PRODUCTIVE TYUMEN REGION NEEDS PROCESSING INVESTMENT

Valeri S. Plotnikov Sibneftegaspererabotka Corp. Western Siberia, Russia The Tyumen region of Western Siberia holds vast potential for oil and gas processing investments. Oil and other hydrocarbons for the most part remain unrefined in the region, which despite its huge reserves of oil and gas must import fuels and chemicals from central Russia. The Tobolsky petrochemical plant in the southwest comer of the region and the Omsk oil refinery in the south are the only major oil and gas upgrading

Aug. 2, 1993

8 min read

Valeri S. Plotnikov
Sibneftegaspererabotka Corp.
Western Siberia, Russia

The Tyumen region of Western Siberia holds vast potential for oil and gas processing investments.

Oil and other hydrocarbons for the most part remain unrefined in the region, which despite its huge reserves of oil and gas must import fuels and chemicals from central Russia.

The Tobolsky petrochemical plant in the southwest comer of the region and the Omsk oil refinery in the south are the only major oil and gas upgrading and conversion facilities currently in operation in the Tyumen Oblast.

While Western Siberia has extraordinary potential for production of crude oil and other hydrocarbons, it must import 1.5 million metric tons/year of gasoline, more than 3.2 million tons/year of diesel fuel, and about 1 million tons/year of kerosine jet fuel.

In addition to petroleum products, the region imports basic petrochemicals and basic plastics, pipes, polyethylene film, textiles, other consumer goods, and specialty chemicals.

Transportation in effect doubles the cost of oil in the Tyumen region in comparison with other parts of the former Soviet Union (F.S.U.). The cost of transporting a ton of unrefined oil to processing plants elsewhere and importing the refined product back to the Tyumen region is about double the cost of developing and producing a ton of Tyumen crude at gas-oil separation plant battery limits.

Long haul transportation is difficult due to challenging winter weather, a limited road network, great distances between widely dispersed major industrial towns and villages, and the multiplicity of oil fields.

High delivered prices and frequent disruptions in supplies of gasoline, jet fuel, and diesel are hampering economic development, impairing the quality of life, and disrupting production of oil and gas.

In spite of its potential, therefore, the Tyumen region is suffering high financial losses because of its inability to produce finished products and its consequent need to rely on other regions of the F.S.U.

Development of a processing industry would not only solve those regional problems but also help meet expected increases in petrochemical demand throughout the F.S.U.

According to the scientific-industrial corporations Plastpolimer of St. Petersburg and Plastik of Moscow, the F.S.U. as a whole will have growing shortages of polyolefins through 2000, which ensures a market for whatever the Tyumen region can produce (Table 1).

USE OF LPG

LPG output in the Tyumen region is expected to increase through 2000, creating significant surpluses that could feed new petrochemical facilities.

LPG utilization suffered after the natural gas liquids pipeline disaster near Ufa in 1989. In that year, total LPG sales reached about 6 million tons/year.

Tyumen region LPG production from associated gas grew from 970,000 tons in 1980 to 3.63 million tons in 1985, when an additional 1.1 million tons came from gas condensate separator plants operated by what is now Concern Gas Prom. LPG output from associated gas fell to 3.4 million tons in 1990 and 3.04 million tons in 1992.

Petrochemical plants use most of the region's output of light hydrocarbons. The main customer is the Tobolsky petrochemical plant, which produces 180,000 tons/year of a divinyl raw material for caoutchouc, a synthetic rubber.

Other petrochemical plants are west of the Ural Mountains. LPG destined for these markets now must be transported by railway because the NGL pipeline remains out of service.

The research institute VNIPI Gaspererabotka of Krasnodar expects Tyumen LPG output to exceed the anticipated demand of currently operating facilities by one-third (Table 2).

Sibneftegaspererabotka (SNGP) expects major growth in LPG recovery from associated gas but flat production from Concern Gas Prom gas condensate separation plants.

The Tobolsky petrochemical plant will remain a major consumer, but demand for Tyumen LPG outside Western Siberia is likely to decline by 2000, leaving a substantial surplus of Tyumen LPG.

VNIPI Gas predicts that 15% or more of recovered Tyumen LPG will not be distributed under business as usual and may have to be flared. This and SNGP natural gasoline could provide an important energy resource base for further economic development in Western Siberia.

Construction of petrochemical plants capable of making use of surplus LPG in the Tyumen region would not only resolve the problem of costly dislocation between raw material and processing facilities but also diversify the economies of Tyumen cities.

