Unconventional Crude Oil Selection and Compatibility

Unconventional Crude Oil Selection and Compatibility Scott Sayles and Mark Routt KBC Advanced Technologies, Inc. Houston, TX

PROPRIETARY INFORMATION Š 2012 KBC Advanced Technologies plc.

All Rights Reserved.

May 2012

Summary • Crude selection and compatibility are critical to profitable refining operations • Conventional and unconventional crude qualities are changing • Mixtures of crudes can increase profitability can foul equipment or underperform financially • Tools are available that predict crude compatibility and performance of unconventional crudes and crude mixtures in a specific refinery

May 2012

PROPRIETARY INFORMATION

2

Canada & Venezuela • Largest two non-OPEC and OPEC sources of unconventional crudes  Both are proximate to the US  Canadian production dramatically growing; +2 million b/d in both upgraded and nonupgraded Canadian output by 2020  Venezuelan production is declining

May 2012

PROPRIETARY INFORMATION

3

Conceptual Unconventional Oil Upgrader Production/Utilities Heavy Naphtha

Processing Units

Output

Natural Gas Boilers

Water

Steam

Steam Methane Reformer OR Gasifier

WTI

100%

Hydrogen

90% SAGD Production

Condensate

Crude and Vacuum Distillation, Hydrogen Addition Carbon Rejection

Syncrude SCO

80% 70% 60%

Synbit

50%

Cokerbit

40%

Blender

30% 10‐25%

Dilbit

Blender

10%

90‐75%

Bitumen

PROPRIETARY INFORMATION

20% 0% Syncrude Transport Diluent Upgrading Investment Production Cost

Opportunity Price Advantages Can Fluctuate Significantly Crude Baskets

$16.00

Peak Opportunity Crude Advantage in Late 2007

$14.00 $12.00

Base Crude • Arabian Heavy • Arabian Light • Forcados

$10.00

Opportunity Cr. • WCS • Maya • Marlim

 $/B

$8.00 $6.00 $4.00 $2.00 $0.00

Drops to a $1.50/B Disadvantage in Early 2009

$2.00 $4.00 Jan‐07

May‐07

Sep‐07

Jan‐08

May‐08

Sep‐08

Jan‐09

May‐09

Sep‐09

Jan‐10

May‐10

Opportunity Crude Basket Price Differential Varies over $15/B in <3 years!

5 PROPRIETARY INFORMATION

KBC Understands the Upgrader Value 120

Crude Name Dated Brent Arab Extra Light (US) Arab Light (US) Arab Medium (US) Kuwait 31 Forcados 28 Oriente Arabian Heavy (US) Ras Burdan Maya (US) Olmeca Eugene Island Flotta Mesa 30

100

Predicted $/bbl

80

60

Crude Prices Actual vs. Predicted API S wt% 2000 ‐ 2010 38.90 37.20 33.10 31.50 31.00 28.80 28.70 27.90 25.10 21.80 39.50 34.30 37.70 30.10

0.42 1.38 1.86 2.48 2.49 0.20 1.00 2.89 2.41 3.34 0.75 0.82 1.00 1.04

2000 2001 2002 2003 2004 2005 2006

40

2007 2008 2009

20

2010 API

S wt%

1020+ 1020+ Concarbon, 1020+ (Ni + 690/1020 VGO-Total TAN mg 1020+ lv% KOH/g Asphaltenes, wt% wt% V), wppm VGO lv% N2, ppm

‐ ‐

20

40

60 Actual $/bbl

80

100

120

Source: KBC Energy Economics

Crude market prices can be correlated to quality characteristics

PROPRIETARY INFORMATION

Canadian Heavy Oil Production 5,000 Condensate (C5+) 4,500

non‐upgraded bitumen SCO From Upgraders

4,000 Conventional Crude 3,500

000's b/d

3,000 2,500 2,000 1,500 1,000 500 ‐ 1998 May 2012

2000

2002

2004

2006

2008

2010

PROPRIETARY INFORMATION

2012

2014

2016

2018

2020 7

Canadian Upgraded Oil Quality Description

Units

Bitumen

SCO

DilBit

SynBIt

CokerBit

SAGD1

SAGD

SAGD

SAGD

SAGD

0

0

30

50

50

9

31.8

22.1

24.9

26.8

C

84.1

88.9

84.5

86.2

86.0

H

10.0

10.5

10.9

10.2

10.3

S

4.6

0.5

3.6

2.8

3.0

N

0.4

0.1

0.3

0.3

0.3

Ni

60

0

47

34

24

V

170

0

119

97

68

Other

300

0

236

171

120

0.8

0

0.6

0.5

0.3

Very High

N/A

High

High

High

Production Method Percent Diluent in Blend

V%

API Dry Elemental Analysis:

