Crude oil-to-chemicals (COTC): An
industry gamechanger?
Dr. Richard Charlesworth, Executive Director
• Refinery and Petrochemicals
Integration
• Overview of COTC projects
• Production Capacities &
Competitiveness
• An Industry Gamechanger?
Agenda
• Refinery and Petrochemicals
Integration
• Overview of COTC projects
• Production Capacities &
Competitiveness
• An Industry Gamechanger?
Agenda
Converging forces are forecasted to halt growth
in refined products
000
300
600
900
1200
2010 2015 2020 2025 2030 2035 2040
Petrochemicals products Refined products
Index of base chemicals and refined products growth
Source: IHS Markit © 2019 IHS Markit
Global refined products & petrochemical cumulative demand growth
Mill
ion
To
ns
• Annual refined product growth from
2020 to 2030 expected to be 0.6%
and then plateau due to:
• Reduced Transportation Fuel
Usage
• Substitution by NG, LPG, H2,
Biofuels
• Regulations/Taxes/Mandates
• In contrast, market forces increase
petrochemical demand due to:
• Population Growth
• Middle Class Growth
• Therefore Refinery/Petrochemicals
integration expected to grow
Refinery and petrochemical plants have
achieved various degrees of integration
Refinery Petrochemical
Naphtha
Reformate
Propylene
C2 & LPG Gas
Hydrogen
C4=
Crude Flexibility
Fuels
Lube base oil
Energy
Integration
Feed Flexibility
• Ethane
• LPG
• Condensate splits
Petrochemicals
Refineries must integrate to survive
-30
-20
-10
0
10
20
30
40
0 5,000 10,000 15,000 20,000 25,000 30,000 35,000
Fully Integrated Ethylene Integrated Paraxylene Integrated Non Integrated
2020: East-of-Suez refinery margin analysis
Source: IHS Markit © 2018 IHS
Cumulative crude capacity, thousand b/dNe
t C
ash
Ma
rgin
s, $
/ba
rre
l of C
rud
e
The portion of the barrel of oil converted to
petrochemical feedstocks continues to increase
Degree of Refinery/Petrochemical Integration =
Feedstock for Petrochemical Production
Crude processing capacity of Refinery
0%
5%
10%
15%
20%
Reliance Sinopec Aramco Exxon BP Chevron Petrobras Rosneft
Deg
ree
of i
nte
grat
ion
Integration Analysis
2010 2024
Crude Oil to Chemicals (COTC) elevates
petrochemical production to refinery scale (x4)
• COTC goes beyond such “state-of-art” refinery
petrochemical integration.
• COTC reconfigures a refinery to produce maximum
chemicals instead of fuels and thus merge refinery and
petrochemical plants into one.
• Due to its large scale, COTC is an imminent threat to
existing producers however it depends on the chemical
chains
Refinery
Petrochem
COTC
• Refinery and Petrochemicals
Integration
• Overview of COTC projects
• Production Capacities &
Competitiveness
• An Industry Gamechanger?
Agenda
Crude oil to chemical routes
Steam cracker Naphtha
Petro
chem
icals
Conventional
process
Crude oilRefinery
Aramco/SABIC
Hengli
Zhejiang
Shenghong
Henyi
Light crude
Crude oil to PX
complex
Mixed crudes
Crude oil to
chemicals complex
PEP 29I
ExxonMobil Steam cracker
Light crude
PEP 29J
PEP 29J
PEP 303,
PEP 303A
PEP: IHS Process
Economics Program
ExxonMobil’s approach to steam cracking
crude oil
• Preheat crude oil in cracker furnace convection
section
• Partially vaporize heated crude in flash pot
outside furnace
• Flash pot overhead vapor (76%) fed to cracker
furnace radiant coils
• Dispose of 24% flash pot bottoms liquid (resid)
in refinery
• Implementation of this technology depends on a
very light oil such as TAPIS.
