Mangalore Refinery Project Adding Value to Existing Assets

Overview

The critical aspect associated with the Hydrocarbon installations essentially revolves around the level of flexibility that can be introduced in the Project. Traditionally, in India, the Refineries were built on a stand-alone basis as a Fuels Refinery. The Petrochemical Complexes were built separately as add-on complexes or on exclusively stand-alone basis. Times have changed however, and it is now a common realization that the real value for money lies in providing additional flexibility in the plants through Integration. This would enable adding facilities in the Complexes through which addition value addition could be realized.

In the olden days, typically between the crude price to the sales revenue generated from a refinery a ratio of 1:3 was typical, which shrank considerably as prices of crude became volatile and move upwards without commensurate increase in product prices. Gradually, this ratio became 1 to 2 times the price of the crude. Consequently, margins from a fuel refinery alone reduced considerably. This trend in general would continue, unless further value addition measures were incorporated in the Complex.

The other major issue was the extent of the cracking ratio in the refinery and the bottoms upgradation or more specifically the Nelson Criticality Index. For all stand-alone refineries with linked bottoms upgradation this was a rather low, and showed an upward trend only when bottoms upgradation facilities were incorporated along with commensurate Secondary Processing Facilities.  However, inspite of an enhanced Criticality Index the Profitability ratio of the Fuel Refinery was always limiting. The revenues from the product emanating from a refinery in terms of distillate was typically 1.5 to 2 times at best of the operating cost and needed to be pushed up further if margins of the Refineries were to be enhanced. The only way through which this can be achieved is first ensuring bottoms of barrel technology in the refinery, wherein, every component of the refinery feed and intermediate stream is upgraded into a valuable product or distillate, and thereafter, certain streams which cannot be fully utilized in the Refinery can be upgraded further to add petrochemicals to the complex.

The course of the hydrocarbon industry in India, in this context, has been gradual only, and while petrochemicals integration to the Refineries is a defined intended objective, it is only in the recent past that this has come to the fore. New complexes, essentially are built as integrated complexes, wherein each and every stream of the plant is upgraded to a valuable product. Similarly, most of the existing plants/assets have been expanded through the Brown Field Route or Higher Levels of upgradation and further to add petrochemicals to their kitty.

In this connection, Mangalore Refinery Project is a very interesting tale of a Project which has already expanded in effectively three phases, but generally referred as two phases, and has plans of mega third phase in the anvil to add additional refining capacity and Petrochemicals to its portfolio. This Article dwells on the aspect as to how this Value Addition perhaps can be carried out even without further expansion of the Refinery capacity in the Complex immediately. In fact, in Phase-1 Petrochemical Complex could be added and designed in a certain manner so that it achieves complete maturity, as and when the final phase of the Refinery takes shape. This will expedite value addition and higher returns much faster and also phase out the capital and expenditure significantly thereby avoid major capex plans of Rs.60,000 crores plus to very reasonable levels in the first phase, and finally, to achieve its designated refining capacity in the final phase both the object of higher value addition and defer/phased out capex planning therefore could be realized.

Existing Refinery and Phase-1   

The existing Mangalore Refinery operates at a capacity of about 15 MMTPA built in two phases. In the first phase, a typical distillates refinery was installed which was duplicated in phases to achieve capacity of about 11 MMTPA in the first phase. The major processing units 

comprised a MS Block and full Conversion Hydrocracker as the central upgraders. The bottoms, however, were practically left unprocessed and converted into fuel oil essentially for bunkering purposes. The Refinery had a flexibility of processing variety of crudes including the typical Arabian Mix crudes. Since in both the early phases of the Plant Hydrocrackers were envisaged as central upgraders diesel was the major produce from the refinery, though of course, MS quantum was also significant. However, the bottoms practically were not upgraded and the prices for the same were therefore recovered only equivalent to Fuel Oil Value effecting the overall economics of the Project. This inspite of the fact that a large Primary and Secondary Processing Capacity was incorporated in the Complex.

Phase-2 Refinery 

The Refinery was further expanded in the recent past around 2014 to 2016, wherein, a major Brown Field Expansion was taken up. In this Expansion, the central intent was to orient the refinery to Petrochemicals and ensure that the Fuel Oils being produced in the existing refinery was completely eliminated through upgradation of the vacuum residue to distillates. Nelson criticality of the Refinery immediately enhanced while a Delayed Coker Unit for bottoms upgradation and Petro FCC was envisaged as a central upgrader in the Expansion Project. One of the existing HCU was converted to Once Through Mode and the HCGO from Coker was upgraded further in a CHT Unit as feed to Petro FCC. This implied that the processing capacity of 15 MMTPA Refinery was addressed both including partial revamp of the existing Open Art Units as well as incorporating a new Crude and Vacuum Distillation Unit. DCU, being the common bottoms upgrader almost all the residue of Phase-1 and Phase-2 Refineries were upgraded centrally with pet coke as reject. 

