Apr-2025

Key profit drivers for sustainable crude-to-chemicals complexes

Case studies consider investment size, land availability, feedstock cost, and carbon neutrality requirements before reaching a project’s final investment decision.

John Melancon, Parveen Kalia, Shankar Vaidyanathan, Ed Reyes and Michelle Barber
Fluor Corporation

Article Summary

The global energy transition is exerting significant technical and economic pressure on many industries, particularly the crude oil refining industry. Public perception views the refining industry as a major environmental concern, yet it remains economically vital for modern society. It will face many regulatory challenges while demand for fuels and petrochemical products remains. The ways we produce, store, and use energy are changing. In some ways, the change is fast, and in other ways, it is slow.

The demand for energy is growing, leading some to realise the energy transition may be better characterised as energy addition. There are different predictions on how this will affect the oil refining industry, but some conclusions are clear. First, the demand for oil is decelerating but continues to grow. It is expected to grow at or just below 1 MM bbl/day this year and next.¹

Products produced from crude oil are shifting. According to the IEA, 30% of the oil demand growth by 2030 will be in the chemical sector. Figure 1 shows the typical product yield from crude oil in 2024. It shows that 75% of the product yield today is transportation fuels (gasoline, jet fuel, and diesel). Only about 9-10% are petrochemicals. It is expected that the petrochemical portion will grow every year while the fuels portions decrease.2

Chemical yields
Projects and operating facilities are increasingly shifting from traditional transportation fuel products to higher petrochemical production. Figure 2 shows a global view of crude-to-chemical projects. These are all late-phase projects or currently operating facilities. Facilities with as high as 55% petrochemical yield exist today. The x-axis of Figure 1 shows that most of these projects are in the 15-20 MMTPA range (equivalent to 300-400 MBD), making it the proverbial ‘sweet spot’ for filling one or two world-scale mixed feed steam crackers while still producing a sizeable amount of transportation fuels.

It is important to take advantage of the economies of scale when a facility reaches world-scale capacity to drive towards an economically feasible project. The y-axis, which is the crude wt% yield as petrochemicals, can be broken into three groups:
• The first is the 20-30 wt% petrochemical yield group.
• The second is the 40-45 wt% petrochemical yield group.
• The third is the 50-55 plus wt% petrochemical yield group.

In addition to the classification, it is important to note that refiners and licensors are collaborating on developing technologies targeting much higher chemical yields. These include technologies for processing crudes directly in steam crackers following pretreatment in feed preparation units.
These groupings align with the type of crude feed, specifically how light or heavy it is. Projects utilising Arab Heavy or equivalent crude need to be in the 20-30 wt% yield group. This considers the lower cost of heavier crude oils vs the cost of processing that oil, particularly the cost of residue upgrading. For Arab Medium or equivalent crudes, the facility should be designed for a 40-45 wt% petrochemical yield. Arab Light or equivalent crudes should be pushed up to 50 wt% petrochemical yield or more. This will be demonstrated in the following two case studies.

Crude-to-chemicals megaprojects face many challenges today. Although each project is unique in many ways, each with its own business drivers and hurdles, Fluor’s recent project experience has shown that there are common major challenges these projects need to overcome to reach a final investment decision (FID). This article will focus on the following challenges:
• Investment size
• Land availability
• Feedstock cost
• Decarbonisation requirements.

Investment size
These large, complex projects require numerous world-scale units, which are capital-intensive. Consequently, the overall project will have a substantial price tag to achieve the desired petrochemical yields. Finding ways to manage investment size is a key challenge for any project, especially for crude-to-chemicals megaprojects. Strategies such as fit-for-purpose designs, no pre-investment in future facilities, phased execution, and engaging joint venture partnerships to offset the large investment by a single owner are imperative for such megaprojects to move past the feasibility stage.

Land availability
Another common issue is land availability and the permitting requirements that go along with it. Again, due to the complexity and size, crude-to-chemicals projects require a large plot of land. They also need reliable services such as power and water supply; otherwise, the facility will need to invest to supply their own. There are a few pathways that can be taken. New land development allows a project to start with a clean plot. However, land development projects are often slow, which will push out the start-up and construction timelines, possibly beyond what is desired by the project owner. The price tag to develop the land and provide common services is also an obstacle.