refinery mact economics - wit press · 2014-05-12 · refinery mact economics: the interaction of...

Refinery MACT economics:

The interaction of technology, feed quality, and

regulatory standards"

Prasad RaoDepartment of Energy, Environmental, and Mineral Economics

The Pennsylvania State University221 Eric A. Walker Building, University Park, PA 16802sxr5(5),vsu.edu; httv://www.zeocities.com/CollezePark/Center/1541/

Abstract

The US EPA has proposed the Refinery MACT* rule to reduce hazardous airpollutant emissions from refinery catalytic cracking units, catalytic reformingunits, and sulfur recovery units. The final rule is due July 1999. This paperpresents results of a cost-benefit analysis conducted by the author while at API.The study computes emissions inventories and reductions, costs, risks, andbenefits of alternative levels and forms of the FCC inorganic MACT standard*.Metal HAPs (MHAPs) and SOX emissions are simulated under alternative feedqualities. The analysis reveals the distinct possibility of higher emissions ofMHAPs if the trend toward heavier, sourer crude continues. The analysisreveals that benefits overwhelm costs and that net benefits increase with thestringency of the standard. The result justifies the addition of the SOX NSPS tothe FCC inorganic MACT rule. FCC inorganic standards denominated innickel, especially the 0.007 Ibs Nickel per Kilo pound coke standard aredeficient because they have the potential to aggravate metal HAPs pollution. Amodified FCC inorganic standard, denominated in Ibs of particulate matter per1000 barrels of FCC feed, is proposed. This is an environmentally just anddynamically efficient emission standard. In conjunction with the SOX NSPS,this standard controls MHAPs, SOX, PM & CO2 and other pollutants.

Transactions on Ecology and the Environment vol 29 © 1999 WIT Press, www.witpress.com, ISSN 1743-3541

224 Ah Pollution

FLUID CATALYTIC CRACKING PROCESS

FCCs: Operation, Emissions and Control

Fluid catalytic crackers (FCCs) are large refinery units that upgrade heavierfractionates from the crude and vacuum distillation towers in to lighter productsof gasoline and distillate grade. During the cracking process complex feedmolecules are broken up in to simpler molecules. Catalysts enable the process atlower temperatures than otherwise. They also increase conversion, yield andselectivity. FCCs are invaluable to the refiner in the context of deterioratingfeed quality, a market demand increasingly weighted toward lighter products,and ever more stringent product specifications. FCCs enhance the flexibility ofrefineries in terms of the feed that they can accept as well as the quality, andmix of products they may produce. The FCC catalyst is regeneratedcontinuously to burn off the coke deposited on its surface. Depending on oxygenavailability, the flue gases contain CO2, CO and a variety of hydrocarbons(VOCs, SVOCs, PAHs, dioxins, furans), generally in small amounts. The finercatalyst particles escape from the FCC regenerator exhaust vent. Semi-/Non-volatile heavy metals including nickel, cadmium, selenium, mercury, arsenic,chromium, manganese, barium, beryllium, cobalt, lead and other hazardousmetals are emitted from the exhaust stream, either as deposits on catalystparticles, or in vapor form*.

Particulate, Metal HAP, and SOX Emission Factors

Baseline emissions inventory of a pollutant is the sum of emissions from theunit in all its cycles of operation. Emission factors for the crucial pollutantsunder the inorganic MACT standard - MHAPS, particulates, and SOX - werecomputed based on a material balance cum empirical approach. Particulateemissions factors were based on device specific emission factors either extractedfrom the data set, obtained from vendor literature, or based on recommendationsof HER*, API's consultant. With this approach, metal content of FCC feed isrelated to feed quality parameters such as API gravity and concarbon residue.Then, material balance equations, process correlations and the efficacy ofparticulate control enable computation of metal emissions at the vent. Data onfeed quality and nickel content of FCC feed enabled the estimation of thefollowing relationship:

Nickel_ppmw_in_feed = Exp (0.197698 + 1.228674? * Log (Concarbon%) (1)

The catalyst replacement rate, a determinant of the metal content on theequilibrium catalyst, EC AT, is primarily a function of the capacity of the unit. Itis also influenced by the quality of feed processed since dirtier feed necessitatesmore replacement. Equation 2 models this relationship.


