Reformer Operations and Impact on

Aromatics Supply
Short and Long Term Outlook on Atlantic Basin

Prepared by:
Hart Energy
1616 S. Voss, Suite 1000
Houston, Texas 77057, USA

DeWitt
15333 John F. Kennedy Blvd., Suite 850
Houston, Texas 77032
All rights reserved Hart Energy

www.dewittworld.com

hartenergy.com

DeWitt & Hart Energy Announces the Release of:

Reformer Operations and Impact on Aromatics Supply:

Short and Long Term Outlook on Atlantic Basin

In the next decade, demand for gasoline derived
from hydrocarbons is expected to decline in North
America and Europe, as more renewable fuels are
blended and consumers favor more fuel efficient
vehicles.
While faced with prospects of declining gasoline
demand, refiners in Europe and the Americas must take
steps to comply with new regulatory mandates, while
competing with new world-scale refining capacity in the
Middle East, India and the rest of Asia. Under that
scenario, the role of reformers within the refineries of the
Atlantic Basin continues to evolve. Most reformers were
designed to produce a high-octane, aromatic-rich
reformate stream and by-product hydrogen from low
octane naphtha.
Reformer hydrogen production is
extremely important to the refiner since it is generally the
refiners primary source of hydrogen for use in the various
hydrotreating operations across the refinery. Very low
natural gas prices in North America make on purpose
hydrogen production, via steam methane reformers, a
viable alternative to reformer hydrogen, and theoretically
constrain contribution margins of hydrogen to reformer
economics. Poor contribution margins from octane and
hydrogen should have far-reaching effects on supplies of
benzene, toluene and xylenes. Last year, reformate
extraction directly accounted for 50% of U.S. benzene
production, and 90% of toluene and 93% of mixed
xylenes. If toluene is used as a feedstock for additional
benzene and xylenes, then reformate directly and
indirectly accounted for 73% of benzene production and
100% of xylenes.
2010 US Aromatics Production from Reformate
52% Benzene
73%
21% BZ (Disp, MSTDP, HDA)
Gasoline Pool (Reformate)

90% Toluene

93% Mixed Xylenes

PX (MSTDP, MPX)

7% MX (Disp)

100%

If reforming capacity is rationalized or operated at

lower rates or severity, as expected, global supplies of
benzene, toluene and xylenes will be greatly impacted.
Reformers directly or indirectly account for more than
50% of the Atlantic Basins benzene production and
virtually all of the regions toluene and mixed xylenes. In
a recently published study entitled Refining Outlook for
Atlantic Basin, 2008-2020: Reformer Operations and

Impact on Aromatics Supply, Hart Energy and DeWitt

have generated three forecasts for reformer operations in
the Atlantic Basin: The Low Case assumes that
reformers run at lower rates, as octane demand is
reduced due to increased blending of renewable fuels
and lower overall gasoline demand; the Base Case,
which we consider to be the most likely scenario; and the
High Case, which assumes that reformers are run at
higher rates due to slower penetration of renewable
components into the motor fuel pool. Major changes in
CAF standards and vehicle pool make-up would likely
reduce gasoline pool octane, further reducing octane
requirements for refinery produced gasoline (at the same
ethanol blending levels). Gasoline Reid Vapor Pressure
(RVP) continues to be targeted for further restrictions to
reduce emissions. Reductions in gasoline pool octane
and/or RVP will put increased pressure on refiners to
decrease octane production and blending of high RVP
stocks.
As ethanol in gasoline increases over time, refinery
produced gasoline decreases in quantity, octane and
RVP. To quantify these impacts and to establish regional
gasoline production, supply and demand, refinery models
were used to simulate refining and gasoline blending
operations in each region (East North America, Mid
Continent North America, Gulf Coast North America and
Europe).
The regional refinery models are provided with an
initial slate of crude and other input streams (ethanol,
ethers and miscellaneous unfinished oils), target refined
product volumes, gasoline and other product
specifications and a crude and product price set. The
model output provides an optimal combination of crude,
processing, refined product production and product
values. Gasoline and diesel product values from initial
model runs are compared and model production targets
adjusted until reasonable product price equilibrium
between regions is achieved.
The final solutions
establish the forecast supply and demand balance for
refined products.
The model solutions provide detailed gasoline
processing and blending summaries including octane
processing activities.
The gasoline reformer is the
primary variable used by the model to adjust gasoline
octane requirements, taking into consideration octane
provided by ethanol, ethers and other refinery gasoline
streams. The model processing and gasoline blending
activities have the option of varying naphtha feed to the
reformer, blending naphtha directly to gasoline without
reforming, and adjusting the reformer operating severity
(reformer product octane). The model solutions provide
reformer throughput, yield and operating severity.
Historically, benzene produced from naphtha either
ends up in the gasoline pool (via reformate blending) or
as reformer yield (BTX streams). It is anticipated that

