Beginning on Jan. 1, 2020, the International Maritime Organization (IMO) is set to enact the Annex VI of the International Convention for the Prevention of Pollution from Ships (MARPOL Convention), which lowers the maximum sulfur content of marine fuel oil used in ocean-going vessels to below 0.5%, down from the current 3.5%.
This regulation has encouraged global refiners to engage in a series of projects designed to increase refinery runs and maximize upgrading of high-sulfur heavy fuel oil into low-sulfur distillate fuel to create compliant bunker fuels, as well as develop grassroots projects aimed to supply low-sulfur fuels to the global market.
While many refiners have kept operational and capacity details of these projects under wraps as they rush to complete them, others have outlined both immediate and future developments to comply with the pending regulation.
The latest OGJ annual worldwide refining survey, which will be available to online subscribers in December, shows a readjustment in global crude oil refining capacity for the coming year, with year-on-year changes continuing to result largely from OGJ’s broadened data collection efforts to include capacity data an individual operator has disclosed publicly but did not voluntarily report to OGJ by the survey deadline.
While the current survey does include data captured via OGJ’s more expansive collection methods, these independent data-gathering procedures are evolving on a continual basis, particularly for regions such as Asia-Pacific, Eastern Europe, the Middle East, and Africa, where capacity information on refinery processes downstream of crude distillation units remains difficult to obtain.
OGJ continues to evaluate additional approaches to enhanced, independent data discovery methods as part of an ongoing program to provide readers the latest operational data available on global refineries whether or not reported by survey respondents.
Preparing for IMO 2020
In August, NARL Refining LP filed for registration and review of the environmental assessment process for a crude efficiency project at its 130,000-b/d refinery at Come-by-Chance, Newf., to help achieve compliance with the IMO upcoming global cap of 0.5% sulfur on fuel oil. While the crude efficiency project is a measure designed to enable the refinery to produce IMO-compliant fuel, it also will enable the site to increase crude throughput to more than 160,000 b/d, making Come-by-Chance the fourth-largest refinery in Canada.
The crude efficiency project includes a $25 million (Can.) investment to install and operate several preheat exchangers and a prefractionation column within the crude unit, as well as several piping modifications. NARL said it also expects the project to reduce the refinery’s GHG carbon intensity by 8% and sulfur dioxide emissions by 40%. Construction on the crude flexibility project is scheduled to begin this summer, with all assets operational by spring 2020.
Announcement of the crude flexibility project follows NARL’s early July filing for registration and review of the environmental assessment process for the construction of a delayed coker at the Come-by-Chance refinery. If approved, the proposed coker would not become operational until 2023.
In October, Freepoint Commodities LLC and Rigby Refining LLC signed definitive contracts to form a joint venture to develop processing plants around the world to help meet the growing demand for IMO 2020 marine fuel. The JV’s first project will be the design and construction of a 10,000-b/d fuel oil processing plant in the US Gulf Coast, which will be equipped with Rigby’s proprietary process to remove sulfur from fuel oil and produce low-sulfur, IMO 2020-compliant marine fuel. While Freepoint did not reveal a precise USGC location for the manufacturing site, the company did confirm it will provide the feedstock to and market production from the plant, which is scheduled for start-up sometime in 2021. Further details regarding the JV’s future processing plants were not disclosed.
Elsewhere in the Americas, Limetree Bay Ventures LLC, a joint venture of ArcLight Capital Partners LLC and Freepoint Commodities LLC, announced in September that it would bring its new single-point mooring (SPM) buoy into service in October and will proceed by yearend with the long-planned restart of the idled and former Hovensa LLC 500,000-b/d refinery at Limetree Bay on St. Croix, USVI. Upon completing its ongoing refinery restart project—which has involved investments to revitalize the facility as an environmentally compliant, multipurpose energy center to conduct large-scale refining operations and provide third-party storage service for crude oil and refined petroleum products—Limetree Bay will initially be able to process about 200,000 b/d of feedstock.
Confirmation of the restart follows Limetree Bay Refining LLC’s November 2018 announcement that it entered into definitive agreements with BP PLC’s supply and trading arm for tolling, supply, and product offtake of the refinery beginning in late 2019. Under the agreement, BP will supply the refinery with feedstocks and market a major portion of the product offtake volumes, including low-sulfur fuels that will meet IMO 2020 mandates. Key restart work at the site began in 2018, including the 62,000-b/d delayed coker unit, extensive desulfurization capacity, and a reformer unit to produce clean, low-sulfur transportation fuels conforming to IMO 2020 standards.
In its late October quarterly report to investors, PBF Energy Inc. confirmed it restarted a previously idled 12,000-b/d second coker on time and on budget at its 189,000-b/d refinery in Chalmette, La., outside of New Orleans, to help boost output of IMO 2020-compliant fuels.
Motiva Enterprises LLC also completed unidentified work at its 630,000-b/d refinery in Port Arthur, Tex., refinery—the largest in the US—to enable compliance with IMO 2020 regulations, according to local media reports.
