Tackling the gasoline/middle distillate
imbalance
An oligomerisation technology can produce a significant increase in middle
distillate production
Marielle Gagnière, Annick Pucci and Emilie Rousseau Axens
T
he varying constraints on the refining
industry result in a market that is in
constant evolution. Regulations on low-sul-
phur gasoline and diesel fuel, curbs on refinery
emissions and the increase in heavy crudes over
the past years have influenced the refiner’s
market. Today, new forces have emerged, with
improvements in light vehicle fuel economy, the
prevalence of emerging markets, and the rise of
shale oil and gas shifting the outlook. In this
article, we present the market trends and
outlook ahead to 2020 and 2030, and foresee
that the current thirst for middle distillates will
be accentuated in the US and Europe, but also in
emerging markets. In the second section, the
oligomerisation technology, PolyFuel, which can
adjust refinery output towards middle distillates,
is presented. Finally, an economic evaluation of
the performance of PolyFuel assesses its value to
the refinery based on 2012 prices and costs.
Market outlook
In 2012, global oil demand was
around 89.7 million b/d accord-
Average annual growth
ing to the latest IEA estimates,
driven by growth in emerging
countries. Broken down by
rate, %
product, global growth in
demand for oil is driven by
middle distillates, comprising
kerosene and diesel, unbalanc-
ing the product slates in some
regions.
World’s appetite for middle distillates
From 2000 to 2010, growth in
world consumption of middle Figure 1 Growth in world demand for oil products
www.digitalrefining.com/article/1000726
distillates exceeded growth in demand for gaso-
line and total oil products: the annual average
growth rates (AAGR) were 1.6%/year and 1.3%/
year, respectively. In 2020, continued robust
global demand for distillate is expected, with a
growth rate still at 1.6%/year, above total growth
in demand for oil. By contrast, growth in
demand for gasoline is forecast to be weak, with
an increase of 0.7%/year. From 2020 to 2030,
while global growth in demand for oil is expected
to be restrained at 0.6%/year, middle distillates
still stay a primary driver with an annual growth
above that of oil (see Figure 1).
Atlantic basin gasoline/distillates balance
Since 1998, Europe has experienced excess
volumes of gasoline production. Much of the
excess European gasoline has been exported to
North America, a light vehicle gasoline market.
Today, however, gasoline production within the
1.8
Gasoline
1.6
Diesel & kerosene
1.4
Total oil products
1.2
1.0
0.8
0.6
0.4
0.2
0
2000-2010 2010-2020 2020-2030
PTQ Q2 2013 1
 The North American situation
1000
is completely different (see
Figure 3):
500 Surplus • US diesel net exports have
Exports, kboe/d

increased considerably since

2008, reaching more than
0
1 million boe/d in 2012
• Kerosene imports and exports

–500 Deficit are balanced

• North America gasoline
Gasoline
Diesel imports have reduced by 75%
–1000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Kerosene when compared to 2006 and
should be about 230 000 boe/d
Figure 2 European (EU-27) net exports of gasoline, kerosene and diesel for 2012.
Source: JODI With world growth in middle
distillates and reduced domestic
1000
demand for gasoline, US refin-
ers have developed diesel
exports over the past few years,
500 Surplus increasing distillate yields by
Exports, kboe/d

