Ethylene industry has been growing at a significant pace since the turn of this century, but more so in the last decade. We have seen growth in North America driven by shale related advantaged feedstock. There is also continuing growth in Asia, particularly China, driven by demand and in the Middle East to capture value addition in hydrocarbon chains.
Growth story from last decade is continuing and here is what to expect till about 2025:

• North America renaissance continues. This region has added more than 11 million Metric Tons per Annum (MTA) of grassroots ethylene in last 5 years and expected to add more than 14 million metric tons more in coming 5 years.
• China continues to add ethylene capacity and expected to add more than 18 million MTA of ethylene in next 5 years.
• Rest of Asia is expected to add more than 11 million MTA of ethylene till 2025.
• Middle East (excluding Iran) is expected to add more than 12 million MTA of ethylene in this period.

The regions mentioned here will likely add more than 50 million MTA of ethylene by building nearly 40 steam cracking units. These estimates include plants currently under construction and in various stages of development, including some that are in feasibility stage.
This offers tremendous opportunities for the industry including the businesses that supply hardware and services to the industry. The key to success will depend on the business strategy for maintaining the competitive advantage to capture market share for sustained growth. The growth in this industry comes with challenges as the supply/demand equation comes under pressure in the short term.
As the petrochemical industry is going through a significant demographic and experience level change in staffing over the next few years, a wide range of skills is substantially lacking. The industry will need to invest in training professionals, including those who are directly involved in operations, but also support roles, business development, service providers etc. The industry must focus on imparting experience and knowledge in an efficient and effective ways to not only fill the gaps left by retiring workforce, but to meet the growing demand of talent.  
At Apex PetroConsultants, we focus on imparting working knowledge based on experience and expertise to help individuals and companies in realizing their full potential.

As the new year is about to unfold, I wanted to share my thoughts on current state of our industry and how best to prepare for the future.
Summarizing the big picture:

• Integrated margins for olefins-polyolefins are declining and expected to stay low
• Capacity additions, in near term, exceed the demand growth
  • Lower global capacity utilization
• Slowing global economic growth
• Oil/refining majors investing in integrated mega-projects changing competitive landscape
• Chemical companies, in general, are shifting focus to capital discipline
• Plastic recycling picking up momentum for both mechanical and chemical recycling
  • Significant investment for developing new technologies
  • Breaking down plastic waste to pyrolysis oil or monomer
• Companies are preparing and positioning for reduction in carbon footprint

These issues will impact the industry and the individual players in significant ways. How you prepare for these issues will determine the future success.
No matter whether you are an oil/refining major or a chemical company, capital discipline and capital efficiency always help positioning for success in a competitive and cyclical business environment.
Whether you are trying to improve an existing operation or building a new facility, there are many areas that require attention:

• When identifying opportunities and setting the direction
• During implementation, to effectively turn the goals and objectives into the reality
• Knowing the full capability of the facility (existing as well as new)
• Utilizing the assets effectively, efficiently and reliably

The options can be technically complex with varying risk profile and deploying the process technologies effectively can be challenging. This requires a great deal of expertise, experience, industry insights and knowledge.
At Apex PetroConsultants, we provide independent expert advise and impartial analysis to help clients realize their full potential. Our clients, whether they have in-house expertise or not, have benefited from the independent reviews and input.

Greetings of the season and best wishes for the new year to you and your loved ones!

The plant owners/operators need to know the capability of an ethylene plant to produce the ethylene product. To be clear, it’s typically not the design or nameplate capacity.

The plant capability is a key parameter for

• Benchmarking the asset utilization
• Understanding the plant operation and maintenance effectiveness
• Determining the current plant bottleneck(s)

​A complete understanding of the plant capability helps in setting business strategies and plans. It typically results in better asset utilization.
This helps in determining the baseline for expansion/debottlenecking projects with a competitive and optimum technical scope.

