residue fluid catalytic cracker (rfcc) project in korea

Nov. 11, 2009

Presented by Mr. Sook-Hyung(Sam) Kwon

Residue Fluid Catalytic Cracker (RFCC) Project in Korea

achieved remarkable benchmark targets

I. Introduction of SK Energy

II. Background of the No.2 FCC Project

III. General Description of the No.2 FCC Plant

IV. Initial Project Goals

V. Project Execution Strategies

VI. Work Breakdown Structures

VII. Implementation of Project Execution Strategies

VIII. Performance of the No.2 FCC Project

IX. Key Success Factors

X. Pictures of the No.2 FCC Plant

Table of Contents

2

3


Asia’s Leading Energy Company

- Asia’s No.4 CDU Capacity of 1,115,000 B/D

- World No.1 API Group III Lube Base Oil Manufacturer

- Ranked No.29 in 2007 Forbes Global Top Oil & Gas Companies

- Ranked No.74 in 2009 Fortune Global 500

- Korea’s first oil refining company which was established in 1962

- Largest domestic market share of 35% in petroleum product sales


Korea’s No.1 Energy Provider

Overall Process Block Diagram of SK Ulsan Complex


G/C &

Me’LSR Me’LSR

NAPHReformer

PE

Ethylene

PO/SM

PPPropylene

BRU/Sul/ AEU CHxBz

XFU PX

Mixed Xylene

KERO

LGO

Naphtha Cracker

S/B Me’ Jet Fuel

MDU Kerosene

Diesel

AR

VDU

LBO Lube Base OilHC

VRDS Fuel Oil

#1~5

CDU

RHDS RFCCLCO

Asphalt

Ethylene

PE

PO / SM

PP

Propylene

Cyclohexane

Benzene

Toluene

PX

C3/C4

B-C

Gasoline

LCNPropylene

Acetylene

Reformate

Reformate

Acetylene

4

Plant Capacity of SK Energy


#1~5

CDU

Petrochemical Plants Refinery

Ethylene Unit 860(C2=)

Sulfolane3,020(BTX)

(880)

PX 958(PX/OX)

MTBE 250(MTBE)

PE 396(PE)

PP 366(PP)

2

5

(2)

2

2

2

2

CHx 180(CHx)1

Butadiene Ext

raction Unit115(BD)2

Butene-1 42(B-1)1

ProcessCapacity

(MBPD)Process

Capacity

( KMT/Yr)Units

CDU7

(2)

1,115

(275)

MDU8

(1)

329

(70)

BRU(Benzene) 1 30

VDU4

(1)

137

(22)

Reformer5

(2)

121

(34)

Hydrocracker 1 45

LBO 2 23

RHDS 3 198

RFCC 2 127

Units

* ( ) : Incheon Refinery

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6

II. Background of the No.2 FCC Project

To Enhance SK’s Competitiveness

SK’s Lower Ratio of Up-grading Facilities

Increased Premium Gasoline Demand

Fulfill Environmental Regulations

No.2 FCC Project

Enhance Price Competitiveness

7


No.2 RHDS

( 80 )

AR

HP

(110 MSCFD )

(80)

SRP

(620 T/ D )

No.2 RFCC

( 60 )

PRU

(972 T/ D )

Alkylation

( 18 )

GDS ( 30 )

Sulfur (510 T/D)

Propylene (11.8)

Propane ( 3.2 )

Alkylate

( 17.5 )

T-Gasoline

( 22 )

C4 (8.0)

HCN ( 7.4 )

SLO ( 5.0 )

Gasoline

( 22 )

C4= (14.5)

Fuel Gas (2)

Fuel Gas ( 0.3 )

L/S B-C (60)

Naph (2.2)

DSL (16.8 )

H2S

H2

C3/C4 (0.6)

B-C (3.6)

C3 ( 15.1 )

Butamer

(13) nC4 (13)

LCO ( 2.9 )

SAR (180T/D)

Sulfuric Acid

SHP

(14.5)

Process Scheme

Unit : MB/D

No.2 FCC plant consists of more than 10 process units and its supporting

utility and offsite facilities.


Utility & Offsite Facilities

Area System Capacity

Utilities

Water Treatment System 2,000 m3/h (Clarifier Base)

Cooling Water System 48,000 m3/h

Instrument & Plant Air System 37,000 Nm3/h (Dry Air Base)

Nitrogen System 5,000 ~ 20,000 Nm3/h (Contract)

Electrical Supply System (154 kV) 160 MVA

Offsites

Storage Tanks 1,500 MBbl (30 EA)

Raw Water Intake System 1,400 t/h (32” x 3.5 km)

Waste Water Treatment System 7,000 t/d

Flare System 1,000,000 kg/h

Fire Fighting System & so on.

