Jones D.S.J., Pujado P.R. Handbook of Petroleum Processing
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ECONOMICS 745
Table 17.1.1. Changes to running plan to maximize profit
Crude Fuel Mid dist Naphtha
MB/CD MB/CD MB/CD MB/CD Cum profit over
Change Base case 200 83 12 40 base case $/D
Reduce viscosity of cat
feed to fuel from 46.9
RI to 40.2 RI@ 100
◦
F
198.267 81.370 11.65 40.667 595
Reduce residue length
from 24 to 22%
189.798 73.406 9.685 43.886 3,558
Decrease octane from 50
to 45 res.
189.702 73.276 9.179 42.870 4,000
Lower cat plant
conversion by 3%
187.129 71.074 8.667 46.186 5,024
the same criteria of cumulative product profits (including plant operating costs) as
described above in economic rules and the example provided by Table 17.1.1. Com-
puter technology is used extensively in planning these days. Indeed most refinery
companies possess their proprietary programs similar to the linear program described
in Part 2 of this chapter to evaluate the economics of the schemes and to determine
the optimum one. However, the development of the scheme itself still remains with
the planning engineer or development engineer for most companies.
The application of running plans in identifying refining inadequacies
This item illustrates a function of the running plan in identifying lack of refining
capacity under certain conditions. An example of a work sheet for the report is given
in Appendix 17.1 of this chapter. The scenario surrounding this exercise is as fol-
lows:
Background
A large international oil company Concord Petroleum Company (Fictional) has re-
quested two of its European refining affiliates to submit plans for low cost debottle
necking of distillation capacity which can be ‘on stream’by next winter. The two
de-bottle neck cases that are to be considered are the company’s Kent refinery and
the company’s South Wales refinery. The expansion for the Kent refinery crude unit
will be 34,000 BPSD and that for the South Wales Refinery crude unit will be 40,000
BPSD. The study will determine whether either or both of these debottlenecking
routes represents an economic investment route for Concord Petroleum Company to
meet the long range expansion program.
746 CHAPTER 17
Table 17.1.2. The base running plan
←−−−−− Summer S. −−−−−→←−−−−− Winter −−−−−→
MB/CD Kent Wales Total Kent S. Wales Total
Input (Crude)
Aramco 66.0 – 66.0 66.0 – 66.0
Brega 113.5 46.5 160.0 130.0 30.0 160.0
Safaniyah 20.0 – 20.0 – 20.0 20.0
Bachequero 18.5 41.5 60.0 22.0 – 22.0
Iraq – – – – 28.0 28.0
Kuwait – 37.0 37.0 – 47.0 47.0
Tia Juana 12.0 – 12.0 12.0 – 12.0
Total Crude 230.0 125.0 355.0 230.0 125.0 355.0
T. J. Dist 1.1 – 1.1 – – –
Output Prod + /()
Gas 3.8 – – 3.8 – 4.4 – – 4.4 –
LPG 9.9 (2.3) 4.9 (2.3) 14.8 – 11.0 (6.6) 4.9 (1.5) 15.9 (5.1)
Chemicals 9.7 – – 9.7 – 9.7 – – 9.7 –
Naphtha Lt 5.9 (2.9) 3.0 (6.7) 8.9 (9.6) – (15.2) 5.3 (11.6) 5.3 (26.8)
Hy Naphtha 53.3 (9.3) 24.7 (3.1) 78.0 (12.4) 54.8 7.6 22.8 (10.2) 77.6 (2.6)
Light Dist 26.4 2.7 4.0 – 30.4 2.7 27.6 (2.7) 5.2 – 32.8 (2.7)
Gas oils 36.2 – 17.7 – 53.9 – 50.1 1.9 22.0 (1.9) 72.1 –
Fuel Blend stk 5.7 – 3.7 – 9.4 – 7.7 – 4.9 – 12.6 –
Heavy Fuel Oil – (41.3) 43.8 (19.8) 43.8 (21.5) – (43.8) – (31.4) – (75.2)
Special FO 54.4 (7.6) 21.6 (7.6) 76.0 – 43.7 (49.9) 53.1 (31.9) 96.8 (18)
Basis for assessing requirements
The following table is the Base Running Plan. It highlights the two UK refinery’s crude
availability and their respective requirements with surplus and deficit highlights:
Table 17.1.2 represents the short range status. Other running plans for other years, are
summarized below. This Table 17.1.3 gives the product deficiencies/(surplus) versus
crude requirement to satisfy product deficiencies over those years.
