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Petroleum RefiningPast, Present, and How You Fit InGreetings everyone.

For those attending the Valero tour, hopefully this serves as a good introduction so that you get more out of the tour. For those unable to attend, hopefully this makes a good alternative professional development event.

For you pledges, this was initially going to be a Brothers only presentation, but Ernie, being the guy that he is, realized that this may be of value to you, so we agreed to arrange things so that you could benefit from this.1OutlineRefining: A Historical PerspectiveThe Early YearsThe Industry Begins to ChangeRefining in the Modern EraRefining: The Process & The UnitsThe Basic Refining ProcessThe Units and Their FunctionsWhen Theory & Reality CollideHow You Fit InChemical EngineeringElectrical EngineeringMechanical EngineeringIf you havent guessed it by now, this presentation is about the petroleum refining industry. The goal is that by the end of this, you understand the current state of the industry, the basic refining process, and the opportunities available to you should you think that this sounds cool and you want to get involved in all of this.

Were going to start by looking at the industry through the lens of history. I believe the best way to understand where we are and where we are going is to look at how we got here. Then we jump into the basic refining process, the units, and how that theory gets applied in practice. Finally, we talk about the roles and responsibilities of the various engineers.2Refining: A Historical Perspective3The Early YearsTimeline1850EventKerosene lamps are invented.Kerosene lamps soon became the standard for oil lamps.Kerosene is found in rock oil, which today we call crude oil.

Oil based lighting has been around since ancient times, but it reached its apex with the development of the kerosene lamp in 1850. Unlike olive oil and whale oil, kerosene has a low viscosity and is easily used as a fuel for lamps.

It is also important to us because kerosene is found in rock oil, which we today call crude oil.4The Early YearsTimeline18501859EventEdwin Drake searches for rock oil in Titusville, Pennsylvania.On August 29th, Drake strikes an oil pocket and is successful.Drakes drilling method is still used today, even for wells over 1 mile below ground.In spring of 1859, Seneca Oil commissioned Edwin Drake to find rock oil in Titusville, Pennsylvania. After months of difficulty, Drake successfully breaks through the rock and finds oil, giving birth to the modern oil & gas industry.

Interestingly, Drakes general method for well drilling is still used today, even for wells over 1 mile below ground.5The Early YearsTimeline185018591870EventJohn D. Rockefeller establishes Standard Oil.Standard Oil eventually grows into the largest oil company in the world.John D. Rockefeller establishes Standard Oil, which would go on to become the worlds largest oil company, and a source of controversy.6The Industry Begins to ChangeTimeline1850185918701890EventEconomical automobiles were coming to the mass market, and they required gasoline.Gasoline, a waste product, would become the refiners most important product..The introduction of cheap automobiles begins a period of intense change for the industry. Gasoline, which used to be burned as a waste product, suddenly had a huge market. What the refiners didnt realize is that gasoline was soon to become their most important product.7The Industry Begins to ChangeTimeline18501859187018901901EventThe Lucas gusher blows, initiating the Texas Oil Boom.The Texas Company (Texaco) and Gulf Oil Corporation are founded to process the oil.Texaco and Gulf Oil build refineries in Port Arthur, Texas.Oil prospectors in Texas declare that theres oil in them hills and the start drilling. The Lucas gusher blows, the Texas Oil Boom begins, and Beaumont is born.

The Texas Oil Company, now called Texaco, along with Gulf Oil Corporation are founded to process the oil, and they both build refineries in Port Arthur.8The Industry Begins to ChangeTimeline185018591870189019011910EventGasoline demand has grown beyond what refiners supply.A method for converting trash oil into gasoline was needed.The answer was cracking, a process invented by Vladimir Shukov in 1891.The waste oil was heated until some of the trash oil broke up into usable gasoline liquids.Gasoline demand has exploded to levels the refiners never expected. Demand has exceeded the quantity of gasoline that used to be thrown away, and refiners need a cheap way to increase gasoline production.

The answer was thermal cracking a process invented by Vladimir Shukov in 1891. Shukov realized that hydrocarbon chains came in varying lengths. Short chains formed light fuels like gasoline, while long chains formed things like asphalt. Shukov discovered that, which enough heat, the hydrocarbon chains would break and what used to be trash oil could now be processed as gasoline. It was a major step forward for the industry because previously worthless oil could now be upgraded into something of value.9The Industry Begins to ChangeTimeline1850185918701890190119101911EventThe Supreme Court rules that Standard Oil is a monopoly.Standard Oil is broken into smaller Baby Standards.Notable Baby Standards:Standard Oil of New JerseyStandard Oil Co. of New YorkStandard Oil of CaliforniaStandard Oil of IndianaHumble Oil & Refining Company

