Energy Economics in Refining

NZRC II-1

Energy Management Course Outline

„ The Impact of Energy Costs on

Profitability
– Impact of Efficiency on Bottom
Line
– Energy Costs vs. Product Margin
„ Energy Efficiency and Energy Cost
– Optimizing Energy Costs
– Energy Efficiency
– Benchmarking Energy Efficiency

NZRC II-2
 Energy Costs

„ The impact of high

energy costs are
impacting the overall
refinery profitability

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What do we mean by Energy Costs?

„ Costs include all forms of energy used

– Purchased electricity
– Purchased gas
– Purchased fuels (oil or gas)
– Self generated fuel gas and fuel oil (if burned)
– Coke burned in process units
– Purchased steam

It is energy if it is burned or consumed in the refinery

NZRC II-4
 Energy Prices 2003-2004

NZRC II-5

Natural Gas Consumption Forecasts

http://www.eia.doe.gov
NZRC II-6
Natural Gas Price Projections

http://www.eia.doe.gov
NZRC II-7

Refinery Economics

Gross Margin - Operating Cost = Net Margin

http://www.eia.doe.gov
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 The Cost of Refining
Breakdown of Operating Cost
(Excludes Feedstocks)

Misc Variable Maintenance Personnel

15% 10%
Personnel Energy
30%
Misc Fixed Misc Fixed
15% Misc Variable
Energy
Maintenance
30%

NZRC II-9

Drivers for Energy Management & Optimization

■ Refiners all over the world have been experiencing the effects of:

Î Rising energy costs

2002 US Refining
Î Increasingly stringent emissions
Energy
regulations 45%
Other
Î While also under extraordinary 8%
pressure to improve or sustain Taxes,
operating margins. Insurance &
Other Fixed
■ Energy savings can have an 7% Routine
Non- Maintenance
extraordinary affect on operating 15%
Maintenance Turnaround
margins. Personnel Maintenance
18% 6%
■ Energy costs typically represent a
major portion of non-feedstock
refinery costs.
NZRC II-10
 What is the total energy bill for the refinery?

Example; If….
100,000 bbls of crude / day
17 $ / MWh (5$ / MMBTU)

Then;
(Use = 7% of feed)
Energy cost = $210,000 per day
Or
$70,000,000 per year !

NZRC II-11

NZRC Energy Cost – November 2004

„ Electricity Cost = 5.11 c/kWhr

„ National Refinery Fuel = 293 NZ$/tonne
„ Asphalt = 17 NZ$/tonne
„ Butane = 293 NZ$/tonne
„ Natural Gas = 350 NZ$/tonne
„ HP Steam = 26.62 NZ$/tonne
„ MP Steam = 25.6 NZ$/tonne
„ LP Steam = 23.87 NZ$/tonne
„ Fresh Water = 1.30 NZ$/tonne
„ Demin Water = 1.77 NZ$/tonne
„ Boiler Feed Water = 4.81 NZ$/tonne
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NZRC – 1999-2003 Energy Usage

NZRC II-13

Average and Marginal

Utility Costs

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 Typical Average Utility Prices
Utility Fuel Equivalent (English) Fuel Equivalent (Metric)
(BTU per BTU) (kcal per kcal)
Liquid Fuel 1.0 1.0
Gaseous Fuel 1.0 1.0

(BTU per kw-hr) (kcal per kw-hr)

Power 9,090 2,290

(BTU per lb) (kcal per kg)

HP Steam (600 psig, 750°F) 1,565 870
MP Steam (150 psig, 430 °F) 1,300 720
LP Steam (50 psig, 300°F) 1,150 640
Condensate (200°F) 140 80
Boiler Feed Water (250°F) 200 110
Desalinated Water (100°F) 115 65

(BTU per gal) / (BTU/hr per gpm) (kcal per m3) / (kcal/hr per m3 / hr)
Recirculating Cooling Water 6.8 / 410 455 / 455
Once Through Cooling Water 8.85 / 530 590 / 590
Fresh Water Negligible Negligible
Treated Water Negligible Negligible
Demineralized Water Negligible Negligible

(BTU per scf) / (BTU/hr per scfm) (kcal per m3) / (kcal/hr per m3 / hr)
Plant Air @ 125 psig 32 / 1,920 285 / 285
Instrument Air @ 125 psig 35 / 2,100 310 / 310
Nitrogen (Gaseous) @ 125 psig 455 / 27,300 4,050 / 4,050
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Marginal Utility Cost

