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Bottom of the barrel conversions: what does the future hold?

May 21, 2019

We need a more focused discussion on crude quality, region, access to capital, and maturity of market -- these will be the major players in successful decisions moving forward.

The world crude oil qualities and demands are constantly changing. Today, sweet crude today is far more abundant than it was 10 years ago. That offers a short-term benefit but it’s not yet clear if there will be a long-term gain.

The challenges in processing sweet crude are many, and now include increased pressure to reduce pollution when managing the carbonaceous bottoms. The most often considered pathway for bottoms management has been the carbon rejection route. But in light of CO2 reductions, is there a different pathway from carbon rejection to hydrogen addition that is sufficiently mature to be a viable alternative?

Mel discussed emerging technologies, such as resid hydrocracking, which adds hydrogen to the bottom of the barrel, alongside the demonstrated proven technology.

Major factors for decisions moving forward include cost, reliability of technology, and the disposition of the coke. Ultimately it will be based upon the margin value, the sweet-to-sour crude differential. The anticipated IMO2020 impact will likely widen that spread, and those who can process more heavy sour will make profit while those who can only process sweet will be pinched.

There is no simple answer or a silver bullet, but any successful approach moving forward will require that our industry become more efficient. We need to focus on achieving reduced variable costs and energy efficiency. We should consider raw material to finished product and the value chain optimization.

Click here to access the Refcomm website article adapted from the keynote presentation.

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