In the Middle East, Brooge Petroleum & Gas Investment Co. FZC said it is building a 250,000-b/d refinery designed to produce bunker fuel in Fujairah, UAE, which would become the first of its kind in the Middle East and North Africa to comply with IMO 2020 regulations. The first phase of the planned refinery will be completed by first-quarter 2020. Further details regarding the refinery or future phases of the proposed project, however, were not disclosed.
In April, Saudi Aramco let a contract to KBR Inc. to provide technology for a supercritical solvent deasphalting (SDA) unit as part of a residue upgrading and clean fuels project at its 126,000-b/d refinery in Riyadh, Saudi Arabia. KBR will deliver licensing for its proprietary three-product SDA ROSE technology, including basic engineering design and proprietary equipment for the new unit, which will be designed to meet Aramco’s specific objectives for the project, including its strategy to comply with IMO 2020 fuel regulations. KBR disclosed neither a value of the contract nor a specific timeframe for the project’s completion.
In June, local media outlets reported Vitol Group started construction of a 30,000-b/d refinery scheduled for commissioning in May 2020 at its storage site in Tanjung Bin, Johor, Malaysia, designed specifically to produce IMO 2020-compliant fuels.
Elsewhere overseas, PJSC Lukoil confirmed in October that subsidiary OOO Lukoil Volgogradneftepererabotka started production of low-sulfur fuel oil that complies with IMO 2020 mandates at its more than 281,000-b/d Volgograd refinery in southern Russia. The Volgograd refinery began production of bunker fuel oil 0.5% sulfur on Oct. 11 and will produce about 1 million tonnes/year (tpy) of the fuel. The Lukoil unit also is advancing the construction of a deasphaltizing unit at the refinery. While the operator confirmed work on the deasphaltizing unit is about 25% completed, Lukoil did not disclose further details regarding the project.
The remainder of this article highlights other refining projects from selected regions announced across the year, many of which industry sources tell OGJ contain elements likely geared towards meeting compliance with upcoming IMO 2020 fuel regulations, as well as further integration with operators’ petrochemicals businesses, achieving energy efficiency, and increasing processing flexibility.
Europe
In November, ExxonMobil Corp. let a contract to Fluor Corp. for a series of services related to the operator’s project to increase production of ultralow-sulfur diesel by nearly 45% at affiliate Esso Petroleum Co. Ltd.’s 270,000-b/d Fawley refinery near Southampton, UK. Following its completion of front-end engineering design (FEED) for the expansion—now known as the Fawley Strategy (FAST) project—Fluor will provide engineering, procurement, fabrication, and construction on a reimbursable basis for the project. Fluor’s scope of work on the project includes design and construction of a new diesel hydrotreater and steam methane-reforming hydrogen plant as well as modifications to unidentified existing installations at the Fawley site. Construction activities on the FAST expansion are scheduled to start by yearend.
The Fawley contract award follows ExxonMobil’s April final investment decision to proceed with the more than $1-billion expansion project, which intends to help reduce the need to import diesel into the UK by adding a hydrotreating unit to remove sulfur from fuel, supported by a hydrogen plant that, combined, will also help improve the refinery’s overall energy efficiency. In addition to logistics improvements, the project will increase ultralow-sulfur diesel production at the site by 38,000 b/d. Pending regulatory approval, the FAST project is targeted for start-up in 2021.
In September, PKN Orlen SA has let a contract to Honeywell UOP LLC to provide process technology designed to increase production of ethylene and aromatics, as well as improve flexibility of gasoline production, at its 327,300-b/d integrated refining and petrochemical complex in Plock, Poland. As part of the project, currently in the basic engineering stage, Honeywell UOP will license its proprietary MaxEne process, which separates full-range naphtha into a stream of normal paraffins ideal for steam crackers because they produce high yields of light olefins, and a second stream of isoparaffins, naphthenes, and aromatics ideal for catalytic reforming units because they produce high yields of aromatics. Honeywell UOP disclosed neither a value of the contract nor a timeframe for the project’s implementation.
In July, OMV AG said it is investing €64 million to build a unit that will produce high-purity isobutene at subsidiary OMV Deutschland GMBH’s 76,300-b/d refinery in Burghausen, Germany. The 60,000-tpy ISO C4 unit—which will be integrated into the refinery’s existing metathesis plant responsible for energy-efficient manufacturing of propylene for the plastics industry—will feature the first global application of an OMV-BASF SE jointly developed technology for direct production of high-purity isobutene. The advantage of integrating the ISO C4 and metathesis units supports OMV’s heat-integration strategy, which will allow up to 80% of the heating energy required by the new process to be met by waste heat from existing installations at the site. BASF also will supply a catalyst system that will fulfill all process requirements for the plant that—scheduled for start of construction this summer—is due for commissioning in September 2020.
Total SA subsidiary Total Raffinerie Mitteldeutschland GMBH in April broke ground on a €150-million project to further improve competitiveness of its 241,000-b/d Leuna refinery in Germany. The project aims to reduce production of heavy products at the site as demand for them decreases, while simultaneously increasing production of methanol via increasing production of the refinery’s existing visbreaker combined with an upgrade of the POX-methanol plant. Work on the project will last until yearend 2021.
