3/27/2015

Hydrogenperspectivesfor21stcenturyrefineries|HydrocarbonProcessing|September2014

COPYINGANDDISTRIBUTINGAREPROHIBITEDWITHOUTPERMISSIONOFTHEPUBLISHER

Hydrogenperspectivesfor21stcenturyrefineries
09.01.2014|Farnand,S.,AirProductsandChemicals,Allentown,PennsylvaniaRatan,S.,Technip,StoneandWebsterProcessTechnology,Claremont,
CaliforniaLi,J.,AirProductsandChemicals,Allentown,Pennsylvania

AsrefiningmarkettrendscontinuetosupportincreaseddemandforH2,itsavailabilityandcostarecriticalformany
refiners,creatingatoughenvironmentforsecuringreliable,efficientandenvironmentallyfriendlyH2.
Keywords:[deepconversionrefineries][hydrogen][hydroprocessing][linearprogramming][hydrogenmanagement]
Thegrowthmarketfortransportationfuelsisshiftingfrommatureeconomiestodevelopingandemergingnations,particularlyinChinaandIndia.
Thesedevelopingregions,however,oftensufferfromlimiteddomesticoilandgasavailability,highenergycosts,questionablepowergrid
reliability,andpotentialwaterscarcity.Today,highlycomplexdeepconversionrefineriesfacethechallengingtaskofimprovinghydroprocessing
intensityandresidueupgradingwhileprocessingincreasinglylowerqualitycrudesundermorestringentfuelspecifications.Therefore,itis
exceedinglyimportantfor21stcenturyrefinerstomanagehydrogen(H2),power,waterandcarboneffectivelyandeconomically.
AsrefiningmarketneedsandtrendscontinuetosupportincreaseddemandforH2,itsavailabilityandcostareincreasinglycriticalformany
refiners,creatingachallengingenvironmentforsecuringreliable,efficientandenvironmentallyfriendlyH2.Still,therearesomeprovensolutions
forreducingthenetunitcostof(onpurpose)H2,includingadvancedH2management,capacityrevampsandoverthefenceH2supply,aswellas
somevalueaddedoptionsandcasestudiesdemonstratingwaystoenhancerefiningeconomics.

CHANGINGREFINERYLANDSCAPE
TheunprecedenteddevelopmentofabundantunconventionalgasreservesintheUSandotherregionsoftheworldisexpectedtohaveasubstantial
impactonenergyindependenceandsecurity,aswellasontherefiningandpetrochemicalsector,atleastintheUS,inthecomingdecades.
Projectionsofsustainedlowpricednaturalgas(NG)andhighpricedoilresultinginanoilgaspricegapsupportH2higherusageintensityvia
H2addition,ratherthanthecarbonremovalroute.
Deeperhydroprocessingandbottomofthebarrelstrategiesarebeingimplementedmoreextensivelytoincreasetheyieldofpremiumcleanfuel
slatesviahigherH2usage(scf/bbl).TheeconomicsofthisapproachareincreasinglyattractivewhenH2isgeneratedfromrelativelycheaperfeed
gasandarefurtherimprovedbyapplyingvariousoptimizationoptionsandsmartconceptstolowertheunitcostofH2(i.e.,thecombinedcapital,
operatingandmaintenancecostforaunitofH2,orUCH).
H2is,andwillcontinuetobe,anessentialelementfortherefiningindustry,particularlyinhighcomplexitydeepconversionrefineries.H2
constitutesasignificantportionofrefineryprocessingandoperationalcosts,especiallyinhighgrowtheconomies.Consequently,therewill
continuetobestrongincentivestolowertheUCHwhileenhancingreliabilitytoimproverefineryprofitability.
Despiteitshighoperatingandcapitalcosts,H2isnolongerjustacriticalutilityforrefineryoperationsinstead,itisgainingstatusasavaluable
assetintherefiningprocess.
SeveralprovenoptionscanbeusedtoreducecapitalinvestmentandtoimprovethethermalefficiencyofbothnewandexistingH2facilities.Such
optionsincludeadvancedH2management,alongwiththeintegratedutilizationofrefineryoffgas(ROG),enhancedenergyefficiency,increased
economiesofscale,augmentationofexistingH2capacity,andstrategicoverthefence(thirdparty)H2supply.Furthermore,mostoftheseoptions
provideaddedbenefitsofimprovedavailabilityandreducedenvironmentalimpact.