changing distillation cut-points

0
or adapting their refinery units’
operational mode with small-
scale capital investment.
–500 Gasoline Deficit US petroleum-based gasoline
Diesel imports have collapsed since
Kerosene
–1000
2011, due to a reduced demand
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 for finished motor gasoline,
which has been declining by
Figure 3 North America net exports of gasoline, kerosene and diesel 1.6%/year since 2007 because of
economic conditions and
US has increased, while demand for gasoline from improved engine energy efficiency for new light
petroleum has reduced. Consequently, European duty vehicles (CAFE standards) and ethanol
gasoline exports to the US have decreased. With a blending requirements.
gasoline surplus exceeding 800 000 boe/d (see On the crude supply side, a game changer is
Figure 2), European refiners have found other also modifying US refining dynamics: rapid
export destinations in Latin America, Africa and growth in shale oil production. US crude produc-
the Middle East. tion is surging in states where shale oil is
Accounting for half of the total oil demand, available. The Bakken field in North Dakota and
diesel remains the principal product consumed Eagle Ford field in South Texas are the largest,
in Europe (EU-27) mainly due to the transporta- but many other finds are spread across the coun-
tion sector. The mismatch between gasoline and try. This development has transformed the US
diesel supply and demand increases the pressure refining industry. Refiners in the US Gulf Coast,
on European refineries that cannot satisfy their where 44% of the US refining capacity is located,
market. As a result, net diesel imports remain benefit from this cheap crude.
significant, reaching a maximum of 560 Yet, there are some disparities: refiners on the
000  boe/d in 2010, originating mostly from the East Coast struggle and experience closures. In
CIS and the US. Furthermore, Europe is short of PADD (Petroleum Administration for Defe-
kerosene, with a strong and stable deficit of nse  District) 1, refiners cannot easily access the
around 300 000 boe/d, heightening the new shale oil supplies; they remain dependent
European thirst for middle distillates (see Figure on crude imports and face competition from
2). European gasoline imports. Nevertheless,

2 PTQ Q2 2013 www.digitalrefining.com/article/1000726

imports of crude and oil prod-
ucts are collapsing and the US 80
OECD
has become a net exporter of oil 70
Non-OECD 60%

Oil demand, Mb/d

products. Furthermore, US Gulf 60
Coast refineries that run shale 50
48%
oil will produce more light
40
products due to this light sweet
30
crude supply, and natural gas
liquids (NGLs) associated with 20
shale production will increase in 10
the coming years. All of these 0
factors will weigh on the whole 2012 2020 2030
light ends complex and may
lead to a naphtha surplus in the Figure 4 OECD and non-OECD total oil demand from 2012 to 2030
US.

Non-OECD economies dominate global Reaction section Splitter

oil demand growth Recycle for
maximum distillates Gasoline
Predictions point to the
non-OECD share in demand for
Fixed-bed
oil rising from 48% to 60% in swing reactors
2030, most of this concentrated
IP 811: in-situ
in Asia, the Middle East and or ex-situ
Africa (see Figure 4). regeneration
Emerging countries, particu-
larly non-OECD Asia, are
forecast to dominate growth in Middle
distillate
demand for middle distillate, Olefinic
with a significant shift towards feed
diesel in the passenger vehicle
market in India and a demand Figure 5 PolyFuel process general flow diagram
growth driven by commercial
freight in China. increased demand in propylene from FCC to
In conclusion, with a global surplus of gasoline help satisfy the much faster growing demand for
reducing export opportunities and a growing petrochemicals. An underlying theme has been
deficit in middle distillates regionally, either in increased regulation to sharply reduce the
OECD countries or emerging economies, refiners sulphur content of both gasoline and diesel, and
are led to rebalance their product slates. New limit the olefin content in gasoline.
technologies are needed to respond to these An increasingly popular technology option to
trends, producing more middle distillates and address the fuels imbalance and product flexibil-
compensating for a reduction in demand for ity requirements is olefin oligomerisation.
gasoline in OECD countries and a potential Reactive olefins can be oligomerised, mainly into
over-supply of light products and gasoline in the dimers and trimers, to increase the size of the
US. molecules and shift the product slate towards
heavier components. A well-proven technology
PolyFuel technology to convert C3-C4 olefins into gasoline and diesel
Optimisation of the products slate around the FCC unit range components has been in commercial oper-
Since demand for middle distillates is growing ation since 1986 under the trade name of
faster than that of gasoline, increased interest in PolyNaphtha. Unlike older polymerisation tech-
process options to shift the ratio of diesel to nology oriented to gasoline production and
gasoline production has been registered. This based on solid phosphoric acid catalyst, this
trend has been seen in FCC units, along with an process uses a regenerable catalyst with the abil-

www.digitalrefining.com/article/1000726 PTQ Q2 2013 3

 eration cycles, with over 95%
activity recovery demonstrated.
Cumulative sulphur
Alkyl-benzo- Catalyst regeneration can be
Olefins Thiophenes
performed in situ or ex situ.
Cumulative sulphur, %
C5/C6 feed Like PolyNaphtha, PolyFuel
to polyfuel
Benzo- produces a high-quality Jet A1
Olefins, %