Air Pollution 225

Catalyst_replacement_rate = Exp(0.87463 * Log(Capacity_bpd) + 0.148696 *Log(Ni_ppmw_inJeed) + 0.226554 * Log(Concarbon%)) (2)The rest follow from material balance considerations. Equation 3 computesmetal content on the ECAT.Metal_ppmw_on_Ecat = Relative_metal_content* * ((Capacity *

Nij)pmw_in_feed * (141.5/(131.5+APIjgravity))*3785/454*42)/Catalyst_replacement_rate) (3)

The identity in Equation 4 reveals that apart from coke burn rate, particulateemissions rate, and the metal content on the equilibrium catalyst are theprimary factors influencing MHAP emissions from FCC vents.Metal_in_vent (tpy) = Coke_burn_rate * PM_emisssion_rate / 1000 *

Metal_ppmw_on_Ecat * 10 -6 * Regeneration_hrs_per_yr / 2000 (4)These relationships enable precise estimation of MHAP emission factors,

and inventories. They also provide a convenient tool to assess the impacts of achange in feed quality on emissions. Thus, the environmental impacts of thetrend toward heavier, dirtier feed to US refineries may be investigated.

Since SOX emissions from FCC vents also depend on the quality of FCCfeed, a similar exercise was carried out to predict SOX emission factors.Estimation of SOX emissions relied on a limited data set of controlled anduncontrolled emission rates. The SOX emission rate from FCC vent wasregressed on FCC feed sulfur content data*, and on variables indicating the useor otherwise of SOX controls . This relationship forms the basis of predictingSOX emissions under various feed sulfur contents, and under alternative SOXcontrol strategies.SOX_lbs_per_klbcokeburn = 26.24982 * FCC_feed_sulfur_% * (1 - 0.98362 *

Have__VS) * (1 - 0.500121 * Use_SOX_additive") (5)The regression confirms that FCC SOX emissions increase with the sulfur

content in FCC feed, and that the relatively expensive venturi scrubbers achievenearly double the SOX control obtained by FCC SOX additives.

NOX concentrations too are a function of the quality of FCC feed. Nitrogencontent in FCC feed non-linearly impacts NO concentration in the FCC vent.Other factors, including the presence of platinum based combustion promoters,de-SOx catalysts, and excess oxygen in the regenerator also affect NOconcentrations. Peters et al [9] indicate that about half the FCC feed nitrogenpartitions to FCC coke, and that approximately 10% of the nitrogen on the cokeconverts to NO. Data reported in their paper yields the following relationship. Itmust be qualified as a first approximation:NO_ppm_in_FCC_exhaust =

938.939 + 263.37 In ( Nitrogen_wt%_in_FCC_feed) (6)

Computation of Emissions Inventory

The annual inventory of MHAP emissions from cracking units was estimatedusing the emission factors developed above. Inventories were also generated for


226 Air Pollution

criteria pollutants, and several organic species. SOX, NOX, participates, andCO comprise the bulk of the FCC pollutant inventory.

SIMULATION OF PARTICIPATE, METAL HAPS, AND

SOX EMISSIONS UNDER HEAVIER, SOURER FEED

Much has been said in the literature about the impact of feed quality changeson emissions from FCC vents (Sadeghbeigi, [14]). Heavier feedstocks havehigher concarbon residues and in turn higher levels of feed contaminants. (Eqn.1). Therefore uncontrolled FCC units that process heavier feed emit moreMHAPs, more SOX, and emit more CO2. DOE data reveals the historical trendtoward the use of heavier, sourer crude in US refineries (Figure 1). This trend isexplained partly by the large number of FCC units that were built at petroleumrefineries, in part to facilitate (the current or future) use of heavier crudes. Sinceheavy crudes and tar sands are abundant in the Americas, a continuation of thistrend is quite possible . Since FCC feeds are more concentrated incontaminants than the crude, these trends are amplified in the FCC feed. Amove toward heavier feeds, in the absence of offsetting controls, will have anadverse impact on the environment .

The trend toward heavier crude is reinforced by another factor. In the past,metal impurities in heavy FCC feed constrained the operation of FCCs. Theimpurities poisoned the catalyst, increased coke make, reduced selectivity andyield of FCC products, necessitating larger capacity regenerator and air blower.

1983 1985 1987 1989 1991 1993 1995 1997

CCZ3API Gravity ^Sulfur

Figure 1: Trends in the gravity and sulfur content of crude (1983-1998)Source: Petroleum Supply Annuals, Ed Swain in OG&J, October '98

1998 data is provisional and up to November only


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However, recent advances in catalyst technology have eliminated or loosenedthese constraints (GRACE Davison, [6]). Consequently, refiners may nowprocess FCC feeds from cheaper, heavier and sourer crudes**. It is imperativethat MACT internalize the environmental impact of these trends.