We help clients in determining and reviewing the current plant capability for

• Better asset utilization and improved economics
• Setting up expansion/debottlenecking projects for arriving at competitive scope (resulting in lower installed cost)

We expect a supply overhang in olefins industry in next two to three years, can be even sooner. Main factors contributing to this are:

• Planned cracker capacity additions in North America, Asia including China, and Middle East
• Softening demand 
  • slowing economic growth
  • Geopolitics – Middle East tensions, Tariffs/Trade barriers

Petrochemical businesses, including steam crackers, need to start positioning to stay competitive when margins will be under pressure. Industry will likely prepare for this by tightening overall spending. We believe that this offers an opportunity to owners and operators to be more competitive while targeting the long-term growth.
Here are some of the smart ways to prepare for the future:

• Take a holistic view of the business
• Mid to long term targets for business growth

This provides key input for evaluating options and approaches:

• Aligning current efforts with future growth expectations

Significant part of the competitive advantages result from:

• Utilizing the current assets effectively and efficiently

The success of these efforts depends on a good understanding of:

• Cost of production from your  existing assets
• Current / historical operation and performance parameters along with benchmarks

We help clients with these assessments and develop a roadmap for staying competitive during the periods of supply overhang while aligning the efforts for future growth. We believe that independent and cold eye reviews provide owners and operators with benefit of a different perspective.

Future of Olefins (ethylene, propylene etc.) is dependent on the historical, geo-political and environmental factors among others.

• Historical factors include:
  • supply & demand
  • feedstock availability and pricing (crude oil and gas feed)
  • GDP growth
  • Population growth, more importantly growth of middle class in emerging and developing economies
  • Urbanization trends
• Geo-political factors include:
  • Trade barriers
  • Tariffs
  • Middle east tensions
  • Sanctions regime
• Environmental factors include:
  • Recovery of plastic waste
  • Recycling
  • Ban on single use plastics
  • Greenhouse Gas emissions & carbon taxation
  • Air quality in large urban centers
  • Climate change pressures
• Renewables and electrification of transport systems
  • Oil majors are shifting their focus to petrochemicals and away from fuels. This is changing competitive landscape of petrochemicals industry
• Large and complex facilities
  • High capital intensity
    • Leading to complex joint ventures
  • Developing and building these facilities within budget, schedule to achieve desired production and performance levels in reasonable timeframe
  • Operating safely, reliably and efficiently
• Disruptive technologies
  • As an example, shale developments brought petrochemical industry renaissance in US based on feedstock advantage
  • Transportation systems
  • Sharing platforms (like Uber)
  • Models for supply chains including commercial transportation systems
  • Alternate energy sources

The petrochemical industry is expected to grow in foreseeable future to meet the quality of life needs of growing world population, middle class and urbanization. This growth will follow the GDP growth.
Industry needs to proactively address the environmental and sustainability issues through innovation and operate these facilities efficiently and reliably to meet the future competitive challenges.

​At Apex PetroChemicals, we help our clients to manage technical complexity and risk profile in a competitive and cyclical business environment. We bring the value of strategic thinking, specific industry insights, knowledge, and a depth of experience for olefins based petrochemical businesses to develop, build and operate best-in-class facilities.

Furnace availability varies greatly from plant to plant and impacts the production levels, more so for the plants that are furnace constrained.
5 Leading Causes of Furnace Outages

1. Radiant coils – carburization, stress/creep rupture are the leading causes followed by plugging, bowing/twisting and brittle fracture
2. TLE cleaning – tube blockage
3. Instrumentation
4. TLE Repairs – contributing factors include water side corrosion, inlet tubesheet erosion, tube to tubesheet weld failure, gasket or seal failure
5. Refractory repairs

Reliability of furnaces can vary significantly depending on:

• Technology selection – including severity, selectivity, flexibility
• Design approach, specifications and selection of components
• Operation approach and discipline
• Monitoring and process control
• Maintenance approach and discipline

At Apex PetroConsultants, we focus on these aspects during all stages - including technology selection, modifications for performance improvements, design/engineering, operation and troubleshooting. Key is to maximize production at an optimum performance level and capital investment. 

