Refineries

BhavnaWhat is refining?Oil or petroleum refinery.Refining of oil by fractional distillation.

What is refining?Refining is the process of purification of a substance or a form by removing impurities or unwanted elements typically as a part of an industrial process.

Broadly speaking refining of liquids is often accomplished by distillation or fractionation, gases by extraction and some solids by growing crystals in a solution.

Oil RefineryAn oil refinery or petroleum refinery is an industrial processing plant where crude oil is refined and processed into more useful products such as petroleum, gasoline, kerosene, diesel fuel, LPG etc.

An oil refinery is considered an essential part of the downstream side of petroleum industry.

Oil refineries also produce various intermediate products like hydrogen, light hydrocarbons, reformate and pyrolysis gasoline.

Contd.Oil refineries have extensive pipelines running through them which carry streams of fluids between large chemical units.

The crude oil feedstock is typically processed by an oil production plant.

There is usually anoil depot at or near an oil refinery for the storage of incoming crude oil feedstock as well as bulk liquid products.Difference between oil refinery and petrochemical plantA refinery processes crude oil into different components such as kerosene, gasoline, diesel, LPG etc.

A petrochemical plant is a chemical plant that will use a petroleum based feedstock, such as LPG or other products from a petroleum refinery to produce a chemical product, such as plastic for example.

OperationFractional Distillation is the main operation in an oil refinery.

Fractional distillation is the process of separation of a mixture into its component parts or fractions by heating it at a very high temperature.

The fractions at the top of thefractionating column have boiling points lowerthan the fractions at the bottom.

The heavy bottom fractions are often cracked into lighter, more useful products.

Contd.However, the lighter elements form explosive vapours in the fuel tanks and are hazardous. Thus the hundreds of different hydrocarbon molecules in crude oil are separated in the refineries into components which can be used as fuels , lubricants etc in petrochemical processes.

These processes produce products like plastics, detergents , solvents and fibers like nylon, polyesters etc

A Fractional Distillation Column

APOORVOil Refining Process: Fractional DistillationUses of petroleum productsPetroleum derived products used in other industriesThe Oil Refining Process What is fractional distillation? Fractional distillationis the separation of amixtureinto its component parts orfractions. The different hydrocarbon components of crude oil are its fractions. Fractional distillation is based on the principle that different substances boil at different temperatures. For example, crude oil contains kerosene and naphtha, which are useful fractions. When you evaporate the mixture of kerosene and naphtha, and then cool it, the kerosene condenses at a higher temperature than the naphtha. As the mixture cools, the kerosene condenses first, and the naphtha condenses later.

Products of Fractional DistillationLight DistillatesMiddle DistillatesHeavy DistillatesGases (1-4)Petrol (7-9)Naphtha (6-11)Kerosene (12-16)Heating oil (15-18)Petrodiesel (15-18)Lubricating oil (18-25)Heavy fuel oil (20-27)Greases & Wax (25-30)Bitumen (above 35)* Figures in brackets indicate number of carbon atoms per moleculeUses of Petroleum Products Gases- Used in making Liquefied Petroleum Gas (LPG)Gasoline (Petrol)- Used as Motor fuel.Naphtha- Used to make solvents & also used in making high octane petrol.Kerosene- Used to make ATF (Air Turbine Fuel).Heating Oil- Used for industrial & domestic heating.Petrodiesel- Widely used as a fuel in cars, trains & military vehicles.

Contd.Lubricating oil- Lubricants have thousands of uses, from fixing squeaky doors to oiling industrial machines and automotive engines.Heavy fuel oil- These are used in large industrial boilers, in power stations for example, and to raise steam to drive turbines on ships. It is also known as Bunker oil.Greases- Used for lubrication purposes.Wax- Used to make candles, electrical insulation and waterproof coverings for food cartons.Bitumen- This is the heaviest product from the refinery. When heated, it can be used in road construction and as a waterproofing material for roofs.