For simulation of the heavier feed quality case, the as-is values for FCC feedparameters, whether original, or off the distribution, were changed by a fixedamount (+1% conradson carbon, -1° API gravity, and +0.2% feed sulfur) for allcracking units in the analysis. Given the change in concarbon assumed above,the relationship in Equation 1 enabled prediction of nickel feed content underheavier feed conditions. MHAP emission factors and inventories were thencomputed from material balance equations presented above.

A similar strategy was used to estimate SOX emissions under higher sulfurfeed conditions. Equation 5, indicates that each percent increase in the sulfurcontent of the FCC feed increases SOX emissions by more than 25 Ibs per 1000Ibs coke burn. For a medium sized uncontrolled FCC, burning 50,000 Ibs ofcoke per hour, a 1% increase in feed sulfur results in the release of anadditional 5,800 tons of SOX annually.

The exercise revealed, that in the absence of regulation, a continuation of thetrend toward heavier, sourer feed would increase MHAP emissions, SOX (NO,and CO2) emissions from FCC vents.

D

1O8

1<L>ja

2

... PKyf 1 < IKo / Hfw»t-»\

'. \* \ - - - .- — — API PM Ni Scenario

" \ x PM n S lh« / lrlhrr,kff

K V\*, \%\

PM emission rate

Figure 2: Representation of various PM and Nickel denominated standards


228 Air Pollution

EVALUATED MACT SCENARIOS

Several scenarios, of varying stringencies, were considered for evaluation in theanalysis. These include particulate and nickel denominated standards. Besidesthe reference Presumptive MACT scenario**, the scenarios for FCC inorganicemissions standard simulated above-the-floor (1.5 Ibs per Klbcoke), and below-the-floor (0.5 Ibs per Klbcoke) options. The above-the-floor option embeddedoptimistic expectations of technology. High efficiency third stage cyclones, alow cost alternative, were assumed capable of meet ing-a relaxed particulatefloor. The below-the-floor scenarios would require fabric filters, venturiscrubbers, large ESPs or electro-dynamic venturi scrubbers (EDVs).

Three versions of the nickel standard were simulated. The first versioninvolved an evaluation of a nickel standard of 0.007 Ibs per Klbcoke. Thisoption, favored by the industry, takes advantage of a provision in the MACTguidelines allowing for 'operational flexibility'. Most FCCs in the US wouldcomply with this nickel standard. Two other nickel standards traded off nickelflexibility for tighter control of PM &/or SOX. The intent of these two standardswas to consider total risk from MHAPs, particulates &/or SOX, and permitlimited trade-off among these pollutant groups in a manner that providesflexibility, limits costs, and yet obtains significant pollutant reductions. Thesetwo standards require simultaneous and continuous monitoring of both/all threepollutants. Their viability also depends on how EPA values reductions in thethree pollutant classes. Figure 2 is a graphical representation of the variousstandards. The area below, and to the left of the standard, is a measure of itsstringency. The smaller the area, the more stringent is the standard.

COSTS, EMISSIONS REDUCTIONS, RISK AND BENEFIT

ESTIMATES, COST-BENEFIT COMPARISON

The analysis revealed annualized costs of about $35 million per year to therefining industry for installing and operating controls on cracking (andreforming) units under the PMACT . This abatement cost works out to lessthan $0.02 per barrel of annual FCC feed capacity. Costs were the least for the0.007 Ibs/Klbcoke nickel standard and highest for the most stringent particulatestandard (0.5 Ibs PM per Klbcoke).

Post control inventory was calculated by subtracting from the baselineinventory the control achieved by the chosen device. The largest reductions inemissions are those of criteria pollutants, SOX and CO. The PMACT referencecase scenario obtains more than 125,000 tons reduction in SOX emissionsannually with as-is feed conditions. The PMACT obtains approximately 7,000tons reduction in toxic heavy metal laden particulate emissions annually.Depending on the quality of feed assumed, the reference case removes between


Air Pollution 229

22 and 45 tons of MHAPs annually. The MACT also obtains reductions,generally in much smaller amounts, of a host of organic pollutants. Inorganicpollutant removal varies across standards. Standards denominated in particulateemissions perform best. The 0.007 Ibs/Klbcoke nickel standard obtains the leastparticulate, MHAP and SOX removal, because it is a very lenient standard thatensures compliance for almost all FCCs in the US.