Metals:

ppm

Oxygen

W%

TAN

1

W%

•

BITUMEN: Athabasca tar sands oil

•

SYNTHETIC CRUDE OIL (or SCO): a low sulfur zero bottoms product

•

DILBIT: Bitumen diluted with approximately 25-30 percent condensate

•

SYNTHTEIC BITUMEN (SyntheticBit): Typically 50 percent synthetic crude used as the bitumen diluent

•

COKER BITUMEN (CokerBit): Coker distillates as the bitumen diluent

SAGD – Steam Assisted Gravity Drainage

PROPRIETARY INFORMATION

Canadian Upgraders â&#x20AC;˘ Existing and planned upgrader capacity is:

Operator, Owners

Year of Crude last Production, increase kbpd

Status

Type

CNRL

Operational

Mine

2008

135

Husky

Operational

Heavy Oil

2010

59

Nexen, OPTI

Operational

SAGD

2009

59

Shell

Operational

Mine

2011

290

Suncor

Operational

Mine

2008

350

kbpd

Syncrude

Operational

Mine

2006

466

NorthWest

Planned

ADOE Blend

2014

77

1,358 Planned

Suncor/Total Voyager

Planned

Mine

2016

218

kbpd

MEG

Planned

SAGD

2020

50 1,703

345

Total

May 2012

PROPRIETARY INFORMATION

Operational

9

Venezuelan Heavy Oil Production 3,500

3,250

3,000

000's b/d

2,750

2,500

2,250

2,000

1,750

Orimulsion Orinoco Onshore

Source: IEA and KBC Energy Economics

1,500 Jan‐98 Jan‐99 Jan‐00 Jan‐01 Jan‐02 Jan‐03 Jan‐04 Jan‐05 Jan‐06 Jan‐07 Jan‐08 Jan‐09 Jan‐10 Jan‐11 Jan‐12

May 2012

PROPRIETARY INFORMATION

10

Venezuelan Upgraded Oil Quality SCO

Naphtha

DILORIN1

Upgrader

Returned as Diluent Feed

Feed to Upgrader

0

0

0

30

8.5

32.2

59.7

20.8

C

86.0

87.4

86.0

86.0

H

9.0

12.5

14.0

10.5

S

3.8

0.1

0.01

2.7

N

0.6

0.03

0.0002

0.4

Ni

89

0

62

V

414

0

290

0.5

0

Description

Units

Orinoco

Production Method

Percent Diluent in Blend

V%

API Dry Elemental Analysis:

Metals:

Oxygen

1

W%

ppm

W%

Diluted Orinoco Bitumen

PROPRIETARY INFORMATION

0.6

0.4

Venezuelan Experience - Upgraders • Retained by CORPOVEN to evaluate Upgrader Options   

Flexicoking Flexicoking and Ebullating Bed Hydroconversion Combos Delayed Coking

• Coordinated Licensor visits to sites with operating Units • Developed process estimates, ITB’s, and economics for cases evaluation 

LP Model construction assistance

PROPRIETARY INFORMATION

12

Venezuelan Heavy Oil Upgraders

Operator, Owners

Crude Year of last Production, increase kbpd

Status

Type

Petrozuata (Petroanzoategui)

Operational

Heavy Oil

1998

112

Cerro Negro (Petromonagas)

Operational

Heavy Oil

1999

106

Sincor (Petrocedeno)

Operational

Heavy Oil

2000

160

Hamaca (Petropiar)

