Jun-2015

Fact and fantasy in catalyst selection

The catalyst business is highly secretive. In a secretive culture, facts are obscured. That’s why, from a refiner’s perspective, it is hard to distinguish fact from fantasy when it comes to catalysts.

George Hoekstra
Hoekstra Trading

Article Summary

Today I will present 10 myths about catalysts, and will shine a light on the facts about those topics. What I will say is based on hard data from experience with 300 independent pilot plant tests, direct participation in 200 catalyst decisions, and continuous market research done by our team of independent catalyst specialists.

The market leader has the best catalysts
Many people make the assumption that whoever sells the most catalyst has the best product. This seems a reasonable assumption when you have no better data; but it is a myth.

For example, our independent testing of conventional diesel hydrotreating catalysts shows that Haldor Topsoe has been offering industry-best catalysts for decades, during which time they were not the market share leader. In fact, for most of that time, Haldor Topsoe had less than 10 percent market share -- and they are only now approaching market share leadership.

You can rely on vendor data
We have proven that the vendor data you see out in public is generally not reliable.
For example, it is common for vendors to exaggerate the benefits of new catalysts.  Often, a new catalyst is better by only a small amount that is hard to see except under special circumstances. Sometimes the claimed benefits are based on hair-splitting differences, and when we test the catalysts side by side under real-life conditions, we see no significant difference.

Catalyst performance has tripled in the last 15 years
This is an exaggeration.
For example, we have tested the different generations of diesel hydroprocessing catalysts alongside each other, for different vendors, with replicate tests, and we keep seeing about 75% improvement, not a tripling, of activity. 

The claim of triple activity comes from compounding exaggerated claims. The benefit of a new generation catalyst is exaggerated; then the benefit of the next generation is exaggerated, compounding the benefit; then the next generation adds another layer of compounded exaggeration; and the exaggerations multiply, growing like Pinocchio’s nose, greatly exaggerating the cumulative effect.

It may seem like I am picking on the catalyst suppliers here – I have only covered three myths out of ten, and I’m already calling them Pinocchio. So I want to pause for a moment and say that even 75% improvement is a remarkable achievement that is worth $tens of billions to the refining industry. The catalyst companies are critical partners in our industry, they are great technical innovators, and we would be lost without them! I do not intend to pick on them or downplay their accomplishments.
I am only downplaying the exaggeration of their accomplishments.

Engineers always resist change
The charge is that engineers cling stubbornly to their incumbent suppliers and are afraid to try anything new. But in fact we have been surprised to see how open most engineers are to using new catalysts to improve the performance of their units. So we call this “stubborn engineer” charge a myth.

What we have seen, though, is resistance to change coming from elsewhere in refining organisations.
For example, one refiner’s engineering network recently did a good analysis of competitive options and came to a recommendation to change to a more profitable new catalyst from a different supplier. But then their recommendation was vetoed by higher management on the grounds that higher management had already made a commitment to stick with the incumbent supplier. In that case, it was higher management, not unit engineers, who resisted change. The engineers’ correct economic answer was politically incorrect with the higher-ups.

Procurement guys are bean-counters
Bean counter is a derogatory term that is sometimes used by engineers and catalyst suppliers to downplay the role of procurement people. The charge is that the procurement guy just wants to buy whatever is cheapest without considering performance.

Is this fact or fiction?
We think it is true to a degree. But what we know for a fact is that when engineers and procurement people work together with a common goal, they can deliver big benefits.

For example, one of our clients last year saved over $500,000 in catalyst cost, and another saved $1,000,000, by changing the supplier of the pretreat catalysts in their hydrocrackers, and got much better performance. This was accomplished by teams of engineers and procurement people working together with the common goal of buying on performance and price; and those teams will pile up more benefits as they replicate their success.

Catalysts are chosen to maximise profitability
This is mostly fiction. The analysis of catalyst options is always based on maximising profitability. But the final decision is not.

For example, in the case I mentioned earlier, senior management vetoed a recommendation based on a verbal commitment made to an incumbent supplier. The veto was not based on profit analysis; it was based on a relationship. Things like this happen a lot. Our reports contain real-life case stories showing how layers of approval, personal relationships, and other non-economic factors have big impact on catalyst decisions made at refineries around the world. 

It may seem impolite to talk so bluntly about things like politics that are usually not discussed out in the open. But this paper is about fact and fiction; and, ladies and gentlemen, the fact is the catalyst business is highly secretive and political.

It is also true that most people don’t like working in secretive, political environments. So when a refiner makes the decision to dismiss with all the secrecy and politics, and to focus on true economic benefits, things improve for everyone involved.  
Next we’ll look at some technical myths.

Catalyst loads must be customised for each unit
Suppliers like to differentiate their products. One way to do this is by offering customised loading strategies for each unit. But it is not necessary to customise every catalyst load, and it makes catalyst selection unnecessarily complex for the refiner.