In most simplistic, yet effective, terms the plant reliability is a measure of the actual production relative to its capability. The reliability, by definition, excludes any impacts of external factors. I will leave the discussion about capability for another time. In this blog, I will focus on understanding the reliability and its impact. Unplanned downtime and slowdowns, including hydrocarbon losses, impact the reliability and have significant economic impact. The economic impact is very large for current world scale ethylene plants.
The reliability is dependent on operational parameters, equipment integrity programs, monitoring and control of process variables and practices for managing changes. Operation parameters and control of process variables have the largest impact on reliability (as high as 60-70%). Most of the systems currently are focused on rigorous mechanical (equipment) integrity programs.
Reliability is determined by decisions made during design, engineering and construction of the facility. Equipment specifications and selection play an important role during project implementation. The approach for sparing, process monitoring/control and specification/selection of plant hardware play an equally important role.
Once the plant starts producing, operational parameters change and can have significant impact on reliability if the operation and maintenance fails to control and adjust the anticipated operating conditions as well as the asset integrity programs. This requires fundamental understanding of the technology and input of multi-disciplinary team of experts.
While it is a common tendency to think of reliability as an extension of maintenance function, the reality is that process technology experts along with other subject matter experts play a key role in solving the reliability issues in the plant.

​The case study will highlight options for refinery/petrochemical integration and their impact on steam cracker economics.
The case study presented here is for the steam cracker with its associated utilities, storages etc. This study reviews cost of productions for six different levels of refinery-petrochemical integration. For reference, a purity ethane cracking case is added. All cases were studied for a 1,200 kTA steam cracker located in Asia. The energy and feed/product pricing are based on crude oil at $75 per barrel and natural gas $6 per million Btu.
The cases are described below:
Case 1: Ethane cracking, mostly based on imported feed supply
Case 2: Naphtha Cracking based on different naphthas from the refinery
Case 3: Ethane and High severity FCC off gas based on import ethane and large capacity high olefins mode of FCC operation in refinery
Case 4: FCC off gases, Coker off gases, saturated gases based on large and complex refinery with FCC, Delayed Cokers, Platforming/Aromatics, Hydrotreating/Hydro-processing units that generate large amount of off gases. In this refinery fuel demand is met by import of fuel gas or through synthetic fuel gas generation (like coke gasification).
Case 5: Heavy naphtha and hydrotreated vacuum gas oil feed based on medium complexity refinery with heavy crudes
Case 6: Naphtha, Light/heavy gas oils, Hydrocracker distillate, butane, refinery off gases based on a complex refinery with hydrocracking/hydrotreating, FCC and Platforming units. High level of integration and optimization based on crude diet to the refinery.
Case 7: Light crude (OSO) cracking based on the concept of minimum processing/separation of unprocessed crude sources

Refinery off gas stream typically contain contaminants that impact the product quality and ethylene plant operation. These contaminants need to be pretreated to ensure reliable and safe operation of the steam cracker. Steam cracker design must account for variations and flexibility of feedstock due to changes in crude oils handled in the refinery and the normal adjustments made in the refinery processing to meet changing fuels demand. Evaluation and selection of design options to optimize an integrated complex requires a great deal of understanding about refinery operations as well as the steam cracker design, operation and reliability. The decisions made during early stages of facility development have a major impact on the overall economics over the life of that facility and therefore the competitiveness. Hydrocarbon management is the key to convert the synergy of refinery-petrochemicals operation into an economic advantage in a market place of constantly changing energy dynamics and shifting product demands. Therefore, the optimization should be based on the integrated facility level depending on supply/demand and pricing of raw materials and products at the in/out boundary. Any sub-optimization based on artificially fixed transfer pricing defeats the purpose of integration synergies.
For this case study, the process units include feed preparation and treating as required. Mixed C4s and Raw Pygas are sent to downstream units for further processing. Main by-products include hydrogen, polymer grade propylene, mixed C4s and raw pygas. In addition, gas oil and fuel oil products are routed to other facilities.
The table below summarizes the cost of production for all cases based on grassroots facility:
(1) Total cash costs include cost of raw materials, credits for by-products, utility costs and fixed (labor costs, overheads, maintenance, insurances/property tax etc.) costs.
(2) Depreciation is based on capital costs for ISBL and OSBL facilities as well as owner’s costs during development and execution of the project.
The overall economics is dependent on feed, product and energy pricing. The table above presents a snapshot cost of production for different options for refinery-petrochemical integration. This analysis provides relative comparison of integration options and their impact on cracker economics based on historic prices of cracker feeds relative to crude pricing (therefore these do not represent a true indication of synergy advantages of integrated operation). For this pricing scenario, the refinery off-gas based cracker (Case 4) results in lowest cost of production. It also indicates that the higher levels of integration provide the opportunities to improve cracker economics as compared to a conventional naphtha cracker (Case 2).
The integrated complexes will have a better economic return and diversified market as compared to standalone fuels refineries. Steam crackers in crude oil feed dependent regions must compete with feed advantaged regions (like North America’s shale-based ethane or Middle East’s low-priced feedstock) and look for feedstock supply integration and synergies. 

