Jun-2022

Olefins and octane from FCC operations

The worldwide olefins market is valued at over $322 billion by 2026 and is anticipated to grow at a compound annual growth rate of 4.0% for the 2022 to 2027 forecast period, according to a new study by Market Data Forecast.

Rene Gonzalez
PTQ

Article Summary

The rapid increase in the world’s population requires more plastics and food packaging material, demand for lubricants, etc. However, the greatest demand is due to the growth of the automotive industry, calling for higher quality olefins used to make car interiors.

Ethylene and propylene, being the basic building block towards the petrochemical value chain are the reason for the current steam cracking boom. However, ethane-based steam cracking yields much less propylene than naphtha-based steam cracking. Steam cracking heavy feedstocks of naphtha and gas oils produces about 60% of the global propylene demand.

With the rapid expansion of shale-based ethane steam cracking capacity along the U.S. Gulf, much less propylene becomes available. Besides naphtha steam cracking, some of the other options for increasing propylene capacity include propane dehydrogenation (PDH) units, metathesis, and FCC upgrades.

PDH units, most of which are in Asia, are relatively capital-intensive projects, compelling consideration of other options, including FCC upgrades targeting 25 to 40% C3= yields. Certain refiners are focused on increasing refinery grade propylene yields (50 to 70% C3= purity) for alkylate production, as well as bottoms minimization and maximum LPG yield (at constant gasoline production).

Besides margins opportunities available from upgrading FCC units for increasing yields of chemical grade propylene (90 to 96% purity) and polymer grade propylene (99.5% purity), an FCC revamp provides scale-up opportunities for converting a variety of high molecular weight feeds, such as upgrading low value feedstock. Other FCC margins opportunities are seen with octane upgrading.

Effective strategies for resolving octane deficits are centered around FCC operations, benefitting from robust FCC catalyst and post-treater catalyst/additive systems. Market trends driving octane upgrading solutions include the widening price differential between regular and premium gasoline.

Even though gasoline demand is projected to remain flat relative to petrochemical market demand, high octane components could continue delivering margins opportunities for refiners because refiners are faced with the conundrum of dealing with sulfur reduction, octane restoration and hydrogen limitations from expanding hydroprocessing operations.

For capturing high-octane fuel margins on an industry-wide scale, refiners have a variety of options ranging from new multi-million-dollar alkylation units to advanced catalysts for FCC units and downstream post-treaters. In addition, the need to produce higher quality products from poorer quality crudes has led to more hydrotreating, requiring more hydrogen.

At 95+% refinery utilization rates seen in certain refining markets, such as North America, hydrogen demand exceeds production available from catalytic reformers and other traditional sources. Optimization of hydrogen utilization is key to the overall profitability of the refinery going forward, possibly imposing limits to octane upgrading because green hydrogen is still a long way off.

Octane destruction from FCC post-treating has increased much more than expected, typically by a factor of five (5) from original estimates, according to comments from George Hoekstra, speaking at the recent 2022 AFPM Summit. However, a variety of combinations and permutations for avoiding octane destruction are available to FCC operators.

The global octane market is valued at almost $56 billion and is expected to expand at a CAGR of 5.1% to 2024. Therefore, avoiding FCC gasoline octane destruction is another relatively low capital consuming strategy involving the FCC unit. Fortunately, FCC catalyst additives favoring butylene selectivity over propylene can be considered for refiners competing in rebounding post-pandemic gasoline markets.

Data published by the U.S. Energy Information Administration (EIA) indicates that the share of premium high-octane gasoline is steadily rising, suggesting strong alkylation economics will continue. Beginning with model year 2023, all U.S. light-duty vehicles will require a minimum 95 RON gasoline.

According to a report from New Research Analysis, the global octane boosters market is expected to reach $222.3 million by the end of 2026, growing at a CAGR of 5.8% during 2021-2026. A recent EIA study indicates very few refinery components exceed 95 RON, except for ethanol, MTBE, alkylate and heavy reformate.

For those interested, these “pain points” will be elaborated on in further detail in the Q4 issue of PTQ.