Earlier in the year, Unipetrol RPA SRO-Rafinerie, the refining arm of Unipetrol AS and parent company Polski Koncern Naftowy SA (PKN Orlen), let a contract to McDermott International Inc. to provide engineering, procurement, and construction management services for the upgrade of a hydrocracker at its 108,400-b/d refinery in Litvinov, Czech Republic. Work on the project is scheduled to be completed in second-quarter 2020.
Hungary’s MOL Group let a contract in March to Frames Group BV to provide desalting equipment for subsidiary MOL PLC’s 166,500-b/d Duna refinery in Szazhalombatta, near Budapest. Frames will supply two of its proprietary desalters (electrostatic coalescers) to be installed in the refinery’s crude distillation unit (CDU) as part of a new project to enable the site to process a broader range of crudes. The new crude desalting system comes as part of the operator’s program of crude basket diversification, increasing its current alternative seaborne crude intake to above 33%, and allowing the processing of more than 50 additional crude grades.
In January, Croatia’s INA Industrija Nafte DD approved a more-than $617-million plan to modernize its 90,000-b/d Rijeka refinery along the northern part of the Adriatic Sea as part of an organizational strategy to boost performance and competitiveness of its Croatian refining business. Part of its INA Downstream 2023 New Course program, the proposed investment plan—which intends to help reduce a current $154 million/year in average losses of the refining business by ensuring long-term sustainability and profitability of refining and marketing operations—would involve concentration of crude processing activities at the Rijeka refinery and conversion of the company’s 44,000-b/d refinery in Sisak into a biorefining and petrochemical production site for bitumen, renewables, and lubricants, as well as equipping it to perform as a modern logistics hub. The proposed 3-year conversion process would coincide with the concurrent construction of a heavy residue upgrading plant—or delayed coking unit (DCU)—at the Rijeka refinery, which would include a delayed coker, a coke port, storage installations, as well as related pipelines and off sites.
INA—which initiated the official tendering process for construction of Rijeka’s delayed coker and associated installations in late 2017—said it expected to take final investment decision by yearend on the DCU project, which, if approved, would be commissioned in 2023.
India, Pakistan
In November, Hindustan Petroleum Corp. Ltd. (HPCL) let a contract to KBR to provide technology for a unit to be added as part of HPCL’s previously announced program to expand and modernize its 166,700-b/d Vishakhapatnam (Visakh) refinery in Andhra Pradesh on India’s southeastern coast. KBR will license its residual oil solvent extraction (ROSE) solvent deasphalting (SDA), which will be integrated with the LC-MAX technology ebullated-bed residue upgrading process from Chevron Lummus Global (CLG). KBR also will deliver CLG the technology licensing, basic engineering design, and proprietary equipment for the ROSE SDA portion of the LC-MAX unit.
As part of the Visakh refinery modernization project (VRMP), HPCL also let a contract to L&T Hydrocarbon Engineering Ltd. to provide engineering, procurement, construction, and commissioning (EPCC) for a 70,300-b/d residue upgrading facility to be equipped with technology licensed by CLG that will enable HPCL to convert the heaviest oils into high-quality Euro 6 diesel while simultaneously eliminating fuel oil production, as well as increasing feedstock and product flexibility. Since project approval in January 2016, HPCL has let multiple contracts for the brownfield VRMP, which proposes to expand refining capacity of the site to more than 300,000 b/d as well as boost production of low-sulfur fuels conforming to Euro 5 and Euro 6-quality standards.
According to India’s Ministry of Environment, Forest, and Climate Change (MOEFCC), HPCL’s originally proposed 208 billion-rupee VRMP was to add the following units at the refinery:
- A 180,700-b/d CDU-vacuum distillation unit (VDU), which will replace one of Visakh’s three existing CDUs.
- A 66,300-b/d full-conversion, vacuum gas oil hydrocracker.
- A 5,860-b/d naphtha isomerization unit.
- A 62,250-b/d solvent deasphalting unit.
- A 50,200-b/d slurry hydrocracker.
- A 96-tonne/day propylene recovery unit (PRU), which will replace an existing 216-tonne/day PRU.
- Two 113,000-tpy hydrogen generation units (226,000 tpy total).
- Two 360-tonne/day sulfur recovery units (720 tonnes/day total, including tail gas treatment).
- A 36,000-tpy fuel gas pressure-swing adsorption unit.
- A 300-tonne/hr nonhydroprocessing sour-water stripper.
- A 185-tonne/hr hydroprocessing sour-water stripper.
- Two 540-tonne/hr amine regeneration units (1,080 tonnes/hr total).
- A 112,000-tpy sulfur recovery LPG treating unit.
- A 1,000-cu m/hr integrated effluent treatment plant (EFP), which will replace all existing EFPs at the site.
According to the latest project information available from HPCL and general contractor Engineers India Ltd. (EIL), major processing units at the refinery are scheduled for revamp as follows:
- A 30% capacity expansion of the naphtha hydrotreater in the refinery’s Motor Spirit (MS) block to 30,120 b/d.