C5 Thiophene
fraction after hydrotreatment to
S
C6
saturate olefins. The smoke point
C -Thiophene
exceeds 35 mm, which is far
C7 3
above the Euro V specification.
2
C -Thiophene Feedstock selection for
S C8 PolyFuel depends on the availa-
Mercaptans C -Thiophene C C10
bility of olefin-rich streams and
1
Thiophene
9 C11 C
12
the refinery-specific product
Increasing cut point requirements. When distillate is
more favoured than gasoline,
Figure 6 Typical FCC gasoline olefins and sulphur profile portions of the FCC gasoline
product are logical feeds. In prin-
ity to produce gasoline and distillate fuels. It ciple, the process can accept the full range of
offers a low-cost alternative to alkylation and an C5-C9 gasoline cut produced from the FCC unit.
alternative outlet for propylene, particularly The C5-C6 portion contains the highest concen-
when recovery is not economic. tration of reactive olefins. The heavier C7+
When distillate production is favoured, an portion contains fewer olefins and can have a
extension of this concept can be used to convert high content of contaminants (sulphur, nitrogen
C5-C9 gasoline olefins to distillate in a simple, and oxygenates), which reduce catalyst cycle
low-cost PolyFuel process. A generic block flow length. To illustrate, a typical gasoline profile of
diagram of the process is shown in Figure 5. olefins and sulphur as a function of boiling point
In the process, light olefins are oligomerised is shown in Figure 6.
catalytically in a series of two fixed-bed reactors. Based on these observations, Axens has identi-
Conversion and selectivity are controlled by fied the C5-C6 olefin-rich cut as the preferred
reactor temperature adjustment, while the heat feed to be processed in the PolyFuel unit to
of reaction is simply removed by feed effluent reach the highest profitability by:
heat exchange (see Figure 5). The reactor section • Maximising the amount of oligomer product
effluent is fractionated, producing gasoline • Maximising catalyst run length
depleted in olefins and middle distillate frac- • Minimising feed pretreatment
tions. The gasoline fraction is partly recycled to • Significantly reducing the olefin content in the
the reaction section to enhance middle distillate remaining gasoline product.
production. The distillate fraction is typically The previous point on olefins reduction in the
sent to existing kerosene and diesel hydrotreat- remaining gasoline pool can be significant in
ing directly. regions where olefins content is tightly regulated.
The reaction section uses swing reactors to Typically, the olefins in the C5-C6 cut are reduced
allow for continuous operation with on-stream by over 80% as compared to the C5-C6 PolyFuel
catalyst regeneration or replacement. The feed. When the FCC unit is operated at high
management of the reactors is optimised to severity to maximise propylene, the concentration
maximise catalyst run length. With the objective of C5-C6 olefins is very high in the gasoline and
to produce high-quality distillate, the process may result in an off-spec gasoline pool. As a
utilises the IP 811 catalyst, which can be oper- result, the new process can help to satisfy the
ated at high severity to maximise the middle need for increased distillate and improve the
distillate fraction as a result of its high activity gasoline pool’s properties.
and stability. Typically, the middle distillate In order to prepare the feed to the PolyFuel
yield exceeds 70% as compared to feed olefins. unit, one can take advantage of existing FCC
The IP 811 catalyst can undergo multiple regen- gasoline selective desulphurisation unit design.

