An Integrated Refinery - Petro-chemical - Gasification Complex located in Land Locked Geography

Overview

During the past few years renewable energy has made a major impact in the way major countries are looking at their energy basket. Compounded with this is the asymptotic decline in the prices of solar energy, which has immediately put green hydrogen in the immediate consideration for major countries, particularly the oil importing countries like India. With all these major changes supplemented with disruptions led by electric cars and bio-fuels also various theories with respect to oil losing its sheen in the energy basket, has been under discussion amongst the policy makers and project implementers.

However, in one stroke, almost everything has been changed by the war in Ukraine. Oil is once again at the top of the agenda of all the countries including the Western Countries, and gradually, almost all the countries are once again looking at Oil strategically, to plan the future course of their respective Nations. It is now evident, that fossil fuels and renewable energy led initiatives will move together in tandem to lend energy security planning of the Nations.

While the Ukraine crisis is impacting geo political shift with respect to the fossil fuel trade, it is worthy of notice that Europe, which had practically decried coal for quite a while, is suddenly found engaged in firing up their otherwise dead coal based power plants! The energy basket led issues are recalibrating the equilibrium for all the Nations and every country is evaluating the best possible fit for their country.

Added to the enthusiasm, is also a realization that the world’s energy equilibrium is somewhat precariously placed. While till the other day, the World at large was gung-ho about how the environmental protection led energy initiatives will quickly put the fossil fuel led energy basket under pressure, it seems that the timelines and calendars will have to be revisited again. Alternatives to Fossil fuel; are surely to be up on the agenda of every Nation perhaps a little caution and pragmatism will have to be additionally factored in. Almost all the major fossil fuel producing nations are sitting on a powder keg and are extremely vulnerable on account of the geopolitical factors.?This is a huge global risk!

Of late, led by green initiatives, a lot of countries in USA and Europe have phased out significant refining capacity. This has led to problems in the times of the current crisis. Problems will further compound, as the Russian crude will not find way into Europe and West. The way things stand, there is a fairly good chance that India might perhaps leverage its refining hub?status, to consistently export a lot of distillates to Europe and elsewhere, till such time as the markets become a little calmer and the geo Political situation settles down to find an amicable solution to the crises. The fact that the process of India exporting a lot of Refinery distillates has already commenced, with private sector refineries taking a lead in the direction. It is a great opportunity as well, to exploit the widening crack between discounted Russian Crude and escalating product prices.

Indian Perspective

It would be worthwhile to recall that Indian Refining capacity is close to 250 MMTPA and will probably touch a level of 285-295 MMTPA as various expansions in the existing PSU refineries and HRRL and CPCL taking shape in the next 2 to 3 years.?Consequently, while catering to all domestic demand, there would always be a case of sustained export of distillates. While several vision papers for Government of India were evolved between2016-17, it is not surprising that the Hon’ble Prime Minister has recently reiterated the need of sustained addition of refining capacity in the country.

While doubling the Refining capacity from its existing level would perhaps be a somewhat ambitious target, but a plan for addition of additional 125-150 MMTPA of additional refining capacity by 2035 does seem viable and definitely on the horizon, to take the total refining capacity of the country to about 400-425 MMTPA. In the interim, there are a number of changes that are taking place in the hydrocarbon sector, wherein the petrochemical growth has been robust and strong and promises to remain so in the immediate visible future of a decade and more. Consequently, there is a consistent endeavor to examine the feasibility of integrated complexes, wherein a swing between distillates to petrochemicals could be provided by way of design flexibility in the existing and new complexes.

The first major step in this direction has already been taken by HMEL, and perhaps, all the other refining companies are beginning to add significant petrochemical production within their product portfolio.?In fact, in the recent past, first generation of petrochemical integration to refineries took place with the inclusion of Petro FCC in the refinery configuration. HMEL, MRPL, BPCL Kochi are immediate configurations wherein a combination of VGO Hydro-treater and Petro FCC were provided to ensure very significant level of propylene recovery from the plant.