ADVANCEDHYDROGENMANAGEMENT
H2istypicallysuppliedandbalancedinarefinerythroughanetworkfedbyH2recoveredfromoffgasstreamsandmostlysupplementedbyon
purposeH2generationsources.Creativesolutionsarebeingdevelopedtoenhancerefiningprofitabilitynotonlythroughoptimizedprocess
integration,butalsothroughadvancedandsmartH2managementmethodologiestooptimizerefineryH2networks.ThetraditionalH2pinch
analysis(HPA)techniqueisnotsufficienttomodelthecomplexitiesandoptimizeanetworkdesign,especiallyintermsofrealisticcapital
expenditure(CAPEX),operationalandhealth,safety,andenvironment(HSE)constraints.
OnesuchadvancedrefineryH2managementmethodology,whichisbasedonlinearprogramming(LP)usingplatformindependentmodels(PIMs)
.SuchsoftwarecarriesvariousprocessandutilitymodelsforrigoroussimulationandreconciliationtoidentifyanoptimizedoverallH2balanceand
itsnetwork.Itusesareallifecostdatabase,scalingindicesandvariousobjectivefunctionsforeconomicanalysisandcaseassessmentfor
grassrootsrefineriesaswellasupgradingorexpansionofexistingrefineries(Fig.1).ItconductssensitivityanalysisforoptimizingthelevelofH2
recoveryfromROGand,additionally,canrecommendtheappropriatesteampowersystemalongwiththeoverallCO 2footprintbasedonarefinery
wideenergyphilosophywithoutcompromisingonsafety,reliabilityandoperationalflexibility.

http://www.hydrocarbonprocessing.com/IssueArticle/3375464/Archive/Hydrogenperspectivesfor21stcenturyrefineries.html?ArticleId=3375464&AddIss

1/6

3/27/2015

Hydrogenperspectivesfor21stcenturyrefineries|HydrocarbonProcessing|September2014

Fig.1.SelectoptimizedH2networkcaseoutputdisplay.

Casestudy
AdvancedrefineryH2managementmethodologywasappliedtoidentifyanoptimizedmasterplanforalargegrassrootsdeepconversionrefinery
processinghighsulfurcrude.ItwasalsoappliedtoestablishanoptimumlevelofH2recoverybasedonthetradeoffbetweentheinvestmentinthe
pressureswingadsorption(PSA)recoverysystemandthepotentialsavingsfromrecoveredH2.
BasedontheoptimizedH2networkconfigurationandtheobjectivefunction,theprogramidentifiedthemostcosteffectiveH2recoverylevelof
about68%,beyondwhichitwasnoteconomicalintermsofincrementalcapitalpayoffagainstextraH2recoverycredit.TheintegratedH2network,
withdualpurityheadersandminimizedlosses,resultedinloweringtheonpurposeH2generationcapacityby30%comparedtothebasecase
withouttheadvancedrefineryH2managementmethodology.TheprogramalsoconductedtheoverallfuelsteampowerbalancetogetherwithCO 2
loadsandrelatedCefficiencywhilesatisfyingcaptivepowerneedsandminimizedunitcostofH2.

REFINERYOFFGASINTEGRATION
Tocapturetheirfullpotential,therehasbeenanincreasingtrendtouseROGforonpurposeH2generation.TheunderlyingdriveristhatH2
burnedasfuelisalossofitsassetvalueaboveitsheatingvalue.Accordingly,byintegratingROGinaH2generationplant,notonlydoesmostof
itsH2contentgetrecovered,butthepriceattachedtotheROGisoftenlowerthanthatofhydrocarbonfeedstocksforH2production.
ThereareenoughfinancialincentivestoidentifypotentialROGstreamsintherefinerythatcanbeintegratedcosteffectivelywiththeH2plantto
enhanceitseconomics.UtilizationofROGthroughintegrationwiththeH2plantcanbemostlyaccomplishedbythreeroutes(Fig.2):
LowcontributionH2recoverybymixingwiththeprocessgasupstreamoftheH2generationPSA
MediumcontributionDirectuseas(part)feedstockforH2generation
HighcontributionDedicatedrecoveryPSAwithoptionalextendedintegrationofitspurgegasas(part)feedforH2generation.

Fig.2.RoutesforROGintegrationwithH2plant.

