In discussing this topic, we will cover: the latest challenges ahead for refiners: The trends, are: heavier crude slates, combined with decreased demand for heavy products and tightening fuel specifications, are all leading to an overall excess of residues and a shortage of hydrogen. We will show how gasification is a comprehensive solution to these converging problems. Then, I’ll discuss a couple of real-life cases where gasification has been implemented in refineries. I’ll review GE’s vast experience, as the leader in gasification. Finally, I’ll close by giving you an update of GE’s commitment to the next generation of gasification technology.
There are tough times ahead … again. In fact, another “perfect storm” is brewing. Several diametrically-opposing trends have been developing. Crude supply is getting heavier, with higher sulfur and fuel oil content, while, at the same time, the regulations for transportation fuels and refinery emissions (including CO2) are becoming more stringent. Add to this, the increasing demand for clean distillate fuels, and tightening specifications for Bunker Fuel oil, and we are looking at some very challenging times. To meet tighter specifications of low to zero sulfur distillates and marine diesel oil, a typical 150,000 bpd refinery could see increased hydrogen demand of 38MMscfd. At the same time, natural gas supply, the traditional source of supplemental hydrogen, through SMR, has been very volatile and increasingly expensive. To minimize fuel oil production, we will see more heavy conversion installations, leading to more petcoke production. To sum it up, the future looks to be long on coke and short on hydrogen. Of course, we cannot entirely predict the future. And it is also important to remember that the fundamental supply/demand crunch for overall energy has not changed much. So, it’s helpful to keep a long-term view of the situation (past & present) and plan accordingly. How will you meet these demands and remain profitable?
There are a couple of methods of getting additional hydrogen into your plant, SMR and gasification. The major difference, one requires more upfront investment and the other requires a crystal ball into natural gas prices. Additionally, SMR still leaves you with a residual product to deal with, and drag down refinery margins. Natural Gas - Since about 2001, the game has changed in natural gas prices. We are seeing a short-term depression of natural gas and LPG. But this too will go away. Again, let us recall what a supply demand crunch did to prices leading up to this past summer. Before things went south, many LNG regasification terminals sat empty, because cargo was being diverted and bought up in Asia. We are already starting to see the bottom, and perhaps the turnaround of gas prices. CERA’s chart here is current as of March 30 th , and shows predictions of the run-up in prices starting again soon. In addition to taking away the volatility risk of natural gas as your source for hydrogen, gasification has many other benefits, including residue destruction. This very fact gives you the ability to process heavier, sour crudes and take advantage of the light-heavy differentials. You can also get power out of the gasification plant, and push back on the grid, if not export. Polygeneration greatly improves the economics and flexibility of the project. So, if not natural gas, what do you use for feed?
The good news, you already have your hydrogen source, and you’ve been trying to get rid of it for years. The same bottom products you sell at negative margins can be the source of your hydrogen, while disposing of it. Listen, this “coke thing” can become a real problem. Some projections indicate petcoke production growing from about 80MMTPY to over 120 MMTPY by 2020. What are you going to do with all of it? I actually have some data around the immense amount of petcoke being “stored” in the Oil Sands. As of 2007, there were over 50 MM tons of petcoke “stored” up there, because it costs more to transport it than it’s worth. This “storage” is expected to grow to over 220MM tons by 2020. The same problem applies to land-bound refineries and could increasingly apply to yours. Another potential concern is liability. When you sell (give away) your petcoke, it usually goes overseas, where it may be burned in an environmentally irresponsible manner. At some point in the future, this could prove to be a liability. Wastes are almost always related back to the producer of the waste. Just look at what happened with MTBE in the US. The US refiners were essentially mandated to use MTBE as an oxygenate to replace tetra-ethyl lead, and are now facing lawsuits for it, because of contaminated groundwater from gas station storage tank leaks. Canada is now viewing this problem as an opportunity, to be a “future energy resource…through gasification…to reduce demand for natural gas.” You see, gasification can solve many of these problems simultaneously, by providing hydrogen, steam and power, by disposing of a waste product in an environmentally-responsible manner. Again, hydrogen you need, by responsibly disposing of waste products you don’t.
Liquids gasification offers some unique advantages. And, petcoke makes a great gasifier feedstock. It has a historically flat price band, compared to much more volatile, and expensive natural gas. It is a highly concentrated form of energy. In some aspects, it is better than coal, because it has very little ash. So, you don’t have to waste energy and oxygen essentially “melting rocks” in the gasifier. You can also simplify your business model and headaches by eliminating the whole coke logistics portion of the plant, and by rationalizing your operations.