naphtha processing will be reduced as ethanol in

gasoline increases, and that benzene in gasoline will be
reduced to meet regulatory requirements. The new
benzene gasoline standard (MSAT II) consists of two
parts. The first includes a reduction in benzene in
gasoline to 0.62% by volume for annual refinery average,
starting on January 1, 2011. Major refiners, being
defined as having an aggregate crude distillation capacity
in 2005 of more than 155,000 bpd and more than 1500
employees, were obligated to comply with the new 0.62%
vol. standard beginning in January 2011. The second
part mandates an upper limit, which is a maximum
average benzene standard for each refinery of 1.3% by
volume to come into effect on July 1, 2012 without the
use of benzene credits. Credits may still be used to
reduce levels at or below 1.3 % to the required 0.62%.
Small refiners will have until July 1, 2015 to meet the
regulations.
Historically, 75-80% of the benzene in gasoline is
attributed to reformer produced benzene. With less
reformate blended into gasoline, MSAT II compliance can
be achieved without expensive investments in new
extraction capacity. Refiners are managing reformer
benzene in other ways, as described in the MSAT section
of this study. These new standards led many industry
analysts to the false conclusion that U.S. benzene
supplies would be increased and the U.S. would import
far less benzene in the future than in recent years. To
the contrary, the studys Base Case projects that:
U.S. benzene imports will increase to 1.4 million
tons by 2015, which is an increase of 200,000 metric tons
(mt) over 2010; and European import requirements are
forecast to more than double, from 577 KT in 2010 to 1.2
million tons in 2015. Under that scenario, the U.S. and
Europe will regularly vie for benzene coming out of the
Middle East and Asia.
U.S. toluene availability is expected to decline by
6%, but this could be offset if more refiners dedicate
reformers to supply the chemical market, instead of
octane for the gasoline pool. The toluene price spread
over gasoline is forecasted to remain relatively flat in the
U.S. as reduced octane demand limits toluene values.
Europe is expected to remain an importer of toluene
throughout the forecast period and its pricing over
naphtha will increase over current levels.
2000-2010 North America
Toluene Production (kt)

Mixed xylenes production will be severely limited

by reduced reformer operations. With polyester demand
expected to grow, U.S. mixed xylenes pricing relative to
toluene is forecasted to increase from 1.7 cents per
gallon in 2010 to 50 cents per gallon by 2020. The
European toluene/mixed xylenes spread is forecast to
remain near parity through 2020.
European Xylenes in Reformate & Required for
Downstream Demand (kt)

As reformate octane demand decreases, large

refiners could consider shut-down of reformer capacity.
With options to blend naphtha directly to gasoline and
pre-fractionate naphtha for benzene management, the
refiner could manage naphtha production effectively. If
purchased hydrogen is readily available from pipeline or
a nearby production facility, this could be the alternate
hydrogen source.
For refineries with aging reformers, the conversion of
fixed bed technologies to CCR can provide a right-sizing
of naphtha management, as demand for high octane
reformate decreases. As demand for reformate octane
decreases, refiners could consider switching reformers to
aromatics production targeted for chemicals.
However this will remove significant gasoline volume
away from the refiner, and could require additional
logistics expense for aromatics transport. This option
may only be feasible for companies with integrated
refining and chemical operations, in order to maximize
the entire value chain and minimize logistics costs.

For further details on the study

Reformer Operations and Impact on
Aromatics Supply, including price and
ordering
Please contact Kristine Klavers at
kklavers@hartenergy.com
or +1.713.993.0032

Table of contents
I.

Executive Summary .................................................................................................................................

II.

Introduction ............................................................................................................................................

