Crude oil-to-chemicals (COTC): An

industry gamechanger?

Dr. Richard Charlesworth, Executive Director

• Refinery and Petrochemicals

Integration

• Overview of COTC projects

• Production Capacities &

Competitiveness

• An Industry Gamechanger?

Agenda

• Refinery and Petrochemicals

Integration

• Overview of COTC projects

• Production Capacities &

Competitiveness

• An Industry Gamechanger?

Agenda

Converging forces are forecasted to halt growth

in refined products

000

300

600

900

1200

2010 2015 2020 2025 2030 2035 2040

Petrochemicals products Refined products

Index of base chemicals and refined products growth

Source: IHS Markit © 2019 IHS Markit

Global refined products & petrochemical cumulative demand growth

Mill

ion

To

ns

• Annual refined product growth from

2020 to 2030 expected to be 0.6%

and then plateau due to:

• Reduced Transportation Fuel

Usage

• Substitution by NG, LPG, H2,

Biofuels

• Regulations/Taxes/Mandates

• In contrast, market forces increase

petrochemical demand due to:

• Population Growth

• Middle Class Growth

• Therefore Refinery/Petrochemicals

integration expected to grow

Refinery and petrochemical plants have

achieved various degrees of integration

Refinery Petrochemical

Naphtha

Reformate

Propylene

C2 & LPG Gas

Hydrogen

C4=

Crude Flexibility

Fuels

Lube base oil

Energy

Integration

Feed Flexibility

• Ethane

• LPG

• Condensate splits

Petrochemicals

Refineries must integrate to survive

-30

-20

-10

0

10

20

30

40

0 5,000 10,000 15,000 20,000 25,000 30,000 35,000

Fully Integrated Ethylene Integrated Paraxylene Integrated Non Integrated

2020: East-of-Suez refinery margin analysis

Source: IHS Markit © 2018 IHS

Cumulative crude capacity, thousand b/dNe

t C

ash

Ma

rgin

s, $

/ba

rre

l of C

rud

e

The portion of the barrel of oil converted to

petrochemical feedstocks continues to increase

Degree of Refinery/Petrochemical Integration =

Feedstock for Petrochemical Production

Crude processing capacity of Refinery

0%

5%

10%

15%

20%

Reliance Sinopec Aramco Exxon BP Chevron Petrobras Rosneft

Deg

ree

of i

nte

grat

ion

Integration Analysis

2010 2024

Crude Oil to Chemicals (COTC) elevates

petrochemical production to refinery scale (x4)

• COTC goes beyond such “state-of-art” refinery

petrochemical integration.

• COTC reconfigures a refinery to produce maximum

chemicals instead of fuels and thus merge refinery and

petrochemical plants into one.

• Due to its large scale, COTC is an imminent threat to

existing producers however it depends on the chemical

chains

Refinery

Petrochem

COTC

• Refinery and Petrochemicals

Integration

• Overview of COTC projects

• Production Capacities &

Competitiveness

• An Industry Gamechanger?

Agenda

Crude oil to chemical routes

Steam cracker Naphtha

Petro

chem

icals

Conventional

process

Crude oilRefinery

Aramco/SABIC

Hengli

Zhejiang

Shenghong

Henyi

Light crude

Crude oil to PX

complex

Mixed crudes

Crude oil to

chemicals complex

PEP 29I

ExxonMobil Steam cracker

Light crude

PEP 29J

PEP 29J

PEP 303,

PEP 303A

PEP: IHS Process

Economics Program

ExxonMobil’s approach to steam cracking

crude oil

• Preheat crude oil in cracker furnace convection

section

• Partially vaporize heated crude in flash pot

outside furnace

• Flash pot overhead vapor (76%) fed to cracker

furnace radiant coils

• Dispose of 24% flash pot bottoms liquid (resid)

in refinery

• Implementation of this technology depends on a

very light oil such as TAPIS.

• Scale is limited by steam cracker

Source: PEP 29J

ExxonMobil Huizhou Phase 1 Process Units

Cru

de

de

sa

ltin

g

Direct Crude

to Steam

Cracker Phase

1

$ 4 bn

Investment

Light crude

e.g.Tapis

1,200 KTA

Ethylene

Propylene

C4

Pygas

Clean Fuel Oil

Sulfur

660 KTA metallocene PE

550 KTA bimodal PE

430 KTA high impact PP

420 KTA homo PP

Butene-1, Isobutylene

Pygas hydrogenation,

Aromatics extraction

Not all “Crude to Chemical” Projects are equal

Project

Refinery

Capacity

(MMTPA)

P-Xylene

Capacity

(MMTPA)

Ethylene

Capacity

(MMTPA)

Est. Chemical

conversion/ bbl. of

oil (%)

