SUPPLEMENT TO REPORT Wr. 13/72 "A STUDY OF THE COSTS OF RESIDUE AND GASOIL DESULPHURIZATION FOR TER COMMISSION OF THE RUROPEAN COMMUNITIES" Prepared by ReJ. Ellis Chairman of the CONCAWE Ad Hoc Group "Experts on Desulphurization" Reproduction permitted with due acknowledgement © Stichting CONCAWE ‘The Hague November 19744 conrENTs SUMMARY ‘TNTRODUCTION DIRECT DESULPHURIZLTION OF RESIDUAL FUELS INDIRECT DESULPHURIZATION OF RESIDUAL FUELS GASOTL DESULPHURIZATION DISCUSSION APPRUDIX: SURVEY OF FURL OLL DESULPHURIZAPION CAPACITY Page 913,1. SUMMARY Increases in the cost of crude oil will result not only in increased fuel costs but will have corresponding effects on manpower and equip nent costs in the future. The investments and operating costs quoted in CONCAWE Report No. 15/72 "A Study of the Costs of Residue and Gas-Oil Desulphurization" were based on 1972 conditions in Western Burope. This Supplement illustrates the effect on these of a range of hypothetical crade oil prices and escalated manpower/equipment costs. The assumptions made for crude oil cost, and for future manpower/ equipment costs, should not be construed in anyway as a positive pre- diction on the part of the oil refining industry. Wo changes have been made in the technological basis used in Report No. 13/72. Neither has the study been extended to feedstocks leas amenable to desulphurization. An Appendix "Survey of Fuel Oil Desulphurization Capacity" is included, listing existing or planned units for the desulphurization of residual oils by either the direct or indirect routes.= ENERODUCTION The cost data presented in CONCAWE Scpor (72 vepresent the joint opinion of the companies par that it is not possible to have a desulphurisation fox reasone tat ¥ oularly in the field of residue de: still limited, changes in cost esti costs are based on 1972 conditions i: iad below and that part. whexe expe The existing pattern of refining operatione in the Comson Market Count- vies is that refineries are pro variety of crude oils which can be classified as low, medivm and high suighur. In oder to meet the varying market demand of products Dota quantity and ouality-wise, second- ary procesaing is applied to a smalier or larger extent, v.g. catalytic cracking, thermal cracking, catalytic zeforming, dictilicte hydro-treat. ing. Residual fuel oils are made by blending the atuospheric and vacuun residues available with residues fron secondazy procerses and diluents as required. None of the existing refineries in the KEO countries has 8 oF residves, since the actual sulphur contents recuized can ce met by blending the residucs and diluents derived from the iow, medium end nigh sulpbur crudes avail~ able. processes for desuiphuricing vacuum dict If sulphur ievels in fuel oii have to be reduced further, and there are iua sulphuz crude, some form insufficient quantities of low endfor m of fuel oil desulphurisation will. be reowized. In considering the costs of this desulphurisation a distinction anould te made between existing refineries and new refineries or extensions to oe i vo cover the in- creasing demand for products. For new refineries or extensions wine 6 desulphurisation is re~ quired it is possible to optimize the whole operation and to estimate within reasonable ranges the capital end operating costs. For existing refineries the situation cen arise where mesidue desulphur- ization does not readily fit in with the existing operations, the avail~ able utilities facilities, the effluent treatment eystem, evc., resulting in fragmented off-site development, furthermoxe, suitable sites may not be available, thus involving the replacement of non-depreciated equipment to provide space. Heat integration may be more complex and less efficient than in new refineries. The engineering costs associated with achieving ‘the best solution in such a case will be considerably higher than the engineering coste for a grass roots package. Another difficulty may be that the residuss available are difficult to desulphurize, e.g, ex~thermal cracking and catalytic cracking feed pro- paration and lubricating oil manufacture units. The orly solution may be a chenge in crude allocation and in types of secondary processes, which in tum create product surpluses and deficits which can only be solved logistically, in all these cases the costs of desulphurization can be significantly higher than for new refin¢ 28. Another important point is that the firet smal reduction in sulphurcontent of the fuel oil pool can be obtained by desulphurization of selected easily treated high suiyhur vesidues vhereas every additional, reduction in sulphur content will involve treating more difficult or lower sulphur residues thereby increasing the costs in terms of tons of sulphur removed. Zt is clear from the above that it is not possible to produce a single cost for residual fuel oil desulphurization. Unfortunately a range to cover the wide spectrum of situations will be so large that its inter- pretation will be difficult. The costs quoted in report No. 13/72 therefore are only applicable to sites where no abnormal extra costs will be incurred for the reasons already discussed and to residues which can be easily desulphurised. Costs for the above-mentioned exceptions can be significantly higher. Since the issue of CONGAWE report No. 13/72 on desulphurization costs, there have been some drastic changes to the oil scene which among other things have resulted in significant price increases in crude oil. These increases have a two-fold effect on refinery processing cost including desulphurization costs viz. an increase in cost of the enersy required for running the process and an increase in the cost of equip- ment and manpower. In considering the costs of desulphurization in connection with possible environmental legislation these new cost as~ pects mst be taken into account. The following sections give the revised cost data which represents the Joint opinion of the companies participating in CONCAWE.ode sation conte can ‘manpower elenent. of a 2 below. tito costs and the rate of ‘ised desulphuzization costs ch este against a ing assumptions abo range of ass residue for the yea™ 1980 (80-87% desuivmurization refer report =77 for nere details. It shoula be note: various crude o: desu pin prepared by bik sulphur residu cumstances, th: of deaulphari In euch mel: ease of fuel oil would be a nigher e.g. 1% sulphur. In such eir- than applying a lower degree feadéstock. ‘Capital dnvestaant i 100 | oncuat tan ap.)