Indian Refining Scenario and Global Perspective - petrofed ...

Petrofed SymposiumIndia as a Refining HubIndian Refining Scenarioand Global Perspective22 nd March, 2010Shriram Hall, PHD House, New DelhiSusobhan SarkarDy. General manager (Technical)Indian Oil Corporation Ltd.

Structure of the presentation… Global Refining Scenario Indian Refining ScenarioRefining Challenge‣Future of Oil Refining: Technologies andConfiguration‣Fuel Quality & Climate Change – Technologiesto address the issues

Global Refining Scenario

Global Oil Refining ScenarioRegionwise no. of Refineries & Crude Processing CapacitiesAsia constitutes 23.4% of refineries and 26% of capacitySource: BP/OGJ 2007

REFINERY CAPACITIES(REGION-WISE SHARE)92010 Africa, S &C America21NorthAmerica2520625258Europe &EurasiaAsia PacificMiddle East1998 : 79.7 MMBPD 2008 : 88.6 MMBPDGLOBAL CAPACITY INCREASED BY ABOUT 9 MMBPD.INCREASE IN ASIA PACIFIC REGION IS ABOUT 5 MMBPDSource : BP Stats 2009

Source: OGJ 2007World Refining: Towards Economic SizeSmaller Refineries getting shut down…

World Refining Capacity Growth10080mmb/d6040200North America Latin America Europe FSU Africa Middle East AsiaAdditions ‘08‐15: World: 9.5 mmb/d Asia = 4.5‐5.0 mmb/d,7

Global Refining Scene—An Inconvenient Possibility105.0100.0World Demand vs Refining Capacity—Announced Case*(*As per announced refining plans that we classify as firm and likely)World Total Refining CapacityWorld Conventional Oil Demand**Refining‐Demand GapIncreasingOvercapacity7.06.05.0mmb/d95.090.085.04.03.02.01.080.02008 2009 2010 2011 2012 2013 2014 2015** Excludes biofuels, GTL and others0.0Source : FACTS SEP, 20088

World Refinery Utilization Rates100%95%90%85%80%75%70%65%60%55%50%North America Latin America Europe FSUAfrica Middle East Asia World9Source : FACTS SEP, 2008

Product BalancesGlobal Product Balance as per Announced Refining Plans2,5002,0001,500kb/d1,0005000‐500‐1,0002007 2010 2015LPG Naphtha Gasoline Jet/Kero Gasoil/Diesel Fuel oil10

Indian Refining Scenario

Indian RefineriesRefineries No. MMTPAIOC Group 10 60.2BPC group 3 22.5HPC 2 13.0ONGC/MRPL 2 9.8RIL (Pvt.) 2 62.0ESSAR 1 10.5Total 20 178.0JAMNAGAR(RIL 33.0 + 29.0)ESSAR 10.5+ 3.5)MUMBAI(BPC 12.0)(HPC 5.5+ 2.4)BHATINDA(9.0)MANGLORE(9.69 +5.31)BARODA(13.7)KOCHI(7.5 + 2.0)PANIPAT(12.0+3.0)MATHURA(8.0)BINA(6.0)CHENNAI(9.5+ 1.7)NARIMANAM(1.0)BARAUNI(6.0)TATIPAKA(0.08 + 0.08)(15.0)VISAKH(7.5+7.5)GUWAHATI(1.0)HALDIA(6.0+1.5)PARADEEPBONGAIGAON(2.35)DIGBOI(0.65)NUMALIGARH(3.0)Existing IOCSubsidiaries of IOCOthersNew / Additions

Refinery Capacity Utilisation200MMT180160140120100127.4127.4 132.47 130.1120.2122.4100 98.2132.4146.5131.7110.6148.9156.1140.7104.8177.9160.7145.31088060402002004-05 2005-06 2006-07 2007-08 2008-09Installed Capacity as on 1st April Throughput Capacity Utilisation ConsumptionAround 100% capacity utilization of Indian RefineriesSource:MOP&NG 2008

India : Downstream Industry Overview50(in MMTPA)403020100'97-98 '00-01 '01-02 '02-03 '03-04 '04-05 '05-06 '06-07 '07-08 08-09*ImportsExportsImport/Export Products onlySince 2001-02, India has transformed from being a net importer ofpetroleum products to being a net exporterIndian Hydrocarbon sector has acquired the critical mass for major productivity leaps