ThetypicalreductioninnetH2costscanbebetween2%and10%dependingupontherelativepricingofROGvs.thebasefeed,availablequantityof
ROGstream(s),H2(orhydrocarbon)fraction,availablepressureandlevelofimpurities.
Toillustratethisconcept,acasestudywasundertakenusingROG(with40vol%H2)astheprimaryfeedforH2generationbasedonmediumlevel
contribution.ComparativeeconomicsarepresentedinTable1.ThoughROGpricingwassimilartoNGintermsofitsheatingvaluebasis,the
http://www.hydrocarbonprocessing.com/IssueArticle/3375464/Archive/Hydrogenperspectivesfor21stcenturyrefineries.html?ArticleId=3375464&AddIss

2/6

3/27/2015

Hydrogenperspectivesfor21stcenturyrefineries|HydrocarbonProcessing|September2014

operatingcostbenefitfromthepotentialH2contributionwassubstantial(approximately7%).Thepayoutoftheadditionalinvestmentwaslessthan
threeyears,withoutdownsizingthereformeranddownstreamsection,whichwerestillsizedforNGfeedasthecontrollingdesigncase.

IfNGcompressionwasrequired,thepayoutforROGintegrationwouldhavebeenevenshorter.OtherinherentbenefitsofoperatingwithaROG
feedmixincludedrelaxationonrecycleH2,easierstartupandlongerreformertubelife.VariousROGintegrationschemeshavebeenimplemented
andproven,ultimatelyprovidingbetterrefinerymargins.

ENHANCEDENERGYEFFICIENCYANDDESIGNOPTIMIZATION
OnpurposeH2generationplantsarecapitalintensiveduetohightemperaturecatalyticprocessingandnecessarygasphasepurification.Thetotal
investmentcanvaryconsiderablydependinguponsitespecificfactorssuchaslocation,feedstock,exportsteamconditions,degreeofutility
integrationandreliabilityneeds.
TheenergyrelatedcostsbecomemoreimportantforoptimizinglargerH2plantdesignsandforloweringthehydrogenunitcost(UCH).
Accordingly,itallowshigherincrementalcapitalinvestmentpayoffsforapplyingenhancedandadvancedheatrecoverybelowtheheatpinchby
extendingthesocalledcoldcomposite,asshowninFig.3.

Fig.3.Enhancedheatrecoverybelowpinch.

AtypicalH2plantenergybalanceisillustratedinFig.4.Themainthrustforimprovingthethermalefficiencyliesinreducingeventualheatloss
throughthefluegastostackandthroughprocesscoolingtocoldutility(airorcoolingwater).

http://www.hydrocarbonprocessing.com/IssueArticle/3375464/Archive/Hydrogenperspectivesfor21stcenturyrefineries.html?ArticleId=3375464&AddIss

3/6

3/27/2015

Hydrogenperspectivesfor21stcenturyrefineries|HydrocarbonProcessing|September2014

Fig.4.EnergybalanceofaH2plant,
where1Gcal/kNm3=104.31Btu/scf.

Energyefficiencyoptimizationbasedonoperatingexpenses(OPEX)/CAPEXevaluationsdependsupontheH2generationunit(HGU)capacityand
relatedsteamreformer(SMR)size.Itisfurthersensitivetowhetherapplicationofprereformingisrequired(forfeedflexibility)orisoptional.
Basedoncasespecificdata,asensitivityanalysiswasconductedforkeyvariablessuchasfeed/fuelpriceratioandfuel/steampriceratiotooptimize
OPEXagainstincrementalCAPEXinvestmentwhilekeepingoveralleconomicswithinthegivenevaluationcriteria.Theresults,presentedin
Table2,canbesummarizedasfollows:
1. Whenfeedismoreexpensivethanfuel,whichisoftenthecasewithliquidfeeds,itcallsforhigherfeedconversionandH2yieldsbyincreasingSMR
outlettemperatureand/orincreasingthesteam/carbon(S/C)ratio,extendedshiftconversionlevelandhigherPSArecoveryinordertolowerthe
OPEX.ForCAPEX,however,itincreasesappreciablywhenraisingtheSMRoutlettemperaturebeyondacertainlevel(chosenas1,600Fforthe
study).Itmaybemoreeconomicifsteamcreditishighrelativetofuelvalueinviewofreducedradiantefficiency.
2. Whenfeedandfuelaresimilarlypriced,increasingreformingseverityintermsoflowerS/CratiosandhigherSMRoutlettemperaturescanimprove
OPEX,butCAPEXmustbecarefullyconsidered.TolowerS/Cratiosbelow2.7,amediumtemperature(MT)shiftisnecessary,sinceHTshiftis
restrictedduetoconcernsofoverreduction.CAPEXcanbeslightlyreducedwithlowerS/Cratiosbasedonreducedheatrecoveryloaddownstream
ofthereformer.HavinghighercreditforexportsteamfurthersupportsloweringofS/Cratios.
3. AdditionalCAPEXisnecessarytoincreasePSArecoverybeyond86%89%,andthereforeshouldbeevaluatedonacasetocasebasis:The
economicsgetfavorablewhenfeedismoreexpensivethanfuel.

