Slurry Phase Hydrocracking: Bottoms Upgrading for Today’s Market
Steve Mayo, Director - VCC Technology
Mitra Motaghi, Business Development Manager
Rahul Ravi, Senior Technical Professional - Process
KBR Technology, India

The article focuses on the significance of resid processing methods which has emerged as a big concern for many refineries as they struggle to improve product qualities and refinery margins simultaneously while dealing with their large residuum pool. The authors shares insights into the Residuum Landscape and advocates on 'Slurry Phase Hydrocracking' which has not enjoyed widespread acceptance as the technology as choice for resid upgrading.

In the face of high crude oil prices, low natural gas prices, and ever increasing product quality regulations, refiners are presented with an unprecedented situation of improving margins by re-evaluating their resid processing options. The ability to reliably eliminate fuel oil production, maximise high quality distillate yields, and achieve almost complete conversion to high value transportation fuels, is essential for sustaining the value of installed assets in the years to come.

In its simplest form, refining is a process of changing the carbon to hydrogen ratio of naturally occurring crude oils. At a molecular level, the operation of all refineries in the world is essentially targeted at converting low hydrogen to carbon ratio feedstocks into high hydrogen to carbon ratio transportation fuels. Changing the H/C (Hydrogen/Carbon) ratio between feedstocks and products can only be accomplished through the rejection of carbon molecules or the addition of hydrogen molecules.

Carbon rejection is favoured by low crude prices and high hydrogen prices. Under these conditions it is more economical to reject the residuum as petroleum coke, while producing the required transport fuel volumes by incremental crude oil processing. Conversely, hydrogen addition is favored by high crude prices and low hydrogen prices, when it is more economical to upgrade nearly every molecule of residuum to transport fuels, while also maximising transport fuels production from the base crude capacity. In the United States, shale gas production has had a dramatically reduced the price of natural gas, relative to crude oil, on a comparable energy basis. This provides a relatively low cost source of hydrogen in many geographical regions. Converting inexpensive hydrogen into high value liquid transportation fuels by hydrogen addition to low H/C ratio feedstocks provides a good economic return. Economic analysis clearly points to a transition from carbon rejection to hydrogen addition at USD 50-60/barrel crude, even when considering natural gas prices of USD 10/MMBTU. Lower natural gas prices provide an even more significant tailwind to hydrogen addition economics. As the new gas production techniques spread to other parts of the world, projections are that hydrogen addition economics will remain favored for many years to.

Another significant factor in bottoms upgrading economics is the problem of stranded streams. Many refineries are littered with low value streams that must be blended off, disposed or sold at loss in order to accommodate processing equipment limitations from a different era. The bulk of operating refineries around the world have little or no residuum processing capability and produce large volumes of high sulfur fuel oil and bunker fuel. Falling demand for these undesirable products will continue into the future and already negative margins for these streams will only get worse.

Regulatory pressures on residuum outlets such as marine bunker fuels are expected to worsen in the future. As world governments move towards cleaner bunker fuels, refiners will be forced to find new ways to deal with their large residuum pool. It is a task that is becoming more pressing as oil producers bring to market increasing amounts of heavy crudes, which cost less, but feature substantial increase in resid content. While shale oil production has provided a temporary respite from declining average API and rising sulfur contents, most projections do not expect shale oil production increases to offset the increasingly heavy sources of crude oil production from new discoveries and reserve development.

Not only refinery products but also by-products must be considered when evaluating bottoms upgrading process technology. The market for coke from delayed cokers is highly dependent on availability of local outlets for the material, such as power plants. An abundance of coke on the market creates prices that only marginally cover costs or are negative. Combined with the economic considerations are the environmental considerations of burning or disposing of this low H/C material.

On the product side of the economic equation, the gasoline to distillate ratio continues to move in favour of distillate on a worldwide basis. Even in markets where Fluid Catalytic Cracking (FCC) units are the primary conversion process and gasoline the predominant transportation fuel, rising worldwide demand is driving investments aimed at maximising production of high cetane, ultra low sulfur diesel. The rising D/G (Diesel/Gasoline) ratio is forecast to continue, with most of the incremental increase in transportation fuel volume for future years coming from distillate.

This is an important consideration for refiners, when making long-term, high CAPEX investment decisions. Current economics clearly point to hydrogen addition as opposed to carbon rejection especially for increased distillate production.

Today, the market imposed challenge to refiners is to find a hydrogen addition based resid conversion technology which supports the strong economics of near complete conversion, high selectivity towards diesel, Euro V quality and high operating reliability - all at a reasonable capital investment and strong ROI. A convincing case for slurry bed hydrocracking as the technology choice for today’s market conditions will be laid out in this paper.

The Residuum Landscape
Residuum oils can be broadly classified by their contaminant metal (Ni + V) and Conradson Carbon Residue (CCR) content. These two parameters broadly define the suitability and type of conversion technology which can be applied to these heavy oils.

