A Financial Analysis for the Recovery of High Purity Propylene from Refinery LPG R.E. (Ed) Palmer Ian M. Glasgow 2014 NSF Shale Monetization Workshop La Toretta Resort March 28 th, 2014
Presentation Highlights Refinery Overview Propylene Market Background Propylene Splitter Design and Optimization Case Study and Financial Analysis January 2012 March 2014 Conclusions 2 - Wood Group Mustang
Refinery Overview 3 - Wood Group Mustang
MM metric ton/year Propylene Market Background 120 Propylene Worldwide Production 100 80 60 40 20 0 2008 2011 2015 Propylene Source - 2008 Steam Crackers FCC On-Purpose Propylene Source - 2011 Steam Crackers FCC On-Purpose Propylene Source - 2015 Steam Crackers FCC On-Purpose 4 - Wood Group Mustang from Chuck Carr, World Petrochemical Conference, March 2011
Propylene Splitter Design & Optimization Process Flow Diagram 5 - Wood Group Mustang
Design Basis Arab Medium Refinery Capacity (MBPSD) FCC Capacity (MBPSD) PP Splitter Capacity (MBPSD) 85,000 25,000 3,000 165,000 50,000 6,000 270,000 80,000 10,000 400,000 120,000 15,000 6 - Wood Group Mustang
Design Basis Propylene Splitter Feed Basis 69% C 3 = 28% C 3 3% C 2 /C 4 Product Purity Specs Propylene 99.5% Propane 95% Heat Pump v. Conventional Distillation Evaluated multiple Operating Parameters 7 - Wood Group Mustang
Design Basis Oper Press (psig) Tower Trays 35 150 210 270 two towers 85 150 210 270 one tower 150 150 210 270 Heat Pump Design 265 150 210 270 Conventional Distillation Reboiler DT ( F) 10 15 20 25 10 15 20 25 10 15 20 25 Tower Fabrication Shop 0.05 0.07 0.09 Shop 0.05 0.07 0.09 12 14 ft ID MAX On-Site 0.05 0.07 0.09 90 On-Site 0.05 0.07 0.09 Power Cost ($/MWh) Steam Cost ($/lb) 3.90 3.90 3.90 Single Reboiler is 30,000 to 35,000 ft 2 MAX 3.90 8 - Wood Group Mustang
Evaluated Cost, MM$ Propylene Splitter Design & Optimization 75 Evaluated Cost Vs. Pressure Splitter Feed = 6,000 BPSD 70 65 60 55 $/KwH 0.05 0.07 0.09 50 35 85 135 185 235 285 Operating Pressure, PSIG 9 - Wood Group Mustang
Evaluated Cost, MM$ Propylene Splitter Design & Optimization 170 160 150 140 130 120 110 100 90 Evaluated Cost Vs. Pressure Splitter Feed = 15,000 BPSD 35 85 135 185 235 285 Operating Pressure, PSIG $/KwH 0.05 0.07 0.09 10 - Wood Group Mustang
Propylene Splitter Design & Optimization 140 Evaluated Cost Comparison ($MM) 6,000 BPSD 15,000 BPSD 120 100 80 60 40 20 0 11 - Wood Group Mustang 35 psig 85 psig 135 psig 265 psig Heat Pump Design Conventional Distillation
Propylene Splitter Design & Optimization Process Flow Diagram Evaluate Compressor Design Operating Pressure Reboiler DT 12 - Wood Group Mustang
Polytropic Head, ft Propylene Splitter Design 14000 Compressor Head vs Operating Pressure 6,000 BPSD / 150 Trays 13000 12000 11000 10000 9000 Multi Stage Single Stage Reboiler Delta T 10 F 15 F 20 F 25 F 8000 7000 6000 20 40 60 80 100 120 140 Operating Pressure, psig 13 - Wood Group Mustang
Propylene Splitter Design & Optimization Process Flow Diagram 14 - Wood Group Mustang
Propylene Splitter Design & Optimization Single Stage Compressor Maximize DT Operating Multi Stage pressure Shop Compressor vs. impacts On-Site Heat Minimize Fabrication Pump Design DT Splitter Feed Rate, BPSD 3,000 6,000 10,000 15,000 Operating Pressure, psig 135 135 85 85 Number of Towers 2 2 1 1 Trays, Total 210 210 150 150 Dia/Length, FT 8.5/180 11.5/180 15/250 18.5/250 Compressor Stages 1 1 2 2 Horsepower 1,575 3,150 4,700 7,050 Number of Reboilers 1 1 3 4 Surface, FT 2 Each 12,350 24,700 28,000 32,000 Capital Investment, MM$ 40.2 51.7 75.2 91.1 15 - Wood Group Mustang
Evaluated Cost, MM$ Evaluated Cost, MM$ Propylene Splitter Design & Optimization Shop Fabricated Tower 35 PSIG On-Site Fabricated Tower 70 68 66 64 62 60 58 56 54 52 50 6,000 BPSD Trays 150 210 270 120 115 110 105 100 95 90 15,000 BPSD One Tower Trays 150 210 270 10 15 20 25 10 15 20 25 Reboiler Delta T, F Reboiler Delta T, F Two Towers 16 - Wood Group Mustang
