The prime driver for setting up an oil refinery is the demand supply gap of petroleum products in a particular area. Once oil companies determine that there is a requirement for a refining plant, they move to find out the type of refinery they should construct in that geographical area. Their decision is greatly determined by the kind of crude available in the area in question.

However, when there is no nearby crude oil source, the crude needs to be sourced from elsewhere (imports from other regions). When transportation is involved the refiners are confronted with the challenge of ensuring a maximum or reasonable return on their investment in refining operations. The overall economics or viability of a refinery depends on the choice of crude oil used (crude slates), the refining complexity (refinery configuration) and the desired type and quality of products produced (product slate).

Refinery Process Flow

Before getting into details of the refinery configurations, let us briefly look at the different types of refineries available and their competencies in manufacturing required product slates.

Petroleum refineries are large continuous flow-manufacturing facilities that require heavy capital deployment to transform crude oil into finished, refined products such as LPG, gasoline, jet fuel, diesel fuel, petrochemical feedstocks, home heating oil, fuel oil, asphalt, etc. The process that is adopted by the refiners is separation, whereby crude oil is split into different fractions, each fraction with a unique boiling range. Subsequently these fractions are further processed into finished products through a sequence of physical and chemical transformations.

The following is a comprehensive refinery process flow in a very complex refinery formation.

Types of Refineries

Refineries are classified into four key categories: topping, hydroskimming, conversion and deep conversion refineries.

Topping refineries have only crude distillation and basic support operations. They have no capability to alter the natural yield pattern of the crude oils that they process; they simply separate crude oil into light gas, refinery fuel, naphtha (gasoline boiling range), distillates (kerosene, jet fuel, diesel and heating oils), and residual or heavy fuel oil. They do not have the equipment to control the sulfur contents in their products and hence they cannot produce low sulfur products through the refining process.

Hydroskimming refineries include crude distillation unit and support services. They also have a catalytic reforming unit, various hydrotreating units and product blending. These units help upgrade naphtha to gasoline and control the sulfur content of refined products. Hydrotreating units help to remove sulfur from light products so they can meet the product specifications and/or allow for processing of higher-sulfur crudes. Hydroskimming refineries are mostly found in regions with low gasoline demand.

Conversion or cracking refineries include not only the processes present in hydroskimming refineries, but also and most prominently, catalytic cracking and hydrocracking processes. These two conversion processes transform heavy crude oil fractions that have high natural yields into light refinery streams that will hold gasoline, jet fuel, diesel fuel and petrochemical feedstocks. Conversion refineries have the capability to improve the natural yield patterns of the crude they process as needed to meet market demands for light products. They also produce a few heavy and low-value products such as residual fuel and asphalt.

Deep conversion or coking refineries are a superior class of conversion refineries. They include catalytic cracking and/or hydrocracking to convert gas oil fractions and coking units. (For more on this topic, see FCCU: A Real Value Add To Refineries.) Coking units rescind the heaviest and least valuable residual oil by converting it into lighter streams. It is usually taken as an additional feed to other conversion processes like catalytic cracking and catalytic reforming to produce more valuable light products.

Modern Refineries are Adopting a Flexible Approach

Refineries that are being built nowadays are designed to process multiple crudes from different sources. This ensures that refiners have a more comprehensive refining facility that can cater to the processing of both heavy and light crude. While processing of light crude generates more middle distillates that have ready-made markets to enter, heavy crude processing is a challenging task. Heavy crude contains heavy sulfur that is environmentally harmful and it needs to be processed further to meet the environmental regulations. This is why sulfur control is also a prime consideration when determining the refinery configuration.

Secondly, yield improvement plays a key role in determining the refinery structure. Investments in a refinery are commercially viable only when yield maximization is achieved. For example, a complex refinery structure that has a hydrocracking facility increases the percentage of light products with minimum effort. The hydrotreating facility that is used to treat the feed to a secondary processing facility helps to remove the sulfur contents in the end products and make them marketable products.

Economics of a Refinery Configuration

Refinery planners struggle to find a fine balance between investments and the processing facilities to be included in the refinery. For example, using more expensive crude oil requires only a basic refining facility; however, light and sweet crude oil supplies are decreasing and hence they are expensive to procure. When heavier and sour crude has to be processed, then a complex refinery structure is essential, which entails a huge capital deployment. Factors like anticipated crude oil costs and the projected differential between light and heavy crude oil prices, forecast on product prices, etc., should be analyzed in depth before an organization arrives at a prudent decision on the refinery configuration. (For more information on processing the various types of crude, read Sweet vs. Sour Crude - Production and Processing.)

Apart from the crude slates, refinery configurations must take into account the type of products that will ultimately be marketed as per the demand supply gap in a particular market segment. The quality specifications of the final products are also increasingly important as environmental requirements have become more stringent. Hence, a futuristic approach is needed when making crucial decisions on refinery composition.

Finally, apart from commercial factors, regulatory requirements play a critical role when setting up a refinery. With environmental stipulations evolving frequently to reduce the burning of fossil fuels and achieve a cleaner pollution-free environment, oil companies must strive to strike a balance between commercial and regulatory requirements through a practicable refinery configuration.