Originally appeared in:

February 2011, pgs 37-43.

Used with permission.

CLEAN FUELS SPECIALREPORT

Slurry-phase hydrocracking—
possible solution to refining margins
Opportunity crudes require more hydrogen addition to upgrade
orphan product streams into higher-value ‘clean’ products
M. MOTAGHI, B. ULRICH and A. SUBRAMANIAN, KBR Technology, Houston, Texas

R
efinery margins are complex topic; margins are subject to est in monetizing heavy-oil reserves and the influx of substantial
substantial uncertainties and are impacted by global fluc- heavy crude volumes to the marketplace suggests that in the long
tuations in regional feed and product pricing structures. run, refinery margins are likely to return, in large part influenced
A conscientious analysis of historical data will indicate that for by the restoration of the light-heavy differentials. Central to this
every one good year, on average, refiners are subject to seven years theory is that light-oil fields are on the decline and almost all new
of depressed margins. New globalization trends, which include a crudes entering the market place are substantially heavier than
changing transport-fuel supply/demand balance, geographic shift the current crude basket. This is evident by the decreasing API
in consumption, soaring crude-oil prices, depressed natural-gas as shown in Fig. 1, of the composite worldwide crude blend and
prices and impending regulations, all pose interesting challenges increasing volumes of extra-heavy crudes such as Canadian and
to the very survival of many small- and medium-sized refineries. Latin American bitumens.
As the world’s supply of crude oil becomes heavier and con-
Definitions of profitability. A simple analysis of refinery tains higher sulfur levels, the challenge to the refiners will be
economics will reveal that margins are largely impacted by three compounded by the need to meet the growing demand for light,
basic factors; crude cost, type of products produced and disposi- high-quality, ultra-low-sulfur transportation fuels. This leads to
tion of low-value, stranded streams. While the first two factors are the next major determining factor that sets refinery margins, i.e.,
simple to understand, the relationship between the refiner’s ability quality of products.
to handle these orphaned streams and margins is more complex.
34 1.3
Crude price. The cost of crude is the single most important fac-
tor in setting refinery margins. This is the primary reason for the
recent surge in refinery upgrades targeted at processing “opportu-
nity crudes.” While the definition of opportunity crudes is nimble
and can vary from refinery to refinery, for the purpose of this
article, it makes sense to simply define these crudes as the cheap-
API gravity

Sulfur, %

est possible crude basket available to any given refinery on any

given day. This basket may consist of heavy or extra heavy crudes, 33 1.2
bitumen-derived crudes, high-acid/high-metals naphthenic crudes
or high metals-containing, paraffinic, heavy inland crudes.
Most refiners are limited in their ability to handle this wide
range of opportunity crudes; more often than not, they are con-
strained by the residues derived from these crudes. In recent
years, the surge in interest over resid upgraders was catalyzed by
the growing light-heavy differentials. This, in turn, forced refin- 32 1.1
ers to evaluate their bottoms processing technologies, as margins 1990 1995 2000 2005 2010 2015 2020 2025
Global petroleum outlook
dictated a higher percentage of heavy oils in their crude diet.
Although the large light-heavy differentials have since diminished, FIG. 1 Crude API trends, 1990–2025.
this phenomenon is likely to be temporary. The renewed inter-
HYDROCARBON PROCESSING FEBRUARY 2011
SPECIALREPORT CLEAN FUELS