The analysis developed approximate measures of risk reductions and partialestimates of monetized benefits. Total risk was computed based on a multimediarisk-ranking index developed by Pratt et al [10]. The product of annualemissions and the risk index is an indicator of total risk. Measures of total riskwere estimated for each class of pollutant, for each unit, under all scenarios andfeed quality conditions. While MHAPs are orders of magnitude more toxic thanother pollutants, total risk is more equally spread across criteria pollutants,particulates and MHAPs. This result holds because criteria pollutants andparticulates are emitted in much larger quantities.

Partial, crude estimates of monetized benefits were computed using damageestimates available in the literature. Per ton damage estimates for particulates,SOX , NOX, VOC, and CO were used to compute approximate estimates ofpotential benefits from the implementation of alternative MACT standards.Partial benefits outweighed costs for all options. Net benefits varied inproportion with standard stringency - being the highest for Scenario 6 and leastfor Scenario 3.

Assumptions and CaveatsThere are many assumptions, data limitations, and qualifications to the analysisthat could not be detailed here. These caveats, as well as detailed results, arenoted in the author's September '97 API draft final report.

COMMENTS ON EPA'S REFINERY MACT PROPOSAL

On the Applicability of the FCC MACT Inorganic Standard to NSPS Units

In its earlier drafts, EPA had specifically excluded NSPS units from the purviewof MACT. EPA seemingly has changed its stance regarding the applicability ofRefinery MACT to NSPS FCCs and CRUs. This has important regulatoryimplications. If the nickel standard proposed in the MACT regulation is lessstringent than the particulate NSPS for FCCs, as seems to be the case, then,making the MACT applicable to NSPS FCC units may inadvertently let theNSPS units off the hook with respect to complying with the particulatestandard. That is because relaxing the particulate standard is a means to complywith the relaxed nickel standard (See Eqn. 4). NSPS units should only beincluded under MACT if the MACT is more stringent than the NSPS.Alternatively, applicability of MACT should not absolve NSPS units of theirobligations under the NSPS regulation.


230 Ah Pollution

A Note on API's 0.007 Ibs per KIbcoke Nickel Emission Standard andEPA's Nickel Denominated Options

In its proposed MACT rule, the EPA indicates that, apart from the 0.029 Ibs Niper hour standard, it is considering two forms of an FCC inorganic MACTstandard denominated in nickel. The first is the industry proposal of 0.007 Ibsnickel per kilo pound coke bum. The second is EPA's 'answer' of 0.0013 Ibs Ni

per KIbcoke.Nickel denominated standards are unlikely to be efficient for a couple of

reasons. The first concerns the level at which the nickel standard is sought. The0.007 Ibs Ni standard, advocated by the industry, is in effect a 'no-control'scenario. It is currently non-binding on all but the heaviest FCC feed units.Heavy crudes from the Central and South America, California, and Canada areincreasingly available in the US. Advances in FCC technology and FCCcatalysts now facilitate the use of these heavier crudes. Given the trend towardthe processing of heavier and sourer crude, refineries currently processing lownickel feed could in the future process the dirtier, heavier feed. Since the 0.007Ibs nickel standard is non-binding and does not require particulate controls, itfacilitates the processing of heavier, less expensive feeds, and in turn higheremissions of nickel and other MHAPs (as well as SOX, NOX, and CO2)from FCC vents over time. Table 1 compares the NSPS for FCCs against theAPI proposal for various criteria of interest to regulators. As is clear from thetable, API's proposed nickel standard is NOT technically equivalent to theMACT PM floor. It is, in many respects, the antithesis of the PM NSPS.The 0.007 Ibs nickel per Kilo Ibs coke standard must be rejected outright

A problem shared by all nickel denominated standards, regardless of theirlevels, is that they are inherently difficult to monitor, and enforce compliancewith. Refinery operations are continuously optimized to take advantage of smallchanges in price of crude and product markets. The quality of purchased crudemay differ from transaction to transaction. At constant cutpoints, the distillationof crudes of different qualities yields FCC feeds of different qualities. Further, inresponse to input and product market prices and inventory situations, refinersmay vary the cutpoints in their distillation towers. Varying cutpoints has theeffect of changing the quality of feed to the FCC. Thus, the quality of FCC feedis likely to vary over a period of time. MHAP emissions too will vary with feedquality. Because EPA dropped a clause providing for biennial inspection andmonitoring of the FCC inorganic standard ensuring compliance is made doublydifficult**. A nickel option opens the possibility of unmonitored non-compliance. Since better alternatives exist, EPA should avoid denominating theFCC inorganic standard in nickel terms.