Definition: Cost of the next increment of energy
(i.e. Next BTU of energy used or next kW of power used)

• Critical in evaluating return on investment

• Can vary depending on quantity
• Can vary depending on infrastructure

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 Two Types of Utilities

„ Direct Utilities: Energy sources that are purchased

or can be sold.
– Electricity
– Natural Gas
– Fuel Oil
– LPG
„ Transfer Utilities: Energy sources that are used to
transfer energy from one place to another but cannot
be sold outside the site.
– Steam
– Refinery Fuel Gas

NZRC II-17

Marginal Utility Cost

„ Direct Utilities:
– Marginal Utility cost = Contract Spot Price
– Costs Vary based on contract / time of day / quantity
„ Transfer Utilities:
– Marginal Utility Cost = Cost of direct utility the
marginal utility will replace
„ Costs vary based on:
– Anything that impacts direct utility cost
– Quantity dependent
– Can be infrastructure dependent

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 Import Electrical Prices

$0.100

$0.080
$/kW -H r

$0.060
$0.040

$0.020

$-
0
731
1461
2192
2922
3653
4383
5114
5844
6575
7305
8036
Total Hours per year

NZRC II-19

Economic Challenges in Refining

Worst Best
Bottom Quartile Top Quartile

Energy Efficiency

„ 30% Difference in Energy Efficiency from the best to

the worst (equivalent to +/- $0.60 / bbl crude)

„ An inefficient 100,000 BPD refinery can spend $20

MM/yr more on energy than its competitors

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 Critical Issues

„ How much the Energy costs

(and when)
„ How much Energy you use
„ How you can impact energy
usage
„ Understand the full impact of
any change (don’t shut down
the plant to save energy!)

NZRC II-21

Considerations and Risks

Associated with Energy Cost

„ Overall profitability is mostly determined by

capacity and yields, Energy is usually 3rd (see
example)
„ However, the most critical times are when
margins are low (energy is a larger % of
competitive margin).
„ Recent increases in energy costs are changing
previous conclusions on what energy
improvements make sense.
NZRC II-22
Example from a recent study of impact on profits.

Worst Best

1. Making the right products (yields)

$1 - 1.5/bbl potential improvement
2. Making more of the right products
(utilization)
50 - 75 cts/bbl potential improvement
3. Do it efficiently
25 - 35 cts/bbl potential improvement

NZRC II-23

Energy Benchmarking
“Shortcut method to measure energy efficiency”

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 How is Process Energy Benchmarked ?

„ Benchmarking is typically done using an “Energy

Index” (or EI).
„ It is a number that indicates energy efficiency relative
to a standard of “100”
„ The basic formula is….
Actual Energy Consumed
--------------------------------------- x 100 = EI
Benchmark Energy - Calculated

„ Gives numbers in the range of 80 - 120 for typical

refineries. (80 is good & 120 is poor)

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How is an Energy Index Calculated ?

Actual Energy Used, MW

x 100
„ Basic Formula =
Standard Energy, MW

„ Actual Energy Used (MW) = Add the following...

Energy of ….
– Natural Gas Import (Gas flow x heating value basis)
– Refinery Fuel Gas and FO Burned (flow x heating value)
– Imported Electricity (kW * factor or fuel used to
generate electricity)
– Energy of Other Fuels Burned (weight * heating value)
(includes FCC Coke, Refinery Fuel Oil, etc.)
– Any Imported Energy (steam heat x flow)

NZRC II-26
 How is EI Calculated ?

Actual Energy Used, MW

Basic Formula x 100
=
Standard Energy, MW

Standard Energy, MW = Actual Flowrate to unit x energy/bbl factor

NZRC II-27

How is EII calculated ?

Standard Energy, MW = Actual Flowrate to unit x energy/bbl factor

Process Unit Process Energy

„ Each Process has its
own “Process Factor” Crude 70
Vacuum 55 Units =
„ Multiply “Process Reformer 1 200 kBTU/
Factor” times actual Reformer 2 150 bbl
NHDS 40
charge rate and add Coker 190
up the total DHDS 40
H2 Plant 80
Hydrocracker 330
Sulfur 30
Utilities & Offsites 80

NZRC II-28
 How is an Energy Index Calculated ?