See the following notes for Table 17.1.3:
1.0 Swing capacity is defined as the sum of international bunkers plus volume of
seasonal storage. It is assumed that crude is run for international bunkers in the
summer if necessary, and an equal volume of fuel oil is imported in the winter
against inland fuel oil requirements. Thus, swing capacity represents the volume
of crude which can be run in the summer against winter requirements.
2.0 Net crude is the volume of crude running capacity required in summer and winter
when maximum use is made of swing capacity.
ECONOMICS 747
Table 17.1.3. Crude requirements to satisfy deficiencies
year 1 year 2 year 3 year 4
Year Min Max Ave Min Max Ave Min Max Ave Min Max Ave
Deficiencies MB/CD
Naphtha – 8.8 4.4 — 17.0 8.5 9.8 13.4 11.7 9.6 26.8 18.2
Distillates – – – – – – – – – (2.7) 2.7 –
Fuel Oil (15.9) 32.5 8.2 3.5 48.2 25.9 8.5 70.0 39.2 21.5 93.2 57.4
Total (15.9) 41.3 12.6 3.5 65.2 34.4 18.3 83.4 50.9 35.8 115.3 75.6
Crude equiv (16.3) 42,4 13,0 3,6 67.0 35.2 10.0 85.7 52.2 36.8 118.3 77.6
Swing capacity 40.8 (40.8) —- 39.4 (39.4) – - 37.0 (37.0) — 35.0 (35.0) —-
Net Cap Req 24.5 1.6 13.0 43.0 27.6 35.2 55.8 48.7 52.2 71.8 83.3 77.6
Mon Cap 13.0 35.2 52.2 77.6
3.0 Minimum crude capacity is the volume of distillation capacity which must be
available just to meet deficiencies and making maximum practical use of the
swing capacity.
Eight basic schemes were studied to meet the minimum capacities for satisfying the
deficiencies. These were as follow:
Case 1. Expand Kent distillation by 82 mbsd—Debottleneck
Case 2. Expand Kent distillation by 34 mbsd on CDU 101 and 50 mbsd on CDU 102
Case 3. Expand Kent distillation by 50 mbsd on CDU 101 and 34 mbsd on CDU 102
Case 4. Expand S. Wales distillation by 100 mbsd—Grass Roots
Case 5. Expand Kent distillation by 100 mbpsd—Grass Roots
Case 6. Expand Kent distillation by 34 mbsd and S. Wales by 40 mbpsd—De-bottle
neck
Case 7. Expand Kent distillation by 40 mbsd and S. Wales by 34 mbpsd – De-bottle
neck
Case 8. Expand S. Wales distillation by 75 mbsd—Grass Roots.
There were in addition one sub case for each of cases 4, 6, 7, and 8. These sub cases
took into account special depreciation allowances for the S. Wales refinery.
The results
The discounted cash flows at 10% for the 8 cases and the four sub cases were calculated
for the entire period as shown in Table 17.1.4 (This took into account the company’s
long range plan and forecast). The preferred case was case 6 with the cognizance of the
S. Wales refinery depreciation allowance. This cash flow for this item is as follows:
748 CHAPTER 17
Table 17.1.4. Study cash flow and result
M$ out/ (in)
Year base 12345678Total Preference
Case 6A – 5,991 1,054 2,953 380 (1,252) (923) (859) (58) 7,286 1
Cash flow of some other cases are as follows:
Case 5 6,973 7,100 1,395 1,871 779 (1,760) (1,300) (1,196) (81) 13,781 12
Case 7A – 1,352 6,706 804 (401) (1,070) (886) (409) (27) 8,069 2
Case 6 – 5,991 1,054 2,953 1,841 (1,352) (1,090) (948) (64) 8,385 4
Case 4 5,212 8,191 1,467 1,040 534 (1,614) (1,233) (1,138) (77) 12,382 11
Author’s Note: The names and location of the company and its refineries are, of cou-
rse, fictitious. The study though is not. The author actually participated in the study
itself, and was later the lead engineer in the process design of one of the selected
refinery (Case 6A) debottlenecking expansion.
A copy of one worksheet used in the study is given in the appendix to this section.
Most calculations at that time were done by hand, although the discounted cash flow
calculations were computerized.
The refinery operating program
One of the major uses of the running plan is to enable the refineries of the company
to develop their own operating program. The running plan sets the objective for the
refinery production over a short term and provides a long term forecast. The operating
program translates these requirements into a day by day program of work. Operating
programs are concerned about the short term plans for the operation, and are prepared
for a monthly period. Thus while running plans are calculated in terms of Barrels per
Calendar Day, operating programs are always in terms of Barrels per Stream Day.
