Refinery Catalysts–Growth Acceleration Strategies In The Current Downturn May09

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Refinery Catalysts–Growth Acceleration Strategies In The Current Downturn May09

  1. 1. Refinery Catalysts–Growth Acceleration Strategies in the Current Downturn Christina Priya Dhanuja Rajaram Vijayan Technical Insights–Chemicals, Materials, and Food May 2009
  2. 2. Focus Points 1 The Economic Crisis and the Refinery Catalyst Industry 2 Major Product Suppliers and the Market Scenario 3 Strategic evaluation of the Current Market Dynamics 4 Stimulus Packages–Hope for Recovery? 5 Growth Strategies and Future Directions 2
  3. 3. The Economic Crisis and the Refinery Catalyst Industry 3
  4. 4. Impact of Crisis on the Global Chemicals and Materials Market Europe Europe Decline in consumer demand resulted Decline in consumer demand resulted in scaling-down of production and in scaling-down of production and Russia redundancies across all industries. Russia redundancies across all industries. Russia is affected by the Construction. automotive and real Russia is affected by the Construction. automotive and real economic downturn but its estate industries and the finance and economic downturn but its estate industries and the finance and strong position in oil and banking sectors have already been hit, strong position in oil and banking sectors have already been hit, gas reserves suggest a affecting the chemicals and materials gas reserves suggest a affecting the chemicals and materials quick comeback markets quick comeback markets USA USA Housing market collapse affected a wide Housing market collapse affected a wide range of chemicals and materials markets Japan range of chemicals and materials markets Japan Significant job losses in the industry and Automotive giants are hit Significant job losses in the industry and Automotive giants are hit plant closures (Dow, BASF, Rohm & Haas hard by economic recession plant closures (Dow, BASF, Rohm & Haas hard by economic recession and others) and resulting drop in global and others) and resulting drop in global demand; this directly affects Decline in consumer demand affects end- demand; this directly affects Decline in consumer demand affects end- all dependent chemicals and market pricing, which in turn led to all dependent chemicals and market pricing, which in turn led to materials markets volume reduction materials markets volume reduction 4
  5. 5. Impact of recession on the Refinery Catalyst Industry Decrease/Cancellation in the number of refinery projects. Lesser effect on diesel demand • Sluggish Oil Demand in US and Europe has led to refining margins facing short-term pressure. Global Economic Crisis • Demand is likely to decline by around1.1 million b/d in US and Europe; - Utilization cuts: US refiners (Gulfcoast 2.5%, East coast–5%), EU refiners (0.5%) Investment in new refinery capacities doubtful. Opportunities for catalytic technologies aimed at higher refinery throughputs Lower cash flow for R&D investment • Credit Crunch-substantial reduction of throughputs in the US and Europe will become necessary and this could lead to an additional reduction in utilization of 5%. • The smaller and more vulnerable refineries will be severely Opportunities for sulfur affected by the credit crunch. removal and aromatics saturation. Increase in number of hydroprocessing units. No effect on Opportunities to develop Fuel specifications cost-effective catalysts 5
  6. 6. Poll Question Which of the following strategies do you think will work best for refinery catalyst companies in the current economic downturn Collaborations and Technology Partnerships Investments Customer Support R&D and Innovation Others 6
  7. 7. Major Product Suppliers and Market Scenario 7
  8. 8. Refinery Catalysts–Major Suppliers by Product Types Suppliers FCC and Additives Reforming Hydro-cracking Hydro-treating Isomerization Albemarle Chevron Lummus BASF Johnson Matthey Haldor Topsoe Criterion UOP LLC Sud Chemie Grace Davison Strong Market Low-Market Presence Presence Source: Frost & Sullivan 8
  9. 9. Strategic evaluation of the Current Market Dynamics 9
