1. Upgrading Options for Diesel Production
Nicolas Thevenot

2. Agenda Market characteristics Axens heavy ends technologies
Overview of the different options
Global analysis
Economic evaluation
European case
Upgrading Options for Diesel Production – Jornadas Latinoamericanas de refinacion – Mendoza 2006

3. EU-25 Market Characteristics
Source: IFP
Upgrading Options for Diesel Production – Jornadas Latinoamericanas de refinacion – Mendoza 2006

4. Latin America Market Characteristics
Source: IFP
Upgrading Options for Diesel Production – Jornadas Latinoamericanas de refinacion – Mendoza 2006

5. Argentina Market Characteristics
Source: IFP
Upgrading Options for Diesel Production – Jornadas Latinoamericanas de refinacion – Mendoza 2006

6. VGO & Resid Conversion Mapping
Topping
Unit
Crude
Oil
LPG
HyC-10
FCC
Naphtha
HyK
Vacuum
Distillation
Unit
Jet Fuel
Hyvahl
H-Oil RC
HDHPLUS®
R2R
Diesel
Fuel-oil
Solvahl
H-Oil DC
Upgrading Options for Diesel Production – Jornadas Latinoamericanas de refinacion – Mendoza 2006

7. Resid Conversion - Axens’ Offer -
1000
1000
800
H-OilRC
Ni + V Content
in Feed,
ppm
HDHPLUS
300
H-OilRC
200
Hyvahl + R2R
100
... 30 40 50 60 70 80 90
Net VR Conversion,%
Upgrading Options for Diesel Production – Jornadas Latinoamericanas de refinacion – Mendoza 2006

8. Resid Conversion Features
ARDS/VRDS TECHNOLOGY : HYVAHL
Fixed bed process for VR hydrodesulfurization
Can process feeds with high metals content using “PRS” technology
Low to Medium diesel production: 20-25%
Hydrotreated residue applications:
Ultra low sulfur (S< 0.3%) and stable fuel oil
Excellent feed for resid FCC unit (R2R) : low metal content reducing catalyst consumption + better products at R2R outlet
Upgrading Options for Diesel Production – Jornadas Latinoamericanas de refinacion – Mendoza 2006

9. Resid Conversion Features
RESID FCC PROCESS : R2R
1- or 2-Stage Regeneration (to reduce catalyst consumption from Va poisoning)
Technology: Feed injection, Mix Temperature Control, Riser Separator System RS2, Stripping with Structured Packing, Catalyst Coolers
New technology features and catalysts permit cracking of heavy feeds & high propylene yields.
Upgrading Options for Diesel Production – Jornadas Latinoamericanas de refinacion – Mendoza 2006

10. RHCK PROCESS : H-OilRC Resid Conversion Features
Ebullated bed process for VR Hydrocracking
On-line Addition/Withdrawal of Catalyst
Constant Conversion and Product Quality
Very long cycle length
VR Conversion range: %
Process VR feeds with high metals and CCR
Hydrocracked Residue application
Low sulfur (S< 1%) and stable Fuel oil
Feed for Coker or gasification units
Upgrading Options for Diesel Production – Jornadas Latinoamericanas de refinacion – Mendoza 2006

11. Resid Conversion Features
RHCK PROCESS : HDHPLUS®
Slurry technology for deep hydrocracking of VR feeds
Alliance with PDVSA, Intevep and IFP for improvement and marketing of the process
Very high VR Conversion level, more than 85% of Vacuum Residue
Can process heavy refractory VR feeds regardless of sulfur, metals, asphaltene and CCR contents
Integrated scheme with Sequential Hydroprocessing of primary hydrocracked products
Upgrading Options for Diesel Production – Jornadas Latinoamericanas de refinacion – Mendoza 2006

