KBC IoE Webinar - Planning Successful Petrochemical Projects

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This free 45-minute webinar discusses: global petrochemical trends, investment considerations, alternative feedstock processes, process simulation, and ingredients for success. View now to learn more!

Volatile and high prices of crude oil, in combination with environmental concerns, have spurred the valuation of alternative feedstocks for the petrochemical industry. An in-depth comparison of new technologies for high valued chemicals production versus traditional steam cracking is required before an owner can decide to spend billions in capital on a new petrochemicals complex, be it grassroots or brown-field. This requires deep and comprehensive knowledge of the available alternative processes, a full petrochemical market analysis including an accurate forecast of feed and product prices, and rigorous process modelling to optimise the complex configuration. Whereas existing sites may have many degrees of freedom on feedstocks (LPG/naphtha/gasoil/condensate) and products (olefins/aromatics), the benefits for properly integrating an appropriate new technology can be substantial. Tens of millions of dollars per year of margin improvement can be expected if the correct technology is selected and then integrated properly into the existing complex and/or planned configuration. Alternatively, an improperly selected project can become a long-term money pit for the stakeholders instead of the desired cash cow investment.

Matthew is a Senior Consultant at KBC with over 13 years experience as a Chemical Engineer. He has primarily focused on the petrochemical industry, where he served as a process engineer and unit manager for a large polyolefin manufacturing complex. Conversant in modelling software, he was able to coordinate optimisation, manufacturing, sales, and customer services to effectively manage product inventories and execute the strategies of business management.

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KBC IoE Webinar - Planning Successful Petrochemical Projects