III. Crude Oil History and Forecast ...............................................................................................................

IV. Outlook for Refined Products Demand and Margins.............................................................................
a.

North America .....................................................................................................................................

North American Gasoline Demand .........................................................................................................
North American Ethanol Demand ...........................................................................................................
North American Gasoline Imports ..........................................................................................................
North American Gasoline Production by Region ....................................................................................
North American Refinery Rationalization ...............................................................................................
North American Hydrogen Demand .......................................................................................................

b.

Europe .................................................................................................................................................
Europe Gasoline Demand .......................................................................................................................
European Ethanol and Ether ...................................................................................................................
European Gasoline Exports .....................................................................................................................
European Gasoline Production and Refinery Gasoline Production Requirements ................................
European Refinery Rationalization .........................................................................................................
European Hydrogen Demand..................................................................................................................

V.

Overview of Reformer Operations and Process Economics ...................................................................

a.

Catalytic Reforming .............................................................................................................................

b.

Types of Reformers .............................................................................................................................

c.

Reformer Process Chemistry...............................................................................................................

d.

Reformer Feedstock ............................................................................................................................

e.

Process Flow........................................................................................................................................
Naphtha Hydrotreating ...........................................................................................................................
Reforming Process ..................................................................................................................................
Reformate Hydrotreating........................................................................................................................
Reformate Processing .............................................................................................................................
Reformer Catalyst ...................................................................................................................................
C7 and Lighter Processing .......................................................................................................................

f.

Reformer Hydrogen ............................................................................................................................

Reformer Hydrogen ................................................................................................................................

g.

North America Reformers ...................................................................................................................

h.

European Reformers ...........................................................................................................................

i.

Reformer Technology Strengths and Weaknesses .............................................................................

CCR ..........................................................................................................................................................
Semi-Regeneration..................................................................................................................................
Cyclic .......................................................................................................................................................

j.

Reformer Process Economics ..............................................................................................................

Feedstock Quality....................................................................................................................................
Feedstock/Product Value ........................................................................................................................
Hydrogen Quality and Value ...................................................................................................................
Natural Gas/Fuel Gas Price .....................................................................................................................
Catalyst....................................................................................................................................................
Severity ...................................................................................................................................................
Reformer Technology..............................................................................................................................
Benzene Production ................................................................................................................................

k.

Reformer Economics ...........................................................................................................................

Cash Margin Results ................................................................................................................................
Conclusions .............................................................................................................................................

VI. Impact on Supply of Aromatics ...............................................................................................................

a.

Benzene...............................................................................................................................................
i.

Benzene In Reformate .................................................................................................................

ii.

Background Summary of the EPA Regulation (MSAT II)..............................................................

iii. Description of ABT (Benzene Credit Program) ............................................................................

Early Credits ............................................................................................................................................
Standard Credits......................................................................................................................................
Benzene Control Compliance ..................................................................................................................
Benzene Credit Price Mechanism ...........................................................................................................
iv. Benzene Reduction Costs ............................................................................................................
v.

Benzene Removal Mechanisms from refinery streams (EPA findings) .......................................

vi. Original EPA Estimates of Refinery Modifications Required to Meet the Regulation ................
vii. Impacts on Octane and Recovery of Lost Octane .......................................................................
viii. Benzene Supply/Demand Outlook ..............................................................................................
Benzene Supply Demand Forecasts ........................................................................................................
Base Case, North America .......................................................................................................................
The Low Case, North America .................................................................................................................
The High Case, North America ................................................................................................................
Base Case, Europe ...................................................................................................................................
Europe, Low Case ....................................................................................................................................
Europe, High Case ...................................................................................................................................
Global Benzene Trade Flows, Base Case .................................................................................................
b.

c.

d.

Toluene ...............................................................................................................................................
i.

North America Toluene, Base Case .............................................................................................

ii.

Toluene, OECD Europe ................................................................................................................

Mixed Xylenes .....................................................................................................................................

i.

North America .............................................................................................................................

ii.

Mixed Xylenes, OECD Europe ......................................................................................................

Paraxylene ...........................................................................................................................................
Western Europe Paraxylene Supply Demand .........................................................................................
Petrochemical Price Forecast, Base Case-North America .......................................................................
Petrochemical Price Forecast, Base Case-Europe ...................................................................................