HIGHERECONOMIESOFSCALE
ForlargerH2plants,variablecostslinkedtospecificenergyconsumptioncoststendtogoverntheunitcostofH2.Table3
providesanoverviewofthesensitivityofvariableandfixedcoststoplantcapacity.TheunitcostofH2(UCH)isthesumofvariableandfixedcosts.

A1%reductioninenergycostsina100MMscfdH2plantcanresultinapproximately$750,000savingsperyearbasedon$5/MMBtunaturalgas.
ForlargerH2plants,thefocusismoreonefficiencyoptimizationandthereisabiggerincentiveforincrementalinvestmentintermsofextended
heatrecoveryandflowsheetoptimizationbasedonatypicalpaybackperiodoftwotofouryears.
WhileCAPEXisrelativelylesscriticalforlargerplants,itsreductionbecomesvitalforloweringtheUCH.TheUCHproducedbyasingletrain
largecapacityH2plantcanbeappreciablyloweredbyeconomiesofscale.Fig.5illustratestheUCHreductionfroma50MMscfdtoa200MMscfd
H2plantbasedonUSGulfCoasteconomicswith$5/MMBtuNGprice.Forhigherenergypricing,asobservedinEuropeandAsia,thebenefitsof
economyofscalecontinuetoholdtrue.

Fig.5.EconomyofscaleforH2generationplant.

Thougheconomiesofscalefavorlargerplants,thereisacapacitylimitabovewhichasingletrainplantstartsbecomingcumbersomeandrequires
detailedevaluationtoestablishthebreakpointfortwoormoretrains.Physicalsize,weightandtransportablelimitsontheequipment,valvesand
http://www.hydrocarbonprocessing.com/IssueArticle/3375464/Archive/Hydrogenperspectivesfor21stcenturyrefineries.html?ArticleId=3375464&AddIss

4/6

3/27/2015

Hydrogenperspectivesfor21stcenturyrefineries|HydrocarbonProcessing|September2014

piping,andconstructionfacilitiesmustbeconsidered.Suchlimitshaveprogressivelyincreasedfrom100MMscfduptoarecentprojectsizeof220
MMscfdH2baseduponcompactingequipment,advancedequipmentdesign,pipingmodelingandmodularconstructionconcepts.

CAPACITYREVAMPOFEXISTINGH2PLANTS
RefinersareoftenfacedwithaH2shortfallwhenaddressingchangesincrudemixagainstthemarketbasedcleanfuelsproductslate.Such
variationscanbelargeenoughtoimpactoveralloperation,H2balance,andrefineryprofitability,butmaynotbelargeenoughtojustifyanew
dedicatedH2plant.
AchievingadditionalH2byrevampingexistingplantscanbeanattractivealternativewithlowerUCHthroughcosteffectiveretrofitting.Actual
economicswilldependuponthedegreeofuprate,availabledesignmargins,theconditionofexistingequipmentandthelevelofmodifications
required.Normally,acapacityrevampnotonlyprovidesadditionalH2atlowercost,butalsooffersthebenefitsofshortertimeschedulesbecauseof
alreadyexistinginterfacingfacilities/offsites,andcanalsoprovidefeedstockchangeorflexibility,improvedefficiencyandenvironmental
performance.
TherearevariousprovenoptionstocosteffectivelyaugmentH2capacityupto30%ineachcase,however,bottlenecksmustbeidentifiedanda
properassessmentconductedtoselectthemostappropriateoption.
Ifthetargetcapacityincreaseissubstantial(>15%)withmajorlimitationsonthereformingsection,aneffectivesolutionwithoutoverloadingthe
reformerisregenerativereforming.Theunderlyingconceptistousethereformedgashighlevelheattoreformadditionalfeedthroughconvective
heatexchange,alsoknownaspostreforming.Thisoptionalsoprovidesa10%15%reductioninCO 2,NO xandSO xemissionlevelsperunitofH2.
WithadditionalH2capacityrangebetween2MMscfdand25MMscfd,aregenerativereformingretrofitinvestmentlargelydependsuponthe
percentincreaseinH2capacity,designconditions,availabledesignmarginsandthelevelofmodificationsrequiredintheexistingplant.Generally,
whencomparedwithanewH2plantforthesameadditionalcapacity,togetherwiththenecessaryoffsite/utilitiesandauxiliaries,suchinvestments
canbeeconomicallyattractive,asshowninTable4.