Buildings Main Control Building,Admin. Building, Fire House, Maintenance Building,

MCC/SW GR Rooms & so on.

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9

IV. Initial Project Goals

Description Project Goals Remarks

Schedule• 35 months from the start of FEEDto commercial operation

• Unprecedented tight schedule

Quality• On-Stream Factor 0.95 (Note) • No.1 FCC Project Record : 0.93

Cost• Within the budget (US$ 2.0 Billion) • Estimated TIC during Feasibility

Study was US$ 2.3bil.

Safety• No Serious injury

• No-Death• No-Serious Injury requiring hospitalization more than3 months

To enjoy big cracking margins before downturn, SK sets the schedule driven project goals while maintaining project qualities and not exceeding the budget.

(Note) On-stream Factor = Actual treated quantities for 90 days after

initial start-up divided by design capacity

•World-wide project rushes

•Heavy workload of eng’gcompany and manufacturers

•High price and long delivery

•Unstable construction workers’ union

•Limited space- Lay-down area- Construction space

•Limited engineers

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•A lot of project experience - Know-how - Internal technical support - Trouble history

•A lot of operation experience

•Good cracking margin

•Leveled-up LECs’ capability

•Enhanced local manufacturers’ capability

•Manufacturers’ good will for SK

W

O

S W

O T

•Schedule- Limited engineering companies’ resources

- Longer procurement cycles- Construction workers ‘union

•Cost- Seller’s market- Increasing trend of equipment & material cost

- Labor cost increase

•Quality- Lack of qualified engineers due to heavy workload

- Manufacturers’ poor workmanship

- Short construction period

Project Environments Project Risks

To establish the project execution strategies, SK evaluated and identified SQC risks through SWOT analysis of project environments.

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Project Risks

• Schedule

- Limited engineering companies’ resources

- Longer procurement cycles

- Construction workers ‘union

-

-• Cost

- Seller’s market- Increasing trend of equipment & materialcost

- Labor cost increase

• Quality

- Lack of qualified Engineers due to heavy workload

- Manufacturers’ poor workmanship

- Short construction

period

Required Actions

• Quick decision making

• Minimize engineering periods

• Secure qualified engineers

• Secure manufacturing periods

• Early buying is buying chief

• Early selection of FEED and

EPC contractors

• Incentive systems for schedule

acceleration

• Quality Management tools

• Engineering quality check

• Enhance manufacturers’

workmanship

• Maintain design consistency

Project Execution Strategies

• Strong owner management team

with single responsibility

• Early selection of FEED and EPC

contractors for parallel execution

• Early procurement of equipment

and materials

• Promote teamwork among all

partners

• Reinforced Quality Management

driven by SK

To overcome several project risks, SK established the following project execution strategies.

Process Section FEEDProcurement

RHDS, HPU

RFCC, GDS, PRU

Sulfur, Alkylation

FEC

FEC

FEC

LEC-1

LEC-2

LEC-3

FEC

FEC

FEC

Construction

LEC-1

LEC-2

LEC-3

Detailed

Engineering

LEC-1

LEC-2

LEC-3

Utilities & Offsites LEC-4 LEC-4- LEC-4LEC-4


[Work Breakdown Structures]

Considering project scale, fast-track schedule and limited engineering

resources of contractors, SK divided the process area into four sections.

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Non-CriticalCritical

■ FEC : Front-end Engineering Contractor, Shaw Group.

■ LEC-1 : Local Engineering Contractor-1, Daelim Industrial Co, Ltd.

■ LEC-2 & 4 : SK Engineering & Construction

■ LEC-3 : Hyundai Engineering & Construction


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Contracting scheme

Licensed Units

RFCC/PRU : UOP

RHDS : CLG

HP : HTAS

Alkylation : Dupont

SAR : MECS

GDS : Axens

SRU : CB&I

WGS : Belco

Butamer/ SHP : UOP

Non-licensed Units

ARU /SWTU : Shaw

Utility & Offsite:SKEC

Basic Design

By FEC

Project Spec & Procedure

Basic Engineering

Procurement Service

for Critical Equipment

Detailed Engineering

Procurement Assistance for owner supplied items

Procurement Services except owner supplied items

Construction & Construction Management

Pre-commissioning

Commissioning Assistance

Process Design

LEC-1

Daelim

RHDS

HP

LEC-3

Hyundai

Sulfur

Alkylation

LEC-4

SKEC

Utilities

Offsites

LEC-2

SKEC

RFCC

PRU/GDS

SK Energy

EPC

Project Champion

Strong Owner-Centered Project Management Team

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Project DirectorTech. SupportTeam (Existing)