India : Refining Capacity Growth350300MMTPA3022502001501005027117127 127 13290 94 94 9933 33 3310644149731061781597623520210002003 2004 2005 2006 2007 2009 2012* 2017*PVT PSU Total* XIth Plan Projection• As on April 1, 2009, India has a total refining capacity of 178 MMTPA (including the newlycommissioned RIL refinery at Jamnagar)• 18 out of the total 20 refineries in India belong to PSUs (with a capacity of a little over 59%)• In the last few years, the Indian refinery sector has witnessed continuous capacityadditions and the trend will continue in near future also; Projected capacity by 2017 is 302MMTPA

India : Product Demand & Refining Capacity350300Gap between Refining Capacity & Product Demand30225023514020015017842136 1351001621005002008-09 2011-12 2016-17Refining Cap (MMT)Product Demand (MMT)Surplus refining capacity is expected to increase further by 2030India will continue to be product surplusImport/Export requirement for crude/products to be quite substantialource: PPAC/ Draft XI Plan Demand Document

Refining Challenges

Refining Challenge• Crude Oil Sourcing/ Oil Security• Margin Improvement• Environmental Issues• Funding for New Projects

Wide gaps between product demand andindigenous crude availability• Widening gap between product demand and crude productionfrom indigenous sources; Heavy dependence on Imports• Bridging the gap - Oil Equity abroad and fresh finds under NewExploration & Licensing Policy• Need for huge investments in refining, pipelines & MarketinginfrastructureSource: XIth Plan Document

Crude Sourcing/Oil Security• Crude Potential available from existing fields in Middle East, Africa and SouthAmerican countries to support refining capacity expansion and sustaincapacity utilization• Efforts for new finds– Attractive New Exploration Licensing Policy (NELP)• 206 oil & gas exploration blocks awarded in 7 rounds• 68 major discoveries reported• Investment commitments of the order of $ 10 billion• Huge Unexplored acreage• World’s biggest deep water gas discovery made in 2002 (K-G Basin)– India Hydrocarbon Vision – 2025• 100% exploration coverage of all sedimentary basins by 2025• Internationally competitive fiscal terms• Alternative sources : CBM and Gas Hydrates

Oil Security: Strategic Storage• Storage & Supply Infrastructure– Integrated Energy Policy recommended 90 days storage of oilimports– Present storage coverage is 74 days and will reduce to 63 dayswith increase in the oil imports– Storage capacity augmentation actions have been taken toenhance the total storage capacity to 78 days.– Planned capacity addition: 8.62 MMT• 5.33 MMT by ISPRL at Vizag, Mangalore and Padur• 3.29 MMT at other locations– Strategic storage to provide addl. 12 days cover

Margin Improvement• Refinery Configuration/ Complexity FactorImprovement to address– Changing Feed Stocks : Input costreduction– Product Mix improvement : Value addition• Energy Efficiency improvement

Refinery Configuration/ ComplexityChanging Feedstocks : Input Cost Reduction• Quality – 0 API / Sulfur / Acidity• Widening of crude basket• New Frontiers - Unconventional sources - Tar sands,Oil shales• Compulsion to co-process feed-stocks of Bio-origin

7 7 713 14 1554 56 5726 23 21

Increase in Upgrading Ratio Driving the Market80.070.060.050.040.030.020.0North AmericaLatin AmericaEuropeFSUAsiaMiddle EastWorld10.00.026Source : FACTS SEP, 2008Upgrading Ratio % (FCC equivalent/CDU Capacity)

Source : Mckinsey

Resid Upgradation ProcessesFCCSource : Shell Global Solutions

Slurry HydroCrackingFuture Resid TechnologyResidProcessResidProcess with HVGO Recyce

Energy Efficiency Improvement• Energy efficiency improvement by use of– Energy efficient technologies/designs– Energy efficient equipments– Best operation and maintenance practices• GHG emission reduction through energy efficiencyimprovement• Close monitoring and timely actions bridge the gap in specificenergy consumption to match with the global best• Tools applied are: Pinch Technology, Hydrogen Management,Waste Heat Recovery, Steam Power balance (CogenerationCycle)• Increased utilization of gas in place of conventional liquid fuel

