Stepping into a new century, China’s refining plants are facing many challenges. The most important two challenges are as follows: one is to produce clean oil products to meet the increasingly strict requirements for environment protection; the other is to improve economic profits against the increasingly serious competition in the market after China’s entry into WTO. The former can only produce social rather than economic benefits or even negative economic benefits, and thus makes the latter challenge more serious.

It is well known that the integration of refining plants and petrochemical companies can improve profits. Generally speaking, an integrated company can increase the return ratio of investment by 2%-5% than a single refining plant. But the construction of a petrochemical-refining integrated company is constrained by many factors. For instance, the ethane degradation equipmentoften has a capacity of 600 thousand t/a, and thus needs a refining plant to have a capacity of five million t/a to feed raw materials. The downstream processing equipment for this ethane degradation equipment also needs enormous investment. Therefore, the construction of such integrated companies is surely limited by national structure of the industry.

According to statistics in 1999, the common capacity of refining plants in China is of 2.13 million t/a. Several cases in China have proven that it is not beneficial for those small-scale and medium-scale refining plants to construct ethane degradation equipments. Only when those plants can take full advantage of existing petrochemical resources to increase output and produce products with high additional benefits can it become feasible for them to increase benefits.

Petrochemical products have been proven to be more profitable than petroleum products. And to increase the number of petrochemical equipment has become a common strategy for refining plants to increase profits.

Petrochemical resources of refining plants are very important components of petrochemical raw materials. According to statistics, 70% of propylene products in the world come from degradation of ethane, and 30% come from refining plants. In the US, 50% of propylene comes from refining plants, and 70% BTX arene depends on refining plants.

The international demand for petrochemical products is greater than that for petroleum products. According to reports, the annual international demand for propylene and ethane will increase by 5.7% and 4.8%, respectively, while the annual international demand for petroleum products will keep rising only by 2% each year. In China, during 1990-1998 the annual consumption of polyethylene and polypropylene has increased by 18.9% and 25.6%, respectively, while the annual consumption of petroleum has increased only by 7%. Thus the market prospects for petrochemical products are better than that of petroleum products.

Advantages for refining plants to expand business into the petrochemical field
1.It can make refining products more flexible to satisfy the market. Refining plants can adjust the structure of products according to the market prices of petrochemical products and petroleum products. For instance, when propylene has a large demand and good price in the market, refining plants can adjust degradation operation to produce more propylene and less gasoline.

2.The roll-over pattern can solve capital problems. Once the construction of large-scale ethane degrada-tion equipment has been decided, downstream supporting facilities must be built. If refining plants extend to the petrochemical field, they can choose to launch certain projects first for the consideration of the market demand and their own capital, and thus will improve the flexibility of investment.

3.The cheap and steady supply of raw materials can make up for the shortcoming of scale economic benefit. In small-scale and medium-scale refining plants, the obvious shortcoming is the scale. As petrochemical raw materials are byproducts for refining plants, the price is relatively cheap. For example, the price of polypropylene produced by ethane degradation equipment is about 4000RMB/t, and the price of polypropylene made of catalytic cracking gas is only about 3000RMB/t. This is why many refining plants built small-scale polypropylene equipments, which produces great profits.

4.It is easier to overcome the crisis of petrochemical ‘profit cycle’. According to research done by Pace Consulting Company, the petrochemical field has an obvious ‘profit cycle’, i.e. the petrochemical field prospers first and then shrinks. The cycle is about seven years.

5.It has good economic benefits and short repayment period of investment. Refining plants can use their existing facilities to produce petrochemical products, which can also save transportation fees. Thus the investment is relatively small. Meanwhile, petrochemical products are more profitable than petroleum products. So the repayment period of investment is relatively short. It is reported that the repayment period of a single fuel refining plant is seven years, but if this refining plant built BTX arene equipments, the repayment period will shortened to 1.7 years. If PX producing equipment is built, the repayment period will be shortened to 2.1 year.

Raw Petrochemical Material Resources in Refining Plants
Refining plants have two kinds of raw petrochemical material:
1.Olefine and alkane of low molecular weight in refining gas
Several steps are involved in producing gas: delaying carbonization, hydrogen-added cracking, catalytic reformation, and catalytic degrading, etc. Catalytic cracking produces most gas with high content of olefine, and thus becomes the most important petrochemical materials resource.

Because China’s crude oil is relatively heavy, catalytic cracking is very important in processing. Up to 1999, China’s catalytic cracking capacity was 91.18 Mt/a, which accounted for 36% of crude oil processing capacity and ranked the second after the US. In order to improve economic profits, many refining plants improve their gas production in catalytic cracking. In 1998, catalytic cracking equipments in the whole nation yield liquefied gas of 7.2Mt/a, of which 1.8Mt is propylene. And in the same year national propylene output produced by ethane cracking equipments is only 1.7-1.8Mt. It shows that similar to the US, in China, propylene resources in refining plants have taken half of the national output. Other resources, like ethane in catalytic cracking dry gas, olefine and alkane in each kind of liquefied gas, are valuable petrochemical materials too.

2.Arene produced by catalytic reformation
The standard of gasoline in the future will be more strict in arene and benzene content. Petrochemical production needs arene, and arene is a byproduct in the producing process of gasoline. Thus petrochemical production can help refining plants to make more profits. According to the evaluation by O.Genis et. Al. from UOP, gasoline demand will reach 135 Mt/a in 2005. When the new gasoline standard is put into practice, European refining plants will have to decrease at least 0.8 Mt/a and 4.5 Mt/a arene in gasoline production, of which 40% is toluene and 50% is xylol.