Attachments
Appendix I
Appendix II

List of Tables
Table 1: Real Crude Oil, Refined Product and Natural Gas Price Forecasts: 2010-2020 ................................
Table 2: North American Gasoline Demand: 2007-2020 ................................................................................
Table 3: North American Ethanol Demand: 2007-2020..................................................................................
Table 4: North American Gasoline Net Imports..............................................................................................
Table 5: North American Regional Gasoline Supply and Demand: Base Case ................................................
Table 6: North American Regional Gasoline Supply and Demand: Low Reformer Scenario ..........................
Table 7: North American Regional Gasoline Supply and Demand: High Reformer Scenario .........................
Table 8: North American Regional Gasoline Octane and Volatility Requirements.........................................
Table 9: North American Regional Reformer Throughput: 2007-2020 ..........................................................
Table 10: North American Refinery Capacity Expansions and Shutdowns: 2009-2020
Table 11: North American Refinery Capacity Changes: 2009-2020 ................................................................
Table 12: European Gasoline Demand: 2007-2020 ........................................................................................
Table 13: European Ethanol Demand: 2007-2020 ..........................................................................................
Table 14: European Gasoline Net Imports ......................................................................................................
Table 15: European Gasoline Supply and Demand: 2007-2020......................................................................
Table 16: European Refinery Gasoline Octane and Volatility Requirements .................................................
Table 17: European Reformer Throughput: 2007-2020 .................................................................................
Table 18: European Refinery Capacity Expansions and Shutdowns: 2009-2020 ............................................
Table 19: European Refinery Capacity Changes: 2009-2020 ..........................................................................
Table 20: Total Atlantic Basin Reformer Capacity...........................................................................................
Table 21: EPA Estimates of BZ Extraction/Destruction ...................................................................................
Table 22: Projected Gasoline Production and Benzene Concentration for Total U.S. (2007-2015) ...............
Table 23: Benzene Compliance Projects .........................................................................................................
Table 24: North America Base Case ................................................................................................................
Table 25: North America Low Case Reformer Benzene ..................................................................................
Table 26: North America Low Case .................................................................................................................
Table 27: North America High Case ................................................................................................................
Table 28: Total North America High Case Reformer Benzene ........................................................................
Table 29: Europe OECD Base Case ..................................................................................................................
Table 30: Europe OECD Low Case ...................................................................................................................
Table 31: Europe OECD High Case ..................................................................................................................
Table 32: Total North America Base Case Reformer Toluene ........................................................................
Table 33: Europe Reformer Toluene Base Case ..............................................................................................
Table 34: Europe Reformer Toluene Low Case ...............................................................................................
Table 35: Europe Reformer Toluene High Case ..............................................................................................
Table 36: North America Reformer Toluene Low Case...................................................................................
Table 37: North America Reformer Toluene High Case ..................................................................................
Table 38: North America Reformer Xylenes Base Case ..................................................................................
Table 39: North America Reformer Xylenes Low Case ...................................................................................

Table 40: North America Reformer Xylenes High Case...................................................................................

Table 41: Europe Reformer Xylenes Base Case ..............................................................................................
Table 42: Europe Reformer Xylenes Low Case ...............................................................................................
Table 43: Europe Reformer Xylenes High Case ...............................................................................................
Table 44: North America Paraxylene ..............................................................................................................
Table 45: North America Base Case ................................................................................................................
Table 46: Europe Base Case ............................................................................................................................