Energy Reduction(MBTU/BBL/NRGF)90807060502002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09IOC 85 77 77 73 71 67 64INDUSTRY 89 84 81 77 74 71 69

Environment Issues• Managing new norms– Environmental• Quality upgradation requirements• GHG emission– Societal (Corporate Social Responsibility)– Regulatory and legislative norms– Sustainability

Transportation Fuel QualityNorth AmericaEuropeFSU & Central AsiaAfricaAsia & OceaniaS & C AmericaWorldwide Reduction in Sulphur Content in HSD & MS

Environmental Issues: Stringent Product Quality NormsAUTO FUEL POLICY : Aligning with global normsProduct Quality Parameters Equivalent LocationsSulphur – 50 ppm (max)Benzene – 1 % (max)Aromatics – 35 % (max)Olefins – 21 % (max)Euro IV13 Major citiesby April 2010PetrolSulphur – 150 ppm (max)Benzene – 1% (max)Aromatics – 42% (max)Olefins – 21% (max)Euro III13 Major cities- CurrentRest of the country – by April 2010Sulphur – 500 ppm (max)Benzene – 3% (max)Euro IIRest of the country - CurrentCetane No – 51Sulphur – 50 ppm (max)95% Rec. – 360 0 CPAH – 11% (max)Euro IV13 Major citiesby April 2010DieselCetane No – 51Sulphur – 350 ppm (max)95% Rec. – 360 0 CPAH – 11% (max)Euro III13 Major cities- CurrentRest of the country – by April 2010Cetane No. 48Sulphur – 500 ppm (max)95% Rec, - 3700CEuro IIRest of the country - Current

CLIMATE CHANGEIncreased conc. of GHGs (CO2, CH4, N2O, PFCs, HFCs, SF6) inatmosphere due to increased human activities (last 150 years)have resulted into following climate change :Increase in CO2 concentration from 278 to 386 PPM(Threshold Value of CO2 : 350 ppm)CO2 beyond 450 PPM will make Global climate more hostile.Avg. global temp. rise : 0.74 o C in last 100 years.Climate change phenomenon has put a serious social andeconomic challenges on mankind.

GHG EMISSION BY COUNTRIESCountries Survey CO2 Eq MMT Population Per capitaYear(Millions) CO2 eqAustralia 2000 535 (VII) 19.44 27.54USA 2002 6746 (I) 280 24.09Canada 2004 740 (VI) 31.56 23.45RussianFederationEuropeanUnion1999 1880 (IV) 145.60 12.911999 4030 (II) 375.30 10.74China 1994 3650 (III) 1198.50 3.05India 2001 1228 (V) 914.00 1.34( ) Position based on discharge volume Source: carbon planet.com

Futuristic Refinery• Highly automated, integrated and energy efficient withhigh level of heat integration.• Capable to process variety of crude oils to reduce cost ofraw material Heavy and sour crude, High Acid Crude withappropriate metallurgyAlternative crude oils derived from Tar sands and shaleoils• Matching desulphurisation capability for production of 10ppm sulphur auto fuels (Euro-V spec.) including ATF andKerosene.• High performance fuels and lube oil basestocks• Zero residue• Zero flare

Futuristic Refinery• Hydrogen, power and steam production throughGasification of coal/coke and biomass.• Integration with biorefining: Production of secondgeneration bio-fuels and co-processing of biofuels inexisting refinery units.• Technology innovation to develop and adopt processesbased on biotechnology, super efficient catalysts & fuelsadditives through application of nano-science.• The performance of refineries in future will be judgedmore by their success in conserving resources like energyand water and minimizing carbon footprints. Adoption of clean technologies for reduction of GHGemission CO 2 sequestration and revenue from carbon credits Zero effluent, rain water harvesting and seawaterdesalination for coastal refineries

Funding New Projects• Investment plans for India’s downstream petroleumindustry for the period 2007-2012; ~ US $55 bn• Investment planned by IOCL in the similar period is ~US $11 bn– Refining Sector: 59%– Petrochemicals: 27%– Pipelines, Marketing and others: 14%• Majority of available fund is getting diverted in development ofnational infrastructure like power generation, roads/highways,rail, airports, ports etc. which are essential for developingcountry like India

