Crude to Chemicals Flashcards

Flashcards for Crude to Chemicals lecture.

Techno Economics Challenge

Calculation of Key Investment and Profitability Metrics, Competitiveness, Margins, and Cash Cost of Production

Crude to Chemicals (C2C) Margins

C2C margins are better than traditional refining and petrochemical integration. Top quartile margins for ref+petchem integration are ~2x.

Future Demand for Chemicals

The future demand for chemicals is good, indicating growth opportunities in the chemical sector.

Zero Fuels Sold (ZFS)

A concept where a crude to chemicals facility aims to eliminate fuel production, focusing solely on chemical products.

Zero Fuels Sold (ZFS) units

Processing units, Crude, Chemicals, CAPEX & OPEX,CXHY Consumption and/or Losses, AVERAGE CRUDE NO ADVANTAGED FEEDS, COMMODITY PETROCHEMICAL BUILDING BLOCKS, EXISTING TECHNOLOGIES

Crude to Chemicals (COTC)

Few COTCs running mostly in China

Techno Economic Analysis Fundamentals

CAPEX, OPEX, Revenues and Returns

Techno-Economics

Techno-Economics is for Competitiveness and Investment Profitability

Techno Economic Analysis

• Are we creating value? • Making Money? • What is the best investment option? • How risky is this investment opportunity? • Which is the most financially attractive and competitive location, technology, feedstock, configuration?

Techno Economic Analysis

Precision guesswork art of drawing sufficient conclusions from insufficient premises based on unreliable data provided by those of questionable knowledge

Simple Economic Balance

Revenue (-) OPEX (-) CAPEX

Revenue

Product Yields * Product Prices

Net Margin

Gross Margin minus Fixed Operating Costs

On Stream Factor

P/L= [Product][Product Price] - [Crude][Crude Price] - [Utilities] - [FIXED COST] - [CAPEX]

Price forecast

consistent with the positive outlook for Chemicals, Configuration DON’T FOLLOW PRICES, but PRICE DIFFERENTIALS !!!!

OPEX

Operating Expenditures

OPEX Components

Variable Costs, Fixed Costs, and Overheads (G&A)

Variable Costs

Direct costs that change with refinery utilization

Fixed Costs

Direct costs that do not change with refinery utilization

Overheads (G&A)

Indirect costs allocated to the refinery

Energy Costs

Major Variable operating costs (Utilities – No Feedstock), Fuel, steam, electricity ,Hydrogen (often own produced or in HC margin) ,Water and minor utilities

Fixed Costs

Fixed cost ~ to size (CAPEX), Complex refineries require higher headcounts, Changes with labor productivity and site specific factors

Net Cash Margin

The incremental cash contributed by the refinery to the business before investments and financing activities

CAPEX

Capital Expenditures

Capital employed

Working capital + Property, Plant and Equipment

Capital Cost

function of size, Capital sustainability and Economy of Scale

ISBL(A)

formula=(#TRAINS)ISBL(B)(Cap(A)/Cap(B))^(2/3)

Capital Cost

function of accuracy, location and size

Capital Cost

function of time and location - IHS China’s boom tightened the construction market. Rapid escalation Deep recession Oil price slump

Cash Cost of Production

Price set by marginal producer

Cash cost to Main Product

Anchor Product = Ethylene

Investment KPIs

NPV and IRR

Financial KPIs

NPV : Net Present Value, IRR : Internal Rate of Return

Financial Decision Metrics

Shows the biggest risks and opportunities

Zero Fuels Sold (ZFS)

Margins for ZFS are better, Outlook for Chemicals is Good, Outlook for Fuels is Bad

Techno-Economics

Higher Returns and Conversion require lower CAPEX and OPEX

Zero fuels sold - ZFS

converting middle distillates to Chemicals destroys value. Technology Development via process intensification could allow profitable Crude to Chemicals with higher conversions