Fixed bed hydroprocessing is suitable for processing atmospheric or vacuum residue with modest amounts of metals and CCR and mainly for desulfurisation rather than conversion. Conversion is typically 15-20 per cent and further conversion of the products in other units is necessary. Nonetheless, operating pressures are high, increasing investment costs and operating costs can be high as well due to catalyst deactivation from metals and coke .

Resid FCC (RFCC) is a seemingly attractive way to convert resid with no unconverted product to deal with. Unfortunately, the more hydrogen deficient the feedstock the more of it forms coke on catalyst. This sets a limit on the amount or heaviness of the residue processed in the RFCC while keeping regenerator temperatures at an acceptable level. Catalyst coolers and other methods of heat removal can improve the range of feedstock processing possible but RFCC is still very limited.

More recently, ebullated bed hydrocracking technology has been the choice for hydrogen addition to residue with higher levels of metals and CCR. Conversion is higher than prior technologies but still limited to less than 80 percent conversion and in some cases, significantly less. The nature of the e-bed conversion process creates an unstable asphaltene phase which usually limits overall conversion by causing severe fouling in downstream equipment. Introducing aromatic solvents and high recycle rates can help maintain asphaltene solubility and reduce fouling but these solutions have a cost and there is still an upper limit on the level of asphaltene conversion which can be achieved.

Slurry phase hydrocracking offers the greatest potential for a robust residue conversion technology which encompasses the entire residue landscape . Only coking is as immune to high levels of CCR or metals content in the feed and, being a hydrogen addition process, slurry hydrocracking has the advantage over coking of ne near complete conversion of the residuum to high value products.

One such slurry phase technology is Veba Combi Cracking (VCC™), a commercially proven bottoms upgrading technology suitable for converting 95 wt% of residues into high quality distillates.

VCC™: Veba Combi Cracking
The origin of slurry phase hydrocracking and the VCC™ process dates back to 1913, when Freidrich Berguis was awarded his first patents for the process of liquefying coal. The 1931 Nobel laureate had demonstrated that liquid products can be produced by simply subjecting coal to a high enough temperature and hydrogen pressure.Using these principles, 12 commercial units were built and operated in Germany between 1927 and 1945, producing about 100,000 BPSD of transportation fuels from coal and coal tar. After WWII, several of these units were dismantled and sent to Eastern block countries. The remaining units, including the six operating trains at Gelsenkirchen, were converted to 10,000 BPSD trains for processing refinery vacuum residues. The first true VCC™ units were developed in the 1950’s when an integrated second stage fixed bed reactor was added to the slurry phase reactor. It was realised that mild hydrofinishing of the slurry phase products could result in higher quality distillate. This integrally coupled combination of slurry phase hydrocracker and trickle bed hydrofinisher was the origin of the VCC™ process as it is known today.

These original VCC™ units operated on residues until 1967 when very low crude oil prices and the end of government subsidies forced the units to be shutdown and subsequently dismantled. Low crude oil prices make it uneconomic to add hydrogen to residue, in particular for this period when outlets for residue, such as fuel oil, existed. VCC™ technology went dormant for a period until viable economics would once again surface.

The trigger for resurrection of VCC™ was the hike in crude oil prices resulting from the oil embargo of the 1970's. Economics of hydrogen addition and high conversion of residues turned positive and Veba Oel constructed a 3500 BPD in Bottrop, which started up in 1981. In addition, 200, 3.5 and 1 BPD pilot plants were built for developing the technology. Over its operating period, significant improvements were made to the process through equipment design modifications and operational adjustments. Two units were licensed by Veba to utilise VCC™ technology, but, once again, oil prices fell to levels which would not support project economics. Bottrop was decommissioned and shutdown in 2001 after a period of sustained low oil prices.

Following BP's acquisition of Veba and a rise in crude oil prices from increasing market demand rather than exogenous events, VCC™ was added to BP's Vision 2030 portfolio and the BP Advanced Refining Program. In 2008 a new 1 BPD VCC™ pilot plant was designed, built and commissioned at BP's research facilities in Naperville, USA. In 2010, BP and KBR agreed to a marketing, licensing and engineering alliance to promote the technology.

Slurry Phase Hydrocracking
While slurry phase hydrocracking has been reliably practiced for several decades, it has not enjoyed widespread acceptance as the technology of choice for resid upgrading. Even with its strengths of high asphaltene conversion and distillate selectivity, the specific set of economics supporting VCC was elusive until recently. Higher hydrogen consumption and CAPEX compared to alternative resid conversion technologies was not economically justified without sustained higher crude and product prices. The appropriateness of any technology choice must be weighed against the prevalent market conditions, and its relevance is deeply rooted in the principles of molecule management. Embedded in this approach is the core belief that refining margins are maximised by selectively maximising the value of every molecule in naturally occurring crude oils in every stage of processing. Vacuum residues can be broadly classified by SARA analysis (Saturates, Aromatics, Resins and Asphaltenes). These properties set the severity of operation (pressure and temperature), hydrogen uptake, and capital investment required to convert the material. Since asphaltenes are the most hydrogen deficient part of the resid and contain virtually all the impurities, the decision to convert them or remove them can be complex.

