For more than a century, Honeywell UOP LLC has advised its customers on ways to apply new technologies to ensure consistent profitability in the face of changing trends in the global oil and gas industry. These conversations begin years before its customers are prepared to make final investment decisions, and they generate unique insight into the needs of the industry.
One of the greatest challenges faced by refiners today is the need to make carefully timed investments to meet near-term demand growth for cleaner-burning transportation fuels, in the presence of a broadly forecasted, longer-term levelling-off of global transportation fuels demand. This challenging outlook is affecting both product mix and investment priorities.
What’s in store
“In the near-term, rapidly growing middle classes in high-growth economies will increase global demand for cleaner-burning transportation fuels. Many of those economies are actively investing in domestic refining capacity using the most advanced technologies available. Refiners who currently export fuel products into these markets may one day find demand for those products met domestically,” John Gugel, president of Honeywell UOP told OGJ.
“Millions of barrels of refining capacity are at risk of being stranded, unless that capacity can be adapted or repurposed to make new products for which demand is rising. In the longer-term, as global demand for these fuels peaks—probably in about 10-15 years—even refiners in markets where fuels are growing will be looking for ways manage their molecules to produce different product slates that offer greater profitability,” Gugel said.
In the meantime, global demand for petrochemicals is growing 40% faster than gross domestic product, and several times faster than transportation fuels. This demand is being driven by dozens of countries, led by China, India, and Indonesia, where by 2050, as many as 3 billion people will graduate into the middle class. These economies will demand more synthetic fibers, packaging, personal and commercial vehicles, new food options, pharmaceuticals, and billions of consumer durables.
Faced with an outlook of longer-term declining demand for transportation fuels, many of today’s refiners will invest in assets that can produce petrochemicals.
“Perhaps more than any time in history, the need for significant upgrades in refining capabilities must be made with a clear view of the rapidly changing landscape of demand for new products and the capacity to supply them,” Gugel said.
UOP developed the concept of the Refinery of the Future to describe its philosophy that refineries, and related facilities, must be designed to accommodate evolutionary changes in product slates while ensuring sustained competitiveness in terms of overall cash cost of production, capital efficiency, and the ability to respond to both regulatory changes and competitive threats.
“In other words, the Refinery of the Future must enable our customers to manage molecules for the greatest profitability in the near term, and at every stage over the ensuing decades,” Gugel said.
The Refinery of the Future will be capable of upgrading crude oil into an increasingly higher proportion of petrochemicals and clean fuels. It will provide refiners a route to long-term profitability for crude-to-chemicals, using increasingly cost-advantaged feedstocks.
Fast forward
Not long ago, refineries capable of converting 15-25% of their production into petrochemicals were considered highly integrated.
“Today, UOP is designing refineries that will convert more than half their crude intake to petrochemicals, and we firmly believe that the day is within sight, when we will design refineries capable of producing 100% petrochemicals. Refineries that can produce high percentages of petrochemicals are likely to be the most consistently profitable,” Gugel said.
The Refinery of the Future will be digitally connected and equipped to continuously analyze performance data to improve optimization, energy consumption, water use, and eliminate waste. These connected plants will operate closer to their peak process-performance capabilities while demonstrating greater on-stream reliability. These capabilities will provide proactive operational advice and insights that will help refiners address gaps in experience caused by operator attrition.