  10. 10. Force Field Analysis–A Strategic evaluation Current Scenario Desired Scenario • Exxon Mobil’s reformate alkylation Demand for Maintaining technology coverts benzene-rich High Octane Number reformate and light FCC off gas olefins to high octane gasoline. Need to improve Manufacture of catalysts for • Albemarle has introduced Ketjenfine refinery throughput specific application segments 770, hydrodesulphurization catalyst to produce ultra-low sulfur diesel (ULSD). • BASF has introduced the Prox-SMZ Increased need for Catalyst design challenges technology for maximizing distillates to diesel over gasoline higher olefins. • The development of Australian and Regulative and Higher catalyst production costs Canadian companies to start the mining Legislative standards process for the production of rare earth metals. Poorer accessibility of raw Use of heavier feedstock materials for rare earth catalysts Push Forces Pull Forces 10
  11. 11. Challenge Assessment Recommendations Implementation Challenges • Process optimization. • Improvement on process economics • Develop alternatives for precious Higher Production Cost • Develop effective regeneration technologies metal-based catalysts. • Enhance the performance characteristics • Better surface characteristics. • Structural modification for effective • Alternating surface properties pore size distribution. Catalyst Design • Good poison resistant characteristics • Novel chemistry concepts for Challenges • Better availability of acidic and basic sites on the enhancing activity and selectivity. surface • Resistance to metals and gases to suit any type of feedstock. • Higher selectivity and activity. • Improvement on process economics Catalysts for specific • Resistance to metals and gases. • Suit the needs of different feedstocks applications • Investment on hydrogen network • Optimize utilization of hydrogen optimization. • Australian and Canadian companies • Develop other sources of rare earth metal suppliers. have already started mining for rare Poor accessibility of rare • Develop alternate materials for replacing rare earth earth metals. earth metals metals. • Investment on R&D for futuristic materials. 11
  12. 12. Stimulus Packages–Hope for Recovery? 12
  13. 13. Global Response: Massive Government Stimulus USA $787 bn American Recovery and Reinvestment Bill $700 bn bailout rapid interest rate cuts $23bn support for top three auto companies; Plan to create 2.5 million jobs by 2011 EUROPE 900 UK: £250 bn bailout Germany: $67 bn relief package 800 Belgium and Switzerland: Capital infusion Size of Stimulus Packages ECB: Interest rate cuts 700 France: $50 bn stimulus package U S B RUSSIA 600 D i Support for Russian ruble l $20bn stimulus package 500 A l BRAZIL m i 400 Infrastructure development under PDP (more o o than $64bn into country’s financial system) u n 300 n s CHINA JAPAN Interest rate cuts Interest rate cuts t 200 $586bn stimulus 447bn yen stimulus (infrastructure, rural) package 100 INDIA SOUTH KOREA Interest rate cuts Interest rate cuts and 0 $4bn stimulus package efforts to keep currency Brazil China India Japan Korea Saudi UK US (infrastructure, stable. $11bn stimulus exports, textiles) package Arabia 13
  14. 14. Stimulus Packages –Drivers for Growth USA Rest of the World Opportunities with $800 million for Biomass projects • China is expected to announce a 500-billion-yuan Biorefining stimulus package for the struggling petrochemical • Efficient catalytic industry. The stimulus package includes 100-billion- technologies for yuan investment in 2009 and 2010 for oil products biorefineries–thermochemical upgrade, and investment of 400 billion Yuan for platform. construction of 20 new large-scale petrochemical $6.3 billion Refining and • Integration concepts with projects. for energy Energy Efficiency efficiency biorefining. • India--The government is working on a plan to Grants • Hydrogen production from provide a major stimulus to the chemicals and • Incentives for ethanol and biofuels. petrochemicals industry by revising customs/excise energy efficiency. • Production of biodiesel from duty on inputs required by the industry. • Catalysts that resist heavy contamination. vegetable oil. • The European Union has committed 59% of its • Technologies for hydrogen • Technologies for stimulus funding to green programs. The Commission network optimization. conversion of biomass voted a package on renewable energy in December • Cost-effective techniques derived oxygenates in 2008 setting the 10% renewable fuel goal in the for energy efficiency. transport sector by 2020. Countries such as existing petroleum refineries. • Opportunities for enzyme Belgium, Germany, Poland, and UK also have production/development. some funds for green investment, hinting at a • $1 billion energy efficient futuristic, but potential opportunity for large scale Other Drivers programs biorefining. for Rebound - Alternative fuel vehicles • Emerging use of underutilized refinery feedstock (syn gas, castor $787 billion Stimulus Package oil and glycerin) 14