RELIABLEH2OUTSOURCING
H2isthelifebloodofmodernrefineriesandisessentialtotheproductionofcleanerburningtransportationfuels.WhenrefinersneedH2,they
typicallyhavetwochoices:buyaH2plantdesignlicensepayotherpartiestobuildtheplantandthenown,operate,andmaintaintheplant
themselves(knownasthemakecase)orpurchasetheH2requirementsfromathirdparty(knownasthebuycase,saleofgasmodeloroverthe
fencesupply).
Inthebuycase,anindustrialgascompanydesignsandbuildstheH2plantwithitscapitalandsuppliesH2directlytothecustomeroverthecourse
ofalongtermcontract.Thebuycasehasadvantagesthattherefinercanbenefitfrom:thegascompanyusesitsH2experiencefortherefiner,
enablingtherefinertofocusonitscorerefiningbusinessassumesresponsibilityforoperationalandmaintenanceactivitiesandcanprovide
guaranteedonstreamreliability,availability,andefficiencylevels.
AnotherwaytosecurehighreliabilityofH2supplyistoobtainH2fromaH2pipeline.Pipelinesupplycanprovidehighreliabilityand,often,the
lowestUCHduetoeconomiesofscale.
ThevarioussolutionsdescribedpreviouslyareallabletosatisfythefocalobjectiveofloweringthenetUCH.Theseoptionsenhancereliabilityand
HSEcompliancewhileprovidingrefinerswithimprovedeconomicsandmargins.Itisimperativetothesuccessof21stcenturyrefinersthatthey
managehydrogenefficientlyanddiligently.HP
References
1 Ratan,S.,W.BaadeandD.Wolfson,TheLargeH PlantChallenge,HydrocarbonEngineering,July2005.
2
2Ratan,S.,N.PatelandW.Baade,DrivingH PlantEfficiencieswithanEyeonEnvironment,HydrocarbonEngineering,February2010.
2
3Ratan,S.andM.Pagano,RefineryH managementismorethanabalancingact,AIChESpringMeeting,2011.
2

Theauthors
SANJIVRATANisgroupdeputyvicepresidentfortheH2productlineofTechnip,Stone&WebsterProcesstechnology,basedin
California.Hisresponsibilitiesincludetechnocommercialdirection,technologydevelopment,competitiveness,strategy,and
businesspromotion.HehasachemicalengineeringdegreefromtheIndianInstituteofTechnologyinDelhi,India.

http://www.hydrocarbonprocessing.com/IssueArticle/3375464/Archive/Hydrogenperspectivesfor21stcenturyrefineries.html?ArticleId=3375464&AddIss

5/6

3/27/2015

Hydrogenperspectivesfor21stcenturyrefineries|HydrocarbonProcessing|September2014

SARAHFARNANDistheglobalsegmentmanagerforH2andLNGinAirProductsTonnageGases,EquipmentandEnergyDivision.Her
currentresponsibilitiesincludeforecasting,coordinatingcompetitiveanalysis,providingstrategicanalysisandsupportingtheglobalbusiness.
ShehasaneconomicsdegreefromtheCollegeofWilliamandMaryandanMBAdegreefromtheUniversityofMaryland.

JIMMYLIistheHyCObusinesstechnologymanagerforH2andsyngasinAirProductsTonnageGases,EquipmentandEnergyDivision.His
currentresponsibilitiesincluderesearchanddevelopmenttoimprovenewproductcompetitiveness.HehasaPhDdegreeinmechanical
engineeringfromGeorgiaTechandisagraduateoftheWhartonManagementProgramattheUniversityofPennsylvania.

PleasereadourTermandConditionsandPrivacyPolicybeforeusingthesite.Allmaterialsubjecttostrictlyenforcedcopyrightlaws.
2014HydrocarbonProcessing.2014GulfPublishingCompany.

http://www.hydrocarbonprocessing.com/IssueArticle/3375464/Archive/Hydrogenperspectivesfor21stcenturyrefineries.html?ArticleId=3375464&AddIss

6/6