List of Figures
Figure 1: Brent Crude Price Trends: 1995-2010 ..............................................................................................
Figure 2: Global GDP Growth ..........................................................................................................................
Figure 3: Brent Crude Oil Price Forecast: 2004-2020......................................................................................
Figure 4: North American Gasoline Demand: 1996-2010 ...............................................................................
Figure 5: Growth in U.S. Passenger Miles Traveled: 1996-2009 .....................................................................
Figure 6: U.S. Renewable Fuel Standard .........................................................................................................
Figure 7: Regional Percentage of Ethanol Blends Using RBOB/CBOB in North America ................................
Figure 8: Regional Refinery Gasoline Octane Requirements: 2007-2020.......................................................
Figure 9: Regional Refinery Gasoline RVP Requirements: 2007-2020 ............................................................
Figure 10: Base Case Regional Reformer Throughput: 2007-2020 .................................................................
Figure 11: North American Refinery Hydrogen Demand: 2007-2020 ............................................................
Figure 12: European Gasoline Demand: 2000-2010 .......................................................................................
Figure 13: Oil Consumption in the Countries of the EU27 ..............................................................................
Figure 14: European Refining Capacity ...........................................................................................................
Figure 15: EU Oil Consumption by Product Group .........................................................................................
Figure 16: European Middle and Light Distillate Demand ..............................................................................
Figure 17: Western European (EU15) Mogas Exports ....................................................................................
Figure 18: EU27 Refining Capacity (15.65 million barrels) 2008.....................................................................
Figure 19: West European Refiners 2009 .......................................................................................................
Figure 20: European Refinery Hydrogen Demand: 2007-2020 .......................................................................
Figure 21: Continuous Catalyst Regenerating Reformer Process ...................................................................
Figure 22: Extractive Distillation Process ........................................................................................................
Figure 23: Liquid Liquid Extraction / Extractive Distillation Process ............................................................
Figure 24: Production Capacity for Refinery Hydrogen ..................................................................................
Figure 25: BZ Yield (%) per RON ......................................................................................................................
Figure 26: Atlantic Basin Reformer Average Cash Margin (2007-2020) .........................................................
Figure 27: Numerous Impacts on Benzene Supply/Price................................................................................
Figure 28: 2010 Global Aromatic Capacity from Reformate ...........................................................................
Figure 29: 2010 U.S. Aromatics Capacity from Reformate .............................................................................
Figure 30: 2009 U.S. Aromatics Production from Reformate .........................................................................
Figure 31: MSAT II Early Credit Balance ..........................................................................................................

Figure 32: Bz in Gasoline Reduction Strategies by Refinery Count.................................................................

Figure 33: Reformer Benzene in Gasoline ......................................................................................................
Figure 34: 2000-2010 World Benzene Production..........................................................................................
Figure 35: 2000-2010 U.S. & Canada Benzene Production .............................................................................
Figure 36: Pygas & Benzene Yield per Ton of Feed .........................................................................................
Figure 37: 2000-2010 U.S. Benzene Production from PyGas ..........................................................................
Figure 38: 2000-2010 U.S. & Canada Benzene Consumption .........................................................................
Figure 39: 2000-2010 OECD Europe Benzene Production ..............................................................................
Figure 40: 2010 World Benzene Trade-Base Case ..........................................................................................
Figure 41: 2015 World Benzene Trade-Base Case ..........................................................................................
Figure 42: 2020 World Benzene Trade-Base Case ..........................................................................................
Figure 43: 2000-2010 North America Toluene Production.............................................................................
Figure 44: 2000-2010 North America Toluene Consumption .........................................................................
Figure 45: Toluene in Reformate and Required for Downstream Demand ....................................................
Figure 46: Percentage of Toluene Required to be Extracted from Reformate ...............................................
Figure 47: 2000-2010 OECD Europe Toluene Production ...............................................................................
Figure 48: WE (EU15) Toluene Trade ..............................................................................................................
Figure 49: 2000-2010 OECD Europe Toluene Consumption ...........................................................................
Figure 50: Toluene in Reformate and Required for Downstream Demand....................................................
Figure 51: Percentage of Toluene Required to be Extracted from Reformate ...............................................
Figure 52: 2000-2010 North America Xylenes Production .............................................................................
Figure 53: 2000-2010 North America Xylenes Consumption .........................................................................
Figure 54: Xylenes in Reformate and Required for Downstream Demand ....................................................
Figure 55: Percentage of Xylenes Required to be Extracted from Reformate ...............................................
Figure 56: 2000-2010 OECD Europe Xylenes Production ...............................................................................
Figure 57: 2000-2010 OECD Europe Xylenes Consumption............................................................................
Figure 58: Xylenes in Reformate and Required for Downstream Demand ....................................................
Figure 59: Percentage of Xylenes Required to be Extracted From Reformate ...............................................
Figure 60: North America Paraxylene Supply Demand...................................................................................
Figure 61: EU PX Production & Consumption Capacities 2008-2020 .............................................................
Figure 62: EU15 Paraxylene Trade ..................................................................................................................