- A 35% capacity expansion of the continuous catalytic reforming unit in the MS block to 20,890 b/d.
- A 30% capacity expansion of the diesel hydrotreating unit to 57,430 b/d.
- An upgrade of the naphtha hydrotreater downstream of the refinery’s FCC to enable output of BS V and BS VI-grade (equivalent to Euro 5 and Euro 6-quality) fuels.
The 209.28-billion rupee VRMP remains on schedule for mechanical completion in July 2020.
In September, Bharat Petroleum Corp. Ltd. (BPCL) let a contract to CLG to provide process technology and design for a hydrocracker and lubricant oil base stock unit at its 241,000-b/d refinery in Mumbai, Maharastra, India. CLG will provide its proprietary Isocracking, Isodewaxing, and Isofinishing technologies for the unit, which will produce high-quality clean fuels, premium grades of lubricating base oils, and white oils. CLG said its scope of work on the BPCL project also will include supply of catalysts as well as its proprietary Isomix-e reactor internals.
Indian Oil Corp. Ltd. (IOCL) in July let a contract to McDermott to provide process technology for a grassroots fluid catalytic cracking (FCC) unit at IOCL’s 314,000-b/d Panipat refinery and petrochemical complex in Haryana, India, north of New Delhi. McDermott will deliver technology licensing, basic engineering, proprietary equipment, training, and technical services for an FCC unit that will be equipped with INDMAX technology, which—developed in partnership with IOCL—is licensed by McDermott’s Lummus Technology division. The INDMAX FCC forms part of IOCL’s project to expand petrochemicals production at the Panipat refining complex.
Most recently, IOCL let a series of contracts to Emerson Electric Co. to provide services related to a major modernization and upgrade of operations and emissions programs to increase operational efficiency, reduce emissions, and expand production of cleaner fuels at several of its refineries—including Panipat—to ensure compliance with India’s looming more-stringent environmental standards by helping the plants meet the country’s new Bharat Stage VI (BS-VI, equivalent to Euro 6) low-sulfur emissions standards for fuels that, upon taking effect in April 2020, will mandate a maximum sulfur content of 10 ppm. IOCL’s board also has approved a 231-billion rupee project that would expand the Panipat refinery’s nameplate capacity to more than 500,000 b/d as well as add a polypropylene (PP) production unit at the site. Further details on the proposed capacity expansion and new PP unit have yet to be revealed.
Also in July, HPCL Rajasthan Refinery Ltd. (HRRL), a 74-26% joint venture of HPCL and the state government of Rajasthan, confirmed it will proceed with its previously announced plan to develop the JV’s proposed 431.29-billion rupee, 181,000-b/d integrated refinery and petrochemical complex now under construction at Pachpadra Tehsil, Barmer District, Rajasthan. In May, the JV let a contract to CLG to deliver licensing and extended basic engineering design of a 48,200-b/d DCU at the complex based on CLG’s proprietary delayed coking technology. HRRL also awarded an earlier contract to McDermott for license and basic engineering design of two 420,000-tpy PP units that will use Lummus’ proprietary Novolen process reactors and proprietary NHP catalyst to produce a full range of PP products at the new refinery.
Once completed, the Barmer refinery—which will take about 4 years to build—will be equipped to produce BS-VI-grade fuels from a feedstock of both locally produced and Saudi Arabian crudes to meet increased demand for petroleum products in Rajasthan as well as other northern Indian states. During its first 8 years of operation, the refinery will be designed to process 1.5 million tpy of Rajasthan crude from nearby Mangla fields and 7.5 million tpy of imported Arab Mix crude—consisting of Arab Light and Arab Heavy grades—before switching to a full 9 million-tpy feedstock slate of Arab Mix beginning in its ninth year of operation. According to EIL’s revised environmental impact assessment for the Barmer project filed with MOEFCC in July 2017, the complex will include the following nameplate processing capacities:
- Crude distillation, 181,000 b/d.
- Vacuum distillation, 96,400 b/d.
- Naphtha hydrotreating, 36,100 b/d.
- Isomerization, 5,200 b/d.
- Continuous catalyst regeneration reforming, 6,000 b/d.
- Diesel hydrotreating, 82,300 b/d.
- Fluid catalytic cracking, 58,200 b/d.
- Delayed coking, 48,200 b/d.
- PP (two units), 490,000 tpy each.
- Butene-1, 59,000 tpy.
- Linear low-density/high-density polyethylene (two swing units), 416,000 tpy each.
- Vacuum gas oil hydrotreating, 70,300 tpy.
- Dual-feed steam cracking, 820,000 tpy.
- Low-pressure ethylene recovery, 77,000 tpy.
- Benzene recovery, 96,000 tpy.
- Pyrolysis gasoline hydrotreating, 11,000 b/d.
- BTX fractionation, 11,000 b/d.
- FCC gasoline depantanizing, 17,500 b/d.
- Gasoline hydrotreating, 10,600 b/d.