The refineries at HMEL and MRPL supported a world scale Polypropylene facility for captively consuming all the propylene that was produced from the Petro FCCs. BPCL Kochi however, decided to have this propylene production support a Derivative complex to produce Acrylates and Alcohols. Paradip Refinery went a step further to additionally recover Ethylene from the refinery off-gases in a standalone Ethylene recovery unit to support an MEG Complex. The real Integration however, was carried out at HMEL, where the off gases from PFCC and DCU were Treated and routed to the fractionation section of a Cracker to recover Ethylene product, as well as recover all the ethane and the propane from the off – gases to be cracked to extinction. This is a significant value addition and this trend is sure to sustain.?

HRRL Refinery also envisages a Petro FCC along with an Olefin Complex integrated as part of a grassroots refinery configuration itself.?When in operation, very high petrochemical production from this refinery can be envisaged. The petrochemical production from the HRRL refinery is high because of the crude quality and secondly, because of the integrated nature of the complex. CPCL Nagapattinam, as well as horizontal integration of BPCL Refinery at Mumabi to the proposed complex at Raysena, also envisage a Petro FCC as a central VGO up-grader.?It can safely be assumed, that all future complexes in general, will have a petrochemical orientation wherein the flexibility of operation of swinging the product profile between distillates to Petrochemicals would be inbuilt.

The super-mega refinery envisaged along the West Coast also intended to maximize production of petrochemicals, both Aromatic as well as Olefinic to capitalize on the large refining capacity, integrated in the complex as a feedstock producer for the petrochemicals. The sole intention behind the complex was to provide the flexibility of operation between distillates to petrochemicals while also making adequate provisions to export significant quantum of distillates and Petrochemicals.

Grassroots Integrated Complexes in Land Locked Region

India, being a large country has a somewhat typical geography. The Southern end of the country is a peninsula, wherein both the East and West Coast is surrounded by sea and consequently, it provides a unique opportunity of integrating large industrial projects with ports, jetties, SPM etc to handle the various raw materials for processing in various industrial complexes to cater to the domestic requirements as well as for export as required. Since India is a net importer of energy, significant amount of fossil fuels transit takes place in the coastal areas.

The other significant part about the country’s geography is that most of the coal, ore mines etc are located in the Northern and North Eastern part of the country. Additionally, on account of early industrialization distribution gaps the demand of energy is extremely high in the North, North-West and Southern Regions of the country. The Eastern end of the country has been somewhat energy deficient and perhaps naturally, a little laid back in development, and therefore, very large energy requirements hitherto, were not foreseen therein. In the past 7-8 years the focus of the Government of India has been eastwards and consequently, a lot of infrastructure projects in the North East, large Refinery in Orissa and the Urja Ganga Gas Pipeline along with an LNG terminal at Dhamra have matured. This is leading to a lot of industrial activity and energy penetration in the city/ hinterland, wherein the energy deficiency hitherto, is being gradually obviated.?Additionally, need for more gas based projects, as well as more coal/pet coke blended??fertilizer/methanol complexes based gasification units, are on the anvil.

The country has been pragmatic in terms of energy distribution, and while the subject has been debated times out of number, as to whether the mega hydrocarbon complexes should be located around the coastal belts for the?products to be transported to the consumers across the country, or alternatively, crude should be transported to various land locked areas and major projects installed therein for cascaded and all round development to take place in the regions, besides of course catering to the local and adjoining area distillate and petrochemical requirements. All the major Northern belt Refining and Petrochemical installations such as Mathura, Panipat, Bina, HMEL and very recently Rajasthan have been conceptualized based on transportation of crude through long cross country crude pipelines to these locations, wherein product refining and petrochemical facilities have been/are being set up to ensure development of the states, regions and pockets.