Investment

($bn)

Full line

Operation

Hengli Petrochemical 20 4.3 1.5 42 11.4 May 2019

Zhejiang Petroleum and

Chemical (ZPC) Phase 120 4.0 1.4 45 12 2020

Hengyi (Brunei) PMB

Refinery-Petrochem8 1.5 0.5 >40 3.45 Nov 2019

Zhejiang Petroleum and

Chemical (ZPC) Phase 220 4.8* 1.2 50* 12 2022

Shenghong refinery and

Integrated Petrochem16 2.8 1.1 60** 11.0 2021

Tangshan Xuyang (Risun)*** 15 3.5 1.5 >50 8.5 2023

Aramco/SABIC JV 20 -- 3.0 45+ 20 2025

* ZPC/UOP press release Jan. 17, 2019 announced that Phase 2 configuration and technology will be changed from Phase 1.

** Based on information obtained by IHSM from a visit to Shenghong in November 2018

*** A newly announced project which is under environmental impact Assessment

+ Aramco also developing technology with Chevron Lummus Global with the aim of converting 70%+

Hengli’s Refinery-PX complex configuration

Crude Oil

20 MMTPA

60% Saudi Heavy

30% Saudi Medium

10% Marlim

Avg. API= 27.62

S= 2.26%

Lube oil

Atm

ospheric a

nd V

acuum

Dis

tilla

tion

2 x

10 M

ta

Light Hydrocarbon

Recovery 4.5Mta

Kerosene

Hydrotreating

2.0 Mta

Resid Ebullated Bed

Hydrocracking

6.0 Mta(2 H-Oil)

Diesel Hydrocracking

6.0 Mta (2 Units)

Gasoil

Hydrocracking

7.5 Mta (2 x HyK)

Residue gasificationSolvent De-asphalting

(Solvahl)

Heavy

naphtha PX

Benzene

Continuous

Reforming

9.6 Mta (3X 3.2

Mta Aromizing™

IsomerateNaphtha

Hydrogenation

PP, MTBEC3/C4

Key technologies

supplied by Axens

Source: PEP 303

Zhejiang Petroleum Petrochemical Complex-

Phase 1

CD

UV

DU

Naphtha Hydrogenation

Dry gas

LPG

Crude Oil

20 MMTPA

1:1 mix of Arabian

medium and Iranian

Light, or

3:7 mix of Brazilian

Frade and Iranian

Heavy

Light Hydrocarbon

Recovery

Diesel

Hydrocracking

2X 5.4 Mta PX

Heavy

naphtha

Benzene

Continuous

Reforming R

FC

C

Coking

CDU

Residue

VDC

Residue

Coke

KeroseneDiesel

Heavy. V

Gasoil

Light V Gasoil

Hydrocracking

Gasoline

Key technologies

supplied by

Honeywell UOP

Source: PEP 303

Saudi Aramco’s approach to steam cracking

crude oil is olefins focused

• ARAMCO feeds Arabian Light crude oil to

resid hydrocracker (HK)

• Lightest 85% of HK product conventionally

steam cracked

• Heaviest 15% of HK product fed to

proprietary high-severity fluid cat cracker

(FCC), making cracked naphtha +

propylene

• FCC technology developed as joint venture

with Nippon JX.

• In addition to the Aramco/SABIC JV,

Aramco announced work with Chevron

Lummus Global (CLG) to develop

hydrocracking technology (70-80% per

barrel of oil to chemicals)

Hydro

cra

cker

Dis

tilla

tion

Liq

uid

s S

team

Cra

ckin

g &

Separa

tion

Hig

h S

everity

FC

C

Whole

crude

API = 43

VGO

15%

Gasoline

Light Olefins

C1-C4

Naphtha

AGO

Ethylene

Propylene

Mixed C4

Pygas

Fuel Oil

Cracked

Products

Source: PEP 29J

• Refinery and Petrochemicals

Integration

• Overview of COTC projects

• Production Capacities &

Competitiveness

• An Industry Gamechanger?

Agenda

Hengli’s Refinery-PX complex product yields

Mta = million tons

per year

Hengli Refinery – PX Complex

Hydrogen

Methanol

(for MTBE)Coal gasification

Hydrogen, HeatResidue gasification

12 Mta Saudi heavy

6 Mta Saudi medium

2 Mta Marlim

Avg. API= 27.62

S= 2.26%

• PX 4.34

• Benzene 0.97

• Naphtha 1.63

• Gasoline 4.61

• Diesel 4.61

• Kerosene 3.74

• LPG 0.65

• PP 0.44

• Lube 0.54

• Acetic Acid 0.35

• Heavy Aromatics 0.13

• Sulfur 0.52

Total Chemicals = 8.4 Mta

(42% Conversion)