In 1911, the Supreme Court splits up Standard Oil into Baby Standards. (Rockefeller, meanwhile, becomes the richest man in human history because of this.)10The Industry Begins to ChangeTimeline18501859187018901901191019111912EventAmocos William Burton makes refining history by starting the first thermal cracking unit.Refiners can now economically produce more gasoline by upgrading trash oil.William Burton successfully starts the first thermal cracker in Chicago, giving refiners an economical means to produce more gasoline to satisfy market demand.11The Industry Begins to ChangeTimeline185018591870189019011910191119121920EventThe 18th Amendment is passed and the era of Prohibition begins.Chemists who used to work for the alcohol industry are suddenly out of work.They find work in the refining industry, and they introduce fractional distillation to the refining process.Fortune again favors the refining industry when Prohibition hits. Chemists find themselves out of work and migrate to the refining industry where they introduce fractional distillation. Instead of separating the crude into various components one step at the time, refiners can now separate raw crude into its constituent liquids in a single step, saving money and time.12The Industry Begins to ChangeTimeline1850185918701890190119101911191219201936EventEugene Houdry introduced a new cracking process based on a fixed bed and a catalyst.His new design doubled gasoline production versus thermal cracking.In 1946, Esso built the first fluidized catalytic cracking unit (FCCU) in Baton Rouge.The FCCU would become a major part of US refineries.Eugene Houdry changes the industry by introducing catalytic cracking. His design doubled gasoline production against thermal cracking. Not surprisingly, this is a big deal, and in 1946, Esso starts the first Fluidized Catalytic Cracking Unit at its Baton Rouge refinery. FCCUs would become a major part of American refineries (because America uses gasoline for its vehicle fuel, and our high adoption of personal vehicles).13The Industry Begins to ChangeTimeline18501859187018901901191019111912192019361960EventWilbur Nelson publishes a new metric of refinery performance in the Oil & Gas Journal.The Nelson Complexity Index becomes an industry standard measurement tool and changes the refining industry forever.Wilbur Nelson publishes a new refinery metric in the influential Oil & Gas Journal. The Nelson Complexity Index changes the industry forever.14The Industry Begins to ChangeTimeline185018591870189019011910191119121920193619601980EventThe Coast States Gas Corp. undergoes what became Americas largest ever spinoff.Valero Energy Corporation is created from this spinoff.The Industry Begins to ChangeTimeline1850185918701890190119101911191219201936196019801994EventThe Environmental Protection Agency introduces the Tier I standard.Tier I regulates allowable sulfur in gasoline to 300ppm.As youre going to soon find out, crude oil contains sulfur. Unless the refiners specifically remove the sulfur, it makes it into the gasoline (and since the right amount of sulfur makes for better gasoline, the refiners typically left it in). Burning the gasoline burns the sulfur, and burning sulfur produces sulfur dioxide, a chief component of acid rain. People apparently dont like having acid rained down on them, so the EPA decided to regulate sulfur content in gasoline.

The EPA introduced the Tier concept and demanded that gasoline have 300ppm of sulfur or less.16Refining in the Modern EraTimeline18501859187018901901191019111912192019361960198019941998EventBritish Petroleum merges with Amoco to form BP Amoco.In the late 90s, the oil & gas market sucked and companies convinced regulators that they needed to merge to ensure their survival. Consequently a wave of mergers started happening.17Refining in the Modern EraTimeline185018591870189019011910191119121920193619601980199419981999EventExxon merges with Mobil to form ExxonMobil.TOTAL merges with Petrofina.18Refining in the Modern EraTimeline1850185918701890190119101911191219201936196019801994199819992000EventBritish Petroleum acquires Atlantic Richfield.TotalFina merges with Elf Aquitaine, forming TotalFinaElf. (The company renamed itself Total S.A. later.)19Refining in the Modern EraTimeline18501859187018901901191019111912192019361960198019941998199920002001EventChevron Corp. acquires Texaco.Valero finishes acquiring UltramarDiamondShamrock.20Refining in the Modern EraTimeline185018591870189019011910191119121920193619601980199419981999200020012002EventConoco merges with Philips Petroleum Company to form ConocoPhilips.21Refining in the Modern EraTimeline1850185918701890190119101911191219201936196019801994199819992000200120022004EventThe Environmental Protection Agency introduces the Tier II standard.Tier II regulates allowable sulfur in gasoline to 30ppm, a 90% reduction in allowable sulfur content.22Refining in the Modern EraTimeline18501859187018901901191019111912192019361960198019941998199920002001200220042005EventValero purchases Premcor Inc. to become Americas largest independent refiner.Hydraulic fracturing of the Marcellus Shale deposit begins.23Refining in the Modern EraTimeline185018591870189019011910191119121920193619601980199419981999200020012002200420052008EventThe Great Recession begins and the oil & gas industry suffers major reductions in profit margins.Refiners are hit especially hard.Oil & gas companies begin closing or divesting their refining operations.Keystone XL is proposed, changing US energy policy debate forever.24Refining in the Modern EraTimeline185018591870189019011910191119121920193619601980199419981999200020012002200420052008???? EventDirection of industry changes:Integrated oil & gas companies propose lifting US oil export ban.Refiners propose US/Canadian oil trading agreementEthanol blend wall & E15?Tier III gasoline standard begins; gasoline prices increase further.