We recall with nostalgia that during the times of conceptualization of Panipat and HMEL, various economic studies were carried out to examine the internal rate of returns for the integrated Pipeline + Refinery the selected locations accounting for the differential savings that would result on account of the product distribution in the vicinity of the installations. In each of these cases, advantages of setting up the land locked complexes was established, in addition to the fact, that such major projects were required additionally to spur development in the region. Therefore, inspite of what might not be able to be justified by the naked eye, rigorous analysis does support land locked complexes also. The holistic picture outweighs some of the disadvantages that the land locked facilities apparently throw up as part of the analysis.

Perspective towards large integrated complexes

While the West Coast Mega Refining and Petrochemical Complex was conceived on a concept wherein the project would enable the country the leverage to become a petrochemical hub, its scale and capacity was simply mind??boggling. It had a very significant component of export quantum too embedded in the analysis. Contrary to that, the land locked complexes are to be looked at a bit differently.

Our own detailed analysis reveals that given the disruptions which are taking place in the energy segment, a grassroots refinery cum petrochemical complex with more than 20 MMTPA capacity, is frankly not justified to start with. The problem is, that by very virtue of the crude essay irrespective of the Refinery Configuration, considerable quantity of distillates are produced in the refinery, notwithstanding the fact, that the complex would have a typical petrochemical orientation.?Our studies reveal that petrochemical production beyond 33 to 35% of the crude throughput begins to hurt the economics of the project adversely. This implies that for very large capacities significant amount of distillates would be produced in a single location, which could pose challenges of product distribution domestically, unless of course there is a significant incentive to cater to the export market.?Also the petrochemical complexes though have to be built to economies of scale are generally limited in size. For instance the minimum economic size of an Olefin Cracker could range between 1.7 to at best 2 MMTPA Aromatic Complex also to the extent of 1 to 1.5 MMTPA. All down-stream units, the largest being the Polymer Units range maximum to the extent of 450 to 600 KTPA.

This implies that a very large petrochemical capacity would involve multiplicity of chains and therefore, significant implication on capex and plot area.?Reasonable single train refinery of 20 MMTPA with roughly 33 to 35% of petrochemical production (Olefin) would be handy. The other problem is, that on the Aromatic end the Paraxylene and PTA capacity is almost saturated and there would always be a rate race to squeeze in some Aromatic capacity. For the moment the Aromatic chains are not being considered to augment the petrochemical produce.

Proposition

A closer look at the India map of Hydrocarbon complexes does reveal that there are installations around peninsula Regions, as well as up North and Eastern segment. In the Central India per se, not many hydrocarbon complexes have been conceived. Bina seems to be an exception apart from Pata and Vijaipur which are more of Gas processing and Gas based Petrochemical facilities. Barauni slants more towards the East.?Most of the product transit therefore, encompassing the central India is connected through pipelines, railways and tankers.

Generally speaking there could be good case to look into at least one integrated complex in Central India catering to the belt between East Maharashtra-Madhya Pradesh-Chattisgarh and Telengana. This integrated complex could be catered to both from the Western as well as Eastern ports of the country. On an average for consideration purposes a 1000 Kms length of crude pipelines could be envisaged from the port up to the precise project location.

Configuration

Since the integrated complex has to have a petrochemical orientation ideally lighter crudes are preferable. However, design of an integrated complex needs to be robust and flexible and consequently, exclusive dependence on lighter crudes would be an issue, particularly as lighter crude availability is somewhat restrained across the globe. Therefore, it would be important to look into medium, heavy crudes, wherein perhaps crude blend of 60:40 and even 70:30 in favor of heavier crudes could be considered. This would imply that the refinery bottoms up-gradation costs would be relatively higher.

The other important aspect is that heading towards Central India one could be in close proximity of coal and mineral belts of the country. A great idea would be to chose a location of the integrated complex wherein coal would be available readily. If the coal is of better quality (lesser ash content) it would be bonus.?The other important aspect is that if coal is available then the refinery could be logically integrated with an expansion unit, such that bottoms of the barrel up-gradation would be possible and realization of value added products from the least cost of raw material would be possible.