The content of the operating program
The actual format of operating programs will vary from company to company, how-
ever, they will follow a similar pattern. They will consist of the following items:
r
A crude oil program
r
An intermediate stock report
r
A table of programmed production
r
A blending schedule
r
An operating schedule
r
Operating notes
A crude oil program is a table of the refinery’s current crude oil inventory with
projected imports, feed outlets, and the storage tank reference. An example of this
table is given as Appendix 17.2 of this Chapter.
ECONOMICS 749
An intermediate stock report is similar to the crude oil program but it refers to the
refineries intermediate stocks, which will usually be blended to finished products. An
example of this table is also given as Appendix 17.3.
The table of programmed production is simply the scheduled finished product make
from the refinery. The blending schedule is self-explanatory and is usually in a
form of simple block flow diagrams. A typical middle distillate schedule is given in
Figure 17.1.2.
Operating notes include any critical requirements or operational changes. Note op-
erating programs can be updated on a weekly or even daily basis if the Company’s
Supply Department initiates a change in running plans, that affect a particular refin-
ery’s operating program. An example of an operating note is as follows:
Current program
Unit F101 Light gas oil Marine diesel White spirit Turbo Jet JP4
Supply dept requirement 750 m bpsd 235 m bpsd 40 m bpsd 181 m bpsd
Refinery make 668 202 40 181
Supply must have absolute minimum of 725 mbpsd of light gas oil i.e. +57 MB’s
Can stand only 152 MB’s of Marine diesel i.e. −50 MB’s
Action: Change kero/gas oil operation to kero/diesel operation.
Preparing an operating program
In present day refining industry both the running plan and the subsequent operating
program are computerized. However, their preparation requires the same input as
the old manual system. In the case of the operating program these would follow the
sequence listed below:
1.0 In order to begin assembling the operating program the planner will need to know
the following details:
r
The running plan for the refinery for the month in question
r
The latest crude slate data
r
What plants are scheduled for shut down during the life of the program
r
Estimate of the intermediate product stocks (Appendix 17.3)
T/JET Dist. 2486
To/From Store
To/From Store
71, 680
Kero Dist
371, 910
HS–2
6,456
78,136
40,800
78,136
11,075
33,600
11,368
SRN.
18,360
52,564
4.5 days
@8,000 B/D
Re-Run
Still 13
Doctor
Plant.
CS 4
CS 4
SO
2
Treat
Reg. Kero
SO
2
Treat
Prem Kero
To/From Store
90
(80%)
74,400
297,600
372,000
31 days @12,000
T.JET 2486
142,065
141
Reg Kero
Prem Kero
297,600
295
MB’s
Fuel
Gasoline
B/D
Figure 17.1.2. A typical middle distillate schedule.
ECONOMICS 751
2.0 Prepare an outline operating schedule to meet intermediate product require-
ments and timed to maintain adequate intermediate products in tankage (Ap-
pendix 17.4).
3.0 Cut the crude(s) TBP into the required product cuts, for the crude unit operation.
4.0 Cut the product from the other units (such as FCCU, and cat reformer) to meet
intermediate products.
5.0 Balance the crude run against production. From the cutting scheme and schedule
outline develop the detailed and balanced refinery flow plan.
6.0 Develop the detailed operating program (Appendix 17.5).
Monitoring the operating program
The planning section in a refinery organization is usually delegated the duty of mon-
itoring the Program. The following activities are associated with this monitoring
function:
1.0 A check is maintained on the actual product produced, by control room charts,
tank dips, and the like. This is done daily and deviation from program noted with
explanation of cause for the deviation.
2.0 Weekly operating schedules are issued to allow for any deviation to program.
These would include such causes as:
r
Delay in tanker arrivals
r
Changes in crude slate
r
Changes in product requirements
r
Changes in crude fractionator yields
r
Plant operational problems
Example is provided in Appendix 17.6.
3.0 Daily meeting with the department responsible for oil movements and shipping
in the refinery. These meetings are to review shipping and oil movement status
to and from tankage.
4.0 Frequent meetings with the operating and the refinery process department to
review plant operations.
5.0 Contact the company’s supply department with regard to:
r
Crude shipment and changes
r
Lifting products out of refinery schedule (see note below)
r
Changes in requirements
Note: At times of high inventories in the refinery prompt lifting is essential to keeping
the refinery operating as programmed.
Operating summary
An operating summary is a document giving details of the refinery’s performance
against plan. This is issued at the end of each month. A summary of throughputs and
752 CHAPTER 17
yields are usually supplied by the accounts department of the refinery. Comments on
production versus program are made by the refinery’s planning department.