• Scale is limited by steam cracker
Source: PEP 29J
ExxonMobil Huizhou Phase 1 Process Units
Cru
de
de
sa
ltin
g
Direct Crude
to Steam
Cracker Phase
1
$ 4 bn
Investment
Light crude
e.g.Tapis
1,200 KTA
Ethylene
Propylene
C4
Pygas
Clean Fuel Oil
Sulfur
660 KTA metallocene PE
550 KTA bimodal PE
430 KTA high impact PP
420 KTA homo PP
Butene-1, Isobutylene
Pygas hydrogenation,
Aromatics extraction
Not all “Crude to Chemical” Projects are equal
Project
Refinery
Capacity
(MMTPA)
P-Xylene
Capacity
(MMTPA)
Ethylene
Capacity
(MMTPA)
Est. Chemical
conversion/ bbl. of
oil (%)
Investment
($bn)
Full line
Operation
Hengli Petrochemical 20 4.3 1.5 42 11.4 May 2019
Zhejiang Petroleum and
Chemical (ZPC) Phase 120 4.0 1.4 45 12 2020
Hengyi (Brunei) PMB
Refinery-Petrochem8 1.5 0.5 >40 3.45 Nov 2019
Zhejiang Petroleum and
Chemical (ZPC) Phase 220 4.8* 1.2 50* 12 2022
Shenghong refinery and
Integrated Petrochem16 2.8 1.1 60** 11.0 2021
Tangshan Xuyang (Risun)*** 15 3.5 1.5 >50 8.5 2023
Aramco/SABIC JV 20 -- 3.0 45+ 20 2025
* ZPC/UOP press release Jan. 17, 2019 announced that Phase 2 configuration and technology will be changed from Phase 1.
** Based on information obtained by IHSM from a visit to Shenghong in November 2018
*** A newly announced project which is under environmental impact Assessment
+ Aramco also developing technology with Chevron Lummus Global with the aim of converting 70%+
Hengli’s Refinery-PX complex configuration
Crude Oil
20 MMTPA
60% Saudi Heavy
30% Saudi Medium
10% Marlim
Avg. API= 27.62
S= 2.26%
Lube oil
Atm
ospheric a
nd V
acuum
Dis
tilla
tion
2 x
10 M
ta
Light Hydrocarbon
Recovery 4.5Mta
Kerosene
Hydrotreating
2.0 Mta
Resid Ebullated Bed
Hydrocracking
6.0 Mta(2 H-Oil)
Diesel Hydrocracking
6.0 Mta (2 Units)
Gasoil
Hydrocracking
7.5 Mta (2 x HyK)
Residue gasificationSolvent De-asphalting
(Solvahl)
Heavy
naphtha PX
Benzene
Continuous
Reforming
9.6 Mta (3X 3.2
Mta Aromizing™
IsomerateNaphtha
Hydrogenation
PP, MTBEC3/C4
Key technologies
supplied by Axens
Source: PEP 303
Zhejiang Petroleum Petrochemical Complex-
Phase 1
CD
UV
DU
Naphtha Hydrogenation
Dry gas
LPG
Crude Oil
20 MMTPA
1:1 mix of Arabian
medium and Iranian
Light, or
3:7 mix of Brazilian
Frade and Iranian
Heavy
Light Hydrocarbon
Recovery
Diesel
Hydrocracking
2X 5.4 Mta PX
Heavy
naphtha
Benzene
Continuous
Reforming R
FC
C
Coking
CDU
Residue
VDC
Residue
Coke
KeroseneDiesel
Heavy. V
Gasoil
Light V Gasoil
Hydrocracking
Gasoline
Key technologies
supplied by
Honeywell UOP
Source: PEP 303
Saudi Aramco’s approach to steam cracking
crude oil is olefins focused
• ARAMCO feeds Arabian Light crude oil to
resid hydrocracker (HK)
• Lightest 85% of HK product conventionally
steam cracked
• Heaviest 15% of HK product fed to
proprietary high-severity fluid cat cracker
(FCC), making cracked naphtha +
propylene
• FCC technology developed as joint venture
with Nippon JX.
• In addition to the Aramco/SABIC JV,
Aramco announced work with Chevron
Lummus Global (CLG) to develop
hydrocracking technology (70-80% per
barrel of oil to chemicals)
Hydro
cra
cker
Dis
tilla
tion
Liq
uid
s S
team
Cra
ckin
g &
Separa
tion
Hig
h S
everity
FC
C
Whole
crude
API = 43
VGO
15%
Gasoline
Light Olefins
C1-C4
Naphtha
AGO
Ethylene
Propylene
Mixed C4
Pygas
Fuel Oil
Cracked
Products
Source: PEP 29J
• Refinery and Petrochemicals
Integration
• Overview of COTC projects
• Production Capacities &
Competitiveness
• An Industry Gamechanger?
