petroleum production, transportation, refining · 2015-01-05 · petroleum production,...

John Jechura – [email protected]: January 4, 2015

Petroleum Production, Transportation, & Refining

Topics

• Energy consumption & petroleum’s place

• Oil reserves

• Oil sources & production

• Pipelines

• Petroleum Refining

3

Energy Markets Are Interconnected

5

https://publicaffairs.llnl.gov/news/energy/energy.html

Petroleum Pathway

6

Crude Production Crude Transportation Crude Refining

Crude Storage & Transportation Retail Distribution Consumer Use

Worldwide trade of refined products• In general, United States prefers

gasoline to diesel whereas the rest of the world prefers diesel to gasoline

FCC‐based refineries will still produce a great deal of gasoline even when trying to maximize diesel production. Foreign incentive to ship excess gasoline to US, especially to the East Coast from Europe.

• 2008 gasoline imports suppressed the cost of gasoline relative to crude oil

US refineries increasing the installation of Hydrocracking to produce diesel for export, especially along the Gulf of Mexico

7

Ref: Valero, UBS Global Oil and Gas Conference, May 21‐22, 2013

Oil Producing Locations

9

Proven Oil Reserves

10

Hubert’s Peak

11

Hubert’s Peak

12

Origins of Oil & Gas

• Organic life buried in sedimentary rock

• Transformation to hydrocarbons

• Migration from source rocks

• Accumulation of oil & gas

• Flow of oil & gas through porous media

14

Types of Oil Traps

15

http://www.maverickenergy.com/oilgas.htm

Characteristics of Reservoir Rock

16

Porosity Permeability


Oil Production

17


Well Completions

18

Perforating Acidizing

Fracturing


Rotary Drilling Rig

19

http://www.britannica.com/EBchecked/topic‐art/1357080/113917/A‐land‐based‐rotary‐drilling‐rig

Beam Pumping Unit

20

http://www.britannica.com/EBchecked/topic‐art/37157/113919/The‐artificial‐lift‐of‐petroleum‐with‐a‐beam‐pumping‐unit

Directional & Horizontal Wells

• Directional drilling can get you to pay zones that you normally couldn’t reach

• Horizontal wells can expose a much greater drainage area – especially valuable in a tight reservoir

• Cost per well is 2X – 3X that of vertical well but productivity can be 15X – 20X.

21

http://www.horizontaldrilling.org/

Unconventional Resources• Petroleum & natural gas formed from decomposing organic matter in “source rock”

• Conventional – gas & liquids migrate through permeable rock toward the surface until it is stopped by some trapping mechanism

• Unconventional – gas & liquids are trapped at the source rock because of extremely low permeabilities

22

Dec. 5, 2012 update, http://www.eia.gov/energy_in_brief/article/about_shale_gas.cfm

What is hydraulic fracturing?

23

Source: ProPublica, http://www.propublica.org/special/hydraulic‐fracturing‐national

What is hydraulic fracturing?

24

http://c1wsolutions.wordpress.com/2014/07/30/a‐solution‐to‐frackings‐water‐problems/

Major tight‐oil production in U.S.

25

http://www.economist.com/news/united‐states/21596553‐benefits‐shale‐oil‐are‐bigger‐many‐americans‐realise‐policy‐has‐yet‐catch/

Canadian Oil Sands• Heavy oils produced by various technologies

Surface mining & hot water extraction

In situ heating

• CSS (Cyclic Steam Stimulation)

• SAGD (Steam Assisted Gravity Drainage)

Upgrading

• Exported product much lighter than feedstock

26

http://www.ogj.com/unconventional‐resources/oil‐sands.html

http://newenergyandfuel.com/http:/newenergyandfuel/com/2009/08/12/making‐syncrude/

http://www.bp.com/sectiongenericarticle.do?categoryId=9036694&contentId=7067647

Oil Platforms

27

Deep Sea Production

28

Major U.S. Pipelines

30

Proposed Keystone Pipeline Expansion

• Keystone XL Pipeline important to bring oils sands & northern tight oil to Gulf Coast

• Section south from Cushing important to improve flow of all mid‐continent oil.