Refinery-Petrochemicals integration is not a new development. The depth and levels of integration has varied over the years in different regions of the world depending on site specific drivers and economics.
Integrated complexes typically converted 3 to 20 wt. % of crude intake to petrochemicals[i] and are now pushing this to about 50 wt.% utilizing currently available conversion technologies. These complexes typically start with a mix of light to heavy crude diets. The heavier crudes and higher target yield of petrochemicals lead to a more complex refinery configuration. The petrochemistry building blocks typically include steam cracker and aromatics complex.[ii] The integrated complexes are driven by refinery conversion units (catalytic processes) as well as opportunities for improving overall economics by upgrading low value refinery streams to high value chemicals.[iii] Refinery processing objectives can be achieved through a combination of hydrogen addition technologies (like fixed bed, ebulated bed or slurry based hydrocracking of vacuum gas oil and resid), carbon rejection technologies (like FCC/RFCC, delayed coking, flexifluid coking etc.) and carbon concentration technologies (like deasphalting, visbreaking etc.). Steam cracker plants use a thermal cracking process and are highly flexible and can process a variety of refinery streams starting from light off gases to vacuum gas oils.[iv] Aromatics complex is a combination of processing units for converting naphtha and pyrolysis gasoline into benzene, toluene and xylenes.[v] Integrated facilities provide feedstock synergy and flexibility to adapt to future market changes in product quality specifications and product demand shifts.
Refinery businesses are looking for product diversification and vertical integration to secure market share, given the uncertainty about demand growth in fuels market. Steam cracking is a dominant technology for production of olefins and will remain so for the foreseeable future. Naphtha is the leading feedstock globally, and chemical companies constantly look for advantage feedstock for building and operating olefin complexes in a competitive and cyclical business environment. Shale related developments in North America resulted in abundant ethane feedstock supply at very attractive pricing based on cheap natural gas. Natural gas price is expected to stay relatively stable at lower levels. This changed the global energy dynamics of natural gas pricing relative to crude. Chemical companies, operating in regions of the world where most of the feedstock is sourced from crude oil, are constantly looking at the options for staying competitive in the changing marketplace. With most of the new refinery capacity being added in those regions of the world, it’s a logical option to build integrated refinery petrochemical complexes to stay competitive. The case studies, based on different levels of integration between refinery and petrochemical complex, presented in previous publication demonstrate improvement in overall economics. The diversification of product portfolio helps in increasing the production of higher value products and minimizing the processing costs and thus positioning integrated businesses to be competitive in rapidly changing marketplace.i  Integrated complexes are highly capital intensive and complex to plan and implement. It requires a great amount of understanding of the different refining and petrochemical technologies for evaluating the configuration options, along with approach towards integration, to meet the desired business objectives over the long-term life cycle of these facilities.[vi] The scale of these projects is enormous and some in the industry refer to these as “giga-scale”.[vii] Most of these large scale projects are joint venture ownerships (multiple partners) because of large scale investments (tens of billions of dollars). The success of these joint venture lies in understanding of all the aspects of these ventures (strengths of each partner, business drivers, synergy, understanding of technologies/operation and facility operating plan, clear and crisp contractual arrangements based on sound understanding of dynamics that impact the projects/plants over the course of their life etc.) early and upfront.                                                                                                              