Aromatic Complex 

Along with the Expansion of the Complex, an Aromatic Complex was envisaged of world scale capacity i.e. close to 900 KTA of Para xylene produced from the same. All the potential heavy naphtha stream from Refinery Phase-1 & IA were routed to the Aromatic Complex for recovery of aromatics i.e. Benzene and Xylene. All the Toluene present in the streams were alkylated to maximize aromatic recovery. Aromatic so recovered from the Complex were envisaged to be supplied to the other complexes such as PTA etc being envisaged in the MSEZ Block in close proximity.

Other Facilities

The Mangalore Refinery Complex has gradually emerged as an important conversion centre in Southern India wherein, in addition to the Refinery and the Aromatic Complex facilities several other facilities have been created. It houses Crude caverns equivalent to 1.5 MMTPA of Crude Storage and LPG Storage Facilities installed by Total in the immediate vicinity. Strategic advantages of the Mangalore Port was clearly availed of as all these facilities happen to be in the close proximity of the major port through which all the feedstock management took place. A LPG jetty and a crude jetty exists at the port to handle the cargoes from VLCC to unload crude for storage in the crude caverns and LPG from smaller vessels to be stored in spheres.

Additional Facilities have been installed in the MSEZ area with a world scale PTA Complex being set up at Jubail based on the Para Xylene as feed stock from OMPL. Gradually the Mangalore Region has emerged as a hydrocarbon hub. 

Immediate Additional Plans

From the above one can summarise the yields of the existing refinery + Aromatic Complex together below. This excludes, however, the other facilities particularly the LPG which is handled around Aromatic by M/s. Total and the facilities set up in MSEZ area.

Total Material Balance of the Existing Complex

Phase-3 of the Complex has already been outlined in their plan of further expanding the refining capacity to 25 MMTPA alongwith an Olefin Complex for utilization of additional naphtha from the Refinery for conversion to Petrochemical Intermediates in the Olefin Complex.

We, however, believe that this is where the overall scheme of optimization could be re-visited. 

New propositions

LPG Terminal 

LPG is already being handled in Mangalore and there are plans laid out for an LPG Cavern as well. All these plans could remain undisturbed. In our opinion, Propane and Butane separately must be sourced to Mangalore additionally in Cryogenic Tankers and stored in Cryogenic Tanks separately as propane and butane. The quantum of propane and butane import would be large and our proposition is that close to 650 KTPA of Propane and 1100 KTPA of butane must be imported. The Cryogenic Terminal could be located strategically between the port and the Refinery site to ensure that the advantage of the cold available in the streams is solicited as part of the Integrated New Complex. This will enable rationalization of Refrigeration loads.

Cryogenic Double Walled Tanks two each for Propane and Butane respectively are envisaged to handle the propane and butane unloading and simultaneous down-stream processing. 

PDH Complex  

All the propane as received above i.e. to the tune of 620 to 650 KTPA is anticipated to be routed to PDH Facility for conversion of Propane into Propylene. Hydrogen and Fuel Gas would be the by-product which could be utilized either in the Refinery or in the additional facilities of the expanded Complex. The PDH Complex also would be divided into two sections, the Reaction Section and the Fractionation Section. Only the Reaction Section would be envisaged as part of Processing Scheme and the PDH Affluent is expected to be routed to the Olefin Fractionation Section Unit for Recovery of Propylene and Hydrogen.  All the Cold integration of the PDH shall be integrated with the Olefin Complex and the Storage facilities for Value Addition and optimization. This will reduce the Capex of the Virgin PDH Complex substantially.

Olefin Feed Diet

The Feed to the Olefin is the central issue. The following three feeds are envisaged. All the imported butane shall be routed to the Olefin Complex as one of the feed stock stream. The other feedstock shall comprise of light kerosene + naphtha to the tune of 1130 KTA. This stream would also include the naphtha which is displaced from the Aromatic Complex on account of which BTX generated within the Olefin Complex as well as in the K-COT. 