CURRENT ACTIVITY

The Tyumen region now has eight as processing plants in operation.

They are operated by SNGP, established by the government in 1975 to make use of 8 billion cu m/year of associated gas then being flared.

Total installed capacity of the gas processing plants is 27 billion cu m/year. The plants currently handle about 19 billion cu m/year. An estimated 32 billion cu m/year of gas is available in the region.

The plants are named Gubkinsky, Muravlenko (formerly Noyabrsky), Belozerny, Nizhnevartovsky Locosovsky, Surgutsky, South Balyksky and Krasnoleninsky (see map).

There also is a gas processing plant at Varyegan that operates at present only as a compressor station.

The Surgutsky facility is operating at above capacity rates, partly because it is supplying lean gas directly to the Surgut power station. The Krasnoleninsky and Gubkinsky facilities are not producing LPG because a design code for LPG product pipelines from the Gubkinsky facility and construction of an LPG rail load-out facility at the Krasnoleninsky plant have not been completed.

SNGP assets also include seven compressor stations, a partially completed LPG gathering pipeline, and sections of natural gas pipeline.

Petrochemical enterprises are being developed to process the Tyumen region's crude oil and gas liquids. Planned projects include:

Obpolimer, a petrochemical enterprise that will produce 80,000 tons/year of polypropylene. Feed will be LPG from the Krasnoleninsky gas processing plant. UOP's Oleflex process is under consideration.
Noyabrsky motor fuel plant, which will produce gasoline and aromatics from 700,000 tons/year of LPG from the Muravlenko and Gubkinsky plants.
Surgutpolimer, a petrochemical enterprise to produce 150,000 tons/year of polypropylene from 600,000 tons/year of LPG from the Surgutsky plant, which will be expanded.
Nizhnevartovsk motor fuel plant to produce gasolines, kerosine jet fuel, diesel fuel, bitumen, and fuel oil via catalytic reforming. Feed will be 3 million tons/year of oil and stabilized natural benzene. The plant, using conventional refining technology, initially will have distillation, naphtha hydrotreating, catalytic reforming, and other treating units as well as an asphalt vacuum tower. It will produce two grades of unleaded gasoline.

Several gas processing plants are considering expansions into unleaded gasoline production from LPG or light natural gasolines. The expansions could boost gasoline production by 20,000-50,000 tons/year.

One process under consideration is called Zeoforming. Developed by the Groznii Research Institute, it uses IK-28 zeolite synthesized by the Academy of Sciences Siberian branch as a catalyst.

The process involves isomerization and aromatization of paraffins and dehydration of naphthenes from straightrun fractions of gas condensates. A Zeoformer charges light naphtha (C5 to C7) over the catalyst at moderately high temperatures to form a high octane, fairly aromatic blendstock for gasoline.

The catalyst in each online tubular reactor deactivates slowly, and reactors must be switched out at intervals for regeneration. A demonstration unit rated at 5,000 tons/year of gasoline is in operation at the Nizhnevartovsky gas processing plant. Scale-up to modules capable of producing 20,000 tons/year is considered practical.

Zeoforming also makes it possible to process nonhydrorefined feedstock that does not require complex compressor equipment and circulation of gas containing hydrogen.

The zeolite catalyst used in the process does not contain costly metals, is ecologically safe, and does not corrode equipment.

THE FUTURE

The Tyumen region offers raw materials and a vast market area but lacks modem processing capacity and capital.

Several local oil and gas companies are in operation in addition to SNGP. They include Nizhnevartovskneftegas, Tomskneft, Mgeonneftegas, Surgutneftegas, Noyabrskneftegas, and Krasnoleninskneftegas.

Companies from outside the F.S.U. could form a joint-stock company with these local firms. With financing from the companies, Russian and non-Russian banks, and possibly an international aid package, the joint-stock company could build and operate the plants described here.

The plants would be relatively inexpensive and, in the opinion of this author, could be self-supporting in 2-4 years.

After a 4 year period, the joint-stock company should be able to begin repaying both western and nonwestern banks from cash flows generated by product sales.

Tyumen region petrochemical companies should embrace all phases of production and marketing, from processing of raw materials to the production of consumer goods and the distribution of products.

In summary, the advantages of developing the downstream energy industry in Western Siberia are that transportation costs will be reduced and that regional demand for petrochemical products will be satisfied. A joint-stock company would be an excellent way to implement these proposals.