AM-97-33 FCC PROFITABILITY: UNCOVERING THE HIDDEN VALUE EVALUATING THE DIFFERENCES BETWEEN HARD AND SOFT DOLLARS

Description:

In today’s market, refiners have to operate smarter and more cautiously than in the past. Budgetary constraints are being imposed at all levels of the refinery, and those areas with large allotments come under careful scrutiny. Today’s refiner of petroleum products has to make difficult choices in order to achieve the maximum profit for their unit. Given the pressure to control costs, refiners are often faced with choices that seem worthy at first review, but may fall short when longer term benefits are evaluated. The feed quality used by a particular refiner is the most important element of how many dollars can be squeezed from that barrel of crude’. The second most important element is the type of processing equipment found within a given refinery. Included in this equipment is the workhorse, known as the Fluid Catalytic Cracking Unit (FCCU). More volume expansion and dollars are generated in the FCCU than in any other piece of refinery equipment. The profits produced from an FCCU are largely controlled by parameters such as: operating conditions, feed, market opportunities for the products and FCC catalysts. These controllable parameters all operate within a three dimensional box having fixed limits. The operating conditions are generally more fixed than the other parameters, due to physical constraints that are inherent to the unit. The most common operating constraints seen in North American refineries are air blower limits and wet gas compressor limits. Although all refineries have to operate within a given riser and regenerator limit, these are generally thought of as controlled constraints, meaning they are adjusted for the particular mode of operation. The feed in most cases is relatively fixed in that a refinery has to run whatever crude has been purchased, often months in advance. Refinery economics and yields are significantly altered depending upon feed characteristics. The differences have been reviewed between crude types (west coast, gulf coast, and east coast) and how they impact a unit at constant conditions. Factors such as API, CCR, metals, sulfur and nitrogen all impact profitability. In addition, the economics from varying parts of North America (west coast, east coast and gulf coast) are also evaluated against constant feed and operating conditions*. FCC catalyst is one of the refiner’s bigger expenses, and is often examined for cost saving feasibility. It is just this type of approach which can cause a refiner to inadvertently lose large amounts of hidden revenue when strict cost-cutting measures are imposed. Ultimately, FCC catalyst is the most flexible parameter in refinery optimization. Refineries typically purchase FCC catalyst using one of two approaches. One option is to buy strictly on the economics of the catalyst and how much it costs in dollars per day or dollars per ton (herein referred to as “hard dollars”). Hard dollars are defined as dollars that a refiner can see on a daily basis (e.g. catalysts, crude, utilities and manpower). These have dollar figures usually budgeted for, and controlled within a given budget. Unfortunately, the refiner choosing catalyst on a cost basis alone can lose significant dollars due to non-optimization of the FCCU. Alternatively, in a ‘more ideal catalyst selection process, the refiner and the catalyst supplier work closely together to determine the constraints ‘and the yield structures necessary to maximize the FCCU profitability. In turn, this information is used to select the proper catalyst and uncover the hidden values of the FCCU, referred to as “soft dollars”. Performance based catalysts can cost up to several hundred dollars per ton more but are accompanied with significant vendor technical support compared to a low priced catalyst. Performance catalysts can generate several thousand dollars per day in increased profits by giving a refiner more desirable economical yields. These catalysts can be tailored for specific markets and fine tuned to address specific unit constraints and goals. In the following pages it will be demonstrated how different feeds, regional market economics, and operating conditions can effect the refinery’s profitabihty. These factors, which have great influence on operations, do not have the flexibility that FCC catalysts have in influencing the soft dollars gamed by optimizing the yield structure. Thus it is easy to demonstrate how these factors can be optimized with the refiner’s input to maximize his performance and soft dollars, while controlling hard dollars. By choosing the best.FCC catalysts for varying unit operations, it is shown that the benefits (in terms of soft dollars) far exceed the short term benefits in saved hard dollars, especially when the cheaper FCC catalyst does not give quality performance. In many cases optimization can save both hard and soft dollars.