Refining and Petrochemicals - The golden age of refining which peaked in the first decade of this century is over. Now oil refining has become a far more complex operation. Since refineries supply most petrochemical feedstocks, their current plight, particularly in Europe, has a major impact on the petrochemical business as well.

However the changes in refining and petrochemical feedstocks are giving new opportunities to producers of catalysts, additives and other process chemicals required by the two sectors. In particular they are providing openings for developers of new technologies which enable refineries and petrochemical plant operators to be more flexible and cost effective in responding to the needs of the market.

The major beneficiaries of the new trends are the developers and manufacturers of catalysts which are crucial to the efficiency of most refining and petrochemical production processes. Perhaps the trend which has affected the demand for process chemicals and catalysts the most has been the swing to heavy oil feedstocks. Previously the prevalence of light, relatively clean oils made refining much easier technologically and much more profitable. Heavy oils, some highly contaminated with sulphur and metals, are more difficult and costly to break down into the fuels demanded by the transportation market and into the feedstocks required by petrochemical companies.

Market Effects

In North America the shale boom has made refining more intricate because refineries are having to cope with a much wider range of oil types. Many refineries in the region have been gearing themselves to deal with ultra heavy oil from oilsands in Canada. But at the same time they are having to cope with increasing amounts of shale oil, which is light but with highly varied properties.

Another major influence on refinery processes is tightening environmental regulations which lead to stricter automobile fuel standards not only in North America and Europe but also in emerging markets like China. The most widespread regulatory initiative has been mandatory cuts in sulphur levels so that low sulphur fuels have become obligatory across much of the world.

These regulatory requirements are pushing up costs at a time when excess capacity is squeezing refinery margins. Yet for chemical companies supplying catalysts, additives and other process chemicals to refineries and linked petrochemical operations the sector can be a profitable market.

Market Players

The catalysis and energy business of Clariant, much of it in catalysts for refining and petrochemicals production, reported a 5% drop last year in sales to 713 million Swiss francs ($806 million) and 2% fall to 159 Swiss francs in earnings before interest, tax, depreciation and amortisation (EBITDA). Nonetheless the EBITDA margin on sales rose slightly to 22.3%, reinforcing its position as one the company's most profitable operations.

BASF also recorded what it said was a "significant earnings increase" in its catalysts division last year "mostly on account of higher margins" for refinery catalysts and higher sales volumes for automobile catalysts. Total catalyst sales went up 3% to €5.7 billion.

W.R. Grace & Co., Columbia, Maryland, reported a 11% decline to $1.1 billion in the sales of its catalysts technologies operation in 2013 while its EBITDA decreased by 15%. Nonetheless the EBITDA margin of the business which covers mainly refining and petrochemicals went down only marginally to 34%.

Among the leading suppliers of fluid catalytic cracking (FCC) catalysts for refineries, BASF has been active in the development of catalyst technologies for dealing with heavy oils so that refineries can respond quickly to variations in properties of crudes and also the needs of the fuels and petrochemicals sectors. "Flexibility in (FCC) operation will be key for refiners looking to capture market opportunities and regain healthy margins," BASF says in a recent technical note. The note was about BASF's latest version of its Distributed Matrix Structures (DMS) catalyst technology comprised of highly dispersed zeolite crystals. The matrix design and the process for its manufacture ensures that the oil cracks on the zeolite surface itself rather than amorphous material as in other FCC catalyst systems. This results in improved yields and selectivity. In particular it lowers the amount of refinery feed which is turned into a carbonaceous solid or petcoke which remains unprocessed and is sold as a relatively low value fuel or as a raw material for making electrodes for the steel and aluminium industries. Usually the proportion of petcoke residues is much higher with heavy refinery feeds than light ones. Consequently a lot of effort is being put into the development of technologies which enable traditionally low-value residues to be converted into high-value fuels, hydrogen and petrochemical feedstocks. One option is the gasification of petcoke residues which have similar properties to coal but with a higher energy content. Gasification produces syngas a combination of carbon monoxide and hydrogen which can be synthesised by catalysis not only into fuels but also base chemicals.