Air Pollution 231

On the Denominating the FCC Inorganic Standard in Ibs PMper barrel

One problem with denominating FCC inorganic standard in Ibs per Klb cokeburn is that it does not distinguish between units processing light feeds andunits processing heavier feeds. This distinction is important because unitsprocessing heavier feeds have higher MHAP contents on their catalysts, andburn more coke per barrel of feed processed (and possibly generate more NOXand SOX). FCC feeds may generate between 10 and 20 pounds of coke perbarrel of FCC feed processed depending on the concarbon residue and otherquality attributes of the feed. For a unit of capacity 50,000 barrels per day, a 1 to

12 LbsPM per 1000 Barrels10 Lbs PM per 1000 Barrels

0.75 1

Participate Emission Rate, Lbs per Kibcoke

1.25

Figure 3: A FCC Inorganic MACT standard denominated in Ibs PM per barrel

2 pound difference in coke generation due to the processing of heavier feed, isequivalent to combusting an additional 9,000 to 18,000 tons of coke annually.CO2 emissions are therefore higher for an FCC unit processing heavier feed.Since the FCC is one of the largest units at a refinery, this trend, whenaggregated across all refineries in the industry, has important implications forCO2 emissions from the petroleum refining industry of the US.

The amount of particulate matter (PM) generated per barrel may beexpressed as a factor of two components:

Lbs PM Lbs PM Klb Coke

1000 FCC Feed Barrel Klb Coke 1000 FCC Feed Barrel(7)

The current format of the standard imposes a particulate emission limit per1000 pounds of coke burn. The emphasis is on controlling only one of the two


232 Air Pollution

components in the identity above. All units, regardless of the quality of feedprocessed, are treated equally by the standard. However, if the objective is tooffset the higher MHAPs content on the ECAT of FCCs processing heavierfeed, and also control CO2 emissions, then there is a strong reason todifferentiate between units based on the quality of feed processed. A standarddenominated in Ibs PM per barrel achieves control of MHAPs, particulates, andCO2 emissions. This standard is environmentally just because it is morestringent on those processing dirtier feed in their FCC unit. It is alsodynamically efficient in the sense that as a FCC unit processes heavier feed overtime, PM emissions will need to be controlled more stringently. A standard interms of Ibs of PM per 1000 barrels of feed (Figure 3) may be framedconsidering the coke yield from good quality FCC feed at units in US. With thecurrent emphasis on reduction of GHG gases, and with the trend in the industrytoward the use of heavier (more carbonaceous) feed, EPA is urged to seriouslyconsider re-denominating the FCC inorganic standard. An inorganicpollutant standard for FCCs in the neighborhood of 10 Ibs PM per 1000barrels of FCC feed is worthy of EPA's attention. Denominating the FCCinorganic standard in Ibs PM per barrel allows refiners an additional degree offlexibility in terms of complying with the standard. They may either install orincrease the operating severity of the hydrotreatment unit, &/or reduceparticulate emission rate by installing new or refurbishing and adjustingexisting control devices, &/or process better quality FCC feed &/or use FCCcatalysts that reduce coke make.

Having discussed the various options available to the EPA for considerationtoward the MHAP FCC standard, it is pertinent to compare some of thesealternatives against various efficiency and practical criteria. Table 1 comparesthe industry position, the EPA PMACT proposal, and the Ibs PM per barrelproposal. The industry backed 0.007 Ibs nickel standard fails every testcriterion. It actually has the potential to aggravate pollution. The two particulatedenominated standards perform well. Both effectively control PM. Concomitantreductions in SOX could be achieved if scrubbers/EDVs are chosen instead ofESPs. Both are relatively easy to monitor'*. The Ibs PM per 1000 barrelsstandard is an effective antidote against the historical trend toward heavier andsourer feed. It is the only standard that can contain CO2 emissions from FCCunits by providing incentive to use catalysts with less coke make, and bydissuading the use of heavier feed.

On the SOX NSPS as part of the Refinery MACT Standard

The NSPS for FCC units is comprised of the PM NSPS, the SOX NSPS, the CONSPS, and the Opacity standard. While the standard for inorganic HAPemissions has been directly borrowed from the particulate NSPS for FCC units,the EPA's proposed Refinery MACT rule is silent on the control of SOXemissions from FCC vents.


Air Pollution 233

Table 1: A Comparison of Alternative FCC Inorganic Standards

Criterion

Internalizestrend towardheavier feed?Compliancestatus robust tofeed changes?Potential toreduce SOX

ReducesMHAPs?Reduces PM?