PCT ST-1 ST-2 ST-3 MT

■ PT : Project Team, PCT : Project Control Team

■ ST : Start-up Team, MT : Maintenance Team

■ PET : Process Engineering Team LEC-1 LEC-3 LEC-2 LEC-4 FEC

Start-up Director

PT-1 PT-2 PT-3 PET

Well aligned organization with WBS

Single responsibility for EPC and Start-up

Quick decision

No PMC (Project Management & Consulting) Group

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• Heavy workload of engineering industry

• Selection at the beginning stage of main process

licensor design

• FEED work with piecemeal licensor Information

• Incentive plan for P&ID & Equipment datasheets

• Multiple contractors in view of project scale

• EPC contractor selection at the beginning stage of

FEED work

• Co-work and parallel work with FEED contractor

• Priority on procurement work

• E : Lump-sum, Procurement : Cost + Fee

Construction : Unit Price Basis

• Enable to purchase

equipment & material

in time for long lead

equipment

• Minimize design

period

FEED

Contractor

Selection

EPC

Contractor

Selection

To achieve fast track project goal, SK selected FEED contractor and EPC contractors at the

beginning stage of project for parallel execution.

Early Selection of FEED Contractor and EPC Contractors

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Market Situation

• Seller’s Market (2005 ~ 2007)

- Price goes up as time goes

- Delivery lead time getting

longer

- Difficult to get quotation

- Difficult to secure shop space

- Early buying is buying cheap

Procurement Approach

• Early identification of long lead critical equipment using

No.1 FCC project data at the project planning stage

• Securing shop space for RHDS reactors

- LOI issue before licensor design

- Procurement cost finalizing after design freezing

• Early input of licensor datasheets issue schedule

- Negotiation meeting with licensor

- Kick-off meeting for licensor design

• RFQ issue using licensor datasheets

- P/O spec finalization during TBE

- Incentive program for FEED contractor

Due to tight market situation, in-time delivery of critical equipments was the key success factor

for achieving project goals.

Early Procurement of Equipment and Material

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Good teamwork was essential for successful completion of the project.

There were eight licensors, one FEED, four EPC contractors and hundreds of suppliers.

Active communication was effective to get their good will and willingly support.

Shared Project Goals

Top Management

Support & etc.

Support to Contractors

• Project goals

• Project Execution Plan & Strategy

• Team Building workshops among FEC & LECs

• Dispatch LEC engineers to support FEED work

• Introduce Incentive program for FEED work and

construction schedule acceleration

• Top management Impact visit to key suppliers

• Invite local suppliers to construction site and

entertainment

Teamwork among all partners

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SK organized owner QA/QC team and prepared/implemented Quality Management Plan (QMP)

to ensure one-through Start-up.

Why concerns ?

• Licensor Design &

FEED Quality

- Lack of man-power

- Level of

completeness

• Detailed Design

- Capability

- Parallel execution

& hurry-up

• Equipment & Material

- Heavy workload

- Lack of quality mind

• Construction

- CPU

- Tight schedule

Resources & Tools

• Resources

- SK maintenance people

- 3rd party

- Process design & FEED

review

- Resident inspector at

shop & field

• Tools

- Licensor contract

- Inspection & Test plan

- Lessons learned from

operation and maintenance

QMP

Licensor

Requirement

Guarantee

condition

Optimum

Design

Performance &

cost

effectiveness

ReliabilityOperability &

Maintainability

Job spec

Code &

Regulation

Requirement

by law or

regulation

WorkmanshipDefect-free

workmanship

• Control Area • Purpose

Reinforced Quality Management driven by SK

[Overall Quality Management Map (Sample)]


- Plot plan/PFD/P&ID- Key Equipment Data Sheet

- Operation Manual

- H&M Balance - Sizing Equipment & C/V - Process Hydraulic - Flare system - Review Interconnecting Piping System

- Plot Plan- P&ID, - Equipment Data Sheet

- ESD Scheme- Operation Manual

• Design Data of Other Unit

• Experience of Operation/Maintenance

• Lessons Learned Item• Trouble History

• SK STD Spec.• Code Requirement• Trouble History

Licensor Requirement

Review Optimum Design

HAZOP STUDY(1st & 2nd)

Implement Operation Experience

- Reliability Study- Metallurgy(MSD)- Trouble History

Review Design

Implement Basic Design Criteria

Update SK Spec.