- FCC C5 Merox, 4,400 b/d.
- Saturated LPG Merox, 3,300 b/d.
- LPG depropanizing, 3,300 b/d.
- Fuel gas treating, 1,425 tonnes/day.
- Hydrogen generation, 37,000 tpy.
- Pressure-swing adsorption, 28,000 tpy.
- Sour-water stripping (hydroprocessing), 100 cu m/hr.
- Sour-water stripping (nonhydroprocessing), 250 cu m/hr.
- Amine regeneration (three units), 480 cu m/hr each.
- Sulfur recovery with tail-gas treatment (two units), 199 tonnes/day each.
In January, IOCL let contracts to Larsen & Toubro Ltd. subsidiary L&T Hydrocarbon Engineering Ltd. (LTHE) to provide EPCC on two units at IOCL’s more than 300,000-b/d full-conversion refinery at Paradip in India’s state of Odisha on the country’s northeastern coast. LTHE will deliver EPCC for a 357,000-tpy monoethylene glycol plant as well as a 180,000-tpy ethylene recovery unit. Both units come as part of IOC’s ongoing 37.52 billion-rupee ethylene glycol project at Paradip.
Also, in January, Numaligarh Refinery Ltd. (NRL), a group company of BPCL, received clearance to proceed with the long-planned expansion of its 60,250-b/d Numaligarh refinery in the Golaghat district of Assam in far-northeastern India. As part of the 225.94-billion rupee project, which intends to expand crude processing capacity at the refinery by 120,500 b/d to 180,750 b/d, NRL also will build a 180,750-b/d, 1,398-km crude pipeline from Paradip to Numaligarh, as well as a 120,500-b/d, 654-km products pipeline from Numaligarh to Siliguri. Part of India’s Hydrocarbon Vision 2030 for the North-East, which aims to double oil and gas production by 2030, the proposed capacity expansion and pipelines project aims to help meet growing demand of petroleum products in northeastern India, ensure secure crude feedstock supplies to all four state-owned refineries in Assam, and enhance product exports to India’s geographically contiguous neighbors, namely Myanmar, Bhutan, and Bangladesh.
According to a detailed feasibility study for the refinery’s expansion completed by EIL in March 2014, the project would add the following major capacities:
- Combined crude-vacuum distillation, naphtha splitting; 120,500 b/d.
- Naphtha hydrotreating; 19,480 b/d.
- Continuous catalytic reforming; 12,290 b/d.
- Naphtha isomerization; 6,990 b/d.
- Diesel hydrotreating; 58,160 b/d.
- Full-conversion hydrocracking; 39,920 b/d.
- Delayed coking; 22,970 b/d.
- Solvent deasphalting; 15,160 b/d.
Elsewhere, Pakistan Refinery Ltd. (PRL) in March said it is moving forward with its previously announced plan to upgrade and expand its 55,000-b/d hydroskimming refinery along the coastal belt of Karachi, Pakistan. The proposed $1-billion project aims to upgrade the site into a deep conversion refinery as a means of achieving compliance with the government of Pakistan’s requirement for products that meet Euro 2 diesel specifications (i.e., 500 ppm sulfur). With a detailed feasibility study for the upgrading project already completed, PRL said its board of directors has decided to invite expressions of interest from engineering contractors for the award of the project’s FEED as well as engineering, procurement, and construction (EPC) contracts. A revised estimated investment cost will be determined following completion of FEED activities, followed by taking of final investment decision and execution of EPC. The refinery revamp is to include installation of a diesel hydrotreating plant as well as a thermal gas oil unit. The operator, however, did not reveal a specific timeframe for the project’s anticipated completion.
Americas
In September, Husky Energy Inc. received required permit approvals to begin reconstruction of its 47,500-b/cd refinery in Superior, Wis., after a fire broke out at the site on Apr. 26, 2018. Demolition of damaged equipment resulting from the fire is now largely completed, and reconstruction is scheduled to begin immediately. The rebuild will occur over the next 2 years, with the refinery scheduled to return to full operations sometime in 2021. Key features of the rebuild and modernization project will include:
- Implementation of best available control technology incorporating advances in technology and efficiencies from across the refining industry.
- Increased energy efficiency, in full compliance with federal, state, and local regulations.
- Configuration for the refinery to run in a continuous mode averaging 45,000 b/sd, which includes a 5,000-b/d average increase in heavy oil processing to 25,000 b/sd.
- Work to equip the refinery to produce a full slate of products, including asphalt, gasoline, and diesel, enhancing Husky’s ability to service the US Midwest.
Once the refinery is fully ramped up, Husky said it expects the overall downstream throughput capacity across its refineries to reach 400,000 b/sd.