12. Overview of the Different Options: Case Study Base
Arabian Medium Crude: API= 30.6, S= 2.4 wt.%
Feedstock: 100,000 b/d (647.5 t/h) of Arabian Heavy/Arabian Light (50/50) atmospheric residue (S= 4 wt. %)
Investment : European location
Vacuum distillation, HDT, SMR, PPS, SRU Amines and alkylation units included
Note: HDT = hydrotreating, SMR = steam methane reformer, SRU = sulfur recovery unit, PPS = propane-propylene splitter
Upgrading Options for Diesel Production – Jornadas Latinoamericanas de refinacion – Mendoza 2006

13. LPG and C5+ throughput Total: 592 t/h
Option 1: ARDS + RFCC FG
HDT AT
LPG
C3=
Naphtha AR
ARDS
RFCC
Gasoline
647 t/h MD
Fuel Oil
LPG and C5+ throughput Total: 592 t/h
Upgrading Options for Diesel Production – Jornadas Latinoamericanas de refinacion – Mendoza 2006

14. Option 2: RHCK + Mild HCK + RFCCFG
HDT AT
LPG
C3=
Naphtha AR
Mild
HCK
FCC
Gasoline VT
VGO
647 t/h MD VR
Fuel Oil
RHCK
LPG and C5+ throughput Total: 616 t/h
Upgrading Options for Diesel Production – Jornadas Latinoamericanas de refinacion – Mendoza 2006

15. LPG and C5+ throughput Total: 626 t/h
Option 3: RHCK + HP HCK FG
HDT AT
LPG
Naphtha AR
VGO
647 t/h VT
HP-HCK MD VR
HCK resid
RHCK
Fuel Oil
LPG and C5+ throughput Total: 626 t/h
Upgrading Options for Diesel Production – Jornadas Latinoamericanas de refinacion – Mendoza 2006

16. Option 4: Delayed Coker + HP HCKFG
HDT AT
LPG
Naphtha AR
647 t/h
VGO VT
HP HCK MD VR
HCK resid DC
Coke
LPG and C5+ throughput Total: 626 t/h
Upgrading Options for Diesel Production – Jornadas Latinoamericanas de refinacion – Mendoza 2006

17. Option 5: RHCK + DC + HP HCKFG
HDT AT
LPG AR
VGO
Naphtha VT
647 t/h
HP HCK MD VR
RHCK
HCK resid DC
Coke
LPG and C5+ throughput Total: 621 t/h
Upgrading Options for Diesel Production – Jornadas Latinoamericanas de refinacion – Mendoza 2006

18. Option 6: HP HCK + VRDS + RFCCFG AT
LPG
C3=
Naphtha AR VT
Gasoline
VGO
647 t/h
HP HCK MD
HCK resid VR
VRDS
RFCC
Fuel Oil
LPG and C5+ throughput Total: 611 t/h
Upgrading Options for Diesel Production – Jornadas Latinoamericanas de refinacion – Mendoza 2006

19. *BMCI = Bureau of Mines Correlation Index
Products
Propane and butanes sold as LPG
C3= from FCC and RFC is extracted (FCC/RFCC yield: ~ 5 wt%) in a PPS and sold as C3= polymer grade, C4= alkylated with iC4
Naphtha, gasoline, kerosene & gasoil are hydrotreated when required
Hydrocracked residue (HCK residue), low BMCI* (high paraffinicity), used as a steam cracker feed, but could be also a very good base for oils
Fuel oils:
Hydrotreated LCO sold as domestic fuel oil (DFO)
LSFO and HSFO
*BMCI = Bureau of Mines Correlation Index
Upgrading Options for Diesel Production – Jornadas Latinoamericanas de refinacion – Mendoza 2006

20. AR Conversion AR Conversion, wt% N°1 ARDS + RFCC N°2 RHCK + Mild
HCK + FCC
N°3
RHCK +
HP HCK
N°4
DC +
HP HCK
N°5
RHCK+DC
+ HP HCK
N°6
HP HCK + VRDS + RFCC
with iC4 import
with iC4 import
Upgrading Options for Diesel Production – Jornadas Latinoamericanas de refinacion – Mendoza 2006

