West Coast Refinery - An Elusive Dream

Overview

The West Coast Refinery was conceived way back in 2016-17 and has ever since been under various stages of discussions. While the initial work in terms of developing a flexible configuration of developing a Swing between distillates to Petrochemicals was envisaged.?The Complex Refinery was conceived originally in line of hydrocarbon hubs similar to what exists in various parts of the world. A 60 MMTPA Refinery along with an intention of maximizing the Petrochemicals to the extent of 35% of the throughput was conceived.?

The Project location was always an issue as size and scale of the Project warranted considerable area requirements, upwards of 15,000 hectares. While initial work was carried out with Ratnagiri as prospective location, the same could not be taken forward in view of the anticipated environmental concerns and adverse impact on the local mango groves in the region. An alternative location at ROHA in the Konkan region was explored but for technical reasons could not be shortlisted.

In the early stages itself, after the preliminary configuration was carried out, it was felt that the capacity of the refinery must be rationalized. While the ambitious plan of super mega refinery cum petrochemical complex was an ambitious objective, perhaps it would be difficult to justify such a large complex at one location. Apart from environmental considerations the disruptive technologies began to build the pressure on a very large project. An alternative configuration with 40 MMTPA capacity was evolved, though it was felt that the ideal capacity should not exceed 20 MMTPA with the objective of maximization of petrochemicals.

With the reduced capacity of the refinery various location options can be considered. Perhaps, it is in light of the same that the Hon’ble Minister for Road, Transport & Highways, Mr. Nitin Gadkari, has suggested that the Project instead of being located in the coastal region, perhaps could be located in Vidarbha Region. In the early days, with the large coastal complex at Ratnagiri a provision of laying a Propane / Propylene Pipeline connecting West Coast Refinery from Ratnagiri to Vidarbha Region was foreseen. This was essentially to consider trains of PDH / PP Complex or stand alone PP complexes in Vidarbha for gainful development of the region. At that point of time, water availability was identified as a major constraint in the region.

Locating Complex in Vidharbha Region

Relocating the Refinery/Petrochemical Complex to a landlocked location Vs coastal location has its own advantages and dis-advantages. On the positive side Vidharba region may support product disposition from Central India location to wider range of consumers. It can be anticipated that the distillates and the petrochemical produce may find themselves closer to the consumer markets.

On the contrary, the land locked location of the Refinery cum petrochemical complex will lead to incremental Capex on account of crude and gas requirements for the complex.?Additionally, the equipment sizes will have to be restricted and in certain cases multiple trains may be required for process units. The advantage of economies of scale will be substantially lost. ?For instance, while implementing the Panipat and HMEL Complexes, equipment diameter and weights limited the size of single piece consignments. All major/ large towers and vessels practically had to be fabricated at site. This invited several project implementation related issues and directly impacted the overall land requirements and the Capex of the plants.

The coastal projects offer the flexibility of large scale sizes of equipment to be implemented in single piece, such as has recently been demonstrated in Dangote Refinery in Nigeria where equipment upto 15-20 M diameter and 1500- 2500MT ?were delivered in single piece to site and further dressed up with Piping, Insulation and Platforms at grade, before rigging in position. Coastal projects also open up the avenues of modularization of units/parts for fast tracking implementation. The land Requirements can be rationalized even as cost benefits are availed relative to the land locked complexes.

In the early days, while studying the Vidarbha Region paucity of water was identified as a major issue. We understand through latest newspaper articles though, that perhaps some of these problems seem to have been overcome. This is a good signal notwithstanding the other constraints mentioned above. But sea water availability in proximity utilized for desalination – VCM/PVC Plants may be lost. However, the Project location involving a Refinery is always strategic and perhaps, sometimes the positives are considered to outweigh the negatives.

Complex Configuration suggestions ?

A reasonable configuration of the complex to be located either in Vidhraba or any coastal region may be possible as below:

1.????The Refinery capacity should be limited to 20 MMTPA with the intention of maximization of the petrochemicals.

?2.????The Secondary processing units could be a combination of large Petro?FCC Unit along with VGO Hydro treater and Once Through Hydrocracker Units restricted in Conversion such that unconverted bottoms could be integrated to the petrochemical complex.

?3.????All bottoms of the refinery should be converted into distillates through a combination of Delayed Coker and Residue Hydrocrackers. The coke produced from the Delayed Coker could be used in the CFBC Units to produce steam for the complex along with incidental power.

?4.????The RDS Unit must be designed, such that, distillates produced from the same is designed to maximize feedstock to the Olefin Complex.