In India Reliance Industries (RIL) is due to bring on stream next year a $4 billion petcoke gasification project at its refinery at Jamnagar, Gujarat, for making fuels, hydrogen and feedstock chemicals for a new adjacent $4 billion petrochemicals complex. RIL's long-term objective is to create a centre of excellence in gasification at Jamnagar which will gasify not only petcoke but also coal, lignite and biomass.

The Jamnagar gasification unit now being constructed will be based on a entrained flow gasifier technology of Texas-based CB&I, which is one of the world's biggest refining and petrochemicals technology companies. The unit is linked to a range of downstream catalyst-driven units of other technology providers for the supply of energy for power generation, hydrogen and carbon monoxide for making acetyls and their derivatives. The CB&I technology also includes a system for sulphur removal which is now an essential requirement of environmental regulations on industrial emissions and clean fuels. As a result desulphurisation has become a busy area of research to increase the cost effectiveness of technologies for dealing with sulphur-rich heavy oils. Not only do the sulphur emissions from refineries and petrochemical sites have to be controlled but the sulphur content of transportation fuels cut from 500 parts per million to a mandatory limit of 15-10 ppm in most developed countries.

Much of the advances have been improvements to the hydrodesulphurisation catalytic process for breaking the sulphur-carbon bonds in oil and to the standard catalytic Claus process for converting the hydrogen sulphide into elemental sulphur. However the heavier the oil the more use also has to be made of other methods such as the application of solvents, thermal treatment, reduction-oxidation and ionic liquids.Shale oil, which is accounting for a growing proportion of refinery feeds in the U.S., has a low sulphur content but can be contaminated with a variety of solids and metals, which can form sludge and waxes and cause fouling of catalysts. High levels of iron in some shale oil are combining with silica, calcium and sodium to curb the activity of zeolite-based catalysts by lowering their melting temperature. W.R Grace has designed catalysts with alumina-based binders and matrices to resist the effects of the iron and calcium contamination.

The surge in shale gas output in the U.S. has a precipitated big switch in the country's steam cracker capacity from naphtha to ethane feedstocks. This has lowered the country's output of propylene, the main co-product of naphtha-based ethylene crackers, which has led to a shortage of propylene for the manufacture of polypropylene and other chemicals. Propylene scarcities in North America have helped accelerate a trend to the building of on-purpose propylene facilities as an alternative source. Within a few years the proportion of new propylene capacity based on the main on-purpose processes of olefins metathesis and propylene dehydrogenation (PDH) could rise from less than 5% to over 30%, according to CB & I. Through its Lummus Technology business, which also licenses the gas-phase polypropylene Novolen technology, it provides both on-purpose technologies.

Under Construction

Several PDH plants are being constructed in the U.S., as well as a number in the Middle East, to take advantage of low gas prices. The growth in international trading of propane, a lot of it sourced from the U.S., has prompted at least five PDH projects in China.

Clariant and CB&I last year strengthened an alliance in the polypropylene chain which reinforces the combination of expertise of Clariant in catalyst development and manufacture with that of CB&I in process design.

The two companies announced a co-operation agreement under which licensees of the polypropylene process technology of Lummus Novolen Technology, Mannheim, Germany, will be supplied with a new Clariant polypropylene catalyst. Lummus Novolen is investing, as part of the deal, in a new polypropylene production line at Clariant's catalyst production hub in Louiseville, Kentucky. The agreement complements an existing co-operation between both companies in propylene under which Clariant's Catofin catalysts are used in CB&I's process for propane dehydration.

The Clariant/CB&I collaboration in the propylene value chain underlines the importance of catalyst producers in the shaping of the future of refining and petrochemical production technologies in the face of big changes in the oil and gas sectors.