4 PTQ Q2 2013 www.digitalrefining.com/article/1000726

The most widely selected tech-
nology is the Prime-G+ process Prime-G+
first step Splitter Optional C3/C4
with 214 licensed units as of
January 2013. The Prime-G+ PolyFuel
ULS gasoline
Prime-G+ SHU LCN and distillate
first step, which consists of a selective
hydrogenation
selective hydrogenation unit
(SHU) on the full-range cracked
naphtha (FRCN) with a down-
stream splitter, provides an ideal Prime-G+
selective ULS gasoline
feed pretreatment by removing HDS
the diolefins and reducing the HCN
sulphur content of the light FRCN
H
C5-C6 cut. In refineries that Make-up 2

include Prime-G+, a PolyFuel

unit can easily be installed on Figure 7 Prime-G+ integration with PolyFuel for contaminant control
the light cracked naphtha (LCN)
from the splitter top, thereby
FCC PolyFuel
minimising the pretreatment
Max distillate
cost of the process (see Figure
7).
To maximise refinery profita- C -C
3 6

bility, the feedstock can also olefins

Products
include olefinic C3 and/or C4
fractions, depending on the
refinery’s objectives and
economics. Olefin-rich feed Raffinate
components can come from any
cracking process such Gasoline Distillate to DHT
Motor fuel
as FCC, coking, steam cracking
or any other olefin sources,
such as effluent from paraffin
dehydrogenation or alcohol Figure 8 PolyFuel in a FlexEne configuration oriented to distillates production
dehydration. Specific pretreat-
ment options are adapted, depending on feed the gasoline/middle distillates imbalances by
origin and contaminants level. selectively converting unwanted olefinic
An attractive FCC-based refinery configuration streams in the C3-C6 range into distillate fuels
to maximise middle distillates consists of mixing while meeting increasingly tight product speci-
available LPG with a C5-C6 LCN cut and feeding fications. A PolyFuel unit can be designed to
the blend to a PolyFuel unit. Available sources of operate over a wide range of LPG and/or C5-C6
LPGs in a refinery may be: olefinic feed compositions and with the flexibil-
• C3s when not sent to petrochemicals ity to adjust the gasoline/middle distillates
• C4s when no C4 cut upgrading processes are product ratio to regional requirements.
present In addition to a stand-alone configuration, the
• Or excess C4s in the case of an existing C4 cut process can be applied within the FlexEne
upgrading processes bottleneck (alkylation unit concept, which is Axens’ combination of FCC
and so on). and oligomerisation processes. This combina-
The relative amounts of LPG and C5-C6cuts tion enhances product flexibility by controlling
and the operating severity of the PolyFuel unit the balance of propylene, gasoline and middle
can be optimised to adjust the distillate product distillates production with a low additional
rates in accordance with market demand while capital investment to the FCC complex. This
reducing the gasoline surplus. flexibility is achieved via oligomerisation of
In summary, the new technology addresses light FCC olefins into heavier fractions and