Product quality. Global trends show a growing diesel demand bunker fuel market predominantly influenced by globalization
and stable-to-declining gasoline demand (Fig 2). As the world trends and consequential incremental trade and shipping traffic.
emerges from the global recession and as the growth margin in However, the use of VR as the major blending component in
40% of the world’s population continues at a rapid pace, this bunker fuel will come under serious scrutiny as new maritime
trend can only be expected to amplify. With the majority of exist- regulations come in to effect starting in 2015 (Fig. 3). This will
ing refinery configurations slanted towards gasoline production, significantly inhibit VR demands, and the eventual solution may
the price differential between diesel and gasoline will widen over come from either the shipping or the refining industry.
the long haul, validating the market tilt towards dieselization. While one of the solutions under debate involves using
In addition, regulatory demands will only accelerate the shift onboard flue gas scrubbers, this issue is more complex. There are
towards lower density, higher-cetane index, ultra-low-sulfur die- several reasons to underscore the reluctance of the shipping indus-
sel production, as the regional outlets for lower quality transport try to take on the burden of these operating facilities. Regulatory
fuels diminish. trends are almost always unidirectional, and the shipping industry
This combination of lower cost “opportunity crudes” and the can only expect the sulfur oxide (SOx) regulations to extend to
need to produce high-quality distillate-selective products is an nitrogen oxide (NOx), particulates, volatiles and other controls,
important consideration for refiners, when making long-term, not to mention the added capital investment, operating cost,
high-dollar investment decisions. monitoring and reporting requirements. Conversely, the refining
industry is unlikely to invest in expensive VR hydroprocessing
Choices. The least understood variable in determining refin- with the sole purpose of producing specification bunker fuels.
ery margins is the disposition of stranded streams. Refineries
are littered with low-value streams that are blended off, often Regulation directs actions. The global trends show a sharp
downgrading higher-value products for the sole purpose of decline in high-sulfur fuel oil demand (Fig. 4), driven mainly by
finding positive outlets for less saleable streams. While the abil- environmental regulations. While the sharp decline in fuel oil
ity to upgrade these streams is a major factor that sets refinery prices seen through the mid part of this decade has been tempo-
complexity, the solutions for these streams often rests in under- rarily arrested by the installation of many cokers, a reversal can be
standing its potential applications and value within and outside expected as regulatory pressures extend to the rest of the world. As is
the refining industry. evident from the crack margins, producing large volumes of fuel oil
The single largest stranded stream for most refineries is the will result in negative refinery economics and cannot be sustained.
vacuum residue (VR). The bulk of the operating refineries around Road asphalt is a relatively small market (Fig. 5), and envi-
the world have little or no residuum processing capability and ronmental pressures are also likely to force refiners to produce
produce large volumes of high-sulfur fuel oil and bunker fuel. A specification-grade bitumens without resorting to air blowing.
small volume is used to produce road asphalt. The future of VR While this may lead to investment in alternate technologies such
is, therefore, intrinsically tied to the future of these three outlets. as solvent de-asphalting, the overall impact on the volume of
The large growth market for residues may appear to be the stranded VR or its pricing, will be minimal.
All of these factors lead to one obvious conclusion. Going
forward, high refining margins will depend upon the ability to
35
Diesel capitalize on opportunity crudes, while consistently producing
30
high-quality distillate-selective products from refinery residues.
25
Price projection

Selecting the appropriate residue upgrading technology, therefore,

20 Gasoline is a critical part of this puzzle that will define the future of refining
15 and refinery margins.
10
5 Selecting residue upgrading technologies. To better
0 understand the technology options, one must recognize that VR, in
1990 1995 2000 2005 2010 2015 2020 essence, is defined by what is not VR. The quality and quantity of
VR is a function of crude selection and the lowest boiling impurity
FIG. 2 Demand for gasoline and diesel, 1990–2010.
contained within the resid fraction that shows up as the limiting
factor in the vacuum gasoil (VGO) fraction that is fed to a catalytic

5
Possible delay until 2025 12
Fuel oil demand, million bpd
Sulfur maxium content, %

4 10 Western hemisphere
Eastern hemisphere
3 Global 8
ECA 6
2
4
1 2 Source: Purvin & Gertz
0 0
2005 2010 2015 2020 2025 2030 1990 1995 2000 2005 2010 2015 2020 2025

FIG. 3 Expected timeline for IMO regulation enactment. FIG. 4 Declining oil demand trend, 1990–2015.