17.1.2 Process evaluation and economic analysis
Among the principal functions of a refinery’s development engineer is to generate
ideas for implementing the supply department’s planned requirements (both short
term and long term) with the most economic process configuration. In carrying out
this function the engineer is required to study various processing routes or changes to
existing process routes and configurations. When satisfied that the technical aspect of
any proposed changes or additions are feasible and sound he or she must now satisfy
the company management that it is economically attractive. The proposal must also
be shown to be the best of any possible alternatives that may be available to achieve
the same objective.
This chapter sets out to describe some basic techniques used in carrying out this
function.
Study approach
Process studies are usually initiated after a very precise definition by the company’s
management of the company’s immediate and long term production objectives. Apart
from this definition being a premise of the company’s annual operating budget it also
aims to fulfill its marketing strategy. Often such a definition results in changes being
required to be made to the process facilities either in the short term or long term
to meet these objectives. The company will look to the Development Engineers to
provide definition of these changes and to support the definition(s) with whatever
technical and economic data necessary for management to make their “GO/NO GO”
decisions. Figure 17.1.3 shows the steps in a typical study.
This particular study route is to define an expansion of an existing process configura-
tion by adding a new group of plants. The steps shown in Figure 17.1.3 are described
as follows:
Step 1. Receive and review the supply departments requirements.
This step is extremely important. The development engineer or engineers working
on the study must understand completely what is required and what the end product
of the study must fulfill. There is usually also a time element for the completion
of the work. This too must be understood and planned for. Normally the study
premise is presented in a written document with copies to all study participants.
The contents of the document must be studied by all concerned. A study ‘Kick
Off’meeting is always beneficial where participants and management review the
study premises together before commencing work on the study.
Review management's
requirements
Evaluate surplus
or shortfalls in
meeting objective
Establish process
options and
constraints
Commence
screening studies
Prepare capacity
factored cost
estimates
Obtain licensor
data where
applicable
Obtain stream
flows from
existing plants
Develop product
pattern from
new plants
Select two or three
configurations on
best payout
Prepare data for a
more detailed
cost estimate
Calculate cash flow
for selected
configurations
Calculate ROI
on DCF basis for
selected configurations
Prepare offsite and
utility requirements
for configurations
Optimize on unit
size and operation
where applicable
Make formal
presentation to
management
Select process
route with best
ROI
For go decision
prepare process
specification
No go
decision
Figure 17.1.3. Steps in a typical process study.
754 CHAPTER 17
Step 2. Obtain stream flows from existing plants.
In cases where existing plants are to form part of the study premise a detail analysis
of the performance of the plants must be made. This almost certainly will involve
performance test runs under pre-calculated operating conditions. The test run re-
sults are evaluated and included in the analysis of products to meet the study’s
product slate.
Step 3. Develop product pattern from plant data for new processes.
This will be executed in parallel with step 2. Here new processes that may be
included in the study to meet the product requirements are examined and their
product pattern developed. Process licensors may be involved at this stage to provide
data on their proprietary processes. As may the refining company’s own research
department.
Step 4. Evaluate surplus and shortfalls in meeting the objective.
Steps 2 and 3 are now used to determine the possible product slates achievable
using plant yields and blending recipes. Any surplus or shortfalls in the product
slate that may now exist must be eliminated by further work in step 2 or 3 or both.
Step 5. Establish process options and constraints.
With a firm product slate work may now commence to map processing routes that
will achieve the product objective. This will include very rough plant configurations
irrespective of cost or other constraints that will fulfill a processing route. This
step should end with the elimination of the more obvious undesirable routes. For
example those routes which contain very small process units or those that contain
unit processes that have undesirable by products. This step should provide 5 or 6
reasonable process options for further study.
Step 6. Commence screening studies.
The purpose of this item is to reduce the number of possible options to two or at
the most three process configurations that appear most economically attractive. To
arrive at the selected options those alternates arrived at in step 5 are allocated a
capital and operating costs. The capital costs in this case are very rough estimates
arrived at by applying factors to the installed cost for similar processes. Details of
this technique in cost estimating are given later in this chapter in item 4 “Capital
Cost Estimates”. Licensors are usually requested to participate in the development
of these cost items in the case of their proprietary processes. The operating costs
for nonproprietary processes are also factored from similar processes. With these
cost data in place an incremental pay-out time is calculated for each option. The
option with the lowest capital cost is used as a base case and the others compared
against it. Details of this calculation are given later in this chapter.
The two (or three) options with the lowest positive incremental pay-out time against
the base case are selected for further study.
Step 7. Prepare data for a more accurate cost estimate.
The credibility of any economic study depends to a large extent on the accuracy
of the data used in predicting the various cost items. The principle cost item will
be the capital cost of the processes to be installed and/or revamped. The next step in