While demand for transportation fuels will continue to rise in emerging economies, total demand on a global basis remains on track to peak in the 2030s, due mainly to the introduction of new engines designed for greater fuel efficiency and the growing number of vehicles powered by alternative fuels. At the same time, new domestic refining capacity – primarily in emerging markets – will come on stream in the coming years, threatening to strand fuels produced by refineries that currently export to those markets.
As a result, many existing refiners are considering ways to pivot out of increasingly competitive fuels markets – with stagnant growth and declining margins – and into new downstream processes, where product demand and margins continue to rise.
While demand for fuels continues to slow, global gross domestic product is growing by about 4% annually. The engine for this growth is a rising population and economic development in Asia, the Middle East and India, and increasingly in Africa and Latin America. Hundreds of millions of people are experiencing newfound prosperity, driving demand for consumer products, protective food packaging, medical supplies, communications equipment, and other items based on petrochemicals.
For many refiners, petrochemicals clearly are displacing transportation fuels as the most promising products from their operations.
Refiners in the Middle East are no different. In fact, they are among those most aggressively pursuing integration with petrochemicals to ensure future profitability. Many are undertaking modernisation programmes that add new petrochemicals capacity and more efficient refining processes, while others are investing in offshore petrochemicals production. Others are doing both.
Everywhere in the world today, refiners are exercising greater discipline, pursuing capital investment strategies engineered to consistently and sustainably capture growth. This is a philosophy of capital investment that carefully stages the transformation of refinery operations over time, specifically to manage risk and capture growth. This approach is what we call the ‘Refinery of the Future’.
Rather than a standard configuration, or collection of new technologies, the Refinery of the Future is a framework of asset development and molecule management that helps ensure optimal economic efficiency, profitability and environmental leadership. It is a course unique to each refinery, employing different combinations of technologies, often as staged capital investments, aligned with changing market conditions, available feedstocks, new technology, regulatory constraints, and competition – all with the goal of maintaining long-term profitability.
New refineries being built in the Middle East, China and even Africa will use the most current technology and the most efficient configurations, able to accommodate evolving demand patterns in the coming decades. Because of this, this new class of refineries will enjoy an uplift of as much as $15 per barrel oil on fuels and petrochemical feedstocks. If they include further processing into petrochemicals, these refineries can generate an additional uplift of up to $30 per barrel. Not only will they be more profitable, they will be better able to endure downturns in the industry.
Process intensification changes how new refineries look, and offer huge competitive advantages. Instead of traditional processing blocks – with heavy oil conversion, followed by a series of processing units that treat lighter products – the Refinery of the Future largely factors out fuels production and the assets required to meet changing fuel blend specifications. The amount of fractionation and compression, the types of reactors, and catalyst design will serve different purposes.
We see numerous examples today of simple refining operations with limited product slates investing carefully and deliberately to improve their efficiency and evolve profitably into integrated petrochemical operations.
The roadmap is defined by evaluating the efficiency of carbon by directing the right molecules to the right processes to produce the most valuable products. We gauge the efficiency of using hydrogen to improve product values, net utility requirements across the complex, reduction of emissions, and efficient use of water – treated as a scarce resource. These five criteria determine how efficiently capital is employed, and together, the ‘Six Efficiencies’ define how and when each investment should be made.
One of the most important enablers in this evolutionary process is the incorporation of digital technologies. The Refinery of the Future must be digitally connected to efficiently manage the complexity of integrated refining and petrochemical operations. Key performance data is analysed against digital twins to quickly identify latent and emerging performance problems and recommend corrective courses of action.
They also can help operations personnel determine how to adjust product slates to improve profitability as market conditions change, and even enhance the skills and capabilities of a rapidly changing workforce that may be hampered by inexperience and inconsistent direction. These systems are essential tools to ensure the plant achieves its best possible level of production every hour of every day.
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