitz refinery, are being acquired by the consortium in a controversial deal with Germany's Treuhandanstalt, which is charged with privatizing the former communist state enterprises in the region. The Franco/German consortium says it will spend $2.1 billion to modernize the Leuna facilities and build a new 200,000-240,000 b/d refinery there.

In the area of upgrades, Petroleos de Portugal EP is spending $300 million on a project at its Sines refinery. Plans include construction of a 35,000 b/d FCCU, a 26,000 b/d visbreaker, a 45,000 b/d vacuum distillation unit, and two Merox units.

And in a move designed to substantially increase Repsol SA's conversion capacity, the company plans to commission four cracking facilities (cokers and hydrocrackers) at its refineries in Spain in 1994 and 1995.

EASTERN EUROPE/C.I.S.

Although information is still not forthcoming from this area, Khazakhstan is reported to be planning a refinery at the port city of Aktau. And a German-Azerbaijani joint venture called Baku-Invest is planning to overhaul a refinery near Baku, Azerbaijan, to minimize hydrocarbons in waste effluent and generally make the refinery environmentally sound.

As this rapidly changing region continues to adjust to new economic and political systems, major changes in the refining industry configuration are likely. These changes may have far-reaching effects, perhaps increasing worldwide capacity and conversion capability.

At the very least, the changes necessary at these refineries, and in other industries, will provide fertile ground for the exchange of new technologies and ideas.