cht bip shell best practice - masterplanning
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CONFIDENTIAL
CHT - Integrated RefineryBusiness Improvement Program
BPCL KochiShell approach to Masterplanning
March 2007
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Supply and Manufacturing Masterplan
Development of a roadmapFrom corporate vision and broad strategy to a
recommended, financially robust project outlineintegrating supply and manufacturing options
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Project Spec
Project Spec
BOD
BOD
BDP
BDP
D&E, Procurement
Construction
D&E, Procurement
Construction
Basic Design
Master Plan
Definition EPCImplementation
Design
Preparation
Cost of
changes
Cost of
changes
100%
Progress
100%
Shell Global Solutions has proven to add value
Scouting Influence overmargin & cost
Influence overmargin & cost
Our major input is in the project phasesOur major input is in the project phases
with highest influence and impactwith highest influence and impact
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Premises : Key Business Drivers
$
Market Demands & Prices
Available Crudes & Prices
Emissions & Product
Quality Legislation
Fuels, Components Import
and Export Options
External factors
Available Options
max
BusinessAspirations
Return on Investment
Cash Flow
StrategicConsiderations
Market Deregulation
Chemicals OptionsStaged Investment
Opportunity
Growth
Minimum Investment
Case
Power Sales Options
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European emissions: trends inspecifications
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European Market projections
Diesel demand growth
Gasoline demand drop
EU is promoting shift from gasoline to diesel (fuel efficiency)by means of tax incentives in view of Kyoto commitments
Reduction SO2 emissions on-shore and in coastal waters
substitution by Natural Gas (Cogen) LSFO
High-Sulphur Fueloil demand drop
Gradual replacement of depleting North Sea by sour crudes
High-Sulphur Fueloil production increase
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Market projections Europe
-80
-60
-40
-20
0
20
40
60
80
2005 2010 2015
Product
balance
s
Million tonnes per year
HeavyFueloil
Gasoline
Diesel
Source: Wood McKenzie and Shell
Surplus
Deficit
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Diesel Fueloil 3.5 % S price differentials
$/barrel60
Future?
Actua
l
40
20
0
2010
2015
Jan-01
Jan-02
Jan-03
Jan-04
Jan-05
M t l i : d t th f t
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Masterplanning: road map to the futureSustainable competitive position & Value creation
Long termvision Premises
Developoptions Evaluation
Recommended
Supply Option(s) &MF configuration
Where do
you wantto go
Quantificationboundaries
How can
you get there
What are the cost,benefits, risk and
financial sensitivities
Roadmap
to the future
1st phase 2nd phase 3rd phase
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Basic Principles of Masterplanning
Strategy driven
- Based on integrated corporate strategies- Market ambitions (volume growth, product quality)- Supply options (crudes, feedstocks, blending components)- Integration objectives (crude/oil products/chemicals/power/others)
Business premises(to be defined by client; SGSi can help the client to develop robust premises through a challenge process)
- Crude availabilities, Target markets and Product demand levels- Consistent pricing assumptions for crudes and products
- Capital ceiling and investment criteria- Operating cost data
Options to be considered
- Alternative supply Options- Manufacturing configuration options
From long list to most promising option
Masterplanning: road map to the future
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Masterplanning: road map to the futureSustainable competitive position & Value creation
Long termvision Premises
Developoptions Evaluation
Recommended
Supply Option(s) &MF configuration
How can
you get there
1st phase 2nd phase 3rd phase
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Residue conversion options
Carbon rejection Hydrogen addition OxidationAtm Residue
Vac ResidueCracked Residue
Coki
ng
Deaspha
lting
ResidHDM
ResHDS
Ebul/Slu
rryH
C
CatC
racking
FixBedHC
Bitu
men
Hyc
onbu
nker
Power
gen.