Petroleum derived products used in other industriesAgriculture- One of the most important uses of petroleum is in the production of ammonia to be used as the nitrogen source in agricultural fertilizers. Pesticides are almost all produced from oil.Plastics- Plastic is a staple of modern life. Nylon, which is in everything from stockings to mechanical gears and even in car engines, is the most successful petroleum-based plastic to date. Most plastics come from olefins, which include ethylene and propylene.Contd.Tires-Synthetic rubber is used for car tires and rubber soles on shoes. The demand for synthetic rubber is four times greater than that for natural rubber.Pharmaceuticals- Mineral oil and petrolatum are petroleum by-products used in many creams and topical pharmaceuticals. Acetylsalicylic acid (ASA), the active ingredient in many pain reliever medicines, is manufactured from petrochemicals.Other Products One 42-gallon barrel of oil creates 19.4 gallons of gasoline. The rest is used to make things like:Sports items- Basketballs, footballs, golf bags, golf balls, skiis, roller skates etc.Consumer products- Shampoo, deodorant, lipstick, cold creams, shaving creams etc.Sports car bodies, dashboards & Car enamel.Cassettes, CD players & Movie films.Contd.Plastic woodRubber CementAntifreezeArtificial limbsAnestheticsSolventsLinoleum

AbhishekRefineriesGross Refining Margin GRM is the difference between crude oil price and total value of petroleum products produced by the refinery.

One of the major parameters to evaluate the performance of a refinery .

If a refinery receives $80 from the sale of the products refined from a barrel of crude oil that costs $70/bbl, then the Refinery Gross Margin is $10/bbl.

Now suppose if the operating cost of the refinery and the other accounting losses are $2/bbl then margin is $8/bbl.

ExampleFactors affecting GRMCost of sourcing the crude oil.

Manufacturing Reliability and Efficiency

Ability to transport quality fuels.

Nelson complexity.

Customs Duty StructureNelson ComplexityThe Nelson Index is a measure of the complexity of an oil refinery. Refineries that are higher on the Nelson Index are valued higher relative to their peers.

For example, high Nelson Index refineries may be able to refine lower quality crude oil, or be capable of producing higher value end products.

And higher the valuable products higher is the GRM.How customs duty affects ?For petro products manufactured in India, oil refineries in India are paid the import parity price, the international price plus the insurance and freight cost plus the customs duty.

Thus, higher the customs duty, higher will be the gross refining margin.GRMs of some companies:-Reliance:- $8.1/bbl ( 4 th quarter of 2013-2014)

BPCL:- $4.7/bbl

IOCL:-$4.24/bbl

Essar Oil :- $7.7/bbl

HPCL:- $3.71/bbl

AZLAANThe 10 biggest refining countriesUSA ChinaRussiaJapanIndiaSouth KoreaItalySaudi ArabiaGermanyCanada

United States possesses the largest refinery capacity in the world with refinery capacity of 17.38 million barrels per day approximately 18.8% of the world's total refinery capacity

India holds the world's fifth largest refinery capacity with 4.1Mbd in 2012, claiming 4.4% of the global refinery capacity per day. India refined 894,000 barrels of crude oil.

Refining capacityShell 4 million barrels/day

ExxonMobile : 1.95 million barrels/day

British petroleum ; 92,531 barrels/day

Global refinery sector this year The global refining and marketing industry will continue to see pockets of earnings growth over the next year, but flat conditions overall, with product demand expected to increase modestly this year by 1.2 million b/d, according to a recent report from Moodys. That demand increase will be roughly in line with net global capacity additions, Moodys said.The outlook reflects Moodys expectations for the fundamental business conditions in the industry over the next 12-18 months, during which time it expects the R&M sectors earnings before interest, taxes, depreciation, and amortization (EBITDA) to remain volatile but to rise by about 8% through mid- to late-2015

Indias refining capacity;

215.066 MMTPA at present, Comprising-

22 refineries

17 under Public Sector,3 under private sector2 in Joint Venture (JV)INDIAN REFINERY SECTOR -

REFINING CAPACITIES : IOCL :- 65.7 Million Metric Tonnes per Annum (MMTPA) HPCL :- 14.8 Million Metric Tonnes per Annum (MMTPA).BPCL :- 20.0 Million Metric Tonnes per Annum (MMTPA)Reliance:- 60.0 Million Metric Tonnes per Annum (MMTPA)Essar:- 20.0 Million Metric Tonnes per Annum (MMTPA)