Keith A.

Couch Refining & Petrochemicals Integration

Honeywell UOP Opportunities for Value Creation
March 6-7 2017 UOP India Refining and Petrochemicals Technology Conference
Delhi, India
UOP 7804B-0 2017 UOP LLC. A Honeywell Company All rights reserved.
 1

Strategy for Petrochemicals Integration

Refinery

Process Configuration Technology Selection

Integrate process units Select the most efficient
to drive maximum process technologies,
efficiency and flexibility catalysts and adsorbents

Olefins Aromatics
Complex Complex
H
H
H H H C H3C CH3
C=C C=C H
H H H H

Molecule Management
Process right molecule in right unit

UOP 7804B-1
 2

Refinery capacity expansion trends in the future

will continue to follow shifts in product demand

CIS
Europe 2
2 0.6
1 0.3
1
0 China
0
North America -1
-1
6 5.7
2 - -2 5
0.6 0.7 -2 - 0.5
1 2005-2015 2015-20254
1.3
2005-2015 2015-2025 3 2.2
0 Middle East 2
1
-1 3 2.2 0
-2 2 1.3 2005-2015 2015-2025
2005-2015 2015-2025 1 India
0 1.7
-1 2 Rest of Asia
0.8
-2 1 2
2005-2015 2015-20250 0.8
1 0.3
-1 0
Latin America -2 -1
2 Africa 2005-2015 2015-2025
-2
1 0.5 2 2005-2015 2015-2025
0 1 0.1 0.1
-1 0
-
Refining capacity net additions -2 0.3 -1
(Million barrel per day) 2005-2015 2015-2025 -2
2005-2015 2015-2025

GDP CAGR
India ~7.6%
China ~6.4%
Source: IHS Global Insight
ME ~3.8%

Middle East, India and China are well poised for expansion
 3

Expansion into PetChem Improves Project Returns

$140 $120 16.0%
200% 14.3%
Normalized % of Crude Price

$110 13.9% 14.0%

$120
$100 12.0%
150% $100
$90 9.8% 10.0%

$80 $80 8.0%

100%
$70 6.0%
$60
50% $60 4.0%
$40
$50 2.0%

0% $20 $40 0.0%

1999 2004 2009 2014 Sell Crude Fuels Add Add
Aromatics Steam
Gasoline Kerosene Cracker
Gasoil PX
Cash Flow $/bbl crude
Ethylene Propylene
Benzene Brent Crude $/BBL

A fuels only refinery provides little return Petrochemicals;

over covering the cost of capital
Lower in volume than fuels
Typical Coverage Ratio: 1.5 - 2.5
Provide much larger price margin
Needed to make modern projects
economically competitive.

PetChem provides a financial hedge against volatility in crude markets

 4

Global PX Market
Global pX Supply-Demand China pX Supply-Demand
70 90% 30
Nameplate Capacity
Millions Metric Tonnes

Production Consumption

Millions Metric Tonnes

60 85% 25

Operating Rate, %
50
80% 20
40
75% 15
30
70% 10
20
10 65% 5

60% 0
2014 2016 2018 2020 2022 2010 2012 2014 2016 2018 2020
Source: PCI XP

Chinese demand is the major driving force China pX production is not keeping up
Domestic fiber consumption with demand

Largest PTA asset base consuming Heavy naphtha (HN) is 10% of world
~50% of global pX naphtha sales

Strong incentive for PTA producers to One pX plant consumes 40% of global
integrate into pX HN supply
Condensate based pX adds 60% to pX
CCOP, and it makes more Bz
Chinese are early adopters of new technology

UOP 7804B-4
 5

Para-xylene Pricing Remains Favorable

Northeast Asia PX and Spread (Weekly Spot Price)
1,800
1,600 PX- Naphtha
PX Spot Price
1,400
1,200
US$/MT

1,000
800
600
400
200
0
Jan Jan Jan Jan Jan Jan
2012 2013 2014 2015 2016 2017
Source: CCFGroup

New capacity impacted pX Price spreads in 2014

Today, producers are capturing a 400 $/MT premium over naphtha,
stronger than previous cycles
Strong octane demand and extended pX shut downs, have benefit producers

PX continues to create value, despite overcapacity

 Chinas pX Efforts Slowed by Lack 6

of Merchant Heavy Naphtha

World Naphtha Traded (BPSD) China Share of HN (BPSD)
160000 14000
HN Available Other Naphtha Rest of World HN Import - China
140000 12000
120000
10000
100000
8000
80000
6000
60000
40000 4000