Gasifi
cation
ThermCr
/Vis
b
and many combinations only study options after initialscreening
Key driving forces steers best fit-for-purpose option
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VGO Conversion options
Maximum Diesel yield (%vol)in VGO conversion
VGOConversion
40Thermal Cracking feed + heat products + C
Catalytic Cracking feed + heat products + C
Hydro Cracking feed + H2 products + heat
cat
cat
35
80
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Hydrogen options
By-product
H2 plant
Hydrogen
CDUCrude
HCUVDU
HDS
Residue
Conversion
Gasification
Crude CDU HDS
Natural Gas
HMU
Hydrogen
HCUVDU
Residue
Conversion
By-product
Choice depends onprice of Natural Gasversus By-product
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De-coupling of technology selection andprocess licensor provides anindependent advice
Type of technology and required capacities selected inmaster planning exercise, not process licensor
Starting point is to include all possible process
configurations (long list), discuss and select via detailedjoint discussions taking into accountstudy premises, client drivers, capex constraints,
operability, maintainability, constructability
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Local Business Environment
Existing refinery Configuration / Integration optionsUtilities Refinery Facilities, Export/Import options
Logistics facilities Export/Import options
Natural Gas Availability and Price
By-products Markets and Prices
Economy of scale Refinery capacity increase / residue importOperability Reliability / Integration
Investments Restrictions / Financing options
Local Business Environmentwill have major impact on optimum solution
Masterplanning: road map to the future
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Masterplanning: road map to the futureSustainable competitive position & Value creation
Long termvision Premises
Developoptions Evaluation
Recommended
Supply Option(s) &MF configuration
What are the cost,benefits, risk and
financial sensitivities
1st phase 2nd phase 3rd phase
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Refinery simulation tool: REFSIM+
Special Exports planned export pools
Main Product Blenders(revenue driven blendoptimiser) LPG
Mogas
Kero GasOil
FuelOil
Refinery Fuel RFG
RFO
Non-linearProcessModels
based onShell GSIKnowledge
Balances
Mass
Energy
H2
Crudes- Mathematical
Representationof Crude(Properties)
Imports Feedstocks
Blending Components
o Mathematical
Representation ofBoth (Properties)
GRM
Masterplanning: road map to the future
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Masterplanning: road map to the futureSustainable competitive position & Value creation
Long termvision Premises
Developoptions Evaluation
Recommended
Supply Option(s) &MF configuration
Roadmap
to the future
1st phase 2nd phase 3rd phase
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Tailored Optimisation
Big investment requirements ($ 0.5 1.5billion) + Wide variety of technologies+ Impact of local business environments
+ Integration opportunities with existing refinerywarrants
Highly experienced team
Systematic procedure & appropriate tools
Comparison of all available options
Knowing how to successfully operate residue units
What does our customer think of our services?
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Profitable residue upgrading
at Gdask refinery
Basis and justificationof a capital-intensive project
Karol Sep Grupa Lotos SA
Paul Wessels Shell Global Solutions International BV
What does our customer think of our services?
Ch ll CEE il i d d Gd k
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Challenges CEE oil industry and GdanskRefinery, a client example
Competitiveness with rest of Europe
Long term profitability
EU legislation - Produce cleaner fuels EU4 EU legislation - Reduce refinery emissions
IMO legislation, e.g. Bunker 1.5% S in Baltic Sea
Create Business opportunities & Employment
Response to Challenges
Improve competitiveness / Long term profitability Cutting deeper into the barrel
Use heavy refinery residue for clean hydrogen, power & steam
K d i i f f Gd k j t
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Key driving forces of Gdansk project
Key drivers Best option
Zero HS fueloil production Combination ofDeasphalting & Gasification
Diesel Market/Quality Mild HydrocrackingProfitability World-scale units
Alternative: Export toRotterdam bunker market
Resulting in highest rate of return
K f t f j t
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Key features of project
ROSEDeasphalting
Shell MildHydrocracking
Shell Gasification
Hydrogen Power Plant
Diesel 10 ppm S + VGO for FCCto produce Gasoline 10 ppm SLPGNaphthaDiesel
Low-S VGOAtmospheric& VacuumResidues Hydrogen
PowerSteam
Highest yield of suitableHydrocracker feed Clean Power, Steam & H2
for existing + new complex
Sufficient feedstock byExpansion topping capacityImport of residues
e.g. HCUreactors of
600 mWorld-scale units
Gd k R fi C fi ti
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Gdansk Refinery ConfigurationPlanned Revamp
ClausClaus
E4ROSEAtmosph. Resid
BaseOils
Configuration with highest IRR
REF Gasoline
CDU
LPGSplitter LPGPlanned NewExisting ISOM
HCU
HDTPossible Closure
Diesel/Gas oil
Jet
HydrowaxHydrogenSteamPower
Sulphur
HSFOBitumen
Crude and
Vacuum Resid
Base Oils
Merox
HDS
Import of Residuesfor World-scale Units LHF
HVU
MHCDesalt
IGCC
Conclusions jointly drawn with client
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Conclusions jointly drawn with client
Challenges of GdanskRefinery can be profitably
met by Investment in residue 100% conversion complex
Comprising ROSE, Mild Hydrocracking, Gasification
Producing clean fuels, and
Replacing Utilities to reduce emissions drastically
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Masterplanning
to meet longterm businessobjectives