Catalysis 2023 Issue

over the refinery grade propylene. However, only a small number of refiners in the US have the splitter capability to recover higher purity and hence higher value propylene. Due to the purity requirement, many trays are needed (in fact, a 99.95% purity C3 = splitter is typically about 300 ft tall!). The C 3= flow must be sufficient to justify such an investment. • Understanding of capital requirements : Refineries may need to make investments to position themselves to capture the most value from propylene. As previously discussed, these may include investments in purification equipment and logistics capabilities. Importantly, investments may be needed around the FCC itself. For example, if the FCC is operated at nameplate feed rate, the wet gas compressor and downstream handling equipment may be at an upper capacity limit. Therefore, they may not be able to handle increased propylene yield. To increase propylene at nameplate feed rate, refineries will likely need to undertake a significant investment in wet gas compressor (WGC) equipment. Reduced capital sce - narios do exist; for example, when gasoline demand is lower or the FCC competes for feed with other units, FCCs can operate at reduced throughput while staying within the gas compressor limit constraint. Even then, FCCs may be limited by main air blower constraints to reach the necessary sever- ity to attain the highest propylene yields. Catalytic solutions can help alleviate some constraints: for example, increasing C 3= yield by employing ZSM-5 technologies as opposed to increasing riser operating temperature (ROT) results in both lower air requirement (due to lower coke yield) and WGC load (due to lower dry gas yield). • Price fluctuations and asset flexibility : The pricing for both propylene and gasoline can swing significantly. In 2021, as the economy was recovering from the pandemic, significant pent-up demand was driving propylene demand and pricing higher. In contrast, travel and gasoline demand were still low, resulting in weak gasoline pricing: the propylene-to-gasoline spread was as large as US$600/MT during this period. The propylene-to-gasoline dynamic flipped in 2022: polypropyl - ene and, hence, propylene demand have softened, and when combined with large overcapacity built, especially in China, this has resulted in a lengthening in the market and weak- ened pricing. On the other hand, gasoline demand and pricing have been very strong recently. The propylene-to-gasoline pric- ing spread has turned negative recently and is expected to remain weak through 2023 relative to 2021. In the long term, with decreasing gasoline demand and increasing propylene demand, the propylene-to-gasoline spread is expected to remain positive. However, in the short term, there may be times when the market will flip and gasoline will be advan - taged. Refiners with multiple sites have the advantage that their network affords them flexibility. One possibility is that they make investments in one asset to maximise C 3 =, and other assets are optimised to produce fuels, thereby maxi- mising profitability of the overall network. Considerations for increasing FCC propylene While maximising propylene is a key objective, each refinery is different in terms of configuration, unit operations, crude

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footprint. On-demand electricity generation and heating from natural gas and propane, respectively, can offset the intermittent nature of wind and solar. 7 Recently, global demand for propane has been high rela- tive to supply, contributing to rising US propane prices. 8 Demand has increased from Asia for both heating and propylene production from PDH in China. Since the US has developed capabilities to export propane, US propane exports have been on the rise to meet global demand. In the future, growing propane demand is expected. However, US supply is expected to peak, resulting in a tightening of the demand-supply balance and higher propane pricing, which is sure to challenge PDH economics and widen the advan- tage for FCC propylene. Challenges: maximising FCC propylene Given the favourable cost position advantage of C 3 = from the FCC, what prevents more North American refineries from increasing the production of C 3 = from the FCC? Several challenges should be explored in the following detail: • Access to a propylene market/offtake : Approximately 70% of all propylene is used in the manufacture of polypropylene, while the remainder is used in the manufacture of cumene, acrylonitrile, and oxo-alcohols, among other products. The refineries that will capture the most margin from propylene (and other petrochemical feedstocks) are the ones that are integrated with petrochemical assets: integration allows refineries to capture value further down the value chain. Although refinery-petrochemical integration is an increasing trend, many refineries are yet to integrate, and those con - sidering such an approach may need to evaluate their M&A strategy or build a marketing and sales arm for their petro- chemical products. If integration is not possible, refiners may still need to form strategic partnerships with petrochemical producers to secure an offtake for the propylene. On the practical side of things, refineries may require logistics infra - structure to be able to sell propylene: for example, having access to a pipeline or being able to fill rail car vessels. • Purity specification considerations: In North America, there are different grades of propylene depending on the purity. These include refinery (~70%), chemical (~90%), and polymer grade (99.95%+). Not surprisingly, the poly - mer grade captures a higher value than the refinery grade. Typically the polymer grade fetches a $0.20-0.30/lb premium Figure 3 Average cost position for propylene sourced from various technologies. Adapted from Wood Mackenzie 6

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Catalysis 2023

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