Started flow early 2014, up to 700,000 bpd capacity

31

http://www.washingtonpost.com/wp‐srv/special/nation/keystone‐xl‐map/

How Pipelines Work

32

Association of Oil Pipelines, http://www.aopl.org/aboutPipelines/?fa=howPipelinesWork

Batching in Product Pipelines

• Goal is to minimize product downgrade during shipping

• Preferred sequence to ship these products our of refinery:

• Considerations

Interface between the two gasolines can be “downgraded” to the 87 octane (because of octane effects)

Interface between the ULSD & Heating Oil can be downgraded to the Heating Oil (because of sulfur effects)

Interface between 87 octane gasoline & ULSD have similar sulfur contents but different boiling point properties – typically returned to refinery for additional processing – “transmix”

33

RefinerLink, http://www.refinerlink.com/blog/Pipelines_Ship_Refinery_Products_to_Pump/

Louisiana Offshore Oil Port (LOOP)

34

http://blog.nola.com/tpmoney/2009/05/louisiana_offshore_oil_port_is.html

http://www.economicpopulist.org/content/gustav‐eying‐gulf‐oil‐and‐loop

Transportation Infrastructure is Key

• Keystone XL Pipeline important to bring oils sands & northern tight oil to Gulf Coast

Section south from Cushing important to improve flow of all mid‐continent oil. Started flow early 2014, up to 700,000 bpd capacity

• Rail has become preferred method to bring incremental barrels out of Bakken & Eagle Ford

Safety concerns – train derailments July 2013 Quebec (40 dead) & December 2013 ND

Concerns about increased emissions, especially in California

ANSI & API released new recommended practices for shipping crude by rail (ANSI/API Recommended Practice 3000) in September 2014

• Available for free at this web page

35

http://www.washingtonpost.com/wp‐srv/special/nation/keystone‐xl‐map/

http://www.cpr.ca/en/ship‐with‐cp/where‐you‐can‐ship/bakken‐shale/Documents/bakken.pdf

Transportation by Rail in U.S.

36

https://www.aar.org/keyissues/Documents/Background‐Papers/Crude‐oil‐by‐rail.pdf

Each rail car holds about 30,000 gal (714 bbls)

http://peoriastation.blogpeoria.com/2012/03/24/bnsf‐galesburg‐yards‐new‐tracks‐are‐in‐service/

What Does Tight Oil Mean for U.S. Refiners?• Until Marketlink pipeline (southern leg of Keystone XL) operational expect prices for Mid

Continent crude oils to be below market

January 2014 expected to start shipments

• Tight oil production should ensure domestic supply to refineries needing sweet crude in the next 10 – 15 years

Expected to peak @ 4.8 million bpd in 2021(EIA, Dec. 2013)

• Recent investments to allow refiners to process heavy sour crudes might limit the ability to utilize tight oil

Exporting tight oil while importing heavy oil is very possible if permitted by U.S. government

• Environmental concerns could put the brakes on this production

High energy requirements for producing Canadian oil sands

High water quantities needed for tight oil & oil sands production

Public concerns about hydraulic fracturing

Public concerns about oil transport by rail

37

http://www.hydrocarbonprocessing.com/Article/3223989/Channel/194955/Innovative‐solutions‐for‐

processing‐shale‐oils.html

World & U.S. Refining Capacity

39

EIA, Jan. 1, 2014 database, published June 2014http://www.eia.gov/petroleum/refinerycapacity/

“Western Europe leads global refining contraction”, Oil & Gas Journal, pp 34‐48, Dec. 2, 2013