Asia Pacific Supply -DemandBalance 2010-2030

Asian Demand TrendsOil Product Demand by Country, 1970-201512,00010,000kb/d8,0006,0004,000ChinaJapanS. KoreaIndiaIndonesiaThailandTaiwanAustraliaSingaporeMalaysiaOthers2,0000Asia Demand Highlights, ’07‐15:China: 4.9%/year (+400‐420 kb/d/year); India: 4.3%/year (+120‐130 kb/d/year); Japan: 856 kb/d/yr demand declineTotal Asia: 2.7%/year42

Incremental Demand in AsiaIncremental Demand – Main Asian Markets(2006-2025, Million tons per year)300Million tons per year250200150100500Naphtha Gasoline Jet/Kerosene DieselHistorically Chinahas invested tomeet its owndemand, and thisis expected tocontinue, asevidenced by themany firmprojects currentlyunderwayChina India IndonesiaVietnam Thailand OtherSource : Nexants, 2007

Asia Pacific Refining Capacity AdditionAsia Pacific Refining Capacity Likely Changes Through 2015Crude Distillation CapacityChinaJapanS KoreaIndiaSingaporeTaiwanIndonesiaThailandAustraliaMalaysiaPakistanPhilippinesN ZealandN KoreaMyanmarSri LankaPNGBangladeshBruneiVietnamMongoliaJuly 2007 CapacityAdd 2007-10Add 2011-15*(500) 1,500 3,500 5,500 7,500 9,500kb/d* For refining additions after 2010, assumptions have been made based on announced plans and supply and demand situation.Asia Additions, ’08‐15: CDU: 6.3 mmb/d Conversion: 3.1 mmb/d Treating: 2.7 mmb/d44Source : FACTS SEP, 2008

Supply Deficit : Regional SpecificsAtlantic Basin• High demand growth for light & middle distillates• Tight emission norms leading to dismantling of smallerunits• Limited investments in new capacity creationPacific Basin• Economic growth leading to robust POL demand• Additional investments to meet fuel quality norms• Closure of uneconomic & marginal capacity units

Supply Deficit : Regional Drivers• The projected increase in demand, coupled withcapacity rationalization expected to lead to shortfall inrefining capacity• Though a steady demand growth exists, capacityadditions are limited around the world• Several regions are expected to face supply constraintsover the next 5 years• Projected capacity additions as per announced planscannot meet the demand

Supply Deficit : Regional Drivers• 75% of Middle East production available for AsiaPacific, Eastern Europe, Latin America and Africa.• Balance assumed to serve North America and Europedemand• Middle East (capacity addition) & Eastern Europe(increased capacity utilization) expected to emergeas key export centres• Even after accounting increased supply, there wouldbe unmet demand in both Atlantic & Pacific basin

North AmericaDeficit: 43MS: 24Jet kero: 19Surplus: 68LPG: 19Naphtha:15HSD: 5FO: 14Others: 15Net: (+) 25Latin AmericaDeficit: 50Naphtha: 7MS: 10HSD: 32Others: 1Surplus: 30LPG: 5FO: 25Net: (-) 20Regional product balance, 2020EuropeDeficit: 145LPG: 17Naphtha: 23Jet kero: 54HSD: 49Surplus: 133MS: 126FO: 7Net: (-) 12AfricaDeficit: 71LPG: 5MS: 24Jetkero: 3HSD: 38Others: 1Surplus: 36Naphtha:11FO: 25Net: (-) 35Middle EastDeficit: 31MS: 26Others: 5Surplus: 188LPG: 85Naphtha:44Jet/kero: 19HSD: 17FO: 23Net: (+) 157• By 2020, world would be net product deficit @ 247 MMTPA– 100 MMT surplus (LPG:49 & Fuel Oil:51)FSU/RussiaDeficit: 13MS: 7Jetkero: 4Others: 3Surplus: 71LPG: 1Naphtha:2HSD: 34FO: 34Net: (+) 58All figures in MMTPAAsia PacificDeficit: 419LPG: 40Naphtha: 56MS: 107Jet kero: 26HSD: 86Others: 28Surplus: 0Net: (-) 419Source: PEL– 347 MMT deficit (Naphtha:15, MS:72, Jet/kero:88, HSD:147 & Others:25)

Future of Oil RefiningTechnologies & Configuration

Future DirectionsSupply Demand• Fossil fuel to continue to mainstay of energy source innear future.• Era of easy oil nearing over. In future, deep oil, tar sandand shale oil to supplement oil need.• Flexi refineries to handle a wide range of crude oilsfrom high naphthenic acid to high Sulphur levels andnew sources of oil like Shale Oils.• Feed quality improvement through demetallation ofcrude oil and heavy residues without affecting life ofcatalysts.Positive on water and neutral on carbon” will be the guidingoperating philosophy for future to sustain business.

