CONFIDENTIAL
CHT CHT - Inte Integr grat ated ed Refi Refine nery ry Business Improvement Program BPCL Kochi Shell approach to Masterplanning March 2007
Supply and Manufacturing Masterplan
Development of a roadmap From corporate vision and broad strategy to a recommended, financially robust project outline integrating supply and manufacturing options
2
Shell Global Solutions has proven to add value
100%
Our major input is in the project phases with highest influence and impact Master Plan Scouting Design Preparation
Influence Influenceover over margin margin&&cost cost Cost Costof of changes changes
BOD BOD Basic Design BDP BDP Definition Project ProjectSpec Spec
Progress
EPC Implementation D&E, D&E,Procurement Procurement Construction Construction
100%
Premises : Key Business Drivers Business Aspirations
Cash Flow
External factors Market Demands & Prices
Return on Investment
Available Crudes & Prices
Growth max
$
Strategic Considerations Minimum Investment Case
Emissions & Product Quality Legislation Market Deregulation
Fuels, Components Import and Export Options
Staged Investment Opportunity Power Sales Options
Chemicals Options
Available Options 4
European emissions: trends in specifications
5
European Market projections Gasoline demand drop Diesel demand growth EU is promoting shift from gasoline to diesel (fuel efficiency) by means of tax incentives in view of Kyoto commitments
High-Sulphur Fueloil demand drop Reduction SO2 emissions on-shore and in coastal waters substitution by Natural Gas (Cogen) LSFO
High-Sulphur Fueloil production increase Gradual replacement of depleting North Sea by sour crudes 6
Market projections Europe Surplus
Million tonnes per year
80 s e c n a l a b t c u d o r P
Gasoline
60 40
Hea v y Fueloil
20 0 2005 -20 -40
2010
2015 D ie s e l
-60
-80 Deficit
Source: Wood McKenzie and Shell 7
Diesel – Fueloil 3.5 % S price differentials $/barrel 60
? e r u F u t
40
u a l t c A 20
0
1 0 n a J
2 0 n a J
3 0 n a J
4 0 n a J
5 0 n a J
0 1 0 2
5 1 0 2
8
Masterplanning: road map to the future Sustainable competitive position & Value creation 1st phase
2nd phase
Where do you want to go Long term vision
3rd phase
How can you get there
Premises
Quantification boundaries
Develop options
Roadmap to the future Recommended Evaluation Supply Option(s) & MF configuration
What are the cost, benefits, risk and financial sensitivities 9
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 10
Masterplanning: road map to the future Sustainable competitive position & Value creation 1st phase
2nd phase
3rd phase
How can you get there
Long term vision
Premises
Develop options
Recommended Evaluation Supply Option(s) & MF configuration
11
Residue conversion options Carbon rejection Hydrogen addition Oxidation Atm Residue Vac Residue Cracked Residue b s i g g V n i / i n l t k r a c n C h e r a p n g i m m s C a e r k t u t i e a h C o B C D T
C H k e r C r r y n M H D S d l u b u H D e S n H B l / c o d i s s u e i x b y E H R e R F
n n . o i e t g a i c e r f i s a o w G P
… and many combinations – only study options after initial screening
Key driving forces steers best fit-for-purpose option 12
VGO Conversion options Maximum Diesel yield (%vol) in VGO conversion
VGO Conversion
Thermal Cracking
feed + heat
products + C
40
Catalytic Cracking
feed + heat cat products + C
35
Hydro Cracking
feed + H2
cat products + heat
80
13
Hydrogen options Crude
CDU
HDS
VDU
HCU
Residue Conversion
Hydrogen
By-product
Choice depends on price of Natural Gas versus By-product
Crude
CDU
HDS
VDU
HCU
Residue Conversion
Hydrogen
By-product HMU
Gasification
H2 plant
Natural Gas 14
De-coupling of technology selection and process licensor provides an independent advice • •
Type of technology and required capacities selected in master planning exercise, not process licensor Starting point is to include all possible process configurations (long list), discuss and select via detailed joint discussions taking into account study premises, client drivers, capex constraints, operability, maintainability, constructability…
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Local Business Environment Existing refinery Utilities Logistics facilities Natural Gas By-products Economy of scale Operability Investments
Configuration / Integration options Refinery Facilities, Export/Import options Export/Import options Availability and Price Markets and Prices Refinery capacity increase / residue import Reliability / Integration Restrictions / Financing options
Local Business Environment will have major impact on optimum solution 16
Masterplanning: road map to the future Sustainable competitive position & Value creation 1st phase
Long term vision
2nd phase
Premises
Develop options
3rd phase
Recommended Evaluation Supply Option(s) & MF configuration
What are the cost, benefits, risk and financial sensitivities 17
Refinery simulation tool: REFSIM+ Crudes -
Mathematical Representation of Crude (Properties)
Imports
Feedstocks
Blending Components o
Mathematical Representation of Both (Properties)
Non-linear Process Models based on Shell GSI Knowledge Balances
Mass
Energy
H2
Special Exports ‘planned
export’ pools
Refinery Fuel RFG RFO
Main Product Blenders (revenue driven blend optimiser) LPG Mogas Kero GasOil FuelOil
GRM 18
Masterplanning: road map to the future Sustainable competitive position & Value creation 1st phase
2nd phase
3rd phase Roadmap to the future
Long term vision
Premises
Develop options
Recommended Evaluation Supply Option(s) & MF configuration
19
Tailored Optimisation Big investment requirements ($ 0.5 – 1.5 billion) + Wide variety of technologies + Impact of local business environments + Integration opportunities with existing refinery warrants …
Highly experienced team Systematic procedure & appropriate tools Comparison of all available options
Knowing how to successfully operate residue units 20
What does our customer think of our services?
Profitable residue upgrading at Gdańsk refinery Basis and justification of a capital-intensive project Karol Sep – Grupa Lotos SA Paul Wessels – Shell Global Solutions International BV
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Challenges CEE oil industry and Gdansk Refinery, 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
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Key driving forces of Gdansk project Key drivers Zero
HS fueloil production
Alternative: Export to Rotterdam bunker market Diesel
Market/Quality
Profitability
Best option Combination of Deasphalting & Gasification Mild Hydrocracking World-scale units
Resulting in highest rate of return 23
Key features of project Diesel 10 ppm S + VGO for FCC to produce Gasoline 10 ppm S
Atmospheric & Vacuum Residues
Shell Mild Hydrocracking ROSE Deasphalting
Highest yield of suitable Hydrocracker feed Sufficient feedstock by Expansion topping capacity Import of residues
Shell Gasification Hydrogen Power Plant
LPG Naphtha Diesel Low-S VGO Hydrogen Power Steam
Clean Power, Steam & H2 for existing + new complex
World-scale units
e.g. HCU reactors of 600 m³ 24
Gdansk Refinery Configuration Planned Revamp Planned New Existing Possible Closure
LPG Splitter
ISOM
HDT
REF
Merox
Crude and Vacuum Resid
Diesel/ Gas oil
HDS HCU HVU
Base Oils
LHF Base Oils
Atmosph. Resid E4
Desalt
Gasoline Jet
CDU
Import of Residues for World-scale Units
LPG
ROSE
Configuration with highest IRR
MHC IGCC Claus Claus
HSFO Bitumen Hydrowax Hydrogen Steam Power Sulphur 25
Conclusions jointly drawn with client Challenges of Gdansk Refinery 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 long term business objectives
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