Number & Capacity of World & U.S. Refineries

40

Source: EIA, Jan. 1, 2014 database, published June 2014

http://tonto.eia.doe.gov/dnav/pet/pet_pnp_cap1_dcu_nus_a.htm

“Western Europe leads global refining contraction”, Oil & Gas Journal, pp 34‐48, Dec. 2, 2013

Crude Oil as Refinery Feedstock

• Crude Oil

Complex mixture of hydrocarbons & heterocompounds

Dissolved gases to non‐volatiles (1000F+ boiling material)

C1 to C90+

• Composition surprisingly uniform

41

Element Wt%

Carbon 84 ‐ 87

Hydrogen 11 ‐ 14

Sulfur 0 ‐ 5

Nitrogen 0 ‐ 0.2

Other elements 0 ‐ 0.1

Primary Hydrocarbon Molecular Types

• Paraffins Carbon atoms connected by single bond Other bonds saturated with hydrogen

• Naphthenes Ringed paraffins (cycloparaffins) All bonds saturated with hydrogen

• Aromatics Six carbon ring (multiple bonding) All bonds are unsaturated

• Olefins Usually not in crude oil Formed during processing At least two carbon atoms connected by

double bond

H

H

H

H

H

H

Benzene

H

H

H

H H

H

H

H

1-Butene

CH3

TolueneToluene

HH

HH

HH

HH

HH

HH

CyclohexaneCyclohexane

n-Butane

H

HH

HH

HH

H

HH

n-Butane n-Butanen-Butane

42

Example Heterocompounds

43

Composition & Analysis of Heavy Petroleum FractionsK.H. Altgelt & M.M. BoduszynskiMarcel Dekker, Inc., 1994, pg. 16

Petroleum Refining Technology & Economics – 5th Ed.by James Gary, Glenn Handwerk, & Mark Kaiser, CRC Press, 2007

Characteristics of Petroleum Products

44

Refining Overview – Petroleum Processes & Products, by Freeman Self, Ed Ekholm, & Keith Bowers, AIChE CD‐ROM, 2000

47

0

10

20

30

40

50

60

70

80

90

100

Total Continuum Fractions

Bar

rels

Ethane & Lighter

Propane

Butanes

Pentanes

Light Naphtha

Heavy Naphtha

Distillate

AGO

LVGO

HVGO

Vacuum Resid

97.8°F

180°F

350°F

400°F

650°F

1050°F

850°F

Crude Oils Are Not Created Equal

48

Petroleum Products

There are specifications for over 2,000 individual refinery products

Intermediate feedstocks can be routed to various units to produce different blend stocks

• Depends upon the local economics & contractual limitations

49

Ref: Unknown origin. Possibly Socony‐Vacuum Oil Company, Inc. (1943)

Raw Crude vs. Refined Product

50

Petroleum Products• Refinery Fuel Gas (Still Gas)

• Liquefied Petroleum Gas (LPG)

Ethane & Ethane‐Rich Streams

Propanes

Butanes

• Gasoline

Naphtha

• Middle Distillates

Kerosene

Jet Fuel

Diesel, Home Heating, & Fuel Oil

• Gas Oil & Town Gas

• Lubricants

• Wax

• Asphalt & Road Oil

• Petroleum Coke

• Petrochemicals

• Sulfur

51

EIA, refinery yield – updated April 20, 2014http://tonto.eia.doe.gov/dnav/pet/pet_pnp_pct_dc_nus_pct_m.htm

Motor Gasoline Volatility Classes (ASTM D 4814‐13)

52

What are Octane Numbers?