Agenda
Hengli’s Refinery-PX complex product yields
Mta = million tons
per year
Hengli Refinery – PX Complex
Hydrogen
Methanol
(for MTBE)Coal gasification
Hydrogen, HeatResidue gasification
12 Mta Saudi heavy
6 Mta Saudi medium
2 Mta Marlim
Avg. API= 27.62
S= 2.26%
• PX 4.34
• Benzene 0.97
• Naphtha 1.63
• Gasoline 4.61
• Diesel 4.61
• Kerosene 3.74
• LPG 0.65
• PP 0.44
• Lube 0.54
• Acetic Acid 0.35
• Heavy Aromatics 0.13
• Sulfur 0.52
Total Chemicals = 8.4 Mta
(42% Conversion)
Source: PEP 303
Comparison between PEP estimate and Hengli
announcement
• Product yields – Major products
ProductThis study
(KTPA)
Hengli
announcement% Deviation
PX 4,340 4,340 0%
Benzene 960 970 -1.03%
Diesel 1,610 1,610 0%
Kerosene 3,540 3,710 -4.58%
Gasoline 4,580 4,610 -0.65%
Naphtha 1,500 1,630 -7.98%
LPG 620 620 0%
PP 440 440 0%
Acetic Acid 330 330 0%
• Capex – Plant construction cost
0
2000
4000
6000
8000
10000
PEP Estimate Hengli Announcement
Cap
ex I
n M
illio
n $
Source: PEP 303
Global paraxylene production capacity rank
0
1,000
2,000
3,000
4,000
5,000
Ca
pa
city (
KTA
) Hengli
Asian paraxylene market will be severely
disrupted
China PX Capacity vs. Demand
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
Kta
Demand Capacity
6,569
2,412
1,562
1,140
868
3,403
Total PX Imports= 15,954 Kta in 2018
South Korea Japan Taiwan India Singapore Others
China PX Imports in 2018
Source: IHS Markit Paraxylene World Analysis
We expect the paraxylene projects to be very
competitive on the global cash cost curve
0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 50.0
World Cost Curve: Paraxylene
(Cost Basis = Plant Gate, Operating Rate Basis = IHS Baseline
Integration Basis = On)
World Cost Curve: ParaxyleneWorld Cost Curve: ParaxyleneWorld Cost Curve: ParaxyleneWorld Cost Curve: ParaxyleneWorld Cost Curve: ParaxyleneWorld Cost Curve: ParaxyleneWorld Cost Curve: ParaxyleneWorld Cost Curve: ParaxyleneWorld Cost Curve: ParaxyleneWorld Cost Curve: ParaxyleneWorld Cost Curve: ParaxyleneWorld Cost Curve: ParaxyleneWorld Cost Curve: ParaxyleneWorld Cost Curve: ParaxyleneWorld Cost Curve: Paraxylene2020 World Cost Curve: Paraxylene
Source: IHS Markit
Cumulative Production - Million Metric Tons
$/M
etr
ic T
on
Zhejiang
Phase1
Aramco + CLG crude oil steam cracking yields
20 Mta Arabian Light
Avg. API= 34
Mta= million tons
per year
Aramco Crude to Chemicals
Complex
Source: PEP 29J Conceptional design based on Aramco patents
• Ethylene 4.71
• Propylene 3.08
• C4 Fraction 2.54
• Pyrolysis Gasoline 4.00
• Fuel Oil 1.24
• Hydrogen (95%) 0.26
• Gasoline (Aromatics Rich) 1.15
• Light Cycle Oil 0.32
Total chemical products about 14.3 Mta
(72% yield)
• Methane 2.1 (used as fuel in
steam cracker)
• Sulfur 0.6
We expect the Aramco projects to be
competitive on the global cash cost curve
0.0 50.0 100.0 150.0 200.0 250.0
World Cost Curve: Ethylene
(Cost Basis = Plant Gate, Product Basis = Ethylene, Operating Rate Basis = IHS Baseline
World Cost Curve: EthyleneWorld Cost Curve: EthyleneWorld Cost Curve: EthyleneWorld Cost Curve: EthyleneWorld Cost Curve: EthyleneWorld Cost Curve: EthyleneWorld Cost Curve: EthyleneWorld Cost Curve: EthyleneWorld Cost Curve: EthyleneWorld Cost Curve: EthyleneWorld Cost Curve: EthyleneWorld Cost Curve: EthyleneWorld Cost Curve: EthyleneWorld Cost Curve: EthyleneWorld Cost Curve: Ethylene2027 World Cost Curve: Ethylene
Source: IHS MarkitCumulative Production - Million Metric Tons
$/M
etr
ic T
on
US Ethane
KSA FR Naphtha
KSA Aramco COTC
• Refinery and Petrochemicals
Integration
• Overview of COTC projects
• Production Capacities &
Competitiveness
• An Industry Gamechanger?
Agenda
Crude oil-to-chemicals (COTC): An industry
gamechanger? It depends….
• Depends on Crude• ExxonMobil approach requires a light crude
• Depends on Product• COTC will be hugely disruptive to the paraxylene industry. Less so the olefins chain due to scale
vs the market, number of projects and project timescale
• Depends on Raising Large Capital• $10-$20bn for a COTC complex means that only “major” companies can raise the necessary
capital
• Depends on Location• ROIs will be questionable in regions of higher relative CAPEX so China has a great advantage
with location factor of ≈0.6 vs. USGC
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