HYDROCARBON PROCESSING FEBRUARY 2011

 CLEAN FUELS SPECIALREPORT

hydrotreater, hydrocracker or fluid catalytic cracking (FCC) process. The SDA works on the principles of solubility driven separa-
The choice of resid conversion technology must be set by project eco- tion and is capable of lifting light deasphalted oil (DAO) from
nomics, preferred reaction chemistry and mechanism of conversion resid feeds. For most crudes, especially the lower value opportu-
aimed at reliably achieving the overall processing objectives. nity crudes, the overall lift will be low, limited by the CCR and
We present seven questions that one would expect refiners to metal specifications set by the DAO hydrotreating catalyst.
ponder as they investigate the appropriateness of available tech- As a result of the low DAO yield, the reject asphaltenic stream
nology options. The direct relevance of these questions is premised will be large and can range from 50 wt%–80 wt% of the VR. For
on projected market trends and is intended to address the desire refiners who lack an economic outlet for this pitch stream, the
to achieve and sustain high refinery margins: value derived from the incremental distillate production through
1. Has the technology been demonstrated in one or more hydroconversion of the DAO is negated by transportation and
large scale units? handling costs associated with moving the pitch from the facility.
2. Can the technology handle residues irrespective of the feed Thus, DAO derived from the vast majority of solvent deasphalters
quality? operating in fuel services is directed to an FCC unit.
3. Can the technology achieve near complete conversion on Fixed-bed resid hydroconversion processes will achieve mini-
a once-through basis? mal overall resid conversion, will produce a large volume of fuel
4. Can the technology produce finished diesel-selective products? oil, and are inherently limited by changing feed qualities. This
5. Does the technology database demonstrate the ability to incompatibility is evidenced by high operating pressures, large
handle a whole range of crudes? capital investments, low catalyst cycle length and a maintenance-
6. Can the technology do all of this with high reliability? intensive operating history. The quality of the products will not
7. Can the technology achieve all of this at an attractive net meet Euro V specifications, and the overall investment will not
present value (NPV)? be commensurate with the derived benefits. When tested against
Aided by low crude oil prices and high natural gas prices, the the “seven questions to ponder,” it is obvious that fixed-bed resid
delayed coker has, thus far, been the technology of choice for resid hydrocracking technology based schemes would need to be criti-
upgrading. When tested against the “seven questions” above, and cally examined by the refiner on almost every issue.
weighed against the prevalent market conditions of the past, the
conclusions are obvious. Ebullated-bed hydrocrackers. Another option that has
However, going forward, with projected high crude oil prices, been considered and practiced by refiners for resid conversion is
low natural gas prices and diminishing outlets for low-grade the ebullated bed technology. In this case, the same deactivation
petroleum coke, the need for hydrogen addition is now here. In phenomenon seen in fixed-bed technologies is inherent with
the rest of this article, we will examine the landscape of the avail- the one exception: the issue of low catalyst cycle length may be
able resid upgrading hydrogen addition technologies against this resolved through continuous addition and removal of catalysts.
backdrop. As shown in Fig. 6, the technology choice for resid Every resid handling process is subject to asphaltene precipi-
hydroprocessing is inherently determined by the metals and Con- tation as the saturates and aromatics contained in the feed that
radson Carbon Residue (CCR) content in the residuum. hold the asphaltenes in solution are removed or converted. This
phenomenon is essentially driven by asphaltene-solubility chem-
Fixed-bed resid hydrocrackers. Fixed-bed technologies istry, and the achievable conversion is a function of the saturates,
have been used to hydrotreat residues containing low concentra- aromatics, resins and asphaltene content in the residue, which
tions of metals and CCR. In most cases, the operation of these in effect defines crude compatibility. In most cases, these units
units is severely inhibited by the rapid deactivation of the catalyst operate at a nominal 55% to 75% conversion, and in an era of
system. The resultant combination of high operating pressure, low “opportunity crudes”, this inherent limitation must be recognized.
conversion, poor quality products and low catalyst cycle length
make the process capital intensive with limited overall benefits.
To improve the economics of fixed-bed resid hydrocrackers, the 20
unit must be protected from feed impurities. A feed cleanup unit 18 Thermal processing or slurry phase
such as a solvent deasphalter (SDA) may be installed upstream of
16
the hydrocracker to reject the heaviest CCR and metals containing
fraction as a pitch stream. 14
Ebullated bed or slurry-phase
Conradson carbon, %

12

2.5 10
Demand for asphalt, million bpd

Western Hemisphere
2.0 8
Eastern Hemisphere Resid FCC
1.5 6

1.0 4

0.5 2
Source: Purvin & Gertz Fixed-bed hydrocracker
0.0 0
1 10 100 1,000 10,000
1990 1995 2000 2005 2010 2015 2020 2025 Metals content, Ni + V ppm

FIG. 5 Demand for asphalt for road and roofing applications, FIG. 6 Resid upgrading technology options as directed by CCR %.
1990–2025.