25Refining: The Process & The Units26The Basic Refining ProcessSo lets start the discussion on the refining process by talking about crude oil types. The two most important factors in determining oil quality is its viscosity and sulfur content. API Specific Gravity is the standard used by the US oil & gas industry. Heavy crudes have an API Specific Gravity of 30 or less. Medium crudes have an API Specific Gravity between 31-33. Light crudes have an API Specific Gravity of 34 or higher.

The other key metric is sulfur content. If sulfur content is below 5%, the oil is considered sweet. If sulfur content is 5% or higher, the oil is classified as sour.

The chart shows a small sample of crude oil found across the world. As you can see, historically our efforts have focused on extracting light crude. You can also see that light crude tends to have lower sulfur content. Both of these factors are very important to refinery design and economics.27The Basic Refining Process

This is a typically distillation curve for crude oil. The chart shows us several things. First, we can see that short chain hydrocarbons like butane boil at lower temperatures and require less effort to extract. We can also see that butane typically represents anywhere from 5% to about 30% of the volume of a barrel of crude oil.

Distillation curves are important to refineries because they provide a detailed understanding of the physical properties of the crude the refinery is trying to process. ExxonMobils refinery near campus is a light oil refinery, meaning the equipment is optimized for crude blends rich in butane, gasoline, and naptha. If the refinery tried to process heavy crude, they would be left with an excessive amount of waste oil that they couldnt process. Conversely, Valeros Port Arthur Refinery is built to process heavy crude oil. If they attempted to refining a light crude rich in butane and gasoline, they would likely over process the oil and destroy oil that could have otherwise been valuable.

Distillation curves are also important because they help the refineries to understand what it will cost them to refine the oil, what their yields will look like, and what kind of profits they can expect to earn on their investments.28The Basic Refining ProcessOil refining can be broken down into 5 basic processes. Were going to talk about each of the processes, the units that are used to support that function, and how those units operate. For ease of which step each unit belongs to, I have added some color coding.29The Units & Their FunctionsCrude Distillation UnitCrude oil is initially heated by pumping through a series of heat exchangers.Heated oil is then purified by desalting & sediment removal.The oil is heated once more before being pumped into the distillation tower.The crude oil separates into various streams & the bottoms are sent for more distillation.

The Units & Their FunctionsVacuum Distillation UnitThe VDU receives atmospheric bottoms & attempts to distill it under more severe conditions.The VDU produces two main fractions: Light Vacuum Gas Oil & Heavy Vacuum Gas Oil.LVGO & HVGO are pumped off for cracking in FCCUs & HCUs.VDU residuum is pumped off for the harshest form of cracking: the coker unit.

The Units & Their FunctionsFluidized Catalytic Cracking UnitFCCU or cat cracker units take atmospheric bottoms and light vacuum gas oil as feed.The feedstock is mixed with a catalyst to promote the cracking process.The mixture is sent to a reactor; the catalyst is recycled while the upgraded oil is sent off for distillation & to join the other product streams.

The Units & Their FunctionsHydrocracker UnitThe HCU is a newer cracking technology that accepts heavy vacuum gas oil & usually converts it to diesel and kerosene.The feedstock is typically reacted 3 times, each time drawing off fractions that are sent to the distillation column.Anything left over is sent off to the coker.

The Units & Their FunctionsDelayed Coker UnitCracking option of last resort.Residual oil is heated and pumped into a drum under extremely high heat and pressure, so high that the liquid converts to a solid substance called coke.The coke is then cut, drained from the tank, dehydrated, and transported for waste holding.

The Units & Their FunctionsCatalytic Reforming UnitNaptha, a product stream from the distillation units, has a low octane rating & makes a poor fuel blending feedstock.Catalytic reforming takes the low octane strait-run naptha and rearranges the molecules to a higher octane naptha called reformate.This process is also generically known as isomerization.

The Units & Their FunctionsAlkylation UnitMost crude blends contain a portion of light hydrocarbons like butane.Additionally, cracking & reshaping activities tend to crack some hydrocarbons more than intended.Alkylation units accept light hydrocarbons & react them with an acid catalyst to form heavier hydrocarbon chains.