Potential tocontain CO2emissions?Least expensivedevice tocomply withstandard

Easy to monitor& enforce

lOIbsPM/thousandbarrelsVery effectively

Yes

Yes (ifscrubbers/EDVinstalled)Yes

Yes

Yes

FF/EDV/Scrubber/ESPSize/efficiencyvary with feedqualityYes

PMNSPS

Effectively

Yes

Yes (ifEDV/scrubbersinstalled)Yes

Yes

No

FF/VS/EDV/ESP

Yes

0*007 IbsNi/Klbcoke

is an incentive touse heavier feed

question does notarise in most cases

No (potential formore SOX if sourerfeed used)No (could increaseMHAP emissions)No (could increasePM emissions)No (could increaseCO2 emissions)

No control

No

FCCs are one of the largest units at refineries. FCC vents emissions are inthe order of several hundred thousand cubic feet of exhaust per minute. Evensmall concentrations of pollutants translate in to many tons on an annual basis.FCC units are one of the largest emitters of SOX from refineries and SOXemissions are among the largest emissions from FCC vents. An uncontrolledFCC unit emits approximately 26 Ibs of SOX for every percentage sulfur in thefeed per 1000 Ibs coke burn (Equation 5). Even assuming a feed sulfur contentof 1%, a medium sized FCC unit burning 50,000 Ibs of coke every hour emits(50,000/1000*26*24*365/2000 = ) 5,694 tons of SOX annually. Every percentincrease in sulfur results in a similar incremental amount of SOX emissions.

SOX concentrations in ambient air has been implicated in morbidity andeven mortality among sensitive population groups by several epidemiologicalstudies. If these health effects are valued, as they should be, reducing SOX islikely justified from a cost benefit perspective also. The EPA has an ongoingSOX reduction program at utilities, and has also recently announced a program


234 Air Pollution

to limit sulfur content in gasoline. A SOX standard provides an additionalincentive for refiners to process sweeter crudes. It is in this context that EPA'sexclusion of the SOX NSPS for FCCs from the MACT standard is surprising.The MACT is a singular and excellent opportunity to obtain reductions in allMHAPs, particulates, and SOX emissions. EPA should use this uniqueopportunity to reduce SOX from FCC vents. EPA should add the FCC SOXNSPS to the MACT standard. Controlling SOX emissions from FCC vents willensure that refineries do not use modern technology to take advantage of thelower priced sour crude and gain a competitive advantage at the expense of theenvironment and human health. Another advantage of adding the SOX NSPS tothe MACT standard is that EDVs/scrubbers control other pollutants also.Specifically, they may achieve some control of volatile and semi-volatileMHAPs that include mercury, cadmium, and selenium. These metals remainpartly uncontrolled if units are provided the nickel option, or install ESPs toexclusively control particulates. In fact, if refiners install EDVs as the MACTcontrol equipment, their exposure under the residual risk assessment isconsiderably reduced.

DISCUSSION AND RECOMMENDATIONS

The study on the economics of MACT controls on FCC vents reveals severalfacts:4 An incentive exists to take advantage of poorer quality, lower priced feeds

at the expense of the environment (an 'externality*). Therefore, any standardthat is non-binding will be fiilly taken advantage of. This could result inincreased emissions of MHAPs, SOX, NOX, and CO2 from FCC vents.The 0.007 Ibs Ni per K Ibs coke standard could aggravate MHAPspollution. It must be rejected. It is also worth noting that when emissionsare a function of feed quality, it is dangerous to allow feed qualityvariations under the guise of'operational flexibility/

4 If indeed EPA's intention in proposing the 0.029 Ib/hr nickel standard is togrant relief to small business operators, then, the same could be achievedby limiting this option to qualified small business refiners with FCCunits of coke burn capacity less than 15,000 Ibs per hour. This ensuresthat the purpose is achieved without creating a loophole for larger refinerswho may take advantage of this option and not install particulate controls.

• Reformatting the inorganic MACT standard to one denominated in IbsPM per barrel is strongly recommended. Such a standard, set at a levelthat reflects good quality FCC feed quality in US, will provide the incentiveto use lighter FCC feed, and to use catalysts that reduce coke make. Astandard denominated in Ibs PM per barrel achieves control of MHAPs,particulates, possibly SOX, and CO2. It is environmentally just, anddynamically efficient.