Gasification integrates very nicely into your refinery’s existing assets to provide additional benefits, which can reduce the capital costs. You can use heavier, opportunity crudes without generating excessive emissions Improve operating margins by eliminating purchased natural gas & power Availability is critical. Accordingly, you can use the existing power/steam and SMR facilities as backups, increasing your utilization rate. If you have a coker, you already have solids handling operations for feed handling and/or slag disposal. Provides an alternative for refinery residuals (slurry oil, slop oils, etc.) as feedstock All the while, gasification will decrease your overall plant emissions Plus, CO2 can be captured and used for enhanced oil and natural gas recovery or future emissions trading credits These are all nice what if’s. Now, let’s take at look at some real results.
The Sarlux refinery installed gasification back in 2001 to destroy visbreaker tar and produce power, steam and hydrogen. It was running at 90%+ availability in 2006, without a spare gasifier. With a proper sparing/operating philosophy, these numbers could increase to close to 100%. As the flowsheet shows, they are producing 40,000 Nm3/hr of hydrogen, 100 T/hr of med press steam, 85 tons per hour of low pressure steam, and exporting 550 MW of power to the grid, by disposing of 150 tons per hour of visbreaker tar. This information was published in an Article from Gas Turbine World.
I have mentioned that gasification can reduce emissions. Here are the striking data from ISAB, that installed a GE gasification plant back in 2000. As the charts vividly illustrate, gasification reduced overall emissions exponentially. SOx emissions were reduced by almost 96%. Nox emissions were reduced by nearly 90%, and particulate matter was reduced by 87%. They are now producing much of the refinery steam needs from the gasifier instead of burning fuel oil in their boilers. I need to thank ISAB Energy Services for approval to use this slide
With experience, we are getting much better. While Sarlux had more than 90% availability back in 2006, in recent years, we have seen even better numbers. These numbers are not GE numbers. These are the numbers that were reported to us from our customers. What’s important to note here is that these are all numbers based on solids gasification. While they have spares, given the added difficulties of solids, these are very good numbers. With the correct sparing & operating philosophy, 95% availability is being achieved today. It’s also important to note that we are improving installation and startup times. So, experience is critically important to success…
Speaking of experience, GE has been the gasification leader since 1948. There are 65 facilities around the world using GE technology, with another 20 currently under construction. GE (Texaco) developed the first heavy fuel oil gasifier in 1966. Today, we have 27 gasification plants operating on liquid fuels and 27 turbines with over 1MM hours operating on syngas. CO2 capture … it’s already being done. We have 33 clients globally that separate CO2 from the syngas today.
Let’s take a closer look at the experience. Regarding petcoke, I wanted to highlight the amount of experience GE has with solids gasification. There are currently 16 operating, with another 18 in the E&C phase. In the lower right, our experience is broken out by region. Asia has been the growth area of late, but we have experience around the globe.
This slide cuts the experience a different way. There are so many things you can do with syngas. Depending upon your market needs, you can produce methanol, ammonia, oxochemicals, power, hydrogen and various other products, including olefins…and we’ve been involved with most of them. Whatever your desired product, we should have the experience in developing the gasification process to meet your needs. Another thing I want to highlight is our experience with refineries and gasifying refinery feedstocks. While coal gasification has been the news of late, the majority of our installations have historically been based on gasifying refinery products. GE acquired the Texaco Gasification Process technology in 2004. Before that, it was obviously … well, Texaco’s. The point I’m trying to make is that it was developed “by refiners, for refinery opportunities.” Most of those same people now work for GE, where we can leverage their strengths, with the traditional GE excellence & discipline in executing large projects, with the GE rigor and focus on quality.
So, what about CO2? We have not discussed it too much at this conference and it is still a bit of an unknown, as far as economics and regulation. One thing we know for sure, is that CO2 will have a cost in the future, and that cost will be increasing. To remove some of that uncertainty, GE has been proactive in developing a solution for CO2 capture and sequestration. To that end, we formed an alliance with Schlumberger, one of the world leaders in oilfield services. So, we can compliment our experience in gasification, with Schlumberger’s experience with formation characterization and well bores to mitigate future risks. The technology exists. It was just a matter of joining the technologies of gasification with CCS into a complete offering that was required to deliver technical and commercial certainty.
GE is investing heavily in advancing gasification technology. To show just one example of GE’s commitment to gasification, I wanted to touch on one of our investments in developing the next generation of gasification. We have entered into an joint-venture with the University of Wyoming to build a world-class gasification research center. We are building a pilot-plant scale gasification research facility to advance technology in dry-feed design, without using lock hoppers, to increase efficiency and reliability. In 2007, we purchased Stamet solids pump technology for this purpose. While the facility is centered on the efficient use of PRB coals, the lessons learned from there will go great lengths to advance our technology in gasifying petcoke, and liquids streams. This is just one of the numerous technology centers we have created to take the technology to the next level, and again, is a demonstration of our commitment to future of gasification.
Wrapping up, I again covered the challenges facing refining today, including the increase in residual production with no place to go … how gasification offers a unique, comprehensive solution, a couple of real-refinery case studies that demonstrate where gasification has been implemented successfully, GE’s world leadership in experience and our financial commitments to invest in and improve gasification technology. Next slide -