Technological Interventions/Innovation To Process wide varieties of Crude (Heavy/High TAN/HS) : Feedmanagement tool for optimal operation of secondary/treating units Advanced Technology/Catalyst System capable of processing difficultfeeds with higher Sulphur, Nitrogen, metals, CCR/Asphaltenes etc, Bottom of the barrel up gradation : Minimization of low value/low demandproduct Upgradation of low value/surplus products‣ PetCoke Gasification : Power, H2 generation, Chemicals To meet Stringent Product quality in cost effective manner : OptimumHydrogen Consumption Efficiency Improvement in operation

Energy Efficiency Improvement• Energy efficiency improvement by use of– Energy efficient technologies/designs– Energy efficient equipments– Best operation and maintenance practices• GHG emission reduction through energy efficiency improvement• Close monitoring and timely actions bridge the gap in specificenergy consumption to match with the global best• Tools applied are: Pinch Technology, Hydrogen Management, WasteHeat Recovery, Steam Power balance (Cogeneration Cycle)• Increased utilization of gas in place of conventional liquid fuel

Future Directions• Large-scale production of biofuels from algae• Alcohol from lingo cellulosic material• Processing of non-edible vegetable oils in refineriesalong with diesel in existing units.• Pyrolysis of biomass and gasification of biomass, petresidueand coke.• Hydrogen production through water splitting usinglow-grade heat/ solar concentrators or renewablesources such as wind / solar energy.Following complete integration of petroleum refinery withpetrochemicals, the next era will be refineries integratingwith biorefining and CTX.

Future DirectionsBiomassOilCoalBiomass is once again heralded as a global energy saviour along withfossil fuelsFollowing complete integration of petroleum refinery withpetrochemicals, the next era will be refineries integrating withbiorefining and CTL

Future DirectionsIntegration with Biorefining and CTLLPGIsom, (1940)AlkylationGasolineCO 2 SequestrationSolventsBio RfiningAlcoholDieselCoalPetcokeBiomassCDUCTL/CTXARVDU1870NaphthaKerosene/ATF/MTOGas OilVRCoker1932VGOCRU(1952)LPGFCC1942Coke GasolinePPFNaphthaTCOCLOHC1960Aromatics (BTX)GasolineH 2DHDS1954GasolineHSDCatalyticDewaxing1975HSDSyngas

Future DirectionsCTX ProcessesUse of existing refinery infrastructure

Fuel Quality & Climate ChangeTechnologies to address theissues

Future DirectionsEnvironmental Regulations• Stabilizing GHG emissions to sustainable 450 ppmlevel, believed to be limiting temperature rise to nomore than 2 0 C above the pre-industrial level,remains a significant challenge.• Integrated R&D needed with thrust on developingappropriate environment friendly cleanertechnologies and to constantly realigntechnological options having least carbon-footprint.

Future Directions• Technology selection increasingly be influenced by taxes (thatmay be imposed) on polluters, carbon credits, governmentalmandates for reduction of pollution and use of fuels derived fromrenewable sources.• Currently deployed technologies, that do not address the concernof global warming, to lose their relevance.• Development and Realigning of technological options having leastcarbon-footprint will be required.• Increasing use of hydroprocessing for fuel quality improvement/desulphurisation.• Shift towards cleaner fuels richer in hydrogen or to neat hydrogenand renewables.

Future Direction• Intensive use of kinetic models and simulators for Prediction ofproperties and optimization of process variables. Improvingefficiency of process internals• Improving efficiency of operations/ hardware• Greater Understanding of catalysts at sub atomic level and developcost effective, more active and more selective catalyst forimproving efficiency and capacity• Application of biotechnology and NanotechnologyRefining over a period of time has changed fromphysical separation to molecular transformation,wherein catalysts play major role.