Crude Oil to Chemicals (COTC): A technology update
By Paresh Avinash Kulkarni, Senior Consultant, Chemicals Practice, Frost & Sullivan
Crude oil to chemicals developments are an ongoing process that will help refineries serve the growing chemicals market demand
Crude Oil to Chemicals: Development so far
Crude oil has conventionally been used to produce transportation fuels like gasoline, diesel, and other fuels. However, recently, the focus has been on more value addition from crude oil using technologies like Crude Oil to Chemicals (COTC). Many refiners are thinking about investing in COTC because having a focused technology for petrochemical operations extends the scope for optimizing catalyst processing and energy saving, thereby leading to more profits. Presently, most petrochemicals are manufactured as side streams during crude oil refining, primarily focused on transportation fuel production. While most refineries convert ~ 5%–20% of crude into petrochemicals, some existing refineries have up to 45% of the output as chemicals, including olefins, aromatics, glycols, and polymers. It appears variable capacity refineries will be designed in the future. To improve flexibility, it would be better to directly crack crude oil to produce chemicals, particularly light olefins (C2, C3, and C4), using technologies derived from Fluid Catalytic Cracking (FCC).
It is not the first time that efforts on chemical products from crude oil are taking place. Naphtha-based ethylene steam cracking plants are closing all over Europe, as they are less competitive. With fracking technology flooding America with natural gas, from 2016 to 2019, the split between ethane and naphtha in ethylene production flipped to 80-20 from 50-50, according to the association of American Fuel and Petrochemical Manufacturers.
Coal to methanol and coal to olefins production route was most preferred when the conventional route was costly with crude oil prices above USD 100/barrel. China saw a plethora of Methanol-to-Olefins (MTO) units coming online, resulting in huge demand for methanol in China. Increased demand resulted in high prices, which, coupled with environmental implications, led to ceased MTO development in China.
Efforts are ongoing by Siluria Technologies to discover and optimize novel catalysts for the oxidative coupling of methane (OCM) reaction to produce ethylene directly from methane with high performance at low temperatures. With Siluria’s biocatalysts, metals and metal oxide crystals are grown on biological templates, allowing unique ways to manipulate the surface to transform methane. This provides a path to resolving the problems of OCM. If Siluria’s OCM process is commercially viable, it will break the connection between the production of chemicals and fuels from crude oil and its current price instabilities. It is also an exothermic reaction that requires less energy, and the heat thrown off by the reaction can be harvested to drive the process. With Siluria’s technology, the conversion takes place at temperatures 200oC to 300oC below current steam cracking methods, reducing the energy needed to produce ethylene.
Other effort is being seen via ExxonMobil. The company has a high conversion, maximum chemicals configuration in the form of its FLEXICOKING unit. This unit converts vacuum residue to coker naphtha and gas oils. Light gases from the FLEXICOKER and coker liquid are combined in the FCC gas plant. To maximize chemicals production, light paraffins are processed in a dehydrogenation plant for propylene and butylene production. An aromatics plant produces benzene, toluene, and mixed xylenes or para-xylene to meet local market needs.
Many world-scale projects are being configured to produce maximum volumes of chemicals, instead of transportation fuels as in a conventional refinery. Notable projects dedicated to petrochemicals include Hengli Petrochemicals and Zhejiang Petroleum and Chemical in China, Hengyi Industries’ PMB project in Brunei, and the Aramco-Sabic JV at Yanbu, Saudi Arabia. Hengli Petrochemical’s COTC refinery–p-xylene complex at Dalian, China, is configured with 42% conversion per barrel of oil to produce 4.34 MMTPA of p-xylene along with 3.9 MMTPA of other chemicals.
Another project in China, Zhejiang Petroleum and Chemical’s COTC phase 1, achieved 45% conversion per barrel of oil and is expected to produce 4.0 MMTPA of p-xylene, 1.5 MMTPA of benzene, 1.4 MMTPA of ethylene, and other downstream petrochemicals. As Phase 2, Zhejiang Petroleum and Chemical is planning two world-scale steam crackers.
In Saudi Arabia’s Yanbu, two Saudi state-owned firms—the oil company Saudi Aramco and the petrochemical maker SABIC—were planning a new COTC complex backed by Saudi Aramco’s Research and Development Centre (R&DC) situated in Dhahran.
The Saudi Aramco-SABIC COTC collaboration initially targeted producing 9 MMTPA of chemicals with 3.3 MMTPA of ethylene to make a breakthrough in chemical manufacturing directly from 20 MMTPA of light crude oil. However, with the transportation and other fuels, both witnessing a demand shock due to the pandemic, Saudi Aramco and SABIC decided to re-evaluate their USD 20 billion COTC project in 2020. The two companies are now considering integrating Saudi Aramco’s existing refineries in Yanbu with a mixed feed steam cracker and downstream olefin derivative units rather than setting up new plants.
Even though the project has been scaled back, development of COTC technology remains a key focus for SABIC and Saudi Aramco. Their existing development programs aim to improve petrochemical cost effectiveness, sustainability, and value creation opportunities.
Apart from its own R&DC, Saudi Aramco is also working with world-class technology partners such as McDermott, Chevron Lummus Global, CB&I, TechnipFMC, and Axens, to develop at least three new technologies using different processes aimed at converting up to 80% per barrel of oil to basic chemicals and petrochemicals.
From a 10%-15% chemical production and non-fuel production from crude oil, these alliances and research can help convert 60%- 80% crude oil being processed to chemical production and non-fuel products. Certainly, this will significantly increase the value of crude oil reserves and help contribute to Vision 2030 of the Kingdom of Saudi Arabia that aims to increase non-oil government revenue from SAR 163 Bn to SAR 1 Tn and raise the share of non-oil exports in non-oil GDP from 16% to 50%
Even with investment reassessments, COTC continues to be one of the most significant developments with a significant increase in consumption of plastics and chemicals due to the urbanization of developing economies. The GCC, having good proximity to demand centres including India, Africa, and China can add more value to its natural resource, crude oil.
With a global focus on movement away from fossil fuel consumption, stricter carbon emission mandates, and a surge in electric vehicle usage, refiners are already envisaging less demand for gasoline and fuel production. The objective is to shift the product slate derived from a barrel of oil to a range of 60%-80% chemical production and non-fuel products, up from the traditional range of 10%-15%, which can be achieved through COTC. This has the potential to increase the returns per barrel of crude oil from a traditional refinery of about USD 9/bbl. up to USD 17/ bbl. Presently with the increasing focus on maximizing margins, the development of COTC is an ongoing process that can help refineries serve the growing chemicals market demand.