HOW IT WORKS
Heavier Crude Feedstocks: Gaining Respect

Long regarded as virtual pariahs among crude oil feedstocks, heavier slates of crude are increasingly proving their worth at oil processing facilities worldwide. Cheaper to buy but costlier to refine, heavy oils have often taken the proverbial back seat to more expensive but easier-to-process light- and medium-gravity crudes. Now, heavier crudes are getting their due.

A Refining Primer
An oil refinery separates crude oil into its different components so that it can be processed into naphtha, gasoline, kerosene, diesel, petrochemical feedstock, lubricants and other products. After going through a desalter, which dehydrates the crude to remove contaminants, the oil passes through a furnace where it is heated to temperatures ranging from 650 to 700 degrees Fahrenheit. The majority of the crude vaporizes and enters a cylindrical atmospheric distillation column.

Inside the distillation column is a series of trays that are stacked atop each other. Each tray contains numerous holes that allow the vapor to pass through. A tray's location in the distillation column determines which "fraction," or "cut," it will collect. Fractions, arranged here from most volatile to least volatile, fall into the following categories: gases, light distillates, middle distillates, gas oils and residuals.

Trays toward the upper end of the column, farther away from the boiler and thus exposed to relatively cooler temperatures, collect lighter hydrocarbons (i.e., hydrocarbons with fewer carbon atoms) such as naphtha and gasoline. The lighter products from the atmospheric distillation process are refined further through catalytic cracking or reforming. In catalytic cracking, hydrocarbons with heavier molecular weights are broken down, or "cracked," into hydrocarbons with lighter molecular weights under very high pressure and temperatures and through exposure to a chemical catalyst. Reforming does not break up molecules; rather, it improves the quality of gasoline by changing chemical characteristics.

Heavier hydrocarbons such as lubricating oil and heavy gas oil collect on trays on the lower, warmer end of the column. Ultimately processed into products such as asphalt, waxes and coke, residuals -- or "bottoms" -- are the heaviest hydrocarbons and remain in the solid state at the lowest part of the
distillation tower.

Resid Revamp
Refiners that handle heavier slates of crude frequently must deal with higher quantities of bottoms than they would with light- and medium-gravity crudes. "A refinery configured to process heavy oil will have bottoms conversion capacity and adequate hydroprocessing for gas oil and diesel fractions to get the chemistry of heavy oil products aligned with the refinery processes for making gasoline and diesel fuel," said Gerald Bruce, technical committee director with the Calgary-based Canadian Heavy Oil Association (CHOA).

"The principal response by refiners has been to add delayed coking capacity," said Jeff Hazle, technical director with the Washington, D.C.-based National Petrochemical and Refiners Association (NPRA). Delayed coking breaks down, or "cracks," the hydrocarbon molecules present in residuals. The process converts the residue into lighter, more valuable products as well as petroleum coke, which is a solid fuel that resembles coal.

Heavy oil refineries also need extra capacity to handle the higher volumes of impurities -- particularly sulfur -- that are less problematic with sweeter crudes. Hazle noted that refiners add sulfur plants, sour water stripping, amine capacity and hydrotreating capacity to their facilities for this purpose. Moreover, heavy oil refineries require extra hydrogen production capacity to meet the added demands on hydrotreaters. Also known as hydrodesulfurization units, hydrotreaters use hydrogen-rich gas at elevated temperatures and pressures to separate sulfur from the crude feedstock.

In cases where heavy oil or bitumen has already been converted to synthetic crude oil, particularly crude bitumen extracted from Canada’s Oil Sands, the majority of the conversion and hydrotreating has already occurred. "Sweet synthetic crude oil has no high-boiling range material (bottoms) and no sulfur," Bruce said. "It is essentially a blend of gas oil, diesel and naphtha and will require less processing to become finished products." He also pointed out that there are different types of synthetic crude, which range in quality from sour synthetic (with bottoms) all the way to sweet synthetic (no bottoms, no sulfur).

Environmental Considerations
When processing heavy crude, a refiner must take a number of additional environmental considerations into account. First, because heavier crudes contain relatively higher volumes of nickel and vanadium, it is likely necessary to equip the facility with fresh catalyst that can handle the higher content of these potentially harmful metals. Also, the increased volume of water used to process heavy oil translates into more water that needs to be treated, said Hazle of NPRA. Furthermore, modifying the facility’s feedstock would require the refiner to add scrubbers or purchase carbon offsets to account for increased airborne emissions. Hazle stressed that air and water permitting requirements vary considerably by location; there is no "one-size-fits-all" approach to complying with these permits because individual U.S. states often set their own parameters.

