$40.00
Natural gas
External feed
$35.00
$30.00
C =
MFSC
CDU VDU 400 MBD (20 MMTPA)
ROG / LPG
$25.00
Polymers
1 , 800 KTA C =
C =
$20.00
Naphtha
$15.00
Target product slate
$10.00
Residue
Fuels
Chemicals
$20 Billion total project cost $30 Billion total project cost
$5.00
Jet Fuel oil
ULSD
LLDPE/HDPE swing
PP
Bottoms upgrading
$0.00
Base oils
BTX
10%
12%
14%
16%
18%
Internal rate of return
Figure 3 Margin uplift per barrel vs IRR (pre-tax basis)
Figure 4 Case Study 1 project
It is important to study these products from a market per- spective and then find an optimal unit configuration, both from the technologies used and the scale of each, to max - imise profit while also considering the flexibility, capital, operating costs, and quality of products produced. While deciding on an optimised configuration, it is also imperative to decide on handling the bottom of the barrel in an efficient manner in a world with tight specifications around fuel oil post-MARPOL 2020. Fourthly, a strategy that impacts the investment size of the project is trading capital expenditure (Capex) for oper - ational expenditure (Opex). By moving the capital cost of some support facilities to a third party under a build, own, operate, and maintain (BOOM) model, improved returns can be realised. This project delivery model is particularly beneficial for large, capital-intensive projects. By transferring the responsibility of building and owning certain facilities to a third party, the project can significantly reduce its initial capital expenditure. This is because the third party finances the construction and ownership costs. While Capex is reduced, the project will incur ongoing operational costs, as it will need to purchase services or products (such as power, steam, and hydrogen) from the third-party owner. The key is to ensure that the savings in Capex outweigh the additional Opex. An example of this is moving a cogeneration plant out of a facility’s plot to a third-party owner and, in return, pur - chasing power and steam from the third party. This trading of Capex for Opex can improve the return on investment (ROI), but it does require a careful study of all the costs and capital savings involved. Other facilities that can be considered for a BOOM model include hydrogen production, water desalination, air sep - aration, wastewater treatment, and even product storage and exporting. Beyond the cost savings that a BOOM model offers, it also transfers some of the operational and mainte - nance risks to the third party. This can include risks related to reliability, efficiency, and compliance with regulations. These four strategies have been successfully imple - mented on projects to meet the ROI hurdle. This hurdle will be different for each project and each company, and find - ing a way to achieve it is an important task for the project
teams as projects move through feasibility and into engi - neering. To test the results, it is important to analyse the impact on ROI by each of above factors on an individual basis, as discussed in the next section’s Case Study 1. This is why it is important to bring together technical, financial, and execution expertise during the project FEL phases. Figure 3 shows two lines representing the internal rate of return (IRR) against the margin uplift per barrel of crude feed. The lower line represents a $20 billion project, and the upper line a $30 billion project. An investment of $20-30 billion is the size crude-to-chemicals megaproject facilities often require. Graphs such as Figure 3 are used to assess a project’s cur - rent standing and determine how to cross that hurdle rate. For example, if a project is at a 12% IRR but needs to reach a hurdle rate of 14%, a $20 billion project would need to improve its margin uplift by about $2.5 per bbl, while a $30 billion project would need almost $4 per bbl. The project team must find solutions to meet this marginal uplift using the previously discussed strategies. Case studies Below, two case studies are presented to demonstrate the previously discussed points. Case Study 1 The first case study involves a feasibility-stage grassroots refinery with a crude processing capacity of at least 400 MBD, integrated with a petrochemical complex. The pro - ject includes a single mixed-feed steam cracker (MFSC) producing 1,800 KTA of ethylene. The product portfo - lio aims to balance fuels and petrochemicals, designed to be fit-for-purpose and part of a new industrial land development. Figure 4 is process flow diagram of the project. The MFSC is fed by refinery off-gas (ROG), LPG, and naphtha from the refinery, along with an externally sourced advantaged feedstock available at the planned location. Various product slate options were studied, including the target products shown in Figure 4. Notably, the project did not target gaso - line production, as studies indicated no advantage in selling to the regional gasoline market.
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