  1. 1. Planning SuccessfulPetrochemical ProjectsSteven Kantorowicz, Principal ConsultantMatthew Kuhl, Senior Consultant 26 September 2012 © 2012 KBC Advanced Technologies plc. All Rights Reserved.
  2. 2. Agenda• Introduction• Global Petrochemical Trends• Investment Considerations• Alternative Feedstock Processes• Process Simulation• Independent Consulting• Conclusions 26 September 2012 PROPRIETARY INFORMATION 2
  3. 3. Introduction to Petrochemical Project Evaluation• Feedstock alternatives• Process route selection• Technology comparison• Grassroots vs brownfield considerations• Forecast supply/demand/prices for feeds/products• Configuration – Available feedstock choices – Process modeling – Integration with existing units – Steam/Power study 26 September 2012 PROPRIETARY INFORMATION 3
  4. 4. Global Energy Perspectives – Petrochemicals Perspective CommentPetrochemical Industry profitability to remain • Industry consensus is the next cycle peak will be 2015robust • PetChem returns are higher than refining over the cyclePetrochemical demand will remain intimately tied • Troughs in Asia will not be as low as in other regionsto GDP growth • Mature regions will remain under import/ margin pressureAsian Petrochemicals demand and growth drives • Cooled periodically due to “seasonality” – weather; holidays;everything • Yet to see the full impact of Chinese monetary policy tighteningCapacity rationalisation will continue • No Region is immune – Old, small & inefficient plantsGeopolitical factors influence investments and • Could be stable today … issues arise essentially overnight!hence price levels • Who’s next in line for turmoil and production disruption?Middle East cost structures will move closer to • The industry so far is absorbing new Middle East additions, Asian profitability hasthose of other regions remained healthyAverage global olefins feedstock slate will become • Refinery Petrochemical Integration improves marginsheavier • Grassroots crackers & revamps will enable feed flexibilityRussia may finally develop large complexes with • Advantaged ethane feed for PE productionexport capability • Access to Eastern European and Chinese MarketsBiomass & coal conversion to PetroChems are • Being studied in China and SE Asia where feeds are abundantlocal opportunities • Have not yet made significant penetration 26 September 2012 PROPRIETARY INFORMATION 4
  5. 5. Investment Considerations in Petrochemicals Potential Investment Opportunities • Worldwide “Greenfield” petrochemical complexes  Feedstock and/ or market advantage  LPG-based in the right circumstances  Capitalising on economies of scale  Ethane-based projects in Middle East and US • Major “Debottlenecking” projects worldwide • Petrochemical assets that could be combined or integrated for efficiency • Refinery / Petrochemical Integration projects • Gas processing and LNG facilities (Liquefaction & Regasification Terminals) • More speculative investments are being considered  Coal-to-liquids – although quickly becoming mainstream  Gas-to-liquids – not fully mature; Pearl GTL in Qatar will answer many questions  Biomass to wide range of intermediates and products Innovations are essential for current and future ethylene producers  Avoid being a “laggard” relative to players with strong feedstock advantages 26 September 2012 PROPRIETARY INFORMATION 5
  6. 6. Investment Considerations in Petrochemicals Major Risks to Project Developers• Another global financial meltdown - will history repeat itself?• Slowdown in Chinese growth and/or demand• Political and military instability in pivotal regions• Potential increases in Middle East natural gas and ethane prices• Uncertainty of US natural gas prices (e.g., proposed EPA regulation of gas reservoir fracturing could increase cost)  Will ethane supply from shale be monetised – USA; China?• Further world-wide or regional greenhouse gas (GHG) legislation• Ever-tighter environmental compliance requirements on fuels products• Cost and schedule over-runs impact plans of downstream plants  Cannot start production without consistent feed stock availability Risks Must be Considered and Mitigated by Smart Planning  Avoid being a “laggard” relative to players who did their homework 26 September 2012 PROPRIETARY INFORMATION 6
  7. 7. Overview – What’s in Focus • Very Large, High Efficiency Designs • Configured for feedstock and product flexibility; including ultra heavy feeds Process • Can be easily expanded for debottleneck projects Design • Maximum on-stream time (start-up; ease of operation; maintenance; training; etc) • Focus on Energy Reduction Opportunities • Maximum heat recovery from the cracker hot fractionation section Energy • Minimum compression in the cryogenic section Reduction • Process “pinch” during Engineering • Process and Utility Integration Concept • Olefins with adjacent refineries, aromatics plants, central utility facilities and downstream Integration derivative units • Maximum upgrade of every molecule leaving the complex • Reduce Environmental Impacts • Minimise solid, liquid, vapor emissions • Decrease carbon footprint – impact of “emissions trading” Environment Environment • Reduce NOx & CO – advanced burners; catalytic methods (SCR) • Investment Issues • Economy of scale – up to limitations of towers & major rotating equipment • Lower complexity – piece count optimised versus energy consumption Investment • Integration with downstream Derivative Units – how far down the chain? 26 September 2012 PROPRIETARY INFORMATION 7