1. Will crude oil prices remain high?
2. Are outlets for byproducts, such as pet coke or fuel oil, available?
3. Is hydrogen inexpensive relative to crude?
4. Are markets for high quality distillate products growing?
The economics of not upgrading, partially upgrading or fully upgrading high C/H molecules is substantially influenced by: crude price, natural gas price , and capital investment. Historical low crude oil prices, high natural gas prices, and until recently, an acceptable margin for fuel oil relative to lighter products all had an inhibiting effect on the value of upgrading asphaltene molecules. It was both economical and convenient to discard these molecules as coke or as unconverted residual fuel oil. While slurry hydrocracking technology was sound, the market and regulatory landscape did not support the additional capital and operating cost to bring it to commercial application.

The past decade has seen a shift in the market dynamics affecting residue upgrading - crude oil prices have been sustainably higher, natural gas prices are lower, the market for high quality distillate is strong and growing and there is a shrinking market for fuel oil and petroleum coke. Conversion of asphaltenic molecules to lighter products can now be economically justified. Slurry phase hydrocracking is the preferred choice for these new market conditions and specifically VCC™ since it has been developed through decades of innovation.

A comparison of the net present value (NPV) of three technology routes derived from upgrading a refinery residue as a function of bench mark crude price shows a remarkable trend in favor of slurry phase hydrocracking. Both the economic and regulatory trends are heavily weighted in favor of VCC™, and the current and future market conditions are aligned with the inherent features of this technology.

The economic evaluation for one North American refinery clearly shows that the net present value of the ebullated bed process exceeds that of the delayed coker at a bench mark crude price of $85/bbl. This is primarily because of the lower conversion of e-bed, larger volume of lower value unconverted residuum, and the production of aromatic distillate products that need retreatment. On the other hand, the net present value of VCC™ exceeds that of the delayed coker at a bench mark crude price of $50/bbl, making it the clear choice for hydrogen addition technology.

The value of any technology can only be extracted if reliable long term operations can be sustained. In the case of VCC™, this reliability can only be achieved if high asphaltenes conversion can be accomplished without fouling the unit. A molecular evaluation of residuum will reveal that the asphaltenes are held in solution by the aromaticity of the solvent phase.

The basic conversion chemistry for slurry phase hydrocracking is essentially thermal in nature and relatively similar to that seen in other carbon rejection processes. The condensation chemistry associated with these cracked molecules, which would normally lead to coke formation, is interrupted by the high hydrogen partial pressure. Therefore, unlike a typical thermal conversion processes, the reaction system produces a very high level of lighter products with little condensation or coke formation .

As conversion progresses, the side chains that hold asphaltenes in solution are easily cracked causing them to lose solvency, and eventually precipitate . An analogy can be made to the operation of a solvent de-asphalting process . In that case, when the asphaltenes are dissolved in a light paraffinic solvent, phase separation occurs, resulting in precipitation as pitch.

Unconverted asphaltenes precipitate and adhere to equipment surfaces - the walls of the reactor, piping, heat exchanger, etc. This severe fouling limitation leads other resid hydrocracking technologies to reduce their per pass conversion or to resort to recycle with the addition of a large volume aromatic solvent stream in an attempt to keep these unconverted asphaltenes in solution.

VCC™ technology operates with stability and high conversion in a mode that eliminates fouling. This issue has been researched over several decades dating back to the origins of the technology. Over 1,000 patents and over 2 ,000 filings were made, covering the entire landscape of catalytic and additive options. These efforts lead to the discovery and commercialisation of a non-catalytic, non-metallic additive which all but eliminates fouling tendencies and allows unprecedented high asphaltene conversion.

Asphaltene molecules are adsorbed to the high surface area of the additive where the required residence time is made available for the asphaltenes to continue to crack. The lighter, cracked products are released from the additive surface and the heavier, unconverted asphaltenes, containing all the contaminant metals, remain on the additive. Later, the additive is removed from the process along with the captured unconverted asphaltenes and any contaminant metals. This chemistry is possible because of the higher operating pressures of VCC™ which allow the unit to operate in a non -catalytic mode by inhibiting condensation chemistry.

This combination of high hydrogen partial pressure and non-catalytic additive system is unique to VCC™ and is a major reason it has decades of reliable operation at high (>95%), once-though conversion, with no signs of fouling. Hydrogen addition needed to meet final product quality is met by adjusting the trickle bed hydrofinishing conditions. This separation of thermal conversion of residue from the catalytic conversion of converted material is key to the technology. Each stage does the job for which it was designed and this eliminates the issues often seen when using catalysts for residue conversion. The reliability of the process has been proven by operating factors that have consistently exceeded 90% over many years of operation.

Current market and regulatory conditions substantially favor investment in hydrogen addition technologies. Slurry phase hydrocracking in general and VCC™ technology in specific, are ideally positioned to exploit the new market conditions. With VCC™ near complete, once through, distillate selective conversion to high quality finished products can be reliably achieved with high on-stream factors.