Actual Energy Used, MW

„ Basic Formula = x 100
Standard Energy, MW

Sum of all Energy Actual Flows * Energy / bbl factor

“The Lower the Energy Index, the

better the performance”

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Benchmarking to Industry Standards

140
Energy Consumed, MM/BTU

120
100
80
60
40
20
0
Crude Vacuum Butamer Unifiner Ref FCC Alky HDS

Ref A Industry Standard

NZRC II-30
 Energy Index Trends

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Calculating and Energy Index

On a Per Unit Basis

Note that for comparisons it is generally less accurate than site wide EI, but still useful.
„ Use the same basic equation

Actual Energy Used, MW

x 100
=
Standard Energy, MW

– Actual Energy = (Fuel + Elec + STEAM ) used in the unit

– Steam is considered unlike site wide EI
– Use a Fuel equivalent basis
– Standard Energy = Process Factor (kBTU/bbl) * Feedrate

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 Example – Diesel Hydrotreater

„ Basic Equation
AcutalEnergyConsumed (unit ), MMBTU / h
*100 = EII (unit )
BenchmarkEnergy (unit ), MMBTU / h
„ Actual Energy Consumed
1448 kW Elec*(.00909 MMBTU/kWh) = 13.1 MMBTU/h
1.34 MLB Steam/hr * (1.21 MMBTU/MLB) = 2.6 MMBTU/h
46.6 MSCF Ref FG/hr *1.208 MMBTU/MSCF = 56.3 MMBTU/h
TOTAL = 72.0 MMBTU/h
„ Benchmark Energy
– 997 bbls Feed/hr * .085 MMBTU/bbl = 84.7 MMBTU/h
„ EI (Diesel Hydrotreater)
– (72.0/84.7)*100 = 85
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Two Questions

1. What types of
occurrences in the
plant can cause the
Energy Index to
Increase ?

2. What can be done to

Lower the Site’s
Energy Index?

NZRC II-34
 What Type of Things will Impact EI ?
„ Examples of issues that can raise EI

– Operating at low capacities

– Fouled Heat Exchangers
– Over Refluxing Columns
– Recycling products
– High heater O2’s
– Improper turndown
– Excessive Fluctuation in feedrates
– Poor Controls
– Cold Transfers
– Low efficiency equipment

NZRC II-35

Common areas where energy can be recovered.

Optimize Amine Recycle Variable Speed Drives.

Reduce Vents to Flare Heater Controls / Maint.
Sour Water Recycle High Tech Exchangers
Limiting Leaks to Flare H2 Compression
Column Pressure Optimization APC & Optimizers
Maintain Feed stability
Minimizing Reflux rates
Limiting Exchanger Fouling

NZRC II-36
 Energy Loss Method
„ Look for ways to improve efficiency by looking at where
energy is lost.

NZRC II-37

CDU Energy Analysis Procedure

Heat Loss Analysis

NZRC II-38
 Energy Analysis of Crude Unit

Loss to Loss to Loss to

Loss
Stacks Air Environment
to CW
Coolers

Energy of Energy of
Crude Distillation Unit
Feeds Products
Heat of Reaction = 0
Heat in
Heat in
stream
stream

Electricity Steam Fuels

E=9090 BTU/kWh E=HW E=LHV

What is the point where the heat is no longer valuable

NZRC II-39

Energy Analysis Procedure

Insulation

Heat Loss Analysis

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 Heat Loss Analysis

„ Look at where the heat is

“rejected” to the
environment
„ Discuss options to minimize
this loss

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A Few
Examples….

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Example 1: Energy Efficiency almost always
drops at lower utilization
EII vs. Crude Charge Rate Note:
1. Decreased EI at low rates
2. More variability at low rates.
140

130

120

110
Solomon EII

100
Actual Performance Daily
90
Energy Index

Poly. (Actual Performance Daily)

80

70

60
90,000 110,000 130,000 150,000 170,000 190,000 210,000 230,000 250,000
Unit
CrudeFeed Rate Rate, bpsd
Charge

NZRC II-43

Efficiency Loss at Turndown

„ Plot Fuel Equivalent Energy vs Capacity
Energy vs. Capacity
Energy, MMBTU/h

140
120 ?
100
80
60
40 Normal
20 operation
0
0 10000 20000 30000 40000 50000
Capacity, bpsd

Theoretical Constant energy per barrel

Typical energy per barrel NZRC II-44
 Turndown Analysis

„ Signs of Poor Turndown

– Flat curves (large y-intercept)
– Increased variability at lower charge rates
„ Causes of efficiency loss at low utilization
– Improper / incomplete operating procedures
– Improper / incomplete control systems
– Nature of the equipment