For the purposed of study, it has been considered that the integrated complex would be located in the proximity of coal mines within 100-150 Kms at best. A somewhat simple configuration for the refinery, with the intention of eliminating the CRR Unit completely has been considered. Also given the fact that Aromatic market is saturated, facilities such as PX/PTA Unit immediately do not hold promise and are therefore being discouraged. The refinery could be designed with the orientation of maximization of petrochemical produce with zero straight-run LPG, zero kerosene addressed in the configuration. The entire SR LPG and kerosene production would be preferentially routed to Olefin Complex. Similarly, all the straight-run naphtha, Coker naphtha, after hydro treatment would be routed to the Olefin Complex for maximization of Petrochemical feed.

The VGO up-gradation in the refinery would be essentially through a VGO hydro treater which would be designed to process the VGO and the Heavy Coker gas oil for essentially producing hydro treated bottoms streams as feedstock to Petro FCC. The Petro FCC shall be designed for high severity operation for maximization of propylene production, as well as incidental maximization of ethylene in the off-gases.

Since the coal is anticipated to be available in the immediate vicinity of the complex, a Coker unit gets justified for up-gradation of the residues as the least cost solution in the refining segment. Pet coke as produced from the Coker unit could be blended with the coal, for processing in the gasifier to generate syn gases, which after cleaning and CO2 recovery could be utilized for maximization of production of ammonia/urea and methanol.?Also ethanol from the back end of the PSA in the Gasifier section as well as from the tail gases from the gas based hydrogen plant in the Refinery could be obtained as a gasoline blending product.

All diesel produced from the Crude and Vacuum Distillation as well as Coker could be upgraded in DHDT Unit which could be additionally equipped with cracking catalyst to practically operate as a mild hydrocracker. This would enable maximization of LPG, naphtha and kerosene produce from the DHDT while minimizing the diesel production. All LPG, Naphtha, kerosene as above would be routed to the Olefin complex.

The cracked LPG from PFCC would be treated to recover propylene as product and propane as feed stock to the Cracker. Similarly, the Butane content from the FCC Cracked LPG would be separated into Butene and Butane with Butene finding way into the cracked LPG Pool, while butane would be routed to the Cracker. Naphtha from Coker shall be routed to the Naphtha Hydro-treater before routing to the Olefin Complexes. The off-gases from DCU and FCC could be amine treated and routed to the cryogenic section of the Olefin Complex for recovery of ethylene as product, and recovery of ethane and propane as feedstock for cracking to extinction in the cracking furnaces.

With the above configuration, it may be noted that apart from FCC Naphtha there is no other gasoline, which is anticipated to be produced from the refinery section. Diesel from DHDT and VGO hydro-treater would make up for the product diesel pool. All other components barring the cracked LPG, FCC naphtha and the Diesel produced from DHDT is actually intended to be routed as feedstock to the petrochemical section of the integrated complex.?The only other exception is the pet coke which as mentioned above shall be blended with coal and routed to the Gasifier.??

Petrochemical Complex

With practically all LPG, Naphtha, Kerosene, Recycled Ethane, Propane and Butane feedstock from Petro FCC, the Olefin section of the plant can be expected to be of substantial size. Our calculations reveal that for a 20 MMTPA Refining capacity 2 Olefin Plants of 1.7 MMTPA multi feed crackers could be provided to maximize the production of ethylene and propylene based on the above criteria.

Since the plant is land locked, it is desirable that all the C4 Mix should be hydro-treated and recycled back to the cracker. All the C5+ streams from the cracker could be hydro-treated for recovery of C5 streams to be recycled to the cracker and recovery of Benzene as a product. All toluene, Xylenes and Pyrolysis?gasoline as such, would be available to be blended with FCC Naphtha to be routed to the final blender for preparation of gasoline.?