In the case of Canada, concerns about how to dispose of by-products from crude bitumen processing -- specifically coke and sulfur -- have led to the reconsideration of a well-established practice. Traditionally, crude bitumen has been mined and processed into synthetic crude at or near the production site: remove the carbon using delayed coking and fluid coking and then hydrotreat the products of thermal cracking through coking. "With a mining operation, it was possible and permissible to sequester the carbon (coke) back in the mine for potential future recovery," explained Bruce of CHOA. "Disposal of by-products, coupled with new environmental compliance issues (namely controlling carbon-dioxide emissions) has challenged this 'old' model of bitumen processing." Irrespective of the concerns about by-products and emissions, however, all of the actual mined bitumen is processed into synthetic crude oil.

Corrosion
A heavy crude that has not been upgraded contains numerous contaminants that contribute to corrosion of a refinery’s piping and equipment. These impurities include salt, particulates, metals, sulfur and naphthenic acids. The naphthenic acids present in a feedstock, measured by the total acid number (TAN), dictate which metallurgy system will most effectively resist corrosion at a given facility. Such metallurgy systems are expensive, but not having the proper one in place creates a high opportunity cost for the refiner. "Refineries that have not been designed to handle high-TAN crudes will be limited to what their metallurgy can tolerate," explained Bruce.

Fewer Options, More Complexity
Refining heavier slates of crude oil is not a new practice for the petroleum industry. For instance, Suncor and Syncrude have commercially processed crude bitumen extracted from Alberta’s Oil Sands since 1967 and 1978, respectively. Major refiners such as LyondellBasell and Shell have handled heavy crude from Mexico at their respective Houston-area refineries since the 1990s. Nevertheless, making such investments in heavy oil processing capacity in previous decades often did not support a refinery’s strategy. Nowadays, the refining industry appears to be changing its approach out of necessity.

"In general, crudes are trending heavier," said Hazle, noting that refiners worldwide are facing this reality. Cindy Schild, refining issues manager with the American Petroleum Institute (API) agrees with Hazle’s assessment. The available crudes are simply not as sweet as they used to be, she said.

Schild explained that in years past refiners typically chose to pay higher prices for sweeter crudes rather than bear the cost of adding heavy oil processing capacity. Now, however, the days of having such a choice appear to be numbered. Refiners are making their facilities more complex, and thus more flexible, so that they can handle heavier crudes.

In cases where a facility already incorporates an upgrader to convert, for instance, crude bitumen into synthetic crude, making that facility more complex is relatively simple. "An upgrader is about 90% of a fuels refinery," noted Bruce. "If you already have an upgrader, it is not a big step to become a finished products producer."

Adding complexity becomes more arduous when there is no upgrader. "On the other hand, if you have a refinery, it will require significant investment to allow it to process bitumen blends," Bruce said. To streamline processing, refiners may choose to target specific feedstock types -- such as sour synthetic crude or sweet synthetic crude -- to reap the benefits of upgrading and simply produce motor fuels. Bruce added that companies with significant reserves are exploring opportunities to become finished products producers. "There have been announcements of linking up reserves with refineries," he said, citing overtures from EnCana and ConocoPhillips, as well as Husky and BP. "If you already have a refinery, the cost of retro-fitting will be less than building new, provided you can get through the local permitting process."

A Global Issue
In the U.S. and Canada, refiners such as Marathon, Motiva and Husky have either begun making upgrades to certain facilities or have announced plans to do so. Furthermore, Dallas-based Hyperion Resources has taken the unusual step (for the U.S. refining industry) of proposing a 400,000-barrel-per-day (b/d) grassroots heavy oil refinery. The move toward increasing flexibility is also evident outside North America. For instance, Petrobras and Petroleos de Venezuela are building the 200,000-b/d Abreu e Lima refinery in Brazil’s Pernambuco state. Elsewhere, GS Caltex in South Korea recently commissioned a new heavy oil unit at its Yeosu Refinery that will convert residual oil into gasoil and other products. Yet another major grassroots project is the 580,000-b/d facility that Reliance Industries is building in Jamnagar, India. Projects such as these, which often have price tags in the billions of dollars, demonstrate how seriously refiners view the changing crude supply scene.