20000 2000
- -
2009 2014 2019 2024 2029 2009 2014 2019 2024 2029
Source: IHS Source: IHS

Light naphtha is 10 times HN China consumes most of HN traded

Light naphtha will be in excess in Requires refining with PC complexes
locations without PC
HN trade is insignificant compared
to demand

PX demand in China is outpacing refinery investments

 7

India Exports Forecasted in 2020

pXylene
Lt Naphtha Gasoil/Diesel Gasoline KMTA
Export To: KMTA MBPD MBPD Source PCIWM, 2015

NEA 6,599 25 121 312

ME - 95 89 -

SEA 647 15 195 567

AFRICA - 296 76 -

EUROPE - 63 - -

AMERICAS - 5 49 16

Opportunity feeds exist for petrochemicals production

 8

Routes to Increase Heavy Naphtha Production

pX from
Step Crude Cut 15 MM TPA Processing Issues Value
Crude
Straight-Run Reforming: Obvious winner, but:
1 1,250 kMTA Aromatics Not enough feed for world-scale aromatics Low Cost
Naphtha
FCC: Enables parallel Hydrocracking Unit Optimization:
MOGAS blending Often need olefins for Euro 5 gasoline pool
C4= Needed for Alkylate production
2 VGO No Increase Easy Entry
C3= <12 Wt-% to stay below PDH cost of production

Hydrocracker: Revival of HCK for naphtha; origins in the 1960s:

Diesel Zero diesel capability (flexibility) Enables
3 VGO 2,200 kMTA Naphtha Excellent feedstock for reforming unit World-Scale
LPG Enables 1500 KMTA Ethylene Steam Cracker Petrochem

Coking / Resid HC: Upgrade Resid from Fuel Oil

Vacuum Gas oil Couple with VGO Processing to naphtha Upgrades Low
4 2,800 kMTA
Resid Solves MARPOL by exiting that market Value Product

HC / Steam Cracker Typically requires a market dislocation to support

Straight-Run Naphtha sufficient economic return; e.g. fuel tax on Chinese Fuels Market
5 >4,000 kMTA
Diesel LPG independent PetChem producers. Avoidance

After we make the naphtha, leverage it correctly

 9

Global pX Cost Curve

Oil 50 $/BBL, Natural Gas (NEA) 7$/MM BTU
800
2020
780
Marginal MT
760
740 Current Technology in
Mid-East

Demand
$/Tonne

720
700
680 LD Parex in Asia
660
LD Parex in the Middle East
640
620
600
5 10 15 20 25 30 35 40 45
Annual pX Supply (Million Tonnes)

New capacity will reduce the marginal price as it comes on line

 Improve Naphtha Molecule Management: 10

A Recent Example

Original ITB Case

$1,600 40.0%
Isom NPV IRR
$1,200 30.0%

Gasoline Pool
FR
Naphtha

Isomerate
Splitter

Naphtha $800 20.0%

Reformate
$400 10.0%

Raff & HA
$0 0.0%
Reforming Original ITB Case Value Added Case

Hvy Better molecule management led to

Naphtha higher NPV and IRR
Aromatics pX
Reforming Complex
Bz Free Cash Flow increased by
$20MM/yr

Over-constraining boundaries can lead to missed opportunities

Over-constraining boundaries can lead to missed opportunities

 Flexibility Analysis Enables 11

Better Decision Making

Impact on Product Slate
3500
$2,000 17.0%
3000
Product Rate, KMTA

2500
$1,500 15.0%
2000

1500 $1,000 13.0%

1000
$500 11.0%
500

0 $0 9.0%
Para Benzene Gasoline Jet Fuel PC Base 1700KMTA Max Jet Fuel Max
Xylene Naphtha 1400KMTA PX Gasoline Production Aromatics
incl Sulf PX
Raff
Base 1400KMTA PX 1700KMTA PX Total Plant Investment, $MM
Max Gasoline Jet Fuel Production 20yr NPV, $MM
Max Aromatics IRR, % (3yr Const Period)

Max Aromatics has the highest NPV

Jet Fuel production has the highest IRR due to lower CapEx and OpEx
Max Gasoline has the lowest export of PC Naphtha