The Units & Their FunctionsHydrotreating UnitOil is laden with impurities.Impurities lower fuel quality, degrade engine performance, & cause environmental issues.Hydrotreaters purify the oil by vaporizing the crude, mixing it with hydrogen & a catalyst, & recovering the purified oil.Sulfur, the primary impurity, is extracted as a gas called hydrogen sulfide or H2S.

The Units & Their FunctionsAmine Treating UnitH2S is highly toxic & refineries have to destroy it for safety.Amine compounds are an effective carrier for H2S & are used to capture the H2S generated by hydrotreating.The amine treating unit recovers the H2S and sends it a sulfur recovery unit (SRU) for destruction.

The Units & Their FunctionsSour Water Stripper UnitSimilarly, other refinery units contaminate water with H2S.This water cannot be released to the environment with H2S.A sour water stripper (SWS) unit serves a similar purpose to the amine treating unit.H2S from the SWS unit is sent to the SRU for destruction.

The Units & Their FunctionsSulfur Recovery UnitThe SRU accepts H2S streams from the ATU & SWS.H2S is flammable & a portion of the H2S is mixed with air to support combustion.The remaining H2S is heated until the hydrogen & sulfur separate.The SRU uses a series of heaters & condensers to recover the liquid sulfur.

When Theory & Reality CollideRefinery Flow DiagramModern refineries have many process streams: raw liquids, intermediates, final products, off-spec, utilities, & more.No two refineries are exactly alike, so process stream portfolios vary by facility.What happens if a refinery finds itself with unbalanced process streams?

Modern refineries have many process streams. Raw liquids like crude oil, intermediates like Heavy Vacuum Gas Oil, final products like gasoline, utilities like natural gas, and the like. So far, our discussion has focused on the basic refining process of separation, cracking, reshaping, etc. Thus far we have assumed that everything has been in balance. In other words, if a tenth of the oil we distill is Heavy Vacuum Gas Oil, we have assumed that the hydrocracker processes a tenth of the oil that the refinery distills. Seems logical right?

However, what if we imagine that there are two refineries. They process the same oil, and are completely identical except for one thing. One doesnt have money for a hydrocracker, and the other one does. The refinery with the money looks at the market, realizes diesel is highly profitable, and decides to make more diesel. Hence, they want another hydrocracker. So they build their second hydrocracker. But now they need for Heavy Vacuum Gas Oil. They could add more distillation capacity, but that is expensive. Instead, what if they offered to buy the Heavy Vacuum Gas Oil from the refinery that didnt have the hydrocracker? If they did that, they could cheaply supply the new hydrocracker with feedstock and improve their profits.

The 5 steps of refining matter more in theory than they do in reality. If there is a large market for diesel, refiners will gladly build more hydrocrackers than their distillation units can support. If the market favors building cokers, they will build cokers. While the process theory we discussed is helpful for understanding the refining process, in reality, it means very little to refinery operation.41When Theory & Reality CollideRemember Wilbur Nelson & his Complexity Index? This is where he becomes important.Nelson noticed that there was a relation between types of units in a refinery & the refinerys profits.Crackers, reformers, alky units, etc. process less oil and are more complex to operate, but generate higher per unit profits.The Nelson Complexity Index provides a means to analyze a refinerys expected costs & profits.42When Theory & Reality CollideSample problem:Refinery A builds a 300K bpd distillation unit.The Nelson Complexity Index assigns distillation a complexity factor of 1, so the refinerys NCI equals 1.If we assume that the refinery buys crude at $100 per barrel & sells the distilled products at $110 per barrel, the refinery earns $3,000,000 in profits per day.Refinery B builds a 300K bpd delayed coker unit.DCUs get a Nelson Complexity factor of 6, so the refinerys NCI equals 6.The DCU buys vacuum resid at $105 per barrel and converts it to gasoline, worth $125 per barrel. Refinery B earns $6,000,000 in profits per day.Moral of the story: Higher NCI rating means higher potential profits. Therefore, a refinerys NCI score is very important.43When Theory & Reality Collide

44How You Fit InChemical EngineeringAssist Process Engineers in unit optimization.Calculate mass balances, energy balances, etc.Improve unit yields and energy efficiency.Troubleshoot unit operations.Initiate and justify unit upgrades.Identify HSE issues that impact refinery operations and personnel.

Electrical EngineeringDevelop area classifications and safety standards.Maintain electrical one-line drawings.Maintain electrical testing records and programs.Manage refinery electrical power distribution system.Troubleshoot and maintain DCS and PLC systems.Install field instruments, develop process control schemes, and advanced process control technologies.Mechanical EngineeringAssist Mechanical Engineers, Inspectors & Metallurgists in maintaining equipment reliability.Mechanical equipment design, service fitness, material selection, root cause analysisDevelop equipment maintenance programs.Calculate fluid flow, mechanical stress, heat transfer, remaining life calculationsWork with process engineers to execute unit upgrades.