Source: PEP 303

Comparison between PEP estimate and Hengli

announcement

• Product yields – Major products

ProductThis study

(KTPA)

Hengli

announcement% Deviation

PX 4,340 4,340 0%

Benzene 960 970 -1.03%

Diesel 1,610 1,610 0%

Kerosene 3,540 3,710 -4.58%

Gasoline 4,580 4,610 -0.65%

Naphtha 1,500 1,630 -7.98%

LPG 620 620 0%

PP 440 440 0%

Acetic Acid 330 330 0%

• Capex – Plant construction cost

0

2000

4000

6000

8000

10000

PEP Estimate Hengli Announcement

Cap

ex I

n M

illio

n $

Source: PEP 303

Global paraxylene production capacity rank

0

1,000

2,000

3,000

4,000

5,000

Ca

pa

city (

KTA

) Hengli

Asian paraxylene market will be severely

disrupted

China PX Capacity vs. Demand

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

Kta

Demand Capacity

6,569

2,412

1,562

1,140

868

3,403

Total PX Imports= 15,954 Kta in 2018

South Korea Japan Taiwan India Singapore Others

China PX Imports in 2018

Source: IHS Markit Paraxylene World Analysis

We expect the paraxylene projects to be very

competitive on the global cash cost curve

0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 50.0

World Cost Curve: Paraxylene

(Cost Basis = Plant Gate, Operating Rate Basis = IHS Baseline

Integration Basis = On)

World Cost Curve: ParaxyleneWorld Cost Curve: ParaxyleneWorld Cost Curve: ParaxyleneWorld Cost Curve: ParaxyleneWorld Cost Curve: ParaxyleneWorld Cost Curve: ParaxyleneWorld Cost Curve: ParaxyleneWorld Cost Curve: ParaxyleneWorld Cost Curve: ParaxyleneWorld Cost Curve: ParaxyleneWorld Cost Curve: ParaxyleneWorld Cost Curve: ParaxyleneWorld Cost Curve: ParaxyleneWorld Cost Curve: ParaxyleneWorld Cost Curve: Paraxylene2020 World Cost Curve: Paraxylene

Source: IHS Markit

Cumulative Production - Million Metric Tons

$/M

etr

ic T

on

Zhejiang

Phase1

Aramco + CLG crude oil steam cracking yields

20 Mta Arabian Light

Avg. API= 34

Mta= million tons

per year

Aramco Crude to Chemicals

Complex

Source: PEP 29J Conceptional design based on Aramco patents

• Ethylene 4.71

• Propylene 3.08

• C4 Fraction 2.54

• Pyrolysis Gasoline 4.00

• Fuel Oil 1.24

• Hydrogen (95%) 0.26

• Gasoline (Aromatics Rich) 1.15

• Light Cycle Oil 0.32

Total chemical products about 14.3 Mta

(72% yield)

• Methane 2.1 (used as fuel in

steam cracker)

• Sulfur 0.6

We expect the Aramco projects to be

competitive on the global cash cost curve

0.0 50.0 100.0 150.0 200.0 250.0

World Cost Curve: Ethylene

(Cost Basis = Plant Gate, Product Basis = Ethylene, Operating Rate Basis = IHS Baseline

World Cost Curve: EthyleneWorld Cost Curve: EthyleneWorld Cost Curve: EthyleneWorld Cost Curve: EthyleneWorld Cost Curve: EthyleneWorld Cost Curve: EthyleneWorld Cost Curve: EthyleneWorld Cost Curve: EthyleneWorld Cost Curve: EthyleneWorld Cost Curve: EthyleneWorld Cost Curve: EthyleneWorld Cost Curve: EthyleneWorld Cost Curve: EthyleneWorld Cost Curve: EthyleneWorld Cost Curve: Ethylene2027 World Cost Curve: Ethylene

Source: IHS MarkitCumulative Production - Million Metric Tons

$/M

etr

ic T

on

US Ethane

KSA FR Naphtha

KSA Aramco COTC

• Refinery and Petrochemicals

Integration

• Overview of COTC projects

• Production Capacities &

Competitiveness

• An Industry Gamechanger?

Agenda

Crude oil-to-chemicals (COTC): An industry

gamechanger? It depends….

• Depends on Crude• ExxonMobil approach requires a light crude

• Depends on Product• COTC will be hugely disruptive to the paraxylene industry. Less so the olefins chain due to scale

vs the market, number of projects and project timescale

• Depends on Raising Large Capital• $10-$20bn for a COTC complex means that only “major” companies can raise the necessary

capital

• Depends on Location• ROIs will be questionable in regions of higher relative CAPEX so China has a great advantage

with location factor of ≈0.6 vs. USGC

Thank youwww.gpca.org.ae