NZRC II-45

Turndown Analysis
Energy vs. Capacity
650
Actual Performance (----
(----))
Target Performance
600
Energy Target Linear Eqn
Energy, MMBTU/h

y = 0.00246x + 47.91667
550 = Current Performance

500

450

400
130,000 150,000 170,000 190,000 210,000 230,000
Charge Rate, bpsd
NZRC II-46
 Poor Turndown
Energy vs. Charge Rate
150

140

130

120
Energy, MMBTU/h

110

100 Actual Performance (----

(----))
Target Performance
90
Energy Target Linear Eqn
80
y = 0.00479x + 11.91667
70
X= Current Performance
60

50
15,000 17,000 19,000 21,000 23,000 25,000 27,000 29,000
Charge Rate, bpsd
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Example 2 :Minimizing Transient Energy Loss

Overall Energy Performance
2,500

2,000
Energy Consumed,
MMkcal/hr

1,500

1,000 Specific Energy - Actual

Specific Energy - Targeted
500

0
Sept. 27 Oct. 7 Oct. 17 Oct. 27 Nov. 6 Nov. 16 Nov. 26 Dec. 6
Refinery-
Refinery-Wide Operating Cost Gap and EI
Operating Cost Gap, $/day

160 15000
150 % of Refinery Target 13000
Target Operating Cost Gap 11000
140
% of Target

130 9000
120 7000
110 5000
100 3000
90 1000
80 -1000
70 -3000
Sept. 27 Oct. 7 Oct. 17 Oct. 27 Nov. 6 Nov. 16 Nov. 26 Dec. 6
NZRC II-48
 Potential Impact of CO2

NZRC II-49

Proposed CO2 Credit System

Many scientists believe unusually high concentrations of greenhouse
gases (mainly CO2) are increasing the greenhouse effect and
warming the Earth and the Refining and Chemical sector is one of
the largest contributors to the generation of greenhouse gases.

Governments are considering establishing limits on how much CO2

can be emitted per company. Those who cannot meet these limits
will need to purchase carbon offset credits from the government or
from those who exceed their targets.

What are carbon offset credits? Although no market currently exists

for carbon credits, many organizations, utilities, and others are
planning ahead. The informal market for carbon offsets and the
current price of carbon accumulated in trees ranges from about
$1.00 to $10.00 per ton.
NZRC II-50
 Ways to Reduce CO2

„ Carbon Sequestration – Very limited

– Keep CO2 from entering atmosphere
„ Decarbonization
– Using lower carbon number fuels
„ Improve Energy Efficiency
– Stop generating CO2
„ Catalyst Improvements
„ Process Reconfigurations

NZRC II-51

Economics of Energy and CO2

What is the relative cost of CO2?

For the reaction of
CH4 + 2O2 ---> CO2 + 2H2O
1 MMBTU/hr of CH4 will generate 0.058 MT/hr of CO2

This will increase the marginal fuel cost by…

$ 0.40 /MMBTUs for 7 $/ MT CO2
$ 0.87 /MMBTUs for 15 $/MT CO2
$ 2.89 /MMBTUs for 50 $/MT CO2

NZRC II-52
 Economics of Energy and CO2

What is this in total dollars?

Assuming the following
100,000 bbl / day refinery
10% over CO2 allocation
This will increase the fuel cost by…

at 7 $/ MT CO2 will cost 560 k$ / year

at 15 $/MT CO2 will cost 1.2 MM$ / year
at 50 $/MT CO2 will cost 4 MM$ / year

NZRC II-53

Decarbonization – Lower CO2 Emissions

from Lower Carbon Fuels
CO2 generation per Carbon Number in Fuel

200
Self generated H2
lb CO 2 / M M BTU

150

100

50

0
0 2 4 6 8
Carbon Number (1 = CH4, 2=C2H6)

NZRC II-54
 CO2 Train

NZRC II-55

Example Emission Profiles

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 The Refiner’s Perspective

NZRC II-57

Refinery Sources CO2 (Total)

NZRC II-58
Refiner’s Burning of Fuel CO2

NZRC II-59

Fired Heater CO2 Emissions

NZRC II-60
 Fuel Emissions

NZRC II-61

Issue to Consider
Regarding CO2 Production
„ CO2 trading pilot in Europe will likely set the standard.
„ The “accounting rules” for CO2 are an issue.
„ CO2 trading in US is at best several years away.
„ CO2 could potentially double marginal costs and make
several energy projects “profitable”. Maintain your old
“energy project lists”.
„ If you build an energy accounting system consider
adding CO2.

NZRC II-62
 End Section

„ Next: Refinery Steam System

„ Questions ?

NZRC II-63