The gasoline components in China are quite different from that in Europe or in the U.S. The proportion of catalytic reformation gasoline is relatively small in China. The arene component in China’s gasoline is less than that in Europe or in the U.S. BTX arene used in petrochemical production mainly comes from refining plants. Catalytic reformation has been proven to be the cheapest method to produce BTX arene. Of the 55 sets catalytic reformation equipments in China, 34 sets are used to produce arene and 21 are used to produce gasoline of high octane.

Assortment of Petrochemical Products Produced by Refining Plants
Refining plants have many petrochemical resources apart from gasoline-producing components, such as alkylate, MTBE and DIPE, and many categories of petrochemical products.

New Methods to Improve the Output of Petrochemical Materials in Refining Plants
1.Increase the output of low carbon olefine and low carbon alkane
The international demand for propylene is increasing for its increasingly wide use, and the increasing rate is far more than that of ethane. This trend is estimated to continue in the future. In catalytic cracking gas, the content of propylene is far more than ethane. And therefore, it has attracted a lot of attention to increase the output of low carbon olefine and low carbon alkane with the catalytic cracking equipments in refining plants.

At present, some new techniques that can increase the output of catalytic cracking gas, e.g. MAXOFIN technology developed by Mobil and Kellogg, SCC technology developed by Lummus, and the catalytic cracking technology family developed by China Petrochemical Academy ( including DCC, DDC II, MGO, MIO, and MGD etc.). These techniques are common in that they use ZSM-5 or certain molecular sieve as the active components of the catalyst to improve the threshold of reaction. In order to improve the output of gas, some techniques even recycle naphtha. Adjustment of certain operations in these techniques can help to produce different products.

These new techniques can greatly adjust the output of oil products and propylene. For example, the MAXOFIN technology can increase the production rate of gasoline to 49.78%-18.81% and the production rate of propylene to 6.22%-18.37%. If ethane and butylenes are reacted in the gas, and thus produce propylene, the production rate of propylene can reach 5%-7%.

China Petrochemical Academy now has developed new catalytic cracking technology-CPP, using heavy oil as raw material. The technology has been put into practice in Daqing Petrochemical Corporation and has achieved good results. If 55% of the raw material is vacuum residue and 45% is vacuum wax oil, plus propylene operation flow, this technology can produce 9.77% of ethane and 24.6% of propylene. Ethane operation flow can produce 20.37% ethane and 18.23% propylene. This technique provides refining plants a new way to extend their business to the petrochemical field.

2.Increase the output of arene
Catalytic reformation is the main way to produce arene. The following measures can help increase the output of arene.
(1) Change another new catalyst. New catalysts of high quality are of great importance in raising the output of arene. All companies are trying to improve the quality of reforming catalysts. For example the new R-230 reforming catalyst series developed by UOP can improve C+5 by 0.61 v%; compared with R-130 series, also, the new PS-40 catalyst developed by Criterion can improve the production rate by 1m% compared with former PS-40. Moreover, China Petrochemical Academy has successfully developed PS-Ⅵ continuous reforming catalyst.

(2) Optimize raw material for reforming catalysts. The family component and distillate component of raw material of reforming catalysts are closely related to the production rate of arene. Hydrogen-added cracking naphtha and naphtha from diesel oil treated with hydrogen with high arene content will become favorable raw material for catalytic cracking.

(3) Semiregenerated catalytic reformation can match reforming function with corresponding reforming reaction and can increase the output of arene while keeping catalyst active. Some reports declare that this technique can help to increase the production rate of C+5 by 1.7 v%.

(4) Use ACP and online optimism control. Like other refining techniques, ACP and online optimism control are effective measures to lower the cost and improve production and quality. No matter what changes may take place in raw material and in the type of products, the online control can help to make profits to maximum.

Suggestions concerned with refining plants’ extension to the petrochemical field
1.It is important for refining plants to choose suitable petrochemical products to produce. As discussed above, the main problem for refining plants to produce petrochemical products is the problem of scale; the advantages are low investment and cheap raw material. How to balance the advantages and disadvantages and how to choose a proper range of products are the key problems that decision makers must face. Decision makers must make a thorough analysis of the market and make a feasibility study. In China, in addition to polypropylene and acrylonitrile, the chosen products are mainly of basic organic chemical raw material.

2.It is also important for refining plants to extend the industry chain. Petrochemical products are different from petroleum products in that the chain of petrochemical products can be unlimitedly extended in the industry. For instance, butane can produce certain anhydride; anhydride can produce butanediol, tetrahydrofuran, andγbutyrolactone etc. The length of the chain depends on capital, environment and some other factors. The present situation shows that refining plants usually only produce first-stage derivatives, except for certain exceptional products, such as phenol and acetone.

3.It is even important for refining plants to develop potential petrochemical market. Many petrochemical products may sell much better in some countries other than in China because of China’s inadequate applied research of these products and also of its application. In addition to paying attention to the demand in the present market, refining plants should also care about the demand in potential markets. If certain products have a large market demand, refining plants should strengthen the applied research of the product after production.
(Translated by Huang Xingwen)