PTQ Q4 2022 Issue

Economics of refining catalysts

Risk aversion, such as averting a dual-sourcing catalyst strategy, obstructs improved profit contribution, supply flexibility, adoption, and replication of good new catalysts

George Hoekstra Hoekstra Trading LLC

I n the distant past, refiners like Amoco, Chevron, Exxon, Mobil, and Shell spent tens of millions of dollars a year each developing their catalysts within the walls of pro - prietary research and development departments. Over the decades, that work migrated to smaller companies in the specialty chemicals sector, which became the catalyst com - panies we are fortunate to have as business partners today. These catalyst companies have consistently been leaders in developing new products for refining, and their innova - tions have been worth billions of dollars to our industry. They are arguably the most innovative technology compa - nies in the energy industry, continually delivering new cata - lysts that enable the production of cleaner fuels in larger volumes from more difficult feeds at lower costs. While the industry structure has changed radically, one thing that has not changed is that refiners still face the chal - lenge of choosing the best catalysts for their units. Because of its financial impact, catalyst selection is as important today as ever. Financial impact of catalysts What is at stake financially in catalyst selection? For a large refining company, it directly affects tens of billions of dol - lars/year in product upgrade margin and over $100 million/ year in third-party spend. Better catalyst selection brings margin improvement, cost savings, fast replication, early adoption, and supply flexibility. Margin improvement A one-tier improvement in diesel hydrotreating catalyst performance is typically worth $5 million/year per unit in margin improvement. It effectively expands reactor capac - ity enough to allow a 10°F = 5.5°C lower start-of-run (SOR) temperature. That added kinetic capacity could be used to increase throughput or switch 15% of the unit feed to lower-cost cracked feedstocks, typically providing $5 mil - lion/year in increased upgrade margin for the same product sulphur level and cycle life. A one-tier improvement in FCC feed pretreating catalyst is typically worth $20 million/year. In addition to the previ - ously cited benefits for desulphurisation kinetic capacity, a better FCC pretreat catalyst delivers increased upgrade margin by enabling lower-cost feeds to the FCC with higher-value FCC product yields and quality. A better hydrocracking catalyst system will typically deliver a $30 million/year benefit through higher boiling

range conversion, better product yield distribution, and quality. These typical values for margin improvement are given to one significant digit, recognising that catalyst selection is site and unit specific, especially for FCC pre - treating and hydrocracking. Procurement cost savings On average, Hoekstra Trading clients have saved $300,000 per unit on diesel hydrotreating catalyst cost and over $1,000,000 per unit on hydrocracking catalyst cost using independent catalyst testing combined with a dual-source strategy. Table 1 lists qualitative performance benefits and quan - titative procurement savings from six case stories where a client used catalyst testing and a dual-sourcing strategy for the first time versus a strategy relying on vendor data and paper evaluation. The procurement savings are from just their first purchase using the new strategy. Cases 2, 3, and 5 are typical cases where the refiner was using an outdated catalyst that had been surpassed by one or more generations of better-performing catalysts. Our catalyst testing data convinced the refiners to switch to a better, newer product from a different supplier not on their approved list, bringing them up to current industry margin performance plus hundreds of thousands of dollars in pro - curement savings on just the first refill. Fast replication When an engineer first sees good, competitive catalyst test data and uses it in a dual-source strategy, they usu - ally get ‘hooked’ and start replicating the strategy with each successive purchase. Good data clears up confusion

Case

New

Performance

Procurement

supplier

benefit

savings

1

Albemarle

4-fold increase in cycle length $2,000,000

2 3 4

Topsoe Topsoe Topsoe Topsoe

3-tier improvement 2-tier improvement 2-tier improvement 1- tier improvement 1-tier improvement

$1,000,000 $200,000 $330,000 $600,000 $500,000

5

6

ART

Table 1 Six examples of performance benefits and procurement savings from improved catalyst selection, site contacts available on request

87

PTQ Q4 2022

www.digitalrefining.com

Powered by