• References:

iso‐octane 100 (2,2,4‐trimethylpentane)

n‐heptane 0

• Tendency for auto‐ignition upon compression

Gasoline — bad

Tendency of gasoline to cause “pinging” in engine

Higher octane needed for higher compression ratios

• Different types (typically RON > MON)

RON — Research Octane Number

• Part throttle knock problems

MON —Motor Octane Number

• More severe — high speed & high load conditions

(R+M)/2 – Road Octane Number

• Average of MON & RON

• Reported at the pump

53

n-Heptanen-Heptane

iso-Octaneiso-Octane

‐60

‐40

‐20

0

20

40

60

80

100

120

140

0 50 100 150 200 250 300 350 400 450 500

Boiling Point [°F]

Research Octan

e Num

ber

Aromatics

Naphthenes

Olefins & Cyclic Olefins

Iso‐paraffins

Normal Paraffins

0

50

100

150

200

250

300

350

1997 1998 1999 2000 2001 2002 2003 2004 2005

Sulfu

r (pp

m)

Averaged Summertime ParametersAveraged Wintertime Parameters

Conventional Gasoline

Reformulated Gasoline

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1997 1998 1999 2000 2001 2002 2003 2004 2005

Benz

ene

(vol

%)




0

5

10

15

20

25

30

1997 1998 1999 2000 2001 2002 2003 2004 2005

Aro

mat

ics

(vol

%)




0

2

4

6

8

10

12

14

1997 1998 1999 2000 2001 2002 2003 2004 2005

Ole

fins

(vol

%)




http://epa.gov/otaq/regs/fuels/rfg/properf/rfg‐params.htm

Middle Distillates• General classifications

Kerosene

Jet fuel

Distillate fuel oil

• Diesel

• Heating oil

• Properties

Flash point

Cloud point / Pour point

Aniline point

Cetane number

Viscosity

Water & sediment

55

What are Cloud & Pour Points?

Indicate the tendency to form solids at low temperatures – the higher the temperature the higher the content of solid forming compounds (usually waxes)

• Cloud Point

Temperature at which solids start to precipitate & give a cloudy appearance

Tendency to plug filters at cold operating temperatures

• Pour Point

Temperature at which the oil becomes a gel & cannot flow

56

Solidification of diesel fuel in a fuel‐filtering device after sudden temperature drop“Consider catalytic dewaxing as a tool to improve diesel cold‐flow properties”, Rakoczy & Morse, Hydrocarbon Processing, July 2013

Melting Points of selected long‐chain normal & iso paraffinstypically found in middle distillates

Comparison of Boiling Ranges

57

Product Economics — Crack Spread

• Estimates the value added by refining as an industry• 4 standard spreads 5‐3‐2

• 5 bbl crude 3 bbls gasoline + 2 bbls heating oil/diesel

3‐2‐1• 3 bbl crude 2 bbls gasoline + 1 bbls heating oil/diesel

2‐1‐1• 2 bbl crude 1 bbls gasoline + 1 bbls heating oil/diesel

6‐3‐2‐1• 6 bbl crude 3 bbls gasoline + 2 bbls heating oil/diesel + 1 bbl residual fuel oil

• Rule of thumb for profitable operating environment Long held view – greater than $4 per bbl as strongly profitable Current view – should be greater than $9 per bbl to be profitable

59

Crack Spread Calculation

• Example — Bloomberg, 1/4/2015

Prices

• WTI Cushing Spot $52.69 per bbl

• Brent $56.42 per bbl

• RBOB Gasoline $1.4334 per gal

• Heating Oil $1.7957 per gal

5‐3‐2 Spreads

• WTI:

• Brent:

60

42 3 1.4334 2 1.7957 5 52.69$13.60per bbl

5

42 3 1.4334 2 1.7957 5 56.42$10.09per bbl

5

http://www.bloomberg.com/energy/

Prices Are Crude Specific

61

Ref: Statistics, Oil & Gas Journal, January 27, 2014

Historical Crude Prices & Margins

62

Updated Jan. 2, 2015Source: http://tonto.eia.doe.gov/dnav/pet/pet_pri_spt_s1_d.htm

Prices Are Crude Specific

63

EIA published monthly production data– updated Jan. 2, 2015http://www.eia.gov/dnav/pet/pet_pri_spt_s1_m.htmhttp://tonto.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=IMX2810004&f=M