  15. 15. Growth Strategies and Future Directions 15
  16. 16. Growth Strategies Collaborations and Customer Support Technology Partnerships • State-of-the-art catalyst technical support systems and technology • Collaborations between various entities to develop and help attain a competitive edge–on-site technical support, pilot plant protect new technology-lesser individual investments for all the studies and software supported catalyst performance/lifecycle entities. predictions. • Benefuel and Seymore Biofuels LLC plan to build the 10 • Criterion’s CENTINEL & ASCENT Technology–a customized MMgy using Benefuel’s solid catalyst technology. catalyst system. • Albemarle with UOP and Petrobas to provide FCC catalysts. • UOP’s quick fix solutions. • Selective optimization of catalyst design-utilized for different • Increase investments catalytic activities. • Feasibility studies for the futuristic investment plans should be • Decline in base metal prices warrants increase in Research undertaken (heavy feedstocks, hydrogen, LPG conversion, and bio- activities. fuels). • Research for biorefining-for instance, in Canada, Syntec • Grace has increased its investment in R&D by 61% since 2000 and Biofuels announced the launch of a $2.5 million R&D program introduced a variety of new and next generation refinery catalysts that to develop new catalysts for producing biobutanol and help maximize the yield and efficiency of resid feedstock. biopropanol from biomass. Innovation and R&D Investments 16
  17. 17. Prioritization of R&D Strategies Objective R&D Positioning Level 0 Criteria Industry Degree of Degree of Growth Requirement Challenge Innovation Potential Level 1 Criteria Legislation/ Catalyst Number of Industry Non-Industry Return on Criticality Time Frame Regulation Performance Challenges Initiative Initiative Investment Alternatives Hydrogen Conversion Maintain Maintain Conversion of network of Heavy Low Sulfur Low aromatics Excess LPG optimization Feedstock 17
  18. 18. Final Priorities Level 0 Criteria Industry Requirement R&D Priorities Growth Potential 37.6% Degree of C hallenge C onversion of Heavier Feedstock 8.1% Degree of Level 1 Criteria Innovation C onversion of Excess LPG 13.5% Legislation/Regul ation Hydrogen Network Optimization 13.4% Removal of Revenue Aromatics Generation Performance of 27.4% the catalyst Removal of Sulfur 0.0% 10.0% 20.0% 30.0% 40.0% Criticality Number of Industry Initiative Challenges Time Frame Non-Industry Initiative 18
  19. 19. Future Directions and R&D Opportunities Energy-efficient Conversion of catalysts and cost- Multi-tasking heavy feedstock–a effective catalyst high- key industrial regeneration performance measure techniques catalysts Hydrogen Hydrogen network production from optimization–Long-term biofuels goal for the refiner Stringent fuel specifications– Protocoled biorefineries Green gasoline Conversion of underutilized Continued innovation –chemical catalyzed from bio-oils– feedstock such as castor oil for sulfur removal and biorefinery processes existing HT and and glycerin aromatics saturation HC catalysts STRATEGIC DIRECTIONS Current 2030 Green efforts Current industrial measures Long-term opportunities 19
  20. 20. What Next! Register for Frost & Sullivan’s Growth Opportunity Newsletter and keep abreast of innovative growth opportunities (www.frost.com/news) Register for the next Chairman’s Series on Growth: (http://www.frost.com/growth) Join us at a Growth, Innovation and Leadership 2009: A Frost & Sullivan Global Congress on Corporate Growth (www.frost.com/gilglobal) Request a proposal for a Growth Partnership Service to support you and your team to accelerate the growth of your company. Relevant Reports: Refinery Catalysts--A Strategic Assessment of R&D Trends and Developments Alert Services: High-Tech Materials Alert, Performance Materials Alert, and Advanced Coating and Surface Technologies 20
  21. 21. For Additional Information Steve Lee Strategic Account Manager Chemicals, Materials and Food, Asia Pacific (65) 6890 0914 steve.lee@frost.com 21

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