Tools

Licensor Requirement Optimum Design

Reliability / OperabilityMaintainability

JOB Spec. / Code / Regulation

Workmanship

Licensor Requirement

Reliability /OperabilityMaintainability

Plant Performance Implement Code & SK Spec.

Prevent Errors/Mistakes

Operability of Inter-Uints

- Implement S/U & S/D Procedure

Review System & Audit

Consistency Check By LEC

Update Feed/Product

Handling- Feed Supply System - Product Handling - Off-Spec. Handling

Verify Optimum Sizing -3rd Party

- Sizing Main Equipment- Thermal Rating- Hydraulic- Flare System Utility Balance &

Consumption Review

Reliability Study

• Licensor Agreement• Design Data of Other Unit

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[Overall Project Master Schedule]

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Description 2005 2006 2007 2008 Remarks

Process Design 2005.5~2006.7

Basic Design 2005.11~2007.4

Detailed Design 2006.6~2007.9

Procurement(Critical Equipment)

2005.7~2008.2

Procurement(All Other Equipment)

2006.2~2008.2

Site Preparation 2006.6~2006.12

Construction 2006.12~2008.3

Pre-com & Comm. 2008.4~2008.6

Commercial Operation 2008.6~

Plan Actual

SK achieved project goals in every aspect.

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Actual

31 Months

0.99

1.95 Billion US$

No Serious Injury

35 Months

0.95

2.0 Billion US$

No Serious Injury

RemarksPlanDescription

Quality

Schedule

Cost

Safety

from the Start of FEED

to Commercial Operation

On Stream Factor (*)

Initial Goals vs. Achievement

(*) On Stream Factor : Actual treated quantities for 90 days after initial

start-up divided by design capacity

It took 72 days from M/C to get on-specification production, which

reduced 18 days compared to existing No.1 FCC project.

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- Mechanical Completion : Mar.31,’08

- On-Spec. Production of Hydrogen Unit : May 8, ‘08

- On-Spec. Production of RHDS Unit : May 31, ‘08

- On-Spec. Production of RFCC/GDS Units : June.11, ‘08

- On-Spec. Production of Alkylation Unit : June.12, ’08

SK achieved each design capacity for main units on June.25,’08.

SK achieved process performance for each unit as designed.

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SK achieved all process performances as designed satisfying products

specifications as shown below :

Unit Performance Indicator Project Specification Actual Operation

RHDS Capacity, BPSD 80,000 Max. 86,000

T-AR Total Sulfur, wt% Max. 0.5 < 0.5

T-AR MCR, wt% Max. 6.0 < 4.8

C5+ Product Yield, vol. % Min. 98 > 98

RFCC Capacity, BPSD 60,000 Max. 73,000

LCN RON Min. 91 > 91

Propylene Purity, vol.% Min. 99.65 > 99.65

Propylene Yield, vol. % 19.6 14~18 (Note)

GDS Capacity, BPSD 30,000 Max. 36,000

T-LCN Total Sulfur, wtppm Max. 10 4~8

Alkylation Capacity, BPSD 18,000 Max. 20,000

Alkylate RON Min. 95 > 95

Note : However the unit was originally designed to make high propylene yield of 19.6 vol.%, the

actual propylene yield has been set in the range of 14~18 vol.% flexibly to meet market

situation adjusting reactor temperature and reformulating RFCC catalysts since initial start-up.

The plant has been running without shut-down since the initial

start-up operation on June.12,’08.

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- RHDS Unit : Max. 86,000 BPSD

(Design Capacity : 80,000 BPSD)

- RFCC Unit : Max. 73,000 BPSD

(Design Capacity : 60,000 BPSD)

SK tried to find the maximum capacity of No.2 FCC plant using

equipment design margins and optimizing operating conditions.

As a result, we found that the plant could be operating with the

following capacity without any equipment revamp:

Early Procurement of Critical Equipments

1

2

3

Early Engagement of FEC and LECs

4

Strong Project Management

54

IX. Key Success Factors

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5

6 Accurate and In-time Decision

Enhanced Quality Management System

Teamwork with SK, FEC and LECs


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Before Construction (Apr. 2006)

��.


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After Mechanical Completion (Mar. 2008)

��.

Thanks a lot!

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residue fluid catalytic cracker (rfcc) project in korea

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