www.digitalrefining.com/article/1000726 PTQ Q2 2013 5

 share feed and product streams
Catalytic cracking Petrochemical to improve profitability. The
unit with FlexEne integration
oligomers from the PolyFuel unit
C3– Polymer
Steam grade can be entirely recycled to the
cracker ethylene
Propane
FCC unit to maximise propylene
Mixed C3 Polymer production and the paraffinic
PRU grade
propylene raffinate sent to the steam
Mixed C4
cracker to produce more petro-
FCC
Oligomer Paraffinic C4-C6 chemicals or gasoline blend
recycle
R2R PolyFuel stock.
VGO
resid As is indicated in the name,
DCC LCN
Aromatics the FlexEne concept utilising
Gasoline HCN
HS-FCC Prime-G+ complex BTX FCC with PolyFuel provides
ParamaX great flexibility to optimise the
Distillate/
fuel oil
production of propylene, gaso-
line and distillates according to
market demand.
In the context of faster world-
wide growth in demand for
Figure 9 Refining and petrochemicals integration with FlexEne and PolyFuel distillates and propylene than
for gasoline, but with regional
disparities, Axens has developed
LPG
a new process with the flexiblil-
Reaction section Splitter ity to:
• Process lower-valued olefinic
feeds in the C3-C6 range from a
Gasoline variety of sources
• Maximise distillate production
and reduce gasoline production
according to market demand
• Further optimise distillate or
Middle propylene production when
distillate
Mixed integrated with FCC in a
LPG/C5-C6
from FCC
FlexEne configuration
• Improve the overall refinery
Figure 10 PolyFuel case study economics as feed and product
prices fluctuate.
recycle of undesired oligomer cuts for further
cracking in the FCC unit, thus increasing the Economic appraisal
desired product slate – often an increase in The following economic appraisal evaluates the
propylene and distillate. difference in return between the sale of products
A typical distillates-oriented flow scheme of from a classic FCC configuration and the  cost of
PolyFuel integrated in the FlexEne concept is installation of a PolyFuel unit downstream of the
shown in Figure 8. Operation of the FCC unit, FCC unit, and the revenue associated with the
selection of feedstock cuts, operating severity increased middle distillates and upgraded
and oligomer product cut recycled to the FCC gasoline.
unit are all parameters subject to optimisation, The present case study assumes the following
depending on product demand and pricing. feedstocks:
 • C5-C6 light cracked naphtha (LCN) from an
Refining/petrochemical integration existing Prime G+ unit, currently sent to the
When the refinery is integrated with a petrochem- gasoline pool
icals complex, there are further opportunities to • Available LPG olefinic cut currently sent to the

6 PTQ Q2 2013 www.digitalrefining.com/article/1000726

LPG pool with a ratio of
50%LPG: 50%LCN. 35
The capacity chosen is 16
30
500  b/d to illustrate a median
case for economic evaluation of 25
PolyFuel.
20

IRR, %
Feeds and products 15% IRR
15
The light cracked naphtha and
LPG cut from FCC are highly 10
olefinic streams. Olefins in the
feed are converted by oligomeri- 5
–96 $/t
sation in the PolyFuel unit into
0
middle distillates. After hydro- –120 –100 –80 –60 –40 –20 0 20 40
genation, the middle distillates Spread kerosene-gasoline, $/t
produced can be sold either as
diesel or Jet A1 kerosene. Figure 11 IRR sensitivity for PolyFuel based on mixed LPG-LCN feed accord-
The quality of the remaining ing to middle distillate — gasoline price spread with 2012 USGC-based price
gasoline is improved by the
oligomerisation process, olefin and sulphur the gasoline price. When compared with the
content being reduced, while maintaining good 2008 middle distillate/gasoline price difference,
octane numbers. The gasoline product is thus which was $154/t for kerosene and $102/t for
sent directly to the gasoline pool. diesel, this break-even differential is not
excessive.
Investment and economics hypothesis Due to the excess of gasoline production in
The PolyFuel unit inside battery limit (ISBL) Europe, all the gasoline produced is not sold at
capital investment cost is $29 million for a capac- the European gasoline market price. Part of the
ity of 16 500 b/d. The depreciation duration is 15 production has to be exported, possibly at lower
years, with a discount rate of 10% and a profit tax prices than the European market value. The
rate of 30%. local difference between gasoline and middle
distillates prices at the outlet of a refinery is thus
Utilities and catalyst cost most probably lower than the market price
The utilities costs used in the economic evalua- difference, leading locally to economics that are
tion are shown in Table 1. Overall, utilities and already profitable for the implementation of
catalyst costs for this case study were calculated PolyFuel technology.
to be $19/t of feed or $1.8/bbl of feed. Today, the price differentials observed between
gasoline and middle distillates do not seem to
European economics correspond with market conditions. In the near
Prices future, with even more pressure on middle
In Europe in 2012, the Brent crude price was
$112/bbl, while the spread between gasoline and
Feedstock and products prices in
diesel was $57/t and for gaso-
Europe in 2012
line/Jet A1 was $23/t. The prices Utilities costs
of feedstock and products in
2012 were as shown in Table 2. 2012 - Europe $/t $/bbl
Utilities Cost Unit Brent 843 112
Electricity 75 $/Mwh Premium 95 10 ppm 1037 124
Results HP steam 30 $/ton Propane 861 74
Considering 2012 LPG and MP steam 25 $/ton Butane 859 74
gasoline prices, to achieve an LP steam 20 $/ton LPG 860 74
Cooling water 0.20 $/ton Kerosene Jet A1 1014 129
internal rate of return (IRR) of Diesel 979 136
15%, the price of middle distil-
late has to be $38/t higher than Table 1 Table 2