HYDROCARBON PROCESSING FEBRUARY 2011

SPECIALREPORT CLEAN FUELS

Slurry-phase hydrocrackers. With

Vacuum high crude price and low natural gas prices
residue
1st stg. Hot 2nd stg.
on the horizon, slurry-phase hydrocracking
Offgases
reactor separator reactor sulfur etc. (Fig. 7) is emerging as the preferred
approach for upgrading residue streams via
Gas hydrogen addition. The principles of slurry-
Recycle gas phase hydrocracking essentially overcome
compressor cleaning
Additive
Cold
the limitations of fixed-bed and ebullated-
separator C4 bed technologies and provide for substan-
tially higher conversion of the residuum.
Vacuum Naphtha The primary conversion of residues can
H2 column be achieved through either catalytic or non-
Middle
Makeup distillate catalytic routes. Investigations for using
compressor Fractionator catalysts or noncatalytic additive systems for
Residue primary conversion of the residues can be
VGO
traced back to the early 1900s and span the
FIG. 7 Typical resid hydrocracker flowsheet.
entire century, with several hundred patents
that have been awarded in support of these
activities. Over the past few years, substan-
tial effort has been expended by technology
While refinery economics dictate the need to operate at or near providers exploring nanocatalysts to enable the primary conver-
the asphaltene-precipitation boundary limits, the operation of sion of residues at marginally lower operating pressures. While
these units can be fairly complex as the refiner balances the need catalyst-based systems are technically viable, the use of a relatively
to operate at maximum conversion while minimizing reliability expensive catalyst system, catalyst deactivation, low quality of
issues associated with asphaltene-induced fouling. derived products and the need for catalyst recovery, all contribute
With this narrow operating window, any changes in feed qual- to the economic considerations which in the authors’ view, is
ity can contribute to higher maintenance costs and low onstream likely to make this option less attractive.
factors. To achieve a relatively small overall improvement in resid
conversion, and to improve reliability, operators often limit once- Key performance criteria. We will focus on the non-
through conversion, recycle polynuclear aromatics (PNAs) and catalytic slurry-phase hydrocracking in the context of hydrogen
add other external aromatic-rich streams to help solubilize the addition and examine the appropriateness of the technology to
asphaltenes, which, in turn makes the process more capital inten- the current market conditions. HP
sive and will result in higher operating costs. Although these
processes are catalytic and use metal-containing catalysts, the con- Extended version avaiable online at HydrocarbonProcessing.com.
version chemistry is a blend of catalytic cracking and deactivation-
induced thermal cracking. Along with the addition of aromatic
external feeds, the chemistry will result in lower naphtha, diesel
and gasoil qualities requiring the streams to be re-hydroprocessed Mitra Motaghi is a process engineer with the KBR Technology business unit with
to meet Euro V product quality specifications. special focus on resid hydrocracking and VCC technology. She holds an MS degree
This need to add two catalytic steps makes the process capital in chemical engineering from Texas A&M Kingsville.
intensive, thus challenging the economics of this option. With
declining fuel-oil prices, and tightening fuel-oil quality regula- Bianca Ulrich is a principal process engineer with KBR Technology business unit
tions, the large volume of unconverted fuel oil will leave the with special emphasis on resid hydrocracking and VCC technology. She holds a BS
degree in chemical engineering from Georgia Institute of Technology.
refiner with much of the same issues to deal with in the post
investment scenario, although in a smaller scale. When tested
Anand Subramanian is Vice President for new technologies with KBR Tech-
against the “seven questions to ponder,” the choice of crudes, nology business unit and is responsible for the VCC technology. He has 24 years
achievable conversion, product qualities, reliability and invest- of industry experience and 20 years with KBR in various process and technology
ment threshold gain significance. management positions.

Article copyright ©2011 by Gulf Publishing Company. All rights reserved. Printed in U.S.A.
Not to be distributed in electronic or printed form, or posted on a website, without express written permission of copyright holder.

refining.KBR.com