Feasibility Study Refinery Project - PDF

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					                   Mini refinery feasibility study
Introduction
The first part of any study into a mini-refinery application is an initial assessment of
its economic feasibility. This requires an understanding of what a mini-refinery is
able to do, as well as information on the proposed feedstock and intimate knowledge
of local market conditions. Technical issues relating to plant engineering or design
are rarely important considerations at this initial feasibility stage.

This paper is intended to assist the project developer in making an initial feasibility
study. SCA can only provide meaningful assistance once this initial feasibility study
has been performed and the attached questionnaire completed in as much detail as
possible.

Economy of scale

A mini-refinery (typically <4000 bpd) does not have the economy of scale of a large
refinery (typically >100,000 bpd). The capital cost to refine a liter of crude oil is
inevitably higher in the case of a mini-refinery. This cost disadvantage can only be
offset if the mini refinery has access to cheap crude oil (for example from remote or
otherwise non commercial oil fields) and/or offers savings in fuel or crude oil
transportation costs (typically in remote or inaccessible regions) and/or government
incentives to support economic activity in isolated communities.

A seaboard location for a proposed mini-refinery site has to be examined carefully
against the alternative of importing refined product in bulk from a major refining
country. On the other hand, remote or inhospitable inland locations will tend to
provide favorable conditions for mini-refinery fuel production as distances and/or
road conditions results in high transportation costs for imported fuels.

To minimize its capital cost, the mini-refinery is most often supplied only as a simple
straight run atmospheric distillation refinery for diesel and/or kerosene production,
with naphtha and fuel oil as by-products.

In some situations, it may be economical to provide a second distillation tower to
vacuum distil the fuel oil component from the atmospheric tower into a clean heavy
diesel (vacuum gas-oil) and a heavy residual oil. A thermal cracker or coker to
convert the some or all of the heavy residues into more valuable lighter products is
neither practical nor economic at a mini-refinery scale.
Naphtha represents the gasoline fraction of the crude oil but it is unsuitable for
automotive gasoline without octane enhancement through further processing and/or
blending. With the phasing out in most countries of TEL (lead) additives to gasoline,
there is now no simple (and therefore cheap) way to octane enhances the naphtha
at low production volumes. A catalytic reformer to reform that naphtha into
automotive gasoline is normally not economically justifiable as it has a relatively high
capital cost for the relative low production volumes, bearing in mind that naphtha
typically constitutes no more than 25% of the crude oil feedstock some of which will
be consumed in the reforming process. A catalytic reformer can be expected to
increase the cost of a straight run mini-refinery by approximately 80% to 100%. The
major challenge in a mini-refinery project is not what to do with the diesel but to be
inventive as to the most economical disposition of that typical 50% to 75% of the
crude oil, which ends up as the by-products of naphtha and fuel oil.

Alternative fuel costs
The proposed mini-refinery needs to deliver refined product into the targeted market
at a more competitive price than the existing fuel supplies. Knowledge of the local
price of fuel (and other available fuels such as gas or LPG) in the targeted market
and its sensitivity to price competition is therefore crucial to any feasibility study. In
some countries, fuel prices in remote communities may be government subsidized
which may make it difficult for a refinery to compete economically in that market.

In some cases (but not often) the crude oil may be of sufficiently high quality that it is
suitable for use in heavy diesel plant without the need for any refining. Although not
suitable for the general diesel market, if the quality is good, crude oil can be used in
dedicated heavy plant applications (eg pumps on a crude oil pipeline).

Crude Oil
A straight run refinery merely fractionates by distillation the crude oil feedstock into
its boiling point components. Distillation does not alter the molecular structure of its
chemical components. Therefore the natural characteristics of the crude oil (or
condensate) and the required specification of the final refined products are the
determinants of the product yields from the refinery.

To avoid scaling and fouling within a refinery, the crude oil should have a maximum
salt content of 1 Kg per 1000 barrels. Where the salt content exceeds this level, a
pre-treatment process may be required. Although adding a de-Salter to a min-
refinery is quite feasible, it does require a fresh water supply and a means for
disposing of the salt water waste.
Other undesirable components in the crude oil such as sulphur will carry over into
the refined product streams. The maximum allowable sulphur levels for refined
products are normally set by government regulations. Crude oils with <1% sulphur
will normally refine within the allowable fuel specifications for diesel and naphtha
without the need for a de-sulphering process. However reference should always be
made to the local regulations as there can be significant differences from country to
country. Roughly 70% of the sulphur will be concentrated in the heavy fuel residue.

Fuel oil specifications may determine the maximum allowable sulphur content in the
crude oil to avoid desulphering plant.