The Superior refinery, which Husky acquired in 2017 and is the first US refinery along the route of the Enbridge mainline, is equipped to process the operator’s own Canadian heavy crude feedstock into gasoline, diesel, and asphalt for the US Midwest. Before the April 2018 fire, Husky previously committed to investing in key capital projects to improve operational efficiency of the refinery, including former owner Calumet Specialty Products Partners LP subsidiary Calumet Superior LLC’s earlier planned Superior Flexibility Project (SFP). Announced in early 2017, the SFP proposed upgrades to increase the plant’s ability to process a wider variety of crudes to enable improved product yield, recovery, and overall operational performance as well as capture higher margins following the refinery’s scheduled 2018 turnaround, during preparations for which the 2018 fire occurred.
In November, HollyFrontier Corp. announced it is building a new renewable diesel unit (RDU) at its 100,000-b/d Navajo refinery in Artesia, NM. The RDU will have a production capacity of about 125 million gal/year. The proposed investment will provide HollyFrontier the opportunity to meet demand for low-carbon fuels while covering the cost of the operator’s annual RIN purchase obligation under current market conditions. HollyFrontier said it expects the RDU project, which will include corresponding rail infrastructure and storage tanks, is estimated to have a total capital cost of $350 million. To be funded with cash on hand and anticipated to generate an internal rate of return between 20-30%, the project is scheduled to be completed during first-quarter 2022.
Delek US Holdings Inc. in May announced it would invest $150 million in a series of projects over the next 5 years to improve operations at its 74,000-b/sd refinery in Krotz Springs, La. The proposed enhancement projects at the refinery will include infrastructure improvements, plant construction and renovations, and installation of new machinery and equipment. Announcement of the Krotz Springs enhancement projects follows Delek US’s completion of its previously announced 6,000-b/sd alkylation unit to add product flexibility and increase margin potential at the refinery. Completed in early April at a total cost of $138 million, the alkylation project has improved overall refinery flexibility by converting lower-priced isobutane into higher-value alkylate, enabling production of multiple summer grades of gasoline as well as increasing octane for production of premium gasoline. Delek also told investors in May the Krotz Springs refinery is exploring the possibility of producing low-sulfur marine fuel in the future.
In April, Valero Energy Corp. said it will invest $400 million to expand alkylation capacity at subsidiary Valero Refining New Orleans LLC’s 340,000-b/d St. Charles refinery in Norco, La. The project will increase the existing unit’s capacity to convert isobutane and low modular-weight alkenes into alkylate for high-octane gasoline. The alkylation unit expansion also will include new pipes, feed driers, an olefin feeder, accumulator, and other unidentified components. Already in its execution phase and still scheduled for startup in 2020, the project will expand alkylation capacity at St. Charles by 17,000 b/d. A similar $300-million alkylation project scheduled for commissioning in second-quarter 2019 is under way at Valero’s 250,000-b/d Houston refinery that will expand alkylation capacity at the Texas site by 13,000 b/d.
Separately, Valero subsidiary Diamond Alternative Energy LLC and partner Darling Ingredients Inc. will invest a combined $1.1 billion to expand to their joint-venture Diamond Green Diesel’s 275 million-gal/year renewable diesel refinery in Norco. The 400 million-gal/year expansion of the refinery—already North America’s largest renewable diesel plant—will increase renewable diesel production at the site to about 675 million gal/year to make it the second-largest plant of its kind in the world. Scheduled to be completed in late 2021, the project will involve construction of a second renewable diesel plant and renewable naphtha finishing installation (Train 2) adjacent to the Diamond Green Diesel refinery’s existing Train 1. Addressing its $550-million portion of its investment into the Diamond Green Diesel refinery, Valero said it expects margins to be supported by increasing renewable fuel mandates and carbon pricing.
Valero in early April also told investors it expects to complete a $975-million coker project in 2022 at its 395,000-b/d in Port Arthur. Designed to improve margins and light product yields, the project involves installation of a 55,000-b/d coker and sulfur recovery unit, creating two independent CDU-VDU-coker trains at the site. Alongside improving turnaround efficiency and reducing maintenance-related lost margins, the project will enable full utilization of existing CDU capacity, reduce vacuum gas oil purchases, and increase heavy sour crude and resid processing capability as well as light product yields.
In February, ExxonMobil let a contract to KBR to provide services related to the operator’s recently approved project to expand refining capacity by more than 65% at its 366,000-b/d integrated refining complex in Beaumont, Tex. As part of the reimbursable contract, KBR will deliver detailed EPC services for offsites and interconnecting units included in the expansion project. This latest contract followed ExxonMobil’s earlier award to TechnipFMC PLC to provide EPC for four new units to be added as part of the project, including an atmospheric pipe still, kerosine hydrotreater, diesel hydrotreater, and benzene recovery unit. Already under construction, the expansion project will add a third crude unit within the refinery’s existing footprint that will increase light crude refining capacity at the site by 250,000 b/d, supported by increased production in the Permian basin. Part of the operator’s 10-year, $20-billion “Growing the Gulf” investment initiative, the crude unit is scheduled for startup by 2022. ExxonMobil previously announced plans to build and expand manufacturing facilities in the US Gulf region as part of its Growing the Gulf initiative. Growing the Gulf projects include expansion of Beaumont’s polyethylene capacity by 65%, a new selective cat-naphtha hydrofining (SCANfining) unit to increase production of ultralow-sulfur fuels by 45,000 b/d at Beaumont, and a new 1.5 million-tpy ethane cracker at the company’s integrated chemical and refining complex in Baytown, Tex.
