As recently as two years ago, Keith Couch, senior director of sales support and integrated project solutions for Honeywell UOP, tried to talk to North American producers about petrochemicals integration.
"But they didn't want to have that conversation," he said.
A lot can change in just two years in the refining business.
By the time American Fuel & Petrochemical Manufacturers (AFPM) members gathered for their annual meeting in early 2018, the topic had become a major point of conversation.
"Understanding the diesel and gasolines demands in the future, and also seeing that these future demands are both going down at the same time, refiners in the past have played the game of transitioning between gasoline and diesel," Couch noted, discussing fluid catalytic cracking (FCC) units and reformer capacity at the World Petrochemical Conference 2018 by IHS Markit, held recently in Houston.
While not immediately, the opportunity for petrochemicals integration is eventually going to slip away, Couch warned.
"But who's planning today, and who's going to get caught without a plan?" he asked.
Regarding aromatics projects, Couch reasoned some have shown interest in the past but walked away because it didn't offer investment return unless producers had "something else that makes me want to make more of the right heavy naphtha that goes into it."
That, he said, can be achieved economically by moving forward with hydrocarbon.
"The steam cracker is a good, solid investment, but it is a big investment," Couch said, placing emphasis on the word "big."
"You've got to have the cash to run within that space and the want and the desire to move within that space. A lot of people do. We typically see that steam cracker as a stage in investment," he said.
Operators are asking the wrong question, Couch said, when they ask him, "What's the right kind of crude?"
From an official market standpoint, the market is going to balance out supply and demand, he explained.
"The crude pricing market is going to take care of that," Couch continued. "I have to have a solution for whatever kind of crude it is that you're going to get. If I don't, your feedstock costs just went up. So you can't get yourself contained into just one solution."
The Saudis are the exception when it comes to working through the issues of process intensification.
"They have their crude and they can control their crude. They know exactly what's going to which facility today," Couch said. "But they better have an understanding of what that field is going to look like in the future and plan accordingly, because I have never seen a crude stay stable across a protracted period of time."
Stop compartmentalizing
Couch encouraged petrochemical industry stakeholders to achieve their goals by strategizing with "a holistic approach."
"When we get good engagement with the customer, they're thinking about it from a holistic approach," Couch said, adding the "biggest way to destroy value is to operate a refinery, operate an aromatics complex and operate an olefins complex.
"If you treat them like three individual businesses, you're going to have three different sets of how you're creating value for your firm."
Couch said if he were a shareholder, he would want to invest in a firm "that's got it right."
"Stop the silly arguments, stop the transfer pricing arguments. Figure out how to structure your facility to get this all right," he said emphatically. "If the answer is zero refined products, great. If the answer is zero petrochemicals, great."
The appropriate answer, Couch said, can be found somewhere in the middle.
"We've got to get better at having those right discussions and figuring out what the optimum economics are," Couch concluded.
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