Reducing Hydrocarbon Losses in Refineries
John Popielarczyk, Project Manger, HSB Solomon Associates LLC

Reducing hydrocarbon (HC) loss is especially critical for refineries in parts of the world—Europe, India, and Japan, to name a few—where expensive energy places added pressures on margins. Quick-hit HC loss-reduction wins can save from USD 2 to 10 million per year for a typical 100,000 barrel per day (bbl/d) refinery. Additional annual savings exceeding USD 10 million typically are achieved through subsequent no- and low-capital investments .

A significant economic opportunity exists for refineries to improve hydrocarbon (HC) loss management, which deserves more effort than it typically gets, especially in regions with high fuel prices. Many refineries , especially the lowest performers, do not have a good understanding of HC loss in their facilities and what their poor practices cost them. The use of knowledgeable outside help can be effective in developing a HC management programme. In many cases, significant reductions in HC loss can be made with little or no capital cost simply by changing refinery practices.

Measuring HC Loss HC loss - or refinery loss as it is also known—is defined as:
Total Processed Input
- Total Processed Output
- Fuel that is both Produced and Consumed by the Refinery

Discussions of HC loss sometimes debate whether fuel produced in the refining process that is subsequently consumed by the refinery should be included as HC loss. HSB Solomon Associates LLC (Solomon) considers refinery -produced fuel a product, because refinery-produced fuel consumed in the refinery ultimately displaces purchased fuel. In essence, consuming refinery -produced fuel is an economic optimisation between the value of the fuel as a saleable product and the price of an alternative external fuel supply for the refinery. In the end, refiners should manage fuel consumption like a loss, but separately from HC loss. That said, effective management of both is critical to refinery profitability.

HC loss is always measured in mass or weight percent. The refinery mass balance includes the effect of inventory changes in the refinery. These changes include crude oil and purchased feedstocks and blendstocks, intermediate products (work in process), and finished products.

A good refinery mass balance is needed to quantify the difference between HC input and HC output. Very simply put, if it is not fuel consumed, it is a loss. HC includes impurities such as sulfur and nitrogen bound in the HC molecules and H2 as an input or output. However, HC excludes non-HCs such as sediment and water in crude oil, feedstocks, or products.

Complicating the distinction between fuel and loss is the fact that the measurement of fuel gas produced and consumed in the refinery is not always accurate. However, there are some known areas to be considered:
  • Based on the Solomon Worldwide Fuels Refinery Performance Analysis (Fuels Study), total fuel consumed and HC loss in refineries is typically 5–7 weight percent (wt %) of processed input worldwide. HC losses in refineries average approximately 0.6–0.7 wt %, based on data provided to Solomon.
  • There is a wide disparity between high performers and low performers, with high performers (first quartile or Q1) averaging 0.1–0.2 wt % and low performers (fourth quartile or Q4) averaging 1.2–1.3 wt %.
  • The gap between Q1 and Q4 performers can easily exceed USD 20–30 million per year for a 100,000 barrel per day (bbl/d) refinery.>
  • From a chemical and physical perspective, refineries processing higher-sulfur lower-gravity crude oil should have more physical losses than refineries processing low-sulfur light crude oil. Statistically, the impact of gravity and sulfur on HC loss is negligible relative to other variables.
  • Indian refiners have similar performance to the Solomon Europe, Middle East, and Asia Pacific peer results.
In general, these results are consistent with other published industry sources and Solomon experience. There may be some noise in the data, especially for low performers. By definition, underreporting refinery-consumed fuel would result in reporting increased HC loss (Figure 1).

Managing HC Loss
There are two components to HC loss: process mass losses and controllable losses. Process mass losses stem from impurities such as sulfur and nitrogen that must be removed to meet product specifications or for processing reasons. Processing converts HC input into products such as water (H2O), carbon dioxide (CO2), ammonia (NH3), hydrogen sulfide (H2S), and sulphur dioxide (SO2) that have no market value. These materials are lost when vented to the atmosphere, disposed of, or lost in wastewater.

These losses, which generally are fixed by the selection of feedstocks and product-quality requirements, typically represent less than 20 per cent of total HC loss. Some small improvements can be made if there is significant product-quality giveaway. Converting the materials to a saleable product can improve margins and reduce this loss. Ultimately, reductions come down to feedstock selection and product quality as determined by optimised economics .

Controllable HC losses include flares, refinery effluent, process leaks, tank evaporation, slop evaporation, solid waste, and theft. On average, refineries with Q1 returns on investment (ROIs) have approximately 0.2 wt % lower controllable loss than refineries with Q4 ROIs.

This statistic bolsters Solomon’s belief that the difference between high performers and low performers is that high performers pay attention to details and look for opportunities to maximise profitability.

Solomon observation of low performers is as follows:
  • They do not have a good understanding of the magnitude of HC loss .
  • They have difficulty producing good monthly and annual mass balances .
  • They do not have an ongoing effective programme to identify and eliminate sources of HC loss.
  • They do not monetise the cost of HC loss.
What a Good HC Loss Management Programme Looks Like
Generally speaking, a good HC loss management programme exhibits the following characteristics:
  • A good refinery mass balance exists.
    • Primary custody transfer meters are accurate and unbiased.
    • Fuel gas measurement is accurate to differentiate fuel consumption from HC loss.
    • Flares are metered and monitored.
    • Crude oil, feedstock, intermediate, and product densities are kept up to date in flow meters and tank inventory systems.
    • An accounted loss table in the monthly and annual mass balances exists and that table identifies and attempts to quantify sources of losses.
    • HC loss is monetised.
  • A good HC loss reduction programme exists under which sources of routine losses are identified, monitored, and eliminated.
    • Flaring is minimised except in emergencies. Leaking relief valves are minimised. Flare-gas recovery systems recover any gas sent to the flare under normal conditions.
    • Slop oil production is minimised. Slop oil production is routed to vapor -controlled slop tanks in closed systems. Slop oil to sewers is minimised; and sewers are covered to minimise evaporative losses.
    • Detailed procedures are established to minimise slop and flare losses during shutdowns and startups. Procedures are established to manage draining of vessels, heat exchangers, pumps, and lines for inspection and maintenance .
    • Tanks are well maintained.
    • Sources of HC vented directly to the atmosphere are eliminated.
Role of Third-party Assistance in Managing HC Loss
Despite the challenges presented by HC losses, refinery personnel already know the sources for many of the losses. Independent third parties (such as consultants) have the ability to support what employees already know about losses and present a compelling business case to resolve them. Having someone with experience finding similar problems and assisting clients to implement effective solutions at other facilities gives confidence to management and improves the efficiency and effectiveness of solutions.

Another advantage of third-party assistance is cost-efficient training in HC management. A two day training course in HC loss management can discuss all of the basic principles, where to find the losses, how best to measure them and how to manage them. A good programme has participants actively engaged in identifying the refinery’s problems. The consultant can then help the client further investigate and define those issues in a follow up to the training. Finally, the consultant can assist in developing an efficient, effective solution, drawing on outside experience with similar problems.

Impacts and Benefits
Solomon has led successful programmes to reduce HC loss at refineries, petrochemical plants, and terminals around the world. Our consultants have identified quick-hit HC loss reduction wins—improvements achieved with little or no cost that could be implemented in 90 days or less—varying from USD 2–10 million per year. Additional savings of greater than USD 10 million per year are typically achieved with additional no- and low-capital investments.