Final Presentation

Hello All,

Here is my final presentation.  If any edits are made to it the file will automatically update to include them.  Thank you for reading the blog over the past weeks and I hope I was able to educate you about the optimization of oil refineries.

Presentation Link

Who Does What?

Hello,

So this week is going to be a bit different from the past few weeks.  Rather than focus on the actual optimization of oil refineries, I feel it is important to have a post on the industry as a whole, and more specifically on Fluor’s position within it.  Some of this will be slightly similar to what I have put in in other posts, but those posts never focused on industry.  For this reason I hope to paint a clearer picture than I have regarding this topic.

So where does this fit into my research of oil refinery optimization?  Well, outside of expanding upon the company I worked at, it also will help to show how the industry operates.

Within the oil refinement industry (or at least the part of it that matters to this project) there are three main groups of companies.  These include oil companies, licensors, and project management companies (Fluor falls into this group).  What do each of these groups do?

Let’s start with the oil companies.  As discussed in a previous post, their main job is to make money.  Opinions on that aside, they have a financial obligation to their stockholders to do so, and by not working to maximize profits they would risk the company moving towards failure.  Luckily for me, this in many ways is what drives optimization of oil refineries in the first place.  

Onto the licensors.  These guys generally have a product or technology that they have created that they then license out to be used in an oil refinery.  Tough to figure out where their name comes from huh?  They do contribute more to the process than just licensing though.  These companies also consult as to how their technology can best be implemented in the refinery.  I have thoughts that this also helps them to make sure their product is in the best place to succeed, thereby making their company look better, but that is just a thought and is by no way confirmed (thought it was interesting to share though).

And the most important group to the project is the project managers (definitely not biased here).  Fluor is in charge of planning and managing the project as a whole.  They have to decide how to revamp and/or design a refinery based on the agreed to budget.  Fluor will also bring in the licensors they need for the necessary technology to achieve the desired optimization.  This does mean that Fluor does not have the ability to make the final decision though, as the oil refinery decides how much money they are ultimately willing to spend as they are the client Fluor is working for.

Anyways that is the general overview of the players within the oil refinery industry, and it was one that was fascinating and exciting to work within.  Thanks for reading.

Stephen

Raising The Productivity Anywhere Possible

Hello,

Before I get started, I’m going to give a fair warning.  This week may be a bit more on the technical side.  I’ll try to stop and explain as I go, but I may overlook something, and for that I say sorry in advance.   Well, let’s get into it.

This week we will discuss the optimization of a more specific part of the process allowing us to gain insight into just HOW much goes into oil refinery optimization (from the very general layout to the extremely specific).  For that we will be using the catalyst in the fluid catalytic cracker (FCC) as an example.  Don’t worry, I’m already taking a step back to explain.  So the FCC is a unit that is very important to an oil refinery.  It is one of the more productive units that is used early on in the refinery process to crack hydrocarbons to create gasoline.  To help heat the oil the FCC unit uses a catalyst (hence fluid catalytic cracker).  

Cool now that we got that explanation out of the way, what is there to optimize here.  Let’s look at the catalyst itself.  The catalyst has been heavily optimized, looking for the best compound to use to get the best production from the unit.  However, optimization goes further.  At Fluor I learned that they have looked further here than most anyone else.  Currently, there is a tray sitting over the catalyst that distributes the oil down onto it, and the tray sits on a ring on the unit’s wall.  This means that some of the catalyst lays below this ring.  How much? Up to 20% to be exact.  The reason this is important is that the current system of distributing the oil has an extremely difficult time of distributing the oil unto this 20%.  As you would expect, this causes a loss in productivity, and is one of the many reasons (more possibly overlooked even now) that the actual productivity is lower than on paper.  

So how did Fluor look to solve this problem?  They developed a new way distribute the oil, allowing it to spread out more.  This means that the oil is able to reach the edges more as well as making the catalyst in the middle areas do less work.  Overall, this leads to a large productivity increase.  I don’t want to go into much detail as to how they do this to make sure I don’t share anything I shouldn’t.  Anyways that is what I have for this week.  Next week I’ll have another example and will go into the importance of these specific examples of optimization.