21. LPG and C5+ liquid Yield LPG & C5+ Yield, wt% N°1 ARDS + RFCC N°2
RHCK+ Mild
HCK + FCC
N°3
RHCK +
HP HCK
N°4
DC +
HP HCK
N°5
RHCK + DC
+ HP HCK
N°6
HP HCK + VRDS + RFCC
with iC4 import
with iC4 import
Upgrading Options for Diesel Production – Jornadas Latinoamericanas de refinacion – Mendoza 2006

22. LPG, C5+ and Coke Throughput
Production Capacity, t/h .
N°1
ARDS + RFCC
N°2
RHCK + Mild
HCK + FCC
N°3
RHCK +
HP HCK
N°4
DC +
HP HCK
N°5
RHCK + DC
+ HP HCK
N°6
HP HCK + VRDS + RFCC
with iC4 import
with iC4 import
Upgrading Options for Diesel Production – Jornadas Latinoamericanas de refinacion – Mendoza 2006

23.         ++ + +++ Objectives & Options G MD/G MD Options N° 1AR
conversion
LPG + C5+ Liquid
Yield
Main product
Selection
N° 1
ARDS + RFCC ++ + G
N° 2
RHCK + Mild HCK + FCC
MD/G
N° 3
RHCK + HP HCK MD
N° 4
DC + HP HCK
N° 5
RHCK + DC + HP HCK
N° 6
VRDS + RFCC + HP HCK
+++        
Upgrading Options for Diesel Production – Jornadas Latinoamericanas de refinacion – Mendoza 2006

24. Economic Assumptions & Methodology (1)
Economic evaluations based on:
Discounted Cash Flow (DCF) analysis
Profitability index comparisons (NPV, IRR, NPV/TCI, POT)
Net realization calculation ($/bbl of AR)
= Total product sales – Total operating costs
Total operating costs = Exploitation costs (raw materials + utilities, catalyst, chemicals & manpower) + fixed costs (capital charge equal to ~ 20% of total capital investment + maintenance, taxes, insurance & overheads)
Depreciation period: 10 years
Project duration: 30 years
Discount rate 12%
Tax Rate: 40% (construction duration 2 years)
Upgrading Options for Diesel Production – Jornadas Latinoamericanas de refinacion – Mendoza 2006

25. Economic Assumptions & Methodology (2)
Capital investment
ISBL (Inside Battery Limit): European location
10% contingencies
Total Capital Investment = ISBL + Off-sites + Engineering & Contractor fees + Interest on construction loan + Start-up cost + Working capital
NPV calculation based on European averaged values (between 2001 and 2006) for:
Investments, catalysts, utilities
Feedstock, products (NWE prices)
Upgrading Options for Diesel Production – Jornadas Latinoamericanas de refinacion – Mendoza 2006

26. Total Capital Investments: 2006
Billion $
TCI includes:
ISBL investments
Off sites
Engineering fees
Contractor fees
Interest on construction loan
Start-up costs
Working capital
~17%
~16%
N°1
ARDS + RFCC
N°2
RHCK + Mild HCK + FCC
N°3
RHCK +
HP HCK
N°4
DC +
HP HCK
N°5
RHCK + DC
+ HP HCK
N°6
HP HCK + VRDS + RFCC
Upgrading Options for Diesel Production – Jornadas Latinoamericanas de refinacion – Mendoza 2006

27. Total OPEX Comparison: 2006
$/ bbl AR
12.3
11.5
10.6
10.2
8.9
8.0
N°1
ARDS + RFCC
N°2
RHCK + Mild HCK+ FCC
N°3
RHCK +
HP HCK
N°4
DC +
HP HCK
N°5
RHCK + DC
+ HP HCK
N°6
HP HCK + VRDS + RFCC
Upgrading Options for Diesel Production – Jornadas Latinoamericanas de refinacion – Mendoza 2006