Operational

Heavy Oil

2001

180

May 2012

PROPRIETARY INFORMATION

13

Upgraded Crude Quality

May 2012

PROPRIETARY INFORMATION

14

Contaminants In Unconventional Crude METALS

SOURCE

CONCERNS

Nickel, Vanadium

In asphaltenes

Natural organics

Catalyst poison

Iron

Iron oxides

Corrosion products, sulphides

Catalyst poison, Foulant

Arsenic

As organics

Natural organics

Catalyst poison

Natural organics Pigging gel Acidizing gel

Catalyst poison

Phosphorous Titanium

With bitumen solids

Naturally occurring

Catalyst poison

Alkaline metals

Ca, Mg, Na

Naturally occurring

Catalyst poison, Foulant

Calcium sterate

Flow improver

Crude fouling

Mercury

Naturally occurring

Catalyst poison

Defoamer

Catalyst poison

Naturally occurring

Environmental

Silicon Selenium

May 2012

Polydimethlysiloxane

PROPRIETARY INFORMATION

15

Metals Distribution; Nickel Number of Conventional and Unconventional Crudes Containing Nickel 1000

100

Unconventional crudes

10

1 1

2

Low

3

4

5

Nickel Level, wppm

6

7

8

9

High

,

DATA: Metals Distribution Summary: Nickel

Increasing Nickel Content

1,000.0

100.0 Ni, wppm

Number of Crudes

Conventional crudes

Unconventional

10.0

Conventional

1.0

0.1 Cutpoint Temperature 650Increasing 750 850

950

1050

1150

1250

1350

Cutpoint Temperature, F Ni, high Conventional,Average Ni, low Conventional, Unconventional Ni, low

May 2012

PROPRIETARY INFORMATION

Unconventional Ni, high

16

Metals Distribution; Vanadium Number of Conventional and Unconventional Crudes Containing Vanadium 1000

100

Unconventional crudes

10

1 1

2

Low

3

4

5

6

7

8

9

10

High

Vanadium Level, wppm

,

DATA: Metals Distribution Summary: Vanadium

Increasing Vandium Content

1,000.0

100.0

V, wppm

Number of Crudes

Conventional Crudes

Unconventional

10.0

1.0 Conventional 0.1 Temperature 650Increasing Cutpoint 750 850

950

1050

1150

1250

1350

Average Cutpoint Temperature, F Conventional, V, low

May 2012

PROPRIETARY INFORMATION

Conventional, V, high

Unconventional V, low

Unconventional V, high

17

Quality Concerns PROPERTY

COMMENT

IMPACT

API

As the crude gravity approaches that of water, diluent is needed to separate out water from hydrocarbon

Water/Oil Separation

Sulfur

High sulfur levels require H2 and produce more H2S

Corrosion

Nitrogen

High nitrogen levels require H2 and produce more NH3

Corrosion

Metals Ni/V/Fe

High catalyst replacement cycle

Catalyst deactivation

Metals Na/Ca/As/Ti

Alkaline metals require special guard bed catalysts

Corrosion/Catalyst deactivation

Asphaltenes

Increases potential for fouling that requires shutdowns to resolve

Fouling

Naphthenic Acids

High levels cause corrosion

Corrosion/fouling

Chlorides

Typically associated with alkaline metals

Corrosion

Viscosity

If too high to pump, requires diluents or redesign

High transportation costs

May 2012

PROPRIETARY INFORMATION

18

First Level of Protection: Crude Evaluation • Review supplier’s crude assay  Balances are verified  Data reconciliation between cut testing and whole crude

• Determine deficiencies and corrective action • Prepare whole crude assay file from cut data using reconciled data and modeling tool • Evaluate processing potential of crude using a heat and material balanced model • Determine the crude compatibility and requirements for tankage using realistic crude blends

May 2012

PROPRIETARY INFORMATION

19

Crude Economics and Implementation • Estimate incremental variable operating costs for the new crude • Update non-linear refinery LP items • Use updated crude evaluation data from the supplier to update the simulations • Process Safety Management (PSM) preliminary Management Of Change (MOC) • Prepare high-level action list of mechanical and process modifications • If the crude has potential, request a representative sample for independent quality analysis May 2012

