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Christina Priya Dhanuja Rajaram Vijayan Technical Insights–Chemicals, Materials, and Food May 2009
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The Economic Crisis and the Refinery Catalyst Industry Major Product Suppliers and the Market Scenario Strategic evaluation of the Current Market Dynamics Stimulus Packages–Hope for Recovery? Growth Strategies and Future Directions
The Economic Crisis and the Refinery Catalyst Industry
Impact of Crisis on the Global Chemicals and Materials Market
Europe Europe Decline in consumer demand resulted Decline in consumer demand resulted in scaling-down of production and in scaling-down of production and redundancies across all industries. redundancies across all industries. Construction. automotive and real Construction. automotive and real estate industries and the finance and estate industries and the finance and banking sectors have already been hit, banking sectors have already been hit, affecting the chemicals and materials affecting the chemicals and materials markets markets
Russia Russia Russia is affected by the Russia is affected by the economic downturn but its economic downturn but its strong position in oil and strong position in oil and gas reserves suggest a gas reserves suggest a quick comeback quick comeback
USA USA Housing market collapse affected a wide Housing market collapse affected a wide range of chemicals and materials markets range of chemicals and materials markets Significant job losses in the industry and Significant job losses in the industry and plant closures (Dow, BASF, Rohm & Haas plant closures (Dow, BASF, Rohm & Haas and others) and others) Decline in consumer demand affects endDecline in consumer demand affects endmarket pricing, which in turn led to market pricing, which in turn led to volume reduction volume reduction
Japan Japan Automotive giants are hit Automotive giants are hit hard by economic recession hard by economic recession and resulting drop in global and resulting drop in global demand; this directly affects demand; this directly affects all dependent chemicals and all dependent chemicals and materials markets materials markets
Impact of recession on the Refinery Catalyst Industry
Decrease/Cancellation in the number of refinery projects. Lesser effect on diesel demand • Sluggish Oil Demand in US and Europe has led to refining margins facing short-term pressure. • Demand is likely to decline by around1.1 million b/d in US and Europe; Utilization cuts: US refiners (Gulfcoast 2.5%, East coast–5%), EU refiners (0.5%) Investment in new refinery capacities doubtful. Opportunities for catalytic technologies aimed at higher refinery throughputs Lower cash flow for R&D investment • Credit Crunch-substantial reduction of throughputs in the US and Europe will become necessary and this could lead to an additional reduction in utilization of 5%. • The smaller and more vulnerable refineries will be severely affected by the credit crunch.
Global Economic Crisis
No effect on Fuel specifications
Opportunities for sulfur removal and aromatics saturation. Increase in number of hydroprocessing units. Opportunities to develop cost-effective catalysts
Which of the following strategies do you think will work best for refinery catalyst companies in the current economic downturn
Collaborations and Technology Partnerships
R&D and Innovation Others
Major Product Suppliers and Market Scenario
Refinery Catalysts–Major Suppliers by Product Types
Suppliers Albemarle Chevron Lummus FCC and Additives Reforming Hydro-cracking Hydro-treating Isomerization
BASF Johnson Matthey Haldor Topsoe Criterion
UOP LLC Sud Chemie Grace Davison
Strong Market Presence Source: Frost & Sullivan
Strategic evaluation of the Current Market Dynamics
Force Field Analysis–A Strategic evaluation
Current Scenario Desired Scenario
• Exxon Demand for Maintaining High Octane Number technology
reformate and light FCC off gas olefins to high octane gasoline. Need to improve refinery throughput Manufacture of catalysts for specific application segments • Albemarle has introduced Ketjenfine 770, hydrodesulphurization catalyst to produce ultra-low sulfur diesel (ULSD). • BASF has introduced the Prox-SMZ Increased need for diesel over gasoline Catalyst design challenges technology for maximizing distillates to higher olefins. • The development of Australian and Regulative and Legislative standards Higher catalyst production costs Canadian companies to start the mining process for the production of rare earth metals. Use of heavier feedstock Poorer accessibility of raw materials for rare earth catalysts
Challenges Recommendations Implementation
• Process optimization. • Develop alternatives for precious metal-based catalysts. • Better surface characteristics.
Higher Production Cost
• Improvement on process economics • Develop effective regeneration technologies • Enhance the performance characteristics
Catalyst Design Challenges
• Alternating surface properties • Good poison resistant characteristics • Better availability of acidic and basic sites on the surface
• Structural modification for effective pore size distribution. • Novel chemistry concepts for enhancing activity and selectivity. • Resistance to metals and gases to suit any type of feedstock.
Catalysts for specific applications
• Improvement on process economics • Suit the needs of different feedstocks • Optimize utilization of hydrogen
• Higher selectivity and activity. • Resistance to metals and gases. • Investment on hydrogen network optimization.
Poor accessibility of rare earth metals
• Develop other sources of rare earth metal suppliers. • Develop alternate materials for replacing rare earth metals.
• Australian and Canadian companies have already started mining for rare earth metals. • Investment on R&D for futuristic materials.
Stimulus Packages–Hope for Recovery?