  8. 8. Process Selection & Optimisation – Methodology• Keep up with Licensor and Vendor Offerings  Reactor, Heat Removal & Recovery Sections  Feed Flexibility & Debottleneck Opportunities  Synergistic Technologies  Alternative Processes for Same/ New Products  Downstream Derivative Units  Strategic Energy Reduction Opportunities  Develop Cost of Production Models• Evaluate Projects Based On:  Process technology comparison  Structured ranking  Project implementation issues• Tools – Rigorous simulation of any configuration• Experience – Refinery, Cracker and Petrochemicals• Objectivity – Independent From Licensors• Organisation – Human Performance Improvement  Cost Estimation – Needs sufficient Project Definition  Economic Modeling – Financing; JV Selection and Negotiations  Optimise Configuration – Marketing Strategy; LP Modeling  Licensor Comparison – Selection and Negotiation 26 September 2012 PROPRIETARY INFORMATION 8
  9. 9. Available Alternative Olefin Processes• Steam Cracking dominate light olefins production • all hydrocarbon feeds possible• Alternative routes to steam cracker feedstock:  Heavy Feeds – Including direct Crude Oil Cracking  Fischer-Tropsch liquids as feeds• Alternative routes directly to petrochemicals:  Refinery Off-gas Recovery – Extensive integration with adjacent plants  On-purpose Petrochemicals from FCC (higher severity, selective catalysts, and installation of propylene recovery)  Bio-based Petrochemicals – will become mainstream over time  Catalytic ethane dehydrogenation  Catalytic ethane partial oxidation  Direct (oxidative) coupling of methane  Methanol to Olefins; Methanol to Propylene  Coal to “X” – Syngas; Liquids; Chemicals 26 September 2012 PROPRIETARY INFORMATION 9
  10. 10. 1. Undertake Base Market Study – Petroleum Based Products 26 September 2012 PROPRIETARY INFORMATION 10
  11. 11. 2. Conduct Alternative Market Study – Bio-Based Products 26 September 2012 PROPRIETARY INFORMATION 11
  12. 12. Example: Propylene Glycol Production• Standard Route – hydration of propylene oxide• Alternative Route – from bio-based glycerol  A sugar-derived building block  Is a by-product of Bio-Based Building Blocks bio-diesel from 1,4 diacids - succinic, fumaric, malic rape seed 2,5 furan dicarboxylic acid  Not commercialised 3-hydroxybutyrolactone – Undertake an in-depth 3 hydroxy propionic acid comparison of this new Aspartic acid technology versus Glucaric acid traditional routes; Glutamic acid produce more than PG? Glycerol Itaconic acid Levulinic acid Sorbitol Xylitol / Arabinitol 26 September 2012 PROPRIETARY INFORMATION 12
  13. 13. Use Rigorous Process Simulation Tools• Flow Sheet Modelling  Understand process impacts  Gain confidence that predicted results will match the plant operations  Estimate potential economic benefit of process and operational changes  Rigorous models of conventional or step out processes • Steam System Modelling • Pinch Analysis 26 September 2012 PROPRIETARY INFORMATION 13
  14. 14. Integrate New Technology at an Existing Site• Build rigorous simulation of existing complex• Maintain key integrations such as hydrogen• Ensure energy efficiency is enhanced  Use most appropriate technology• Manage environmental impact carefully  Fresh water consumption  Air, water, solid emissions 26 September 2012 PROPRIETARY INFORMATION 14
  15. 15. Consultants Role in Project Development• Identify viable alternative production technologies  Maintain rigorous tools enabling comparison with conventional routes• Bring Capital Project Excellence and Operational Excellence to Owners  Methodology - keep up with licensors and vendors offerings  Tools – rigorous simulation of any configuration  Experience – familiarity based on diverse industry experience  Objectivity – independent from licensors• Conduct preliminary economic screening Current Estimated Raw Estimated Raw Comparative Opportunity Product Market Material Cost From Material Cost for Commercial SWOT & Barriers Ranking Size New Feed/ Process Commercial Material Product• Assist owners with project evaluation/ execution based on  Process technology comparison  Ranking based on detailed methodology – technical and commercial  Implementation issues – Planning; FEED; PMC services 26 September 2012 PROPRIETARY INFORMATION 15
  16. 16. Conclusions and Ingredients for Success Key Factors Contributing to Successful Innovation Company Vision Culture that Fosters Strong Management Creativity Involvement Continual Plant Simulation Tools Presence Continuous Enhancement Management of Operational Flexibility Change Effective Team Skills Mix Communications 26 September 2012 PROPRIETARY INFORMATION 16
  17. 17. A Question and Quick Survey> Was this topic valuable? > How do you rate the – Yes webinar overall? – No – Excellent> Was the presentation – Good clear? – Fair – Yes – Poor – No Please send any further> Would you be interested questions and feedback to: in future webinars? kbc-marketing@kbcat.com – Yes – No 26 September 2012 PROPRIETARY INFORMATION 17
  18. 18. Closing> Questions?> Future webinar topics: – Market conditions – Asset optimisation – Investment support – Sustainable workforce development> We welcome suggestions for future topics – please email kbc-marketing@kbcat.com> Next webinar information will go out shortly.> Thank you for joining us! 26 September 2012 PROPRIETARY INFORMATION 18

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