To simplify the Olefin Complex all the C4 Mix streams generated in the Olefin Complex shall be upgraded in the K-Cot Unit alongwith Cracked Naphtha from the Delayed Coker Unit. The idea is to eliminate C4 hydrogenation and save the Hydrogen towards upgradation of Coker Naphtha in the Refinery. K-COT Unit provides the unique opportunity of converting the cracked C4 Mix, as well as, the cracked naphtha to Hydrogen, Ethylene and Propylene alongwith BTX Cut. The lighter distillates such as Hydrogen, Propylene, Ethylene from the K-Cot Unit are also proposed to be integrated in the Olefin Complex Fractionation section to save several pieces of equipment for recovery of final products in K-Cot, thereby minimizing the overall capex. The feed to the K-Cot, essentially is generated within the Olefin Complex, except for the Delayed Coker Naphtha Stream. 

Similarly, in the Olefin Complex, the initial intent is considered to utilize only 1000 KTPA of Butane and 1130 KTPA of Naphtha + Kerosene. Further the off-gases from the existing Petro FCC shall be treated and fed to the Olefin Complex fractionation unit for recovery of Ethylene and Recycling of Propane and Ethane for cracking to extinction.  The material balance is also provided separately in the table.

PDH Material Balance

 Material Balance Around K-Cot

Material Balance Around Olefin

Summary of Total Products produced from Olefin + PDH + KCOT+PFCC Offgases

From the above, it may be noted that the combined Ethylene production is well below the probable designed capacity of Olefin Complex. The Ethylene from the Olefin Unit itself is close to 774 TPA. That means there is a provision of cracking additional feedstock in the complex to enable a higher design capacity. In an effort to target a total ethylene capacity of close to 1500 TPA, the net ethylene production required would have to be augmented.

Ultimate Capacity

It is extremely important that while the Olefin Cracking Complex can be augmented in modules through addition of cracking furnaces the entire plant per se should be designed for ultimate capacity with only deferred equipment as stand-alone entities wherever possible. However, it would be good idea to design the fractionation section to close to 1485 KTPA capacity while cracking section could be built up in phases from 773 cracking (total 958 KTPA) to a total of 1460 KTPA i.e. additional capacity of 1485-958= 527 KTPA can be added as part of the additional facilities in the complex to achieve the ultimate capacity.

The following assumptions have been made to arrive at the ultimate capacity.

1.    The PDH capacity will remain un-altered at 500 KTPA of propylene production.

2.    K-Cot capacity would give up on account of incremental C4 mix produced which is therefore expected to augment from 470 KTPA to 695 KTPA. Additional ethylene, propylene and BTX shall be produced on account of the incremental feed to KCOT. On an average about 2 cracking furnaces to add about 440 KTPA of Ethylene capacity can be considered to be added to arrive at an ultimate capacity. For addressing ultimate capacity of 1485 KTPA of Ethylene from the Complex, the updated feedstock and product produced from K-Cot and Cracker would be as below:

Augmented K-Cot

Material Balance around Cracker Ultimate Capacity

Pre-Investment

In view of the above the Cracker Fractionation Section must be pre-invested for an ultimate capacity of 1485 KTPA, wherein C4 mix capacity around should be pre invested to a total capacity of 615 KTPA.

Down Stream Complex

The Down Stream Complex for the proposed study can be kept simple and may float around polymers only. For doing the same, the total material balance of the value produce from the complex may be summarised as below:

The BTX can be routed to OMPL and an equivalent naphtha displaced from OMPL to route to Olefin Complex. Pygas could be hydrogenated and blended with the gasoline pool. For the moment, it is assumed that the entire quantum produced shall be pooled with the gasoline. A total aromatic check will however have to be made to meet the specifications. For the capacities utilization of Ethylene and Propylene Phase-1 and Phase-2 Units are proposed as below:

Economics

A brief economics of the Plant is evolved considering the capacities of the Unit for Phase-1 and Phase-2 as below:

It is considered that Power in the respective phases shall be sourced from the Grid to the extent of 120 MW in Phase-1 and 160 MW in Phase-2. The overall Capex and other parameters of the Plant computed as below:

Rs. In Crores

The above numbers have been worked out considering the following prices:

Deductions

The following may be deduced from the above.

1.    An extremely attractive margin is foreseen by addition of PDH + Integrated Fractionation + K Cot + Olefin.

2.    The margins altered substantially and nearly stand doubled when the ultimate capacities are addressed. Pre investment to the tune of 2800 crores is envisaged in Phase-1 towards K-Cot fractionation section of Olefin Complex + Commensurate Utility and Offsites. All the new Units in the Polymer Block are considered as add-ons.

3.    Such Propositions should become the order of the day as the country takes steady steps forward towards fast track and steady development