Air Pollution 235

+ Though the MACT is ostensibly directed at controlling HAPs, significantreductions in particulates, SOX, CO, VOC, and other pollutants areobtained. These ancillary pollutant reductions are an important componentof aggregate risk reductions and monetary benefits. The design of theMACT standard should take account of these ancillary benefits.

$ EPA should add the NSPS set of standard for FCC units to the MACT finalrule. In particular, the agency should add the SOX NSPS requiringunits to control SO2 emissions to 50 ppmv or obtain 90% control. Thisrequirement will provide the necessary motivation for refiners to chooseEDVs/scrubbers over ESPs. Small units could be required to use SOXreducing catalysts at a specified usage rate per percent sulfur per barrel.

4 In the context of generation of multiple pollutants and jointness in pollutioncontrol, use of 'cost-effectiveness* is invalid and misleading . The use of'cost-effectiveness', because it ignores ancillary pollutant reductions, is amajor obstacle in the design of optimal and effective environmentalpolicies. 'Cost-effectiveness' in most environmental contexts is absurd;its use must be eschewed in favor of cost benefit analysis.

$ The benefits of controlling emissions from cracking and reforming unitsoverwhelm compliance cost for all options. MACT controls on refinerycracking and reforming units pass the cost benefit test The magnitudesof partial net benefits are generally in line with the stringency of thestandards.

$ The MACT analysis highlights the need to consider dynamic aspects in aregulation. In the present context, the dynamic element involves a possiblemove toward heavier FCC feed with serious implications for futureemissions of MHAPs, SOX and CO2. When the baseline itself changes overtime, the characterization of such change is important to, and is part of agood economic analysis.

+ This research reveals that technological innovation may sometimes lead toenvironmentally perverse results. In such cases, the design of emissionsstandards should internalize the negative environmental impacts oftechnical innovation.


236 Air Pollution

REFERENCES and BIBLIOGRAPHY

1. Acks, K. 'Environmental Damage Valuation & Benefit Cost News',http://www.damagevaluation.com

2. American Petroleum Institute, 'Characterization of Hazardous Air PollutantEmissions From FCCU, CRU, and SRU Refinery Process Vents, FinalReport, Volumes I-III - Process and HAP Emissions Survey', prepared byEnergy and Environmental Research Corporation, 1995.

3. Anderson, Robert,. 'Emissions of Hazardous Air Pollutants from PetroleumRefineries (NESHAPs)', Chapter VIII in 'Analysis of the Costs andBenefits of Regulations: A Review of Historical Experience', Edited byMichael Rusin, Discussion Paper #084R, API, 1996.

4. Cheremisinof£ Paul N., Air Pollution Control and Design for Industry,Marcel Dekker Inc., 1993.

5. Edward J. Swain, 'U.S. Refining Crude Slates Continue Towards HeavierFeeds, Higher Sulfur Contents', Oil & Gas Journal, 96:40, October 1998.

6. GRACE Davison, 'Guide to Fluid Catalytic Cracking', Part 2Idaho National Laboratory, 'Advanced Plasma Processing of Low-QualityCrude Oil', (http://www.inel.gov/cgi-bin/highlights.prl7/www/technology_transfer/fact-htm/fact272.html:plasma) 1996.

7. Occelli and O'Connor, ''Fluid Catalytic Cracking III Materials andProcesses', ACS Symposium Series, 1994.

8. Patrick, David R., 'Toxic Air Pollution Handbook', Van NostrandRheinhold, New York, 1994.

9. Peters, A.W., et al, 'Origin and Control of NOx in FCCU Regenerator' inFluid Cracking Catalysts, edited by Mario Occelli and Paul O'Connor,Marcel Dekker, 1998.

10. Pratt, Gerbec,. Livingston, Oliaei,. Bollweg, Paterson, & Mackay, 'AnIndexing System for Comparing Toxic Air Pollutants Based Upon TheirPotential Environmental Impacts' Chemosphere, Vol. 27(8), p!359, 1993.

11. Rao, Prasad G., Comments to the US EPA on the Proposed RefineryMACT Regulation, November 1998(http://www.geocities.com/CollegePark/Center/154 l/Refinery_MACT/).

12. Rao, Prasad G., 'Economics of MACT Controls on Petroleum RefineryCracking and Refinery Vents', 19th Annual Conference of the USAEE,Albuquerque, New Mexico, October, 1998.

13. Rao, Prasad G., 'Economics of MACT Regulations on Petroleum RefineryCracking and Reforming Units', Draft Final Report, Policy Analysis andStrategic Planning Department, API, November 1997.