In Canada, Gibson Energy Inc. completed an expansion and debottlenecking project at its Moose Jaw, Sask., refinery made possible by Saskatchewan’s Oil and Gas Processing Investment Incentive program, which is aimed to enhance the province’s competitiveness in oil and gas development by enabling increased value-added processing and infrastructure capacity. Completed on June 29, the expansion aims to increase the refinery’s throughput capacity by about 30% to 22,000 b/d, with no increase in greenhouse gas (GHG) emissions, ultimately reducing the site’s per-barrel emissions of oil processed by about 20-25%. Gibson Energy’s Moose Jaw operation consists of a heavy crude oil processing plant that produces a variety of refined products, including distillate and asphalt.
In May, Petroleos Mexicanos (Pemex) confirmed it will build Mexico’s previously proposed 340,000-b/d refinery in the Port of Dos Bocas, Tabasco, on its own. The refinery, which comes as one of the main projects to help achieve Mexico’s energy independence and ensure national security, will cost about 160 billion pesos. With a budget of 50 billion pesos allocated for this year, construction of the project was to begin on June 2 and be completed in May 2022. The decision for Pemex to build the refinery follows the government’s rejection of outside bids during an official tender process, all of which came in above the country’s proposed project budget. Mexican President Andres Manuel Lopez Obrador said Pemex, alongside the country’s Secretariat of Energy, will receive full support in execution of the project. The United Nations also will actively participate in the project to ensure best practices of transparency and anticorruption are carried out during project execution. Upon announcing the project in late 2018, the government said the Dos Bocas refinery would produce 170,000 b/d of gasoline and 120,000 b/d of ultralow-sulfur diesel.
Africa
Egyptian Refining Co. (ERC) in November commissioned its long-delayed grassroots refining upgrade project built within the existing Mostorod Petroleum Complex, 20 km northeast of Cairo in Qalyoubia governate, Egypt. All the units at ERC’s refinery are now operating and scheduled to ramp up to full production before the end of first-quarter 2020. The $4.4-billion project aims to process about 4.7 million tpy of mainly atmospheric residue feed from the adjacent 145,000-b/d Cairo Oil Refinery Co. to mainly produce Euro 5-quality refined products, such as diesel and jet fuel, intended for consumption primarily in Cairo and surrounding areas.
In March, TechnipFMC completed remaining conditions required to enable work to begin on an earlier awarded contract let by the Egyptian government for delivery of EPC services related to the modernization and expansion of state-owned Middle East Oil Refinery Co.’s (Midor) 115,000-b/d refinery in El Amreya Free Zone, near Alexandria, Egypt. TechnipFMC will provide EPC services for the expansion, including debottlenecking of existing units and delivery of new units including a CDU, VDU, hydrogen production plant based on proprietary steam reforming technology, as well as various process units, interconnecting, off sites, and utilities. Starting in 2022, the modernized complex will exclusively produce Euro 5 products, with a 60% increase in the refinery’s original capacity to 160,000 b/d of crude oil. Upon announcing the original project in 2018, Egypt’s Ministry of Petroleum and Mineral Resources (MPMR) said the Midor expansion project—which will cost a total of $2.2 billion—would increase crude processing capacity at the site to 175,000 b/d. Alongside increasing Midor’s crude processing capacity, the expansion—which comes as part of MPMR’s integrated plan to develop, upgrade, and increase efficiency and production quality of Egypt’s refineries through implementation of a series of new projects across manufacturing sites to help meet petroleum product demand as well as reduce imports from abroad—also will raise the refinery’s current LNG production by about 145,000 tpy, benzene 95 by about 600,000 tpy, and jet fuel by about 1.3 million tpy.
Elsewhere in the region, Nigeria’s federal government pledged to support Nigerian conglomerate Dangote Industries Ltd. subsidiary Dangote Oil Refining Co.’s 650,000-b/d long-planned, grassroots integrated refining and petrochemical complex now under construction in southwestern Nigeria’s Lekki Free Trade Zone. The federal government will supply crude oil feedstock as well as other necessary but unidentified inputs to support success of the new complex, said Timipre Sylva, Nigeria’s minister of state for petroleum resources. Show of support for the privately funded project comes amid the government’s belief that the refinery will attract more foreign direct investment into Nigeria upon its completion, as well as the important role the integrated complex will play in helping to reverse Nigeria’s reliance on fuel imports to meet domestic demand, Sylva added.
Nigeria also is in the process of establishing two 200,000-b/d condensate refineries to boost domestic refining capacity, said Mallam Mele Kyari, group managing director of state-owned Nigerian National Petroleum Corp. (NNPC). Kyari’s confirmation of the condensate refineries follows NNPC’s August 2018 announcement that it would establish the two refineries at Western Forcados and Assah North Ohaji South (ANOH) areas of Nigeria’s Delta and Imo states, respectively. Once completed, the condensate refineries—coupled with 445,000-b/sd capacity of NNPC’s existing refineries scheduled to soon be modernized—will help transform Nigeria into a net exporter of petroleum products to help guarantee the country’s energy security, Kyari said.