Historical Crude Prices & Crack Spreads

64


Historical Crude Prices & Crack Spreads

65


Description of Petroleum Refinery

• Manages hydrocarbon molecules

• Organized arrangement of manufacturing processes

Provide physical & chemical change of crude oil

Salable products with specifications & volumes as demanded by the marketplace

• Complete refinery will include:

Tankage for storage

Dependable source for electric

power

Waste disposal & treatment

facilities

Product blending facilities

Around the clock operations

Conversion units

66

Petroleum Refinery Schematic

67

Petroleum Refinery Schematic

68

Petroleum Refinery Block Flow Diagram

Light Naphtha

CrudeOil Desalter

Atmos-pheric

Distillation

Vacuum Distillation

Gas Separation

& Stabilizer

Solvent Deasphal-

ting

Coking

Visbreak-ing

Fluidized Catalytic Cracking

Hydro-cracking

NaphthaReform-

ing

Isom-erization

Sat Gas Plant

Polymer-ization

Alkyla-tion

NaphthaHydro-treating

Treating & Blending

Coke

Fuel Gas

LPG

Aviation Gasoline

Automotive Gasoline

Solvents

Jet Fuels

Kerosene

Solvents

Heating Oils

Diesel

ResidualFuel Oils

Lubricant

Greases

Waxes

Asphalts

HeavyNaphtha

Kerosene

Distillate

AGO

LVGO

HVGO

VacuumResiduum

CatDistillates

Gas Oil Hydro-treating

DAO

Isomerate

Gas

AlkylFeed

Alkylate

PolymerizationNaphtha

Gases

Butanes

LPG

Reformate

Naphtha

Fuel OilBottoms

Distillates

DistillateHydro-treating

CatNaphtha

Cycle Oils

SDABottomsCoker

Naphtha

HeavyCokerGasOil

Light CokerGas Oil

SulfurPlant

Sulfur

Naphtha

Fuel Oil

SolventDewax-

ing

Lube Oil

Waxes

70

Catalytic Cracking

• Catalytically crack carbon‐carbon bonds in gas oils Fine catalyst in fluidized bed reactor allows for immediate regeneration

Lowers average molecular weight & produces high yields of fuel products

Produces olefins• Attractive feed characteristics Small concentrations of contaminants

• Poison the catalyst Small concentrations of heavy aromatics

• Side chains break off leaving cores to deposit as coke on catalyst

• Must be intentionally designed for heavy resid feeds

• Products may be further processed Further hydrocracked Alkylated to improve gasoline anti‐knock properties

72

Naphtha Reforming• Purpose to enhance aromatic content of

naphtha Improve the octane rating for gasoline Hydrogen as by‐product

• Used in hydrotreating to remove sulfur & nitrogen

• Primary reactions DehydrogenationNaphthenes→ Aroma cs IsomerizationNormal Paraffins → Branched Isoparaffins

• Reformate desirable for gasoline but … High octane number, low vapor pressure, very low sulfur levels, & low olefins concentration US regulations on levels of benzene, aromatics, & olefins – air quality concerns

74

CH3 CH3

+ 3 H2

Dehydrogenation

+ H2

Dehydrocyclization

CH3

CH3

CH3

CH3

+ H2

Isomerization

CH3CH3

CH2

CH3CH3

Delayed Coking

• Process heavy residuum to produce distillates (naphtha & gas oils) that may be catalytically upgraded

Hydrotreating, catalytic cracking, and/or hydrocracking

• Attractive for heavy residuum not suitable for catalytic processes

Large concentrations of resins, asphaltenes, & heteroatom compounds (sulfur, nitrogen, oxygen, metals)

• Metals, sulfur, & other catalyst poisons generally end up in coke

Sold for fuel & other purposes

• Carbon rejection process

Fired Heater

Fractionator

Coke Drums

Gas

Naphtha

Light Gas O

Heavy Gas O

Fresh Feed

Steam

Coke

75