PROPRIETARY INFORMATION

20

Crude Compatibility • Crudes are considered incompatible if the blends result in a sludge or solids production • Laboratory methods vary, results are seen in the field • KBC Methodology uses physical properties to predict compatibility • Builds upon the KBC visbreaking technology • Allows calculation of the potential that two crudes are incompatible • “Titrates” the crude from 0 to 100% of another crude blend

May 2012

PROPRIETARY INFORMATION

21

KBC Methodology Crude Mixture Compatibility

Crude A

% of Crude A in Blend ===>

0

5

10

15

20

25

30

35

40

45

50

55

60

65

70

75

80

85

90

95

100

100

95

90

85

80

75

70

65

60

55

50

45

40

35

30

25

20

15

10

5

0

<=== % of Crude B in Blend

3.2

3.2

3.3

3.3

3.3

3.4

3.4

3.4

3.5

3.5

3.5

3.6

3.6

3.7

3.7

3.7

3.8

3.8

3.9

3.9

4.0

Crude B1

4.0 1.7 16.7 10.0 1.8 11.7

3.9 1.8 8.7 9.4 1.8 10.8

3.9 1.8 6.3 8.9 1.9 10.1

3.9 1.9 5.3 8.4 2.0 9.4

3.9 2.0 4.6 8.0 2.1 8.8

3.9 2.1 4.3 7.6 2.2 8.3

3.9 2.2 4.0 7.2 2.3 7.8

3.9 2.3 3.8 6.9 2.4 7.4

3.9 2.4 3.7 6.6 2.5 7.0

3.9 2.5 3.7 6.3 2.6 6.7

3.9 2.6 3.6 6.0 2.7 6.3

3.9 2.7 3.6 5.8 2.8 6.0

3.9 2.9 3.6 5.5 2.9 5.7

3.9 3.0 3.6 5.3 3.0 5.5

3.9 3.1 3.6 5.1 3.1 5.2

3.9 3.2 3.7 4.9 3.2 5.0

3.9 3.4 3.7 4.7 3.4 4.8

3.9 3.5 3.8 4.5 3.5 4.5

3.9 3.6 3.8 4.3 3.7 4.3

3.9 3.8 3.9 4.1 3.8 4.1

4.0 4.0 4.0 4.0 4.0 4.0

Crude B2 Crude B3 Crude B4 Crude B5 Crude B6 Crude B7

4

4 4 4 4 4 = High probability that crudes will NOT be compatible

4

4

4

4

4

4

4

4

4

4

4

4

4

4

4

= Warning: Possible problems with crude compatibility = Crudes should be compatible

May 2012

PROPRIETARY INFORMATION

22

Petro-SIM™1 for Efficient Molecular Management

Optimizing Refinery Streams

• Molecule management – – – –

1Petro-SIM

Raw material flexibility Improved refinery operations Optimized refinery streams Capitalize on integration

™ is a trademark of KBC Advanced Technologies plc, and it is registered in various territories

PROPRIETARY INFORMATION

23

Refinery Considerations • Crude receipts and tanking  High pour point, viscosity; meters, control valves, horsepower

• Desalting and preheating    

Difficult oil/water separation Treatment chemicals affect desalter performance High temperatures less effective Asphaltene precipitation

• Heat exchanger design • Crude Tower  Volatile phosphates  Naphthenic acids May 2012

PROPRIETARY INFORMATION

24

Refinery Considerations (Cont’d) • Vacuum Tower  Operation affected by sulphur and high boiling ranges

• FCCU  More aromatic feeds  Need higher severity  Pre-feed hydrotreating may be required

• Fixed Bed Hydrotreating  More hetaro-atoms in cracked lighter products, more load

• Hydrogen System  Directionally higher demand in traditional fuel refinery

May 2012

PROPRIETARY INFORMATION

25

Conclusions • Crude selection and compatibility are critical to profitable refining operations • Conventional and unconventional crude qualities are changing • Mixtures of crudes can increase profitability can foul equipment or underperform financially • Tools are available that predict crude compatibility and performance of unconventional crudes and crude mixtures in a specific refinery

May 2012

PROPRIETARY INFORMATION

26

Thank you and Questions May 2012

PROPRIETARY INFORMATION

27