Relatively small pre-investment can enable a lot of value

 12

Global Ethylene & Propylene Markets

World: Ethylene Supply & Demand World: PG/CG C3= Supply & Demand
250 95% 180 85%

200
90%
120
150

MMTPA
Percent
MMTPA

Percent
85% 80%

100
60
80%
50

0 75% 0 75%
11 13 15 17 19 21 23 25 11 13 15 17 19 21 23 25
Global Demand NA Cap.
Europ Cap. CIS Cap. Global Demand NA Cap. Europ Cap.
LATAM Cap. Africa Cap. CIS Cap. LATAM Cap. Africa Cap.
ME Cap. AP Cap. ME Cap. China Cap. OAP Cap.
Operating Rate Operating Rate

Source: IHS Source: IHS

Healthy demand growth drives global ethylene/propylene annually

Light Paraffin Dehydrogenation 13

Enables Many Value Chains

Feedstocks Products Uses

H2
Fiber

Propane Propylene Packaging

Propane Propylene
+ + High performance
Contained plastic
Butane Butylene Alkylate & Gasoline
Blending Components

Butane Contained
Butylene ETBE
MTBE

Iso-Octane
UOP Oleflex Process
Synthetic Rubbers &
Acrylics

Options include both dedicated and mixed-feed applications

 14

Maximize LPG Profitability with BDH to Alkylate

LPG C4 Processing with Recovery of MTBE or Alkylate

Methanol Alkylate is the Ideal Blending
Component for Gasoline
LPG C4s DIB Oleflex Ethermax
Unit
MTBE Producers
Butamer Unit
Unit No aromatics, sulfur, or olefins
H2 Raffinate Low vapor pressure; enables
greater C4/C5 blending
Indirect or
Direct Alkylate Octane > average pool octane
Alkylation
Wide boiling range

Butamer technology converts nC4 to iC4

Oleflex process for dehydrogenation of your light paraffins (iC4 or nC4)
Choose your product:
Ethermax process for MTBE production (or ETBE)
InAlk process for Alkylate from Olefins
AlkyPlus & IsoAlky process for Alkylate from
Paraffins + Olefins

UOP 7804B-14
 FCC Role In Petrochemical Complex is a 15

Balanced Approach
Incremental Cost of FCC Propylene
$1,300 FCC Key strengths:
Incr CCOP Propylene $/MT
PDH CCOP $/MT Makes Olefinic C4-C6 to help meet
$1,100 Euro Gasoline specs
Feed source for Alkylate
$900
and MTBE
$700 C5+ Olefins provide needed
non-aromatic octane
$500
10.0% 11.0% 12.0% 13.0% 14.0%
Produces heavier FCC gasoline
FCC Propylene Yield, Wt-% for MOGAS blend pool
Enables low cost propylene
Middle East NGL Demand and Exports
50,000 production to a point
NGL Total Demand Propane
40,000 NGL total production Propane
On purpose Olefin Production
30,000
India imports 4,000 kMTA C3
20,000
Propane is available for PDH
10,000

0
2015 2017 2019 2021 2023 2025
Source: IHS

Balance FCC and PDH for best overall economics

 Petrochemical Landscape Provides 16

Many Opportunities
Kerosene Naphtha Gas Oil Propane Natural Gas

Steam
Reforming
Catalytic
Reforming Aromatics Methanol
Complex
PAREXTM IsomarTM TatorayTM Steam OleflexTM MTOTM
Process Process Process Cracking Process Process

Benzene (T, o-X, m-X) p-Xylene Ethylene Propylene

MolexTM Ethyl- CumeneTM Vinyl

Process PTA EO/EG PE PP
benzene Process Acetate
PacoTM
Styrene Phenol PET (SSP)
Process

DetalTM Capro
PS
Process /Nylon

LAB Polystyrene Polycarbonate Polyethylene Acrylics

Detergents Nylon Polyester Polypropylene
Key:
Process, Catalyst/Adsorbent, Equipment & Services Alliance
Process Technology and Services By Others
Catalyst/Adsorbent, Equipment & Services

Figuring out the ideal market vertical is a unique exercise for every firm
 17

Summary
Global Refining Capacity will increase regionally to meet
fuel demand
Petrochemical demand continue to offers a profitable
option for ME refiners
New Petrochemical complexes also need refining for HN supply
Global PX supply is in balance but deficit in China
Octane values will help stabilize the PX/naphtha spread
New low cost PX technology will be required to compete with Asia supply
Early integration of UOP technology and Honeywell Process Systems
Control Packages
Maximize the return on your R&P Integrated investment through:
Understanding of market dynamics
Selecting the right technology
Optimal upfront configuration

UOP 7804B-17
 18

UOP 7804B-18