(@) afte Aecused emude sa pete ( (2) (a) — Byulzrant nenpover Bocatatiee/ | your ayers, | for 2960 pre Bre © Bosyoundoa —_| above | | | te BAT 16-32(6) s.2aae7 | 17.224.7 21-55 6.0-25.5 | 19.002765 32064 | to.5-26,6 | 20.5306 ork (a) It is aecw ed that process eneray vosts will dizectly reflect exade oil prices. (o) Sscalstion zoie beflocts the joint offect of individual equipment and manpower escalation rates.By definition equal to 1972 costs. Cost in terms of 1972 U.S. $. Costs at higher levels can be calculated from the following equations: Lower level 5.4 (EH) + re Higher level 98 ( 04%) 4 SE where x is compounded escalation of equipment/manpower costs ele- ment above 1972, and Y is assumed crude oil price in 1972 U.S. $/ton.a 6 INDIRECT DESULPHURIZATION OF RESIDUAL FUEL A typical division of the costs would be $/ton feeastoc! a)(>) Energy element 1.25 Equipment/aanpower 3.25 Cb Total operating cost As Ce’ (a) Energy cost $ 25/ton. Bnergy consumption assumed 5% w on intake (b) Applicable to 1972 (c) Mid of range as reported in 13/72 page 5 As for direct residue desulphurization the effects of increased crude oil and equipment/manpower costs can be calculated as follows: otal operating costs sn 1960 Capital inveotnent (G/t58 Foosstees) (e)(a) in 1980 ($/ennual ‘ton Foedetock)(d) S/ton Ansuned emuée oft price (a) (a) 25 5e 6 100 (2) - ‘Byulment /nanpower Bscalation/ | compounded year above | for 1960 above aiz (8) () 1972 0 ° 35 5.2(0) 4.8 64 | 6.0077 | 7.2 8.9 9-13(c) i ut 58.0 | 5492 | 7.6105 | o.cr1.8 wee 9 99 5.0- 9.2 | T.0-1d | 8.2416 | 9.5129 18.26 Loo Bt 6.5010.4 | T7017.6 | 9.0129 | 10.2004.1 ao (a) It is assumed that process energy costs will directly reflect crude oii prices. (b) Escalation rate reflects the joint effect of individual equipment and manpower escalation rates. By definition equal to 1972 costs. Costs in terms of 1972 U.S. $. 30-45% desulphurization refer report 13/72 for more details. Costs at higher levels can be calculated from the following equations: Lower level 2.25 ( O42) 2 2% Higher level 3.95 (042%) 43% where x is compounded escalation of equipment/manpower cost element above 1972, end Y is assumed crude oil price in 1972 U.S. /ton.5. GAS-O1L DESULPHURIZALION A typical division of the costs would be Energy element Equipment/manpowe= Total operating costs (a) Energy cost # 25/ton. Energy consumption assumed 3.5% w on intake. (b) Applicable to 1972. (c) Mid of xange as reported in 13/72 page 5. The effects of increased erude oi1 and equipment costs can be cal- culated as follows: ‘Total operating coste in 1980 T capital investasnt (8/ten feedetock) (2)(e) an 1960 (3/anmal ‘ton feedstock) (a) Veen | ] semwes tins mice | sf se || mee - Bipot per i Teoalation | Sapna Fane tere, | sor 1900 asore 1972 (%)(b) 1972 1 | Bga2(e) 3.25.5 | 4.16 6.0] 5.2 6.9 5.540.8 (0) ? B66 | 427d | Bata Bd | 6.06 9.2 9015 3 5. tees | sg] Gare] ante ate) 4128.5, 5099.4 \ 5.3 ial 6.8011.2, 15-20 (a) It is assumed that process energy costs will directly reflect exude 0:2 prices. (b) Escalation rate reflects the joint effect of individual equipment and manpower escalation rates. e) By definition equal to 1972 costs. Costs in terms of 1972 0.8. $. 42) 90% desulphurization refer report 13/72 for more details. f) Costs ot higher levels can be calculated from the following equations: Lower Level 1.4 (BEEH) , Soe Higher level 33 (10 ex) + 55¥ to 7 = 100 where x is compounded escalation of equipment/manpower cost ele~ ment above 1972, and Y is assumed crude oil price in 1972 U.S. §/ton.DISCUSSION It is obvious from the foregoing that it is not possible to give future desulphurization costs without making some assumptions about the future fuel (crude oil) costs and the escalation in equipnent/ manpower costs which at this time is virtually impossible. It is for this reason that CONCAWE give a scaie of desulphurization costs against a range of assumptions while recognizing that this procedure leaves open the possibility for different readers to produce different costs. To minimize possibie confusion, estimates of desulphurization costs should always include the following information: 2) Year applicable b) Assumed fuel cost c) Assumed escalation of equipment/manpower cost above 1972. Even within these definitions the cost range is considerable. As explained in report No. 13/72 (section 2.1 and 2.2) a significant contritution to this range is the possible differences in cost for general facilities which are very dependant on local circumstances. The method of presentation also highlights tae energy consumption of the three desulphurization processes which is compared below: pelucand Direct residue HDS 8 Indirect residue HDS 5 Gas 011 HDS 35SURVEY OF FUEL OIL DESULPHURIZATION CAPACITY The following Tables list existing or planned units for the desuiphurization of residual fuel oils by either the direct or in- dixect routes. ‘The Tables have been compiled from published information and examin- ation of the various sources available shows some discrepancies in the capacities reported for some units. Whenever possible, information issued by the operating company or the licensor has been used.10. 1 me i Sua WORE. 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