The Role of Innovation in US Gulf Coast Competitiveness

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The Role of Innovation in US Gulf Coast
Competitiveness

• The Future of the Gulf Coast Petrochemical
  Industry
• Global Energy Management Institute
• University of Houston
• April 29, 2005
• James H. DAuria
• UOP LLC

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Agenda

• The competitiveness gap
• Potential for technology innovations to improve
  competitiveness
• Key technology innovations
• Examples of options for the USGC
• The integration conundrum
• Final thoughts

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The USGC Cost of Production GapEthylene Example
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How Can Technology Innovation Help?

• Technology can be developed to
• Make use of lower cost and/or unique feedstocks
• Create feedstock or product flexibility
• Hedge
• Reduce volatility
• Reduce required capital investment
• Make existing assets more efficient
• Integrate existing assets to increase efficiency
• Improve product quality

Competitive advantage is gained when technology
innovations are linked with the right market or
business circumstances
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Alternative Feedstocks to Consider

• Low Value Refinery/Cracker Streams
• Light Gases
• By Product Olefins
• Pentanes
• Light Cycle Oil
• Resid
• Remote Gas
• Coal ?
• Biomass ???

• Basis for US Industry Advantage
• GC Refining Concentration
• Atlantic Basin Stranded Gas
• Coal Reserves
• Biomass potential

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Key Technology Innovations

• Use of Alternative feedstocks
• Stranded Gas to Olefins/Polymers
• Mega-Methanol Plants
• Methanol to Olefins
• Clean Coal
• Refinery- Petrochemical integration
• Petrochemicals from FCC
• Olefins Conversion
• LCO Conversion
• Naphtha optimization
• Longer term Breakthrough Technologies

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Methanol/MTO Economies of ScaleConstant IRR
Mega Methanol Plants Enable Gas to Olefins
Projects
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MTO on the USGC

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MTO on the USGC
Based on 85/MT methanol from Atlantic Basin
Stranded Gas Based on 100/MT methanol
USGC MTO Becomes Attractive At High Oil Prices
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Clean Coal Technology
Coal
Synthesis Gas
Power F-T Liquids Steam, H2
Gasification
Methanol
Chemicals
Alternative Gasification Feedstocks Petroleum
coke Resid bio-residue
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Coal to Olefins in the US(_at_ 40/BBL Crude)
Based on correlation of 97-05 CMAI data
weighted avg. feedstock Assumes 125/MT
methanol from coal
High Oil Prices Improve Attractiveness of Coal To
Olefins
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Key Technology Innovations

• Use of Alternative feedstocks
• Stranded Gas to Olefins/Polymers
• Mega-Methanol Plants
• Methanol to Olefins
• Clean Coal
• Refinery- Petrochemical integration
• Petrochemicals from FCC
• Olefins Conversion
• LCO Conversion
• Naphtha optimization
• Longer term Breakthrough Technologies

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Propylene from Refineries
Propylene Fuel Gas LPG Gasoline Diesel H
eavy Fuel Oil
C4 and Lighter
PRU
Crude Column
Straight Run Gasoline
Kerosene
AGO
FCC
Crude Oil
Downstream Processing
VGO
Vacuum Column
Vacuum Residue
Refinery FCC is an Important Source of Propylene
UOP 4288K-4
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Petrochemicals from FCC
Increasing Petrochemical Production
Propylene Yield
Max. Gasoline 3 - 5 wt
Gasoline
Unit Design and Operation
Challenge Manage Across Traditional Boundaries
UOP 4399A-7
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Olefins Conversion Technology
Naphtha Crackers
Naphtha
C2 C3
C4/C5 Olefins
C5/C6 Paraffin-Rich

• Metathesis Converts ethylene C4 olefins to
  propylene
• Olefin Cracking Converts C4 C8 olefin streams
  to propylene ethylene
• Utilize USGC refinery liquid cracker capacity

UOP 4399A-22
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Ring Opening to Upgrade LCO

• New catalysis selectively opens rings to upgrade
  Light Cycle Oil to produce
• Clean fuels
• BTX Aromatics
• Environmental Benefits
• Reduces HSFO production
• ULS Diesel co-product
• ULS Gasoline co-product

LCO
LCO RingOpening
Petrochemicals
High OctaneGasoline
ULSD
USGC Opportunity Pool LCO Streams
UOP 4288A-18
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Naphtha Optimization

• Ethylene yield 30 higher than with conventional
  naphtha
• Same propylene yield

C5-C11 n-paraffins
Naphtha Cracker
Full Range Naphtha
Iso/normal separation
CatalyticReformer

• Increased octane-barrel production

C7

• Economic value of 30 MM/year
• Requires close integration of olefins gasoline
  production

UOP 3994J-10
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The Integration Conundrum

• Concentration of refining capacity in USGC
  provides basis for competitive advantage
• Technology innovations that cross traditional
  boundaries can create economic value and cost
  advantage - On Paper
• Barriers to integration are many
• Increasing complexity/Limiting flexibility
• Conflicting objectives
• Mixing disparate cultures
• Difficult technical issues
• Diffusing business focus (What business are we
  in?)

• Need to develop integration enablers
• Business management practices
• Advanced process technology
• Information technology

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Longer Term Technology Outlook

• Continuing investments are needed to develop new
  chemistries
• Example areas of focus
• Catalytic Naphtha Cracking
• Paraffin Activation
• Ethane Benzene to EB
• Direct Propane to PO, CAN, Acrylic Acid
• Pentanes to Higher Value Chemicals
• Direct Methane to Methanol
• Renewables as Feedstocks (carbohydrates, biomass)

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The Role of Technology Final Thoughts

• Technologies are available today to take
  advantage of lower cost feeds
• Remote gas, coal, refinery by-products
• Future technology advances will continue to come
  via process engineering catalysis innovations
• New technology needs to be matched with the right
  situations to provide a competitive advantage.
  For USGC
• Integration with refining, power
• Ability to increase propylene production
• Pooling of by-product streams
• Access to Atlantic basis remote gas, US coal
• Can we improve the risk-reward balance?
• Cost to develop commercialize new technology
• First user risks rewards
• Government regulations incentives
• Market uncertainties

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THANK YOU