5.????All distillates produced in the refinery must be routed through a mild hydrocracker where light ends up to 35%+ could be recovered from the same to be routed to the Olefin Complex.

?6.????All the light ends from the entire Refinery (i.e. Straight run LPG, Propane from PFCC, all straight run naphtha and kerosene + Hydro treated naphtha from MHC, Once through Hydrocracker bottoms, residue Hydrocracker bottoms) all form feedstock to the Olefin Complex to maximize the production of petrochemicals.

?7.????About 4-4.5 MT of Ethylene, 2.5-3 MT of Propylene, about 500 KTA Benzene and 200 KTA of Toluene produce can be foreseen from the complex.

Strategy

A total of 35–40 % of the throughput approximately could be converted into Petrochemicals including Aromatics. The distillates produced from the complex to range between 40-45%.?Efforts should be made to eliminate all LPG and kerosene from the complex except cracked LPG from Petro FCC to be available for merchant sale.

About 15% of ethylene + Propylene could be reserved for niche petrochemical for which the promoters could enter into Joint Venture with the Licensors, such that, Petrochemicals such as PO/PG, EPR, SBR, Propylene Derivatives etc could be produced which are being predominantly imported in the country. The balance part of Ethylene, Propylene and BTX produced in the complex, could be utilized for producing first generation Petrochemicals such as LLDPE/HDPE, LDPE, HDPE, MEG, Styrene, VCM/PVC etc. All the water from the refinery may be recycled for minimizing the intake and part of the water could also be utilized for production of green hydrogen to be integrated with the complex.

About 5 MMSCMD of gas integration may be required for catering to internal fuel and hydrogen production requirements. To minimize captive generation of power, grid connectivity through a dedicated hot line from a coal based power plant could be considered.

?Project Implementation

1.????In case the Project location is around the coast, equipment sizing would not be limiting and maximization of single piece consignments could be considered for tall towers, large vessels, high pressure reactors and modularized plants / sections of plants.

?2.????Project schedule of 48 Months from the date of appointment of Licensor for the schedule controlling units could be considered.

?3.????For a large units such as CDU/ VDU, Petro FCC, Olefin Plants and Residue Hydrocracker Unit must be implemented on the EPCM/OBE route, whereas all the other units such as VGO Hydro-treater, MHC, OHCU, Polymers, MEG, Treater units etc may be implemented on the EPC route.

?4.????Sulphur Block, Hydrogen Plant, Tankages, CFBC, N/O2 Units, Water Block facilities could all be implemented on BOO route.

?5.????The niche Petrochemicals through the JV may be considered to be implemented on a combination of EPCM and EPC/OBE route. Similarly, all utility integration and other offsite facilities may be implemented on EPCM/OBE routes.

?6.????In case the plant is located in a land locked area, such as Vidharbha Region, an extra land space of 10% of the total plant area must be acquired for setting up major workshops for fabrication of all tall towers, LP reactors and ODCs to be fabricated at site. The reactors and separators for the Hydro processing facilities could be limited in size based on ODC limits. On an average an extra 6 months Schedule increment can be foreseen for the land locked project.

?Environmental Concerns

Irrespective of where the plant is located, the green house emission would be an issue, particularly, as large petrochemical complexes are recommended to maximize the value addition from the refinery for ensuring flexibility between distillates to petrochemicals.

Since the emerging technology for the Olefin Complexes in Europe is switching over to electrical furnaces, it may be worthwhile to ensure that solar power to the tune of 1000 MW minimum is integrated with the complex. Possibly a cracking furnace could utilize power in place of fossil fuel, firing to reduce the carbon foot print.

Efforts may also be made to maximize the green hydrogen production, such that grey hydrogen production in the refining complex is minimized to the extent possible.

In either case possibility of Minimizing the power production in the complex may be considered by integration through a dedicated Grid connect from a Coal Based Power plant.

For the refinery products, only movement through rail wagons and pipelines may be considered for both the alternatives. For the bulk petrochemicals production however, container movement may be necessary, for which appropriate market destinations and logistic strategy planning may be necessary.

Capex

The Capex of the Complex would be substantial. The numbers could be estimated once the Project location and the Project configuration are firmed. A return of 18- 20 % though can be expected. This of course, is critically dependent on the price of the crude as well as the refinery distillate cracks. The price of diesel is critical though for ensuring a substantial return as inspite of a larger slant towards the Petrochemicals, eliminating a large quantum of diesel production is not possible economically.

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