There is a further push to increase the petrochemicals yield to 70-80% level (Saudi Aramco and Chevron Lummus Global signed a technology development agreement to commercialize the crude oil to chemicals technology).
Many chemical companies and technology suppliers have focused their effort on crude and condensate sources to directly feed these to the ethylene plants.[viii],[ix] These developments are targeted to eliminate the needs of separation/processing facilities to reduce the overall investment and energy consumption. These technologies are generally limited to lighter crudes of suitable quality for achieving optimum results. These lighter crudes normally have a heavy, non-volatile tail (typically referred as residue or resid). This residue material needs to be separated from the feed entering the high temperature areas of the steam cracking furnaces as this leads to coke build-up. Most the developments to handle these crudes relate to separating the residue from the feed prior to entering high temperature zones of the steam cracking furnaces. Some plants in Asia and Europe have successfully cracked lighter crudes and condensates. Most of the focus previously (in 1960s and 1970s) was related to development of technologies that allowed full vaporization of heavier feeds (straight run or hydrotreated/ hydrocracked gas oils, vacuum gas oils) at conditions that avoided the problems of heavy fouling in convection sections of the steam cracking furnaces. These technologies have been applied successfully in many industrial applications.
For heavier refinery streams and crude oil cracking, many processes were developed and tested from 1960 to early 1980s.[x] Most of these processes were based on fluidized bed cracking. Lurgi developed the sand cracker using sand as heat carrier.[xi] Ube used inorganic oxide as heat carrier.[xii] Kunugi and Kunii process used coke as a heat carrier.[xiii] Gulf Chemical and Stone&Webster jointly developed a thermal regenerative cracking process using solid heat carriers in the fluid bed.[xiv] The development of these processes stopped after crude oil prices collapsed in early 1980s and none of these processes achieved commercialization.
Steam cracking, to produce basic building blocks – ethylene/propylene/butadiene/butenes/ aromatics, is the most versatile and critical technology that drives the integration approach and effective management of hydrocarbons. In upcoming blog, I will present a case study that will highlight options for integration and their impact on steam cracker economics.
References
[i] Kapur et. al., PTQ Q3 2009, “Competitive Driving Force for Integration”, pages 17-23
[ii] Kapur et. al., Hydrocarbon Processing – February 2009, “Why Integrate Refineries and Petrochemical Plants”, pages 29-40
[iii] Kapur et. al., 20th Ethylene Producers Conference April 6-10, 2008 New Orleans, “Catalytic Routes to Olefins Shaping the Integrated Complex Configuration”, paper number 219f
[iv] Sanjeev Kapur, RLPA Conference 1994 Singapore, “Pyrolysis of Hydrocarbons to Olefins”
[v] Zhou et. al., Hydrocarbon Processing – November/December 2012, “Improve Integration Opportunities for Aromatics Units – Parts 1 and 2”
[vi] Sanjeev Kapur, International Petroleum Refining – April 2011, “Planning is imperative for the Success of an Integrated Facility”, pages 66-69
[vii] Interview of Joseph Brewer of Sadara by Ashraf Ayoub of ECC, Hydrocarbon Processing Website – June 19, 2018” http://www.hydrocarbonprocessing.com/news/2018/06/when-mega-goes-giga-a-discussion-on-the-sadara-petrochemical-complex
[viii] Stell et. al., Patent US7588737B2, “Process and Apparatus for Cracking Hydrocarbon Feedstock Containing Resid”
[ix] K. M.Sundram, Patent US20160097002A1, “Thermal Cracking of Crudes and Heavy Feeds to produce Olefins in Pyrolysis Reactor”
[x] Kapur et. al., ENI Encyclopedia of Hydrocarbons – Volume II/Refining and Petrochemicals, “Section 10.5 Ethylene and Propylene”, pages 551-589
[xi] Schmalfeld P., Hydrocarbon Processing and Petroleum Refiner, vol. 42, 1963, “How Lurgi Improved Sand Crackers”, pages 145-148
[xii] Matsunami et. al., Hydrocarbon Processing – November 1970
[xiii] Kunugi D., Chemical Engineering Science, vol. 35, 1980, “Chemical Reaction Engineering and Research and Development of Gas Solid Systems”, pages 1887-1911
[xiv] Ellis et. al., Proceedings of AIChE National Meeting April 1981, Houston, “TRC. A New Olefins Technology”