14. Sadeghbeigi, Reza,. 'Fluid Catalytic Cracking Handbook', Gulf PublishingCompany, Houston, Texas, 1995.

15. U.S. EPA, 'Handbook of Control Technologies for Hazardous AirPollutants' 1991.


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16. U.S. EPA, 'Proposed rule ...for the NESHAP for Petroleum Refineries-Catalytic Cracking (Fluid and Other) Units, Catalytic Reforming Units, andSulfur Plant Units', Federal Register, September 11 1998.

ENDNOTES

'This research was performed in 1997 at the API where the author was an Economist in the PolicyAnalysis and Strategic Planning department.*This is a revised and updated version of the paper titled "Economics of MACT Controls on PetroleumCracking and Reforming Units" published in "Technology's Critical Role in Energy & EnvironmentalMarkets," Proceedings of the 19* Annual North American Conference USAEE/IAEE, Albuquerque,New Mexico, October 18-21, 1998. Readers may wish to refer to the USAEE paper for certain detailsthat do not appear here. A longer, detailed version of this paper is also available with the author.* Maximum Achievable Control Technology* The analysis of emissions data for the sulfur recovery units was undertaken by the NPRA.* Mercury is excluded from the definition of metal HAPs for this MACT. It may be a target in theresidual risk regulations that follows MACT.* Energy and Environmental Research, Inc., California, USA* The coefficient on log terms may be interpreted as the appropriately defined elasticity.* This term is a pre-determined ratio between the content of heavy metal, i, on the ECAT, and the nickelmetal content on ECAT. In effect, the amount of all other heavy metals on the ECAT are assumed tovary proportionally with nickel on the ECAT. The ratios were developed from an analysis of metalcontents of used FCC catalyst sent for landfill, and catalyst fines collected at ESPs.' Sulfur content of virgin gas oil is 2 to 2.5 times the sulfur content in the crude (Edward J. Swain,personal communication). Heavier FCC feeds, such as atm. resid, contain more sulfur.'° The combustion type, and use of certain additives/ promoters also may influence SOX emission rates." This is an approximation. The type and usage of SOX catalyst/additive as well as the pressuredifferential at which the scrubber operates and the reagent concentration of spray water may alsoinfluence SOX control.Idaho National Laboratory is researching in to the feasibility of processing of heavy oil, residuum, and

tar sands by plasma processing, (http://www.inel.gov/cgi-biyt/highlights.prl?/www/technology_transfer/fect-htm/fect272.html:plasma); Peter Kong 208-526-7579; [email protected]" Several refineries have recently constructed hydrotreating units. The data for the analysis wascompiled in 1995 and may not fully reflect either the current number or the impact of these units.Hydrotreatment reduces sulfur, nitrogen, and heavy metals in the feedstock as well as coke make in theFCC.** and/or treat a heavier fractionate from the crude distillation column.'* For inorganic FCC emissions, the Presumptive MACT standards borrowed from the NSPS for thesesources. The NSPS inorganic standard for FCC emissions consist of the PM NSPS and the SOX NSPS.The Presumptive MACT adopted the PM NSPS (1 Ib per 1000 Ibs coke burn), but ignored the SOXNSPS (< 0.3 wt% feed sulfur or 500 ppmv SOX for uncontrolled sources?, and 50 ppmv or 90% controlfor controlled sources) and the opacity limitations. The CO NSPS limit of 500 ppmv, measured on anhourly average basis, was adopted for organic emissions from the FCC. The FCC inorganic MACTstandard was later modified to include a nickel emission rate of 0.00047 Ibs per Klbcoke." An inorganic MACT standard consisting of the paniculate NSPS and the SOX NSPS is also likely toimpact on crude price quality differentials." Only the morbidity component of SOX damages was considered. The mortality component is large.Including the mortality component of SOX increases benefits and net benefits - making the case strongerfor the imposition of the SOX NSPS on all FCC units.** EPA could require refiners to report average API gravity, concarbon, nickel, sulfur and nitrogencontent of the FCC feed on a monthly basis.*' though the 10 Ibs PM per K bbl feed standard must be evaluated at the poorest quality feed that theunit intends to process in any given period.* An crude analogy is purchase of a home. Using a 'cost-effectiveness' criterion, one would choose ahome on the basis of the lowest $ per square foot (regardless of even the size of the house)! A morereasonable approach, analogous to cost-benefit analysis, would require the purchaser to consider thevarious positive and negative attributes of the home (size, price, location, school, crime, taxes, etc.)


Section Four:

Urban and Suburban

Transport Emissions


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