28. Product Revenues: 2006 Europe
Product Revenues ($/ bbl AR)
*Other = Fuel Gas + Sulfur (+ Coke for n°4 & 5)
N°1
ARDS + RFCC
N°2
RHCK + Mild HCK+ FCC
N°3
RHCK +
HP HCK
N°4
DC +
HP HCK
N°5
RHCK + DC
+ HP HCK
N°6
HP HCK + VRDS + RFCC
Products – Raw Materials
in ($/bbl AR)
28.9
27.4
28.7
21.6
31.4
31.9
Upgrading Options for Diesel Production – Jornadas Latinoamericanas de refinacion – Mendoza 2006

29. Economic Results 2006 Europe
ARDS + RFCC
RHCK + Mild HDK + FCC
RHCK + HP HDK
DC + HP HDK
RHCK + HP HDK + DC
HP HCK + VRDS + RFCC
(106 $)
1123
1006
956
657
973
1351
NPV/TCI
0.47
0.51
0.48
0.38
0.42
0.61
IRR (%)
18.5
18.9
17.2
17.8
20.1
POT (yr)(from production start)
~ 7.3 ~7
~ 8.2
~ 7.9
~ 6.2
Net Real ($/bbl AR)
5.3
5.0
4.9
3.0
4.7
7.4
Options
Upgrading Options for Diesel Production – Jornadas Latinoamericanas de refinacion – Mendoza 2006

30. Economic Results Europe 2003-2006
Upgrading Options for Diesel Production – Jornadas Latinoamericanas de refinacion – Mendoza 2006

31. General Economic Considerations Europe
Upgrading Options for Diesel Production – Jornadas Latinoamericanas de refinacion – Mendoza 2006

32. 2006 Main Changes…
AR-to-diesel price differential decrease has deteriorated the profitability of schemes producing the higher quantity of MD i.e. options 3, 4 and 5.
Schemes presenting a more well balanced production (between Gasoline/MD) while minimizing HFO production are in a better position (options 2 and 6).
Situation is worst for schemes (4 & 5) producing coke due to AR-to-Coke price differential increase
AR price increased from 254 $/t (2005) to 356 $/t (2006)
Upgrading Options for Diesel Production – Jornadas Latinoamericanas de refinacion – Mendoza 2006

33. IRR Sensitivity Study to Petcoke Price 2006 Situation
Upgrading Options for Diesel Production – Jornadas Latinoamericanas de refinacion – Mendoza 2006

34. IRR Sensitivity Study to Natural Gas Price
Upgrading Options for Diesel Production – Jornadas Latinoamericanas de refinacion – Mendoza 2006

35. Conclusion
In a diesel oriented market, conversion profitability is mainly dependent on the diesel-to-AR price differential
A diesel-AR differential around 160 $/t is required to exceed a minimum IRR of 15%
Currently, with price differentials around 260 $/t (2006), all studied options are profitable
Due to AR-to-Coke price differential increase in 2006 profitability has deteriorated for schemes producing coke
Natural Gas price has a significant impact on profitability
Optimum solution depends on refinery specific constraints
Upgrading Options for Diesel Production – Jornadas Latinoamericanas de refinacion – Mendoza 2006

36. Upgrading Options for Diesel Production

37. Atmospheric Residue Price Assessment
NWE Prices ($/t)
Source: Platts, Axens
398 $/t
400
AR (0.6%S)
AR (4%S)
LSFO (1%S)
HSFO (3.5%S)
356 $/t
314 $/t
300
283 $/t
200
100
2001
2002
2003
2004
2005
2006
From HSFO at 3.5%S (283 $/t in 2006) & LSFO at 1%S (314 $/t) quotations  Calculation of “Sulfur content adjustment” in $/t per %S (12.4 $/t/%S)
This “Sulfur content adjustment” is applied to AR at 0.6%S quotation (398 $/t) to estimate AR at 4%S (356 $/t)
Upgrading Options for Diesel Production – Jornadas Latinoamericanas de refinacion – Mendoza 2006

38. Main Prices
$/t
Upgrading Options for Diesel Production – Jornadas Latinoamericanas de refinacion – Mendoza 2006