In summary, the optimal feedstock for a mini-refinery is generally a high API crude
oil or condensate that has a relatively high natural diesel fraction in its assay. It also
should be low in sulphur, salt or other contaminants to avoid the capital costs
associated with providing additional plant.

The refinery products
The usual products from a straight run mini-refinery are naphtha, diesel and fuel oil
(residual oil). Some mini-refineries can also be designed to produce kerosene.

Local regulations will determine the required specifications for each product. It
should be noted also that in regions where the ambient temperature changes
significantly during the year, some of these specifications may vary seasonally.

The diesel is a highly desirable product but the refinery by-products of naphtha and
fuel oil find a less ready market. Depending on the crude oil characteristics and the
required product specifications, the percentage volume of these by-products could
represent typically between 50% and 75% of the crude oil feedstock so the problem
is significant.

Operating costs
To minimize operating costs, the MICROSTILL™ does not require cooling water or
steam. It does require the customer to provide electrical power as well as products
storage tanks, load out facilities and associated pipe work.

Recommended manning requirement is 1 man per 12 hour shift with a supervisor on
call. The automated design of the MICROSTILL™ means that it will be sufficient to
have refinery operators with a basic technical background and who can be trained in
the operation of the refinery.
Optimizing the project
There are a number of things that can be considered to improve the project
economics:

1. In the case where there are a number of possible oilfields to supply from, choose
the oil field that have the best crude oil qualities, particularly the one with the highest
diesel yield in its assay.
2. If a crude oil pipeline exists nearby consider putting the unwanted by-products into
the pipeline. This will require amongst other things, an acceptable purchase
arrangement for the refinery by-products with the oil company, pipeline company or
end-of-pipeline refiner.
3. Find local markets for the by-products. For example naphtha can be considered
for turbine fuel (but check availability of competing gas or LPG) or could be used as
a solvent or petrochemical feedstock. In arctic climates the naphtha is often used as
a non-freezing well completion fluid instead of diesel. Fuel oil can be used as bunker
or boiler fuel or heavy fuel for power generation if it has acceptable characteristics.
4. Vacuum distillation will extract heavy diesel (vacuum gas oil) from the residual oil
thereby reducing the quantity of residue that ultimately needs to be dealt with.
Vacuum gas oil is suitable as a heavy plant fuel (eg power generation).
5. While the familiar industry standard turbines do not tolerate heavy diesel as fuel,
there are turbine gensets manufactures which will run on a naphtha and vacuum gas
oil mix. These turbines are skid packaged plants and can complement the
MICROSTILL™ installation. For planning purposes assume that an input of 100 bpd
of residual oil produces about 1.5MW of output electrical power.
6. If the naphtha has suitable properties it may be able to be blended with octane
improvers such as high octane gasoline, toluene or oxygenates (MTBE, ETBE. etc)
to produce low octane gasoline. However relatively high volumes of these products
are required and would therefore entail significant additional purchase, transportation
and storage costs.

The above issues are not matters that SCA is in any position to deal with. They can
only be effectively dealt with by the project developer who is familiar with the local
territory and markets.
Mini-refinery Questionnaire
Proposed mini-refinery location:
Is the local climate arctic, temperate or tropical?
Is the proposed location within an existing plant or industrial park?
Is steam or water available on site?
Is there an approved means for disposing of waste water if crude oil desalting is required?
What is the anticipated price per liter (or barrel) for the crude oil feedstock to be delivered to
the mini-refinery?
Is there a local community or town with labor supply nearby?
What is the required refinery capacity (tones per annum or barrels per day)?
Distance from source of oil?
Distance to nearest oil pipeline?
Distance to nearest seaport?
Distance to main fuel markets?
Distance to nearest refinery?
Source of crude oil:
Quality of crude oil:
Crude oil or condensate?
Density (API or g/cc):
Maximum sulphur content:
Maximum salt content:
Maximum water content:
Attach the assay results of the proposed feedstock (in particular the True Boiling
Point distillation of the feedstock):
Product specifications:
Attach the required product specifications for the gasoline, diesel, fuel oil:
Alternative fuel supplies
Is the local market presently served by pipelined gas?
What is the cost per GJ (or mcf) of gas?
What is the existing source of imported liquid fuels?
Cost per liter of imported diesel:
Cost per liter of imported standard octane petrol:
Cost per liter imported fuel oil:
Can the market absorb additional electrical power generation?
What is cost per KWh for locally supplied electricity?
Can the unwanted by-products be pipelined to market?
What is the anticipated price selling price for the by-products.
What is proposed market for the naphtha product?
What is the anticipated naphtha selling price per liter
What is proposed market for the fuel oil?
What is the anticipated fuel oil selling price per liter?

				
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