www.digitalrefining.com/article/1000726 PTQ Q2 2013 7

 distillates on the demand side, given the tensions in middle
Feedstock and products prices in
we can expect that middle distillate supply, PolyFuel should
the US in 2012
distillate prices are likely to be fulfil a primordial role in adjust-
higher than those of gasoline, 2012 - US Gulf Coast $/t $/bbl
ing the gasoline-distillate
reversing the current price WTI 718 94 production to better fit market
structure. Premium gasoline 1129 136 demand.
Propane 523 45 In other regions, new tenden-
Butane 750 64
US economics
LPG 636 55
cies such as shale oil and shale
Prices Kerosene Jet A1 1018 130 gas are revolutionising the US
In the US in 2012, because of Diesel 936 130 market, providing additional light
the shale gas effect, the aver- products and consequently influ-
age price for LPG was $636/t, encing market balance and prices.
while the gasoline price Table 3 Today in the US, as a result of the
reached $1129/t. The prices of impact of shale gas on the cost of
feedstock and products in 2012 were as shown LPG, PolyFuel is already profitable for a mixed
in Table 3. feed of LPG and C5/C6 cut.
The flexibility of the new process offers many
Results advantages to the refiner and particularly the
In 2012 in the US, the IRR for PolyFuel based on ability to anticipate market needs in different
mixed LPG-LCN feed is 13% with a net present regions as constraints evolve.
value of $12 million.
The new technology is profitable taking into PolyFuel and PolyNaphtha are trademarks of Axens.
account today’s US market prices even if the
middle distillate price is lower than the gasoline
price. Indeed, as a result of shale gas production, Marielle Gagnière is Technology Manager for hydroprocessing
and olefins technologies downstream FCC in Axens’ Marketing,
LPG prices are low. Adding LPG (C3 and/or C4)
Technology and Technical Assistance Department. She is an
cut in a PolyFuel unit lowers feedstock costs and
engineering graduate from the Ecole Nationale Supérieure de
contributes to increased profitability, while Chimie de Paris, and holds a post-graduate engineering degree
maximising middle distillates production in the from the IFP School.
refinery. Annick Pucci is Deputy Product Line Manager in the field of
To reach 15% IRR for PolyFuel with prices light ends hydrotreatment and a specialist in refining olefins
based in 2012 in the US Gulf Coast, the middle processing. She holds a bachelor’s degree in chemical
distillate price can be $96/t lower than gasoline. engineering from Ecole Nationale Supérieure des Industries
If the middle distillate price were equal to the Chimiques de Nancy, France.
gasoline price ($1129/t) and the LPG price kept Emilie Rousseau is a Strategic Marketing Engineer in Axens’
at $636/t, the IRR would reach 28%. Marketing Department. She holds a chemical engineering degree
from the Ecole Nationale Supérieure des Ingénieurs en Arts
Chimiques et Technologiques de Toulouse, a master’s in chemical
Conclusion engineering from Imperial College in London and a master’s in
With the world market for middle distillates energy economics and corporate management from IFP School.
growing and a reduced demand for gasoline in
certain regions, the new process for olefinic
gasoline oligomerisation allows the refinery
scheme to be adapted to a maximum distillate
mode.
It is in Europe where the difference between
refinery yield structure and market demand is LINKS
critical, especially since conventional refining
tools do not have the flexibility to reduce excess More articles from: Axens
gasoline production and to increase the amount More articles from the following category:
of middle distillates. Moreover, with European Diesel Maximisation
refineries facing increasing difficulty in finding
export markets for their excess gasoline and

8 PTQ Q2 2013 www.digitalrefining.com/article/1000726