Global Response: Massive Government Stimulus
USA $787 bn American Recovery and Reinvestment Bill $700 bn bailout rapid interest rate cuts $23bn support for top three auto companies; Plan to create 2.5 million jobs by 2011 EUROPE UK: £250 bn bailout Germany: $67 bn relief package Belgium and Switzerland: Capital infusion ECB: Interest rate cuts France: $50 bn stimulus package RUSSIA Support for Russian ruble $20bn stimulus package BRAZIL Infrastructure development under PDP (more than $64bn into country’s financial system) CHINA Interest rate cuts $586bn stimulus (infrastructure, rural) INDIA Interest rate cuts $4bn stimulus package (infrastructure, exports, textiles) JAPAN Interest rate cuts 447bn yen stimulus package SOUTH KOREA Interest rate cuts and efforts to keep currency stable. $11bn stimulus package
Size of Stimulus Packages
U S B D i l A l m i o o u n n s t
700 600 500 400 300 200 100 0 Brazil China India Japan Korea Saudi Arabia UK US
Stimulus Packages –Drivers for Growth
$800 million for Biomass projects Opportunities with Biorefining • Efficient catalytic technologies for biorefineries–thermochemical platform. $6.3 billion for energy efficiency Refining and Energy Efficiency Grants • Incentives for energy efficiency. • Catalysts that resist heavy contamination. • Technologies for hydrogen network optimization. • Cost-effective techniques for energy efficiency. • Integration concepts with biorefining. • Hydrogen production from ethanol and biofuels. • Production of biodiesel from vegetable oil. • Technologies for conversion of biomass derived oxygenates in existing petroleum refineries. • Opportunities for enzyme production/development. Other Drivers for Rebound • $1 billion energy efficient programs - Alternative fuel vehicles • Emerging use of underutilized refinery feedstock (syn gas, castor
Rest of the World
China is expected to announce a 500-billion-yuan
stimulus package for the struggling petrochemical industry. The stimulus package includes 100-billionyuan investment in 2009 and 2010 for oil products upgrade, and investment of 400 billion Yuan for construction of 20 new large-scale petrochemical projects.
India--The government is working on a plan to
provide a major stimulus to the chemicals and petrochemicals industry by revising customs/excise duty on inputs required by the industry.
The European Union has committed 59% of its
stimulus funding to green programs. The Commission voted a package on renewable energy in December 2008 setting the 10% renewable fuel goal in the transport sector by 2020. Countries such as Belgium, Germany, Poland, and UK also have some funds for green investment, hinting at a futuristic, but potential opportunity for large scale biorefining.
$787 billion Stimulus Package
oil and glycerin)
Growth Strategies and Future Directions
Collaborations and Technology Partnerships Customer Support
• State-of-the-art catalyst technical support systems and technology
Collaborations between various entities to develop and
help attain a competitive edge–on-site technical support, pilot plant studies and software supported catalyst performance/lifecycle predictions. • Criterion’s CENTINEL & ASCENT Technology–a customized catalyst system. • UOP’s quick fix solutions.
protect new technology-lesser individual investments for all the entities.
Benefuel and Seymore Biofuels LLC plan to build the 10 Albemarle with UOP and Petrobas to provide FCC catalysts.
MMgy using Benefuel’s solid catalyst technology.
• Selective optimization of catalyst design-utilized for different catalytic activities. • Decline in base metal prices warrants increase in Research activities. • Research for biorefining-for instance, in Canada, Syntec Biofuels announced the launch of a $2.5 million R&D program to develop new catalysts for producing biobutanol and biopropanol from biomass.
• Increase investments • Feasibility studies for the futuristic investment plans should be undertaken (heavy feedstocks, hydrogen, LPG conversion, and biofuels). • Grace has increased its investment in R&D by 61% since 2000 and introduced a variety of new and next generation refinery catalysts that help maximize the yield and efficiency of resid feedstock.
Innovation and R&D
Prioritization of R&D Strategies
Level 0 Criteria Industry Requirement Level 1 Criteria Legislation/ Regulation Catalyst Performance Criticality Number of Challenges Industry Initiative Non-Industry Initiative Time Frame Return on Investment Degree of Challenge Degree of Innovation Growth Potential
Alternatives Hydrogen network optimization Conversion of Heavy Feedstock
Maintain Low Sulfur
Maintain Low aromatics
Conversion of Excess LPG
Level 0 Criteria
Degree of C hallenge
37.6% C onversion of Heavier Feedstock C onversion of Excess LPG Hydrogen Network Optimization Removal of Aromatics
Level 1 Criteria
Degree of Innovation
Performance of the catalyst
Removal of Sulfur 0.0%
Industry Initiative Time Frame Non-Industry Initiative
Number of Challenges
Future Directions and R&D Opportunities
Energy-efficient catalysts and costeffective catalyst regeneration techniques Multi-tasking highperformance catalysts Conversion of heavy feedstock–a key industrial measure
Hydrogen production from biofuels
Hydrogen network optimization–Long-term goal for the refiner
Stringent fuel specifications– Continued innovation for sulfur removal and aromatics saturation
Green gasoline from bio-oils– existing HT and HC catalysts
Conversion of underutilized feedstock such as castor oil and glycerin
Protocoled biorefineries –chemical catalyzed biorefinery processes
STRATEGIC DIRECTIONS Current
Green efforts Current industrial measures
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For Additional Information
Steve Lee Strategic Account Manager Chemicals, Materials and Food, Asia Pacific (65) 6890 0914 firstname.lastname@example.org