To meet the requirements of the refinery products a significant Hydrogen Plant capacity would be required to meet the hydro treating requirements of the refinery accounting for the surplus Hydrogen generated from the Olefin Complexes. The net Hydrogen requirement is expected to be upwards of 225 KTPA. Lanzatech facility located down-stream of the tail gas of the PSA Unit would yield considerable quantity of ethanol which would be routed to the gasoline blender. Methanol and Ethanol as received from gasification complex would also be available to be routed to the gasoline blender to meet the E-20 specification and M-10 specifications of gasoline.

Downstream Block

All the Ethylene and the propylene from the Olefin Complex along with the propylene from Petro FCC would be available for setting up the down- stream unit. The quantum of ethylene production is to the tune of 3.5 MMTPA and propylene to the tune of 2.4 MMTPA therefore a substantial down-stream block can be conceived. Large multiple chain capacities of Swing, HDPE, MEG, PP could be considered as first generation polymers and glycol to be produced from the Petrochemical Block.

The balance ethylene and propylene shall be utilized to produce niche petrochemicals such as PO/PG, EPR, Cumene/Phenol ensuring captive consumption of the total production of ethylene / propylene / benzene. The product pattern of the down-stream block obviously can be altered based on other products that may be considered to be alternatively produced from the complex.

?Gasification

The entire pet coke produced from Coker as well as coal available from the mines could be blended together, for routing to the gasification block for production of syn gas. The syn gas could be cleaned and shifted in favor of hydrogen production which could be recovered through a PSA system after CO2 recovery. Nitrogen from the O2 plant could be combined that Hydrogen to produce ammonia which could be utilized for production of urea after captively consuming CO2. The balance syn gas after supporting a world class Ammonia/Urea Complex could be used to produce methanol as blender for the gasoline pool.

Economics

For a Complex of this nature, a detailed study would be required to ascertain detailed cost estimates. However, an order of magnitude of study is carried out to examine the economics of the plant and broadly the following important parameters are inferred from the same. A conventional mode of project implementation is considered for the Capex estimation. For the Economics the following price bands have been considered:

From the above, an economically viable case is feasible wherein initially, a massive integrated hydrocarbon complex could be put together, alongside a significant gasification facility. This apart from several other features would provide significant energy security as well, in terms of the directional reduction of fossil fuel import.

Additionally, urea produced from the complex would be at the lowest cost of production and enable minimizing the fertilizer subsidy bills substantially for the GOI. The net product pattern anticipated from the integrated complex is as below:

Operating Cost

Apart from feedstock cost for the entities mentioned above, the other operating costs of significance would be power import. It is envisaged that to minimize the carbon foot print only incidental power generation to the tune of 150 MW may be considered in the complex. About 500 MW of power from coal based power plant could be sourced through a dedicated hot line grid to cater to all the power requirements of the complex.?

The plant would be equipped pre-dominantly with utility boilers to fire the fuel oil produced from cracker and generate steam for integrating with the integrated complex. Power generation is anticipated from the back end of the Petro FCC as well. It is assumed that raw water would be available and sourced from adjoining rivers, municipality etc and the complex would be designed as a zero discharge facility with maximization of water recycling.

Gas integration to the complex shall be limited to production of Hydrogen and gas firing in the process fired heaters. This will enable minimum carbon foot print as well.

Strategy

For implementation such a complex which obviously cannot be an affair to be handled by a single entity. It is anticipated that at least 3 if not more major operating companies would come in some form or the other, to set a joint venture company or evolve an arm’s length arrangements to meet the objective of installation of the Project.?

An oil manufacturing company, gasification/clean up section agency, a fertilizer/ methanol manufacturing company would be bare minimum partners which could come together to set up the complex.

While the above indicated capex nos. is all inclusive, a significant component of the project including the gasification block, SPM & Jetty could be considered to be set up on a BOO basis?in addition to Nitrogen/Oxygen Plant, Hydrogen Plant and the crude and product storages for the distillates.

Conventional Mode of Implementation is suggested for the balance of the plants for minimization of the capex.?A complex of this nature could be set up within 48 months inclusive of process engineering considering that detailed feasibility report as well as the licensor selection activity is accomplished prior to start date of implementation of the Project.