Evaluated Cost, MM$ Evaluated Cost, MM$ Evaluated Cost 85 PSIG 70 68 66 64 62 60 58 56 54 52 50 6,000 BPSD 10 15 20 25 Trays 150 210 270 120 115 110 105 100 95 90 15,000 BPSD 10 15 20 25 Trays 150 210 270 Reboiler Delta T, F Reboiler Delta T, F 17 - Wood Group Mustang
Evaluated Cost, MM$ Evaluated Cost, MM$ Evaluated Cost 135 PSIG 70 68 66 64 62 60 58 56 54 52 50 6,000 BPSD Trays 150 210 270 120 115 110 105 100 95 90 15,000 BPSD Trays 150 210 270 10 15 20 25 10 15 20 25 Reboiler Delta T, F Reboiler Delta T, F 18 - Wood Group Mustang
Propylene Splitter Design & Optimization Prefractionation: Ethylene / Ethane Butylenes / Butanes Treating: Water / COS / Oxygenates: Mole Sieve / Alumina Arsine / Phosphine: Copper Oxide Storage: Bullets Spheres Refrigerated Storage 19 - Wood Group Mustang
Case Study & Financial Analysis January 2012 Polymer Grade Propylene 60 to 80 cents/lb Polymer/Refinery Grade Differential 5 to 10 cents/lb Alkylate Price $2.90 to $3.20/gal 20 - Wood Group Mustang
cents/lb Case Study & Financial Analysis March 2014 14.00 Propylene Polymer v. Refinery Differential Mar 2014 Estimate Jan 2012 Estimate 12.00 10.00 8.00 6.00 4.00 2.00 0.00 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Year Differential remained near 2012 MAX 21 - Wood Group Mustang from IHS Chemical
cents/lb Propylene Market Background 80.00 Propylene Polymer Grade Price 70.00 60.00 50.00 40.00 30.00 20.00 10.00 0.00 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Year 22 - Wood Group Mustang from IHS Chemical
cents/lb Case Study & Financial Analysis March 2014 Propylene Polymer Grade Price Jan 2012 Estimate 90.00 80.00 70.00 60.00 50.00 40.00 30.00 20.00 10.00 0.00 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Year Mar 2014 Estimate 23 - Wood Group Mustang Price has fallen but stayed above 2012 MIN from IHS Chemical
cents/lb Propylene Market Background Propylene Refinery Grade - Alkylate Value 90.00 80.00 70.00 60.00 50.00 40.00 30.00 20.00 10.00 0.00 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Year 24 - Wood Group Mustang
cents/lb Case Study & Financial Analysis March 2014 Propylene Polymer Grade v. Alkylate Differential 25.00 20.00 15.00 10.00 5.00 0.00 2002-5.00 2004 2006 2008 2010 2012 2014 2016 2018 2020-10.00-15.00-20.00 Year Alkylate is now a higher value product than Propylene 25 - Wood Group Mustang from IHS Chemical
Rate of Return, % Case Study & Financial Analysis January 2012 140% 120% 100% 6,000 BPSD Alkylate Value $/Gal 80% 60% 40% 20% 0% 15% ROI 60 65 70 75 80 Propylene Price, ct/lb 2.90 3.05 3.20 26 - Wood Group Mustang
Rate of Return, % Case Study & Financial Analysis January 2012 140% 120% 100% 15,000 BPSD Alkylate Value $/Gal 80% 60% 40% 20% 15% ROI 2.90 3.05 3.20 0% 60.00 65.00 70.00 75.00 80.00 Propylene Price, ct/lb 27 - Wood Group Mustang
Propylene Price, ct/lb Case Study & Financial Analysis January 2012 80 MAX Prices and Feed Rates to Achieve Target ROI 75 70 Alkylate Value $/Gal 65 60 MIN 2.90 3.05 3.20 55 50 3,000 5,000 7,000 9,000 11,000 13,000 15,000 Splitter Feed, BPSD 28 - Wood Group Mustang
Polymer and Refinery Propylene Price Difference, ct/lb Case Study & Financial Analysis January 2012 14 Polymer Grade/Refinery Grade Propylene Price Difference to Achieve Target ROI of 15% 12 10 MAX 8 6 MIN 4 2 0 3,000 5,000 7,000 9,000 11,000 13,000 15,000 Splitter Feed, BPSD 29 - Wood Group Mustang
Conclusions Financial impacts from Shale are still in flux In 2012 and 2014 converting Refinery LPG to Polymer Grade PP had positive economics In 2014 Alkylate is a higher value product than Polymer Grade PP In current market if refiner has Alkylate Capacity, LPG should be converted to Alkylate If there is no Alkylate capacity, economics to make high purity PP from LPG still remain. Flux in economics likely continue as Shale economics continue to change 30 - Wood Group Mustang
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