Now scheduled to be completed by 2021, Dangote’s $12-billion Lekki integrated complex—which will become the world’s largest single-train refinery upon commissioning—will include a 650,000-b/d CDU, a 3.6 million-tpy PP plant, a 3 million-tpy urea plant, and gas processing installations to accommodate 3 bcfd of natural gas that will be transported through 1,100 km of subsea pipeline to be built by DIL. The complex will be equipped to produce 33 million tpy of petroleum products, including gasoline, diesel, kerosine, aviation fuel, and other petrochemicals.
Dangote’s integrated complex joins a series of other projects under way by the Nigerian government to modernize and expand capacities of refineries operated by NNPC as part of a strategy to meet Nigeria’s domestic demand for refined products and reduce its reliance on imports. NNPC recently confirmed it is moving forward with the long-planned modernization of its state-run refineries in a program that will optimize processing capacities at the sites by 2022. The program for full rehabilitation of NNPC subsidiary Port Harcourt Refining Co. Ltd.’s (PHRC) Port Harcourt refining complex—which includes a 60,000-b/sd hydroskimming refinery and 150,000-b/sd full-conversion refinery—in Nigeria’s Rivers state, Warri Refining & Petrochemcial Co. Ltd.’s 125,000-b/sd refinery in Delta state, and Kaduna Refining & Petrochemical Co. Ltd.’s 110,000-b/sd refinery in Kaduna state will begin in January 2020, according to Kyari.
“[W]e will deliver this project by 2022. We will commence actual rehabilitation work in January. We will do everything possible between October and December to close out all necessary conditions for us to deliver on that project. I believe that with the support that we have from the shareholders—government of this country, the entire staff of this company, and the contractors—I believe it is doable, and we will deliver the project,” Kyari said.
In his presentation on the progress and milestones on Phase 1 of the projects, Tecnimont SPA project manager Carmelo La Mattina said the inspection aspect of the project has progressed to 91%, with the project’s final report and EPC proposal now reaching 75%. La Mattina also confirmed Tecnimont would deliver the first phase of rehabilitation project soon, assuring there were no challenges as the project continued to progress efficiently.
Daniele Tamburini, project manager for consulting company NAOC, also confirmed that work completed so far by NNPC and Technimont on the rehabilitation project complied with global standards. Tamburini said NAOC was ready to receive the full report of the scoping for final assessment and support the corporation to deliver the project in record time.
Earlier this year, PHRC let a $50-million contract to Tecnimont and Tecnimont Nigeria Ltd. (TNL) to carry out a complete integrity check and equipment inspections of the Port Harcourt complex. Tecnimont and TNL’s scope of work under the Phase 1 rehabilitation program was to involve a 6-month assessment at site, including relevant engineering and planning activities in preparation for Phase 2 of the refinery modernization project, which will entail a full rehabilitation of the complex aimed at restoring the refining capacity to a minimum 90% of capacity utilization. Subject to successful completion of the integrity check, Tecnimont and TNL, in collaboration with an unidentified partner, also was to execute EPC for the project’s second phase.
The two-phase PHRC revamping project forms a strategic part of NNPC’s development of Nigeria’s downstream business. Eni previously entered a memorandum of understanding with NNPC to partner on PHRC’s modernization, which—alongside upstream measures that call for intensifying oil and gas production operations with an increased focus on development and exploration activities in the onshore, offshore, and ultradeepwater areas operated by Eni subsidiaries NAOC and Nigerian Agip Exploration—outlines Eni’s commitment to cooperate on rehabilitation and enhancement of the Port Harcourt manufacturing site.
In Angola, Eni SPA—as part of its earlier cooperation agreement with state-owned Sonangol EP—let a contract in June to a subsidiary of Maire Tecnimont SPA for an upgrading project involving installation of two new processing units as well as other utilities and offsites at Sonangol’s 65,000-b/d refinery in Luanda. KT-Kinetics Technology will provide EPC services for a naphtha hydrotreater, including a naphtha splitter, and a catalytic reforming unit. Scope of work on the project also will include some unidentified utilities and offsites, as well as necessary tie-ins for integration with the existing refinery. Scheduled for start-up and testing in about 2 years from the start date of the project, the new units will enable the refinery to quadruple the gasoline production to 1,100 tonnes/day from 280 tonnes/day, as well as improve product quality while minimizing the site’s global environmental footprint. The proposed project plays a crucial role in Angola’s national target to reduce fuel imports and reach independence in its fuel supply, which currently is produced by the Luanda refinery, Angola’s only. The proposed project joins other initiatives in the country’s plan to reduce volumes and costs associated with imported fuel, including Sonangol’s recently signed agreements with the United Shine consortium for construction of a new 60,000-b/d refinery in Cabinda as well as proposals for construction of new refineries in Luanda and Lobito.