Stephen

Clearing the Smog Around Oil Refineries and the Environment

Hello again,

So this week will be on how the oil industry deals with environmental regulation.  However, before I get into that, I’ll take a second to lay out what the next few weeks will be on.  After this week, the general overarching topics will be covered, and I will go into specific examples of optimization on a very detailed level to gain insight into just how far optimization goes with oil refineries.  

Anyways, back to environmental concerns and oil refineries.  So, first off, optimization of oil refineries and environmental regulations don’t exactly go hand in hand.  This is because generally it takes further refining of the product to make it more environmentally friendly, and thus more costly to produce it.  For this reason, unless it is mandated by law, oil refineries tend to work to meet specification without going much further in order to stay competitive.  There are some refineries that take a slight hit in the profits to lower their environmental impact, but this is mostly done by smaller private companies (as opposed to publicly traded companies, a.k.a companies traded in the stock market) if at all.  The reason for this is kinda outside my scope so I’ll keep the explanation brief: If a publicly traded company made that trade for environment over profits, it's likely that their reported net earnings would decrease.  The risk is that if the decrease is large enough, the company would potentially have their stockholders sell their shares, lowering the company's value.  Basically, not good.

This is where governmental regulation comes into play.  The government sets certain specifications to meet in order to sell oil in the given state (usually done on a state level within the United States), and the oil industry then adjusts to meet them.  By doing so, the government effectively increases the price of refining oil and thus increasing the price of gas, but helps the environment in the process.  Not a bad trade off.  

So what does the government regulate to help the environment exactly?  The answer is sulfur, and to be honest I was a bit surprised as it feels that the sulfur levels are rarely mentioned.  And this regulation has helped the environment a lot.  Sulfur is one of the main contaminants in oil, and lowering it greatly aids air quality.  Unsurprisingly, California generally leads the charge in lower sulfur, followed by the rest of the United States usually, and then the rest of the world (not a hard set rule, but generally true).  Over the last few decades, sulfur levels have decreased from a few hundred parts per million, down to the 10-15 ppm range.  This staggering decrease has helped, however the government on both a federal and state levels have continued to lower allowable sulfur levels, especially now focusing on diesel fuel (as that is currently higher).  Anyways, that's what I going on as far as environmental concerns and oil refineries.  Thanks for reading!

Stephen

Trying Not To Use Energy While Making Energy

Hello,

This post will be on the optimization of energy within an oil refinery.  In many ways, energy optimization is a subset of economic optimization because if you save energy you save money.  However, I feel that it is important to set it aside because it is one area of refineries that has waste in some form (nor is it possible to completely prevent really).

So first things first, what do I mean by energy optimization?  In refineries, it takes energy to heat and cool the products for the distillation process.  Furthermore, there are compressors that require energy to pump the fluids and even light sources that require power amongst other parts of the refinery that require energy.  The optimization comes into play through figuring out our to best layout the refinery to use the least amount of energy as possible.

Energy optimization in refineries starts with heat.  To gain some perspective at the heat differences, some substances are heated to well over 1000 degrees fahrenheit while others are cooled to a good amount under 0 degrees.  As you would expect, the heating and cooling of these substances takes a lot of energy.  Also, for distillation to work, substances have to be heated to their boiling point, then condensed back into their liquid state.  This leads into the waste in energy.  When a heated substance is cooled, there is a waste of energy in the form of heat.  To combat this refineries use heat exchangers.

A heat exchanger allows a heated substance to heat a different substance, thereby using the thermal energy of the first substance.  It is important to note that the heat exchanger does not mix the two substances (that would be counter productive…) but rather only allows heat to be transferred between the two.  Heat exchangers are more efficient when they limit the amount of heat lost to the environment.

Another important area for refineries is that of pumping the fluids from unit to unit.  Compressors are the main energy drain here and are required when pumping a substance from low to high pressure.  This means that the best way to optimize energy in this regard is to lay out the refinery in such a way that limits the need for compressors.  To put it in simpler terms, engineers try to adjust the layout of the refinery to use gravity and pressure in their favor when moving substances from one unit to another.  

