Hydrocracker upgrade on track to lift refinery profitability

17 June 2014
Hydrocracker upgrade on track to lift refinery profitability

Results from the first in a series of efficiency upgrades to Refining NZ’s hydrocracker unit show that the refiner is on track to improve its diesel processing and lift refining margins.

In March the Company refitted its Mild Vacuum Column (part of the Hydrocracker unit) with structured ‘packing’ – a honeycomb shaped series of corrugated metal plates that make separation of gasoil (the component of diesel) in the first stage of processing more efficient, and improves the yield of higher value products from the hydrocracking process.

Chief Executive officer, Sjoerd Post said the Company had forecast the step-up in separation efficiency from the column refit to lift margins by USD 0.13 per barrel. Early results show that separation efficiency of the new packing is better than had been forecast, having already lifted efficiency by around 3.5 percent.

“It’s clear that we’re getting far better gasoil separation from the column refit, and with a ‘cleaner cut’ we’re able to pull more gasoil out of the column without it being recycled to a second stage of processing, where conversion to less valuable, lighter products occurs.”

“In the current weak margin environment the forecast step-up in efficiency equates to around USD 0.11 per barrel. With better than forecast separation and the team continuing to work on optimisation, we expect to see even better efficiency from the column refit and with it, a further uplift in yield and margins going forward.”

Post said that the column refit is also expected to improve energy use with gasoil separation achieved at lower temperatures, and less hydrogen being required in the process.

“While this is just one component stream in our processing, it is an important first contribution to the series of initiatives aimed at lifting the performance on the hydrocracker which taken together, are expected to add USD 0.66 per barrel to Refining NZ’s Gross Refining Margin.”

Other efficiency upgrades of the hydrocracker undertaken by the Company include the replacement of catalyst, completed during the March shutdown; the installation of a pipeline to route ‘MVC bleed component’ to the Butane De-asphalting Unit due to be finished in the next two weeks; and the increased use of natural gas in the refinery, instead of fuel gases which can be made into products.

Post confirmed that the Company is monitoring the progress of the upgrades and expects to have more to report when all results are in and have been analysed.

“A key part of the Company’s business strategy is to maximise the generation of more valuable fuel products. This column refit along with the other upgrades to the hydrocracker will lift our profitability by making us even more efficient at producing the high quality diesel that New Zealand needs”, he said.

ENDS

Notes to editors:

Together, the improvements to the hydrocracking process are expected to contribute a structural uplift in the Company’s Gross Refining Margin (GRM) of USD 0.66 per barrel, comprised of the following: hydrocracker catalyst replacement (USD 0.29/barrel); Mild Vacuum Distillation column revamp (USD 0.13/barrel); MVC bleed to BDU (USD 0.13/barrel); additional natural gas (USD 0.11/barrel).

The expected GRM uplift for these initiatives is based on margin and price assumptions at the time the business case for each initiative was approved by the Company. The actual GRM achieved for each initiative is dependent on future margins and prices and may vary to that set out in the initiative business case.

The MVC bleed component ‘stream’ contains impurities produced by the hydrocracking process that render catalyst less effective, and is routed to less valuable fuel oil. This upgrade takes the stream to the Butane De-asphalting Unit for purification before routing to the hydrocracker for processing into higher value products.

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