Study on realizing profitability in the downstream industry
Pranjal Kumar PhukanD.Litt. (Hons), M.I.E, F.I.P.E, M.I.I.E
Supply Chain Analyst
Dibrugarh, Assam, India

Primarily the prime objective of any petroleum industry is to maximize its profitability and in order to achieve this objective, process industry has to ensure in meeting quality requirements and compliance of environmental regulations.

Moreover, petroleum industries have to adopt strategies depending on the market aimed at products & derivatives which needs to get maximized with global standard quality and supporting environmental requirements based on the quality, quantity and availability of the crude oil. Generally it is a known fact that heavier crude oils need a higher conversion and treating levels at higher processing costs.

It is an arduous task to compare between different petroleum industries considering that each operational unit attends distinct markets and different specifications. However, some standard processing schemes were defined over the years to allow the comparative studies. Amongst the processing schemes, refining scheme is the sequence of process units in which the crude oil is then input to produce desired derivatives meeting the quality and environmental requirements.

The basic crude oil refining scheme is Topping in which only separation process is applied called as atmospheric distillation. For scheme details please refer Figure 1 which presents a basic process flow of a typical topping refinery.

Figure 1: Typical Scheme for a Topping Refinery

In current scenario, topping refinery concept is impracticable due to difficulty in achieving crude oil conversions thereby making it economically unattractive. Furthermore, the derivatives produced contains high contaminant content viz., nitrogen and sulfur which prohibits commercialization of these products and also affecting environmental regulations.

In addition to above, topping refining configuration produces large quantity of asphalt and fuel oil which have lower commercial value and also has the restricted market globally. Due to these primary reasons the Topping refining scheme makes the refinery economically poor and uncompetitive.

Secondly, Hydro skimming configuration is the collection of conversion and treating processes thereby making the refinery operation more profitable and raising the quality of derivatives produced. The block diagram for a typical refinery operating under Hydro skimming configuration can be referred in Figure 2 below.

Figure 2: Block Diagram for a Hydro skimming Refinery

In Hydro skimming scheme, the derivatives quality are improved and products are more environment friendly thereby adding value to the products and effective commercialization according to environmental regulations. This is possible due to inclusion of conversion units such as Catalytic Reforming and treatment like Hydro treatment. In spite of these positive developments as compared to topping scheme, the process showed limited conversion and maximum production of low added value products like fuel oil and asphalt.

To understand better, Cracking refining scheme configuration adds to the capability of raising the derivatives recovery from crude oil and making it possible to convert residual streams into high-quality derivatives. A Cracking refinery has vacuum distillation unit, Fluid Catalytic Cracking (FCC), Alkylation unit, DE asphalting units and MTBE production process besides with the Hydro skimming configuration units. MTBE production process was applied to raise the octane number of the final gasoline. Block diagram for a typical refinery operating under Cracking refining configuration is shown in Figure 3 as below.

Figure 3: Typical Process Arrangement to Cracking Refi nery Configuration

In case of vacuum distillation unit, it allows to elevate derivatives recovery from crude oil. Gas oil produced is fed to a fluid catalytic cracking unit which produces cracked naphtha and is incorporated into the gasoline pool. With an aim to control the contaminants content in the automotive gasoline currently, this stream is passed through a specific hydro treatment unit called as Cracked Naphtha Hydro treating Unit.

Moreover, LPG fractions from FCC unit are sent to catalytic alkylation and MTBE production units aiming to produce streams capable of raising the octane number of the final produced gasoline. Diesel production gets elevated through the addition of Light Cycle Oil (LCO) stream into diesel pool and along with gas oil which is produced in the visbreaking unit with the condition that prior treatment of these streams are made before adding it to the diesel pool.

Cracking refining scheme produces a large amount of fuel oil in comparison to Hydro skimming configuration. In order to reduce the low added value derivatives production, it is necessary to install bottom barrel conversion units which has the capability to destroy residual streams and convert them into light and middle derivatives. Coking/Hydrocracking refining configuration present these characteristics as presented in Figure 4.

Figure 4: Process Arrangement to a Refi nery Operating Under Coking /Hydrocracking Confi guration

In the case of Coking/Hydrocracking refining scheme, fuel oil production is reduced to the minimum necessary to attend the consumer market and delayed processing at coking and hydrocracking units increase the production of high added value products viz. naphtha, diesel and Jet fuel thereby leading to a significant rise in the refiner profitability. The improvement in the refinery conversion grade increases the complexity of the refining scheme despite improving the profitability. However, the higher volume and better quality of the produced derivatives produces sufficient rise in the refining margin to cover the additional costs notwithstanding increase in operational costs.

Ultimately the choice of the adequate refining scheme depends on the assumptions adopted in the refinery concept steps, its key production focus and the market that will be attended to. More complexes refining schemes improves the refinery competitiveness and makes it more flexible in relation to crude oil processed which are the tactical features of the refining industry in the current scenario.

Any views or opinions represented in this presentation are personal and belong solely to the author and do not represent those of people, institutions or organizations that author may or may not be associated with in professional or personal capacity, unless explicitly stated. Any views or opinions are not intended to malign any organization, company or individual.