Well that’s the basics of energy optimization.  If there is anything not clear in here, I will be happy to answer questions in the comments.  On a side note, my 18th birthday is tomorrow, so I’ll be writing next week a year older (because that’s how age works, best not to question it).

Stephen

Making Something From Nothing....Kinda

Hi again,

In my last post I mentioned that I would dive into the different areas of optimization, and how they are achieved.  This week I will go into how lower end products are made into products of higher value.  To achieve this, there are a multitude of units that work towards this goal, so I will go over the general concept, and talk about one unit in particular.

The general concept of a refinery is to take crude oil and create valuable products, most notably gasoline.  To do this, the refinery takes the heavy crude, and breaks the long hydrocarbon chains into smaller ones.  However, during this process, a number of other products are created, some more valuable than others.  Generally, the lighter the product (smaller hydrocarbon chains creates a lighter product) the more valuable it is.  The least valuable product from refineries tends to be asphalt, which is a mixture of heavy byproducts.  

So now the quest is to make those heavy byproducts lighter and thus more valuable.  Enter the magical coker unit.  What does it do? Great question.  This unit will take those super heavy products, such as residual oils (heavy byproducts from units that create what eventually turns into gas), and makes them into a few different lighter products.  The main products are naphtha (mixed with other products to make gasoline), light and heavy gas oils (used as an energy source), and petroleum coke (also called pet. coke or simply coke).  As you may have guess, the last product is where the name of the unit comes from.  

The petroleum coke in many ways is why this unit is so useful.  Petroleum coke is very similar to coal in use and appearance.  This means that the coker takes what would eventually turn into asphalt, and creates a valuable energy source.  I also mentioned last week about the need to optimize energy, and some coker units do this by using some of the petroleum coke produced to provide the necessary energy to run the unit itself (I’ll continue into energy optimization next week).

Now why is the coker and units like it important to mention?  The reason is that these units are one of the main ways that refineries are currently implementing to find better economic optimization.  The reason for this is because cokers are more useful as the quality of crude oil declines (remember in the last post I mentioned that the quality is in constant decline currently), as poor quality crude creates heavier byproducts that need a unit like the coker to refine.  Thus, units that refine these heavy byproducts are becoming increasingly necessary in the world’s refineries.

Well, that’s a bit on economic optimization.  It is a pretty complicated topic and I may revist this again later, but next week will be on energy optimization.  See you then.

Stephen

Goodbye California

Hello,

Well, I have now returned to Arizona after an all around great experience in California.  I learned so much about the industry I hope to enter, insight into the possible major I will choose, and of course, how to optimize refineries.  In this post I will go over the general aspects of optimizing a refinery, and go into specifics in the upcoming weeks.

So first off I feel it would be good to clear some misconceptions about the oil industry that plays into my research.  The largest one is that oil is quickly becoming more scarce and that it has a huge effect on the market.  Any changes to scarcity are happening slowly and does not really change the market all that much.  If there are any changes in scarcity, it is that over time the quality of the crude oil being processed has decreased (I will go into this more later).  Another misconception, related to the scarcity one, is that there is going to be more money in oil sooner rather than later, because the scarcity will cause the price to increase.  In reality, the oil market is cyclical, and highly dependent on a variety of factors.  

Anyways, onto the optimization.  Refineries are optimized to reach the highest level of economic efficiency as possible.  This means that it is very common that over time refineries try to invest in units that take lower end products and make higher end products.  An example of this would be using products that would normally go into asphalt, and making gasoline products from them.  There are little to no waste products from refineries, it’s just the value of the product and which product is being produced that is optimized here.

Another area of optimization for refineries is that of energy usage.  They are designed to avoid wasting energy throughout the process, and to try to use heat from the process that is needed elsewhere in the process to try not to waste that energy.  In many ways, heat is often the highest area of waste and could be where future changes are made.

Environmental concerns are also playing into the industry.  As legislation is passed to decrease emissions, refineries are forced to implement units that will help them meet the specifications.  The most common form of this is decreasing sulfur levels in fuels.  There have been huge advancements here in the past few decades, and as more legislation is being passed throughout the United States and the world as a whole.

Anyways, that’s the brief overview.  I will go into more detail in the upcoming blog posts.

Stephen