Petroleum Refining Economics

Office of Special Programs and Continuing Education

Petroleum Refining Economics

March 3-5 and October 6-8, 2010

COURSE PURPOSE
This course presents an introduction to petroleum refining technology and economics. The focus is on transportation fuels refineries, however, petrochemical production and biofuels are also discussed. The first part of the program includes an overview of crude oil and petroleum products. This is followed with a description of refinery process technology. Key refining technologies are described such as crude oil distillation, heavy oil conversion options, hydrotreating, and catalytic reforming.

Photo courtesy of Phillips Petroleum

Although oil refineries have many similarities, each refinery is customized to most profitably supply a specific market. Profitable refinery operations involve many economic decisions, such as crude oil selection and production planning. These are important business processes critical for maintaining refinery competitiveness. The course also includes a case study example of a new refinery project. This session will include example calculations of capital costs, operating costs, and project economics. The final session of the course is a description of options for increasing refinery profitability such as new technology for maintaining more accurate planning models, integration with petrochemicals, and improving energy efficiency.

COURSE OUTLINE

Crude oil
The cost of crude oil is approximately 70-80% of the cost of operating refineries. Understanding crude oil reserves and characteristics is therefore important.
- World-wide crude demand
- World-wide reserves
- Future production trends
- Crude oil composition
- Bulk crude oil properties
  - API gravity
  - Sulfur content
  - Distillation range
  - Other important properties

Petroleum products
Environmental concerns are resulting in increasingly stringent transportation fuels specifications, and this has a significant impact on refinery operations. This session will review product consumption trends and key specifications.
- Product demand trends
  - Gasoline
  - Distillate
  - Fuel oil
- Product specifications
  - Gasoline
  - Jet fuel
  - Diesel
  - Fuel oil
- Refining centers
  - Product pricing
  - Import/export parity

Refinery process technology
This is an overview of process technology, with a focus on heavy oil conversion options. The range of refinery process technology will be discussed. This session is divided into the following sections:
- Separation
  - Distillation fundamentals
  - Atmospheric distillation
  - Vacuum distillation
  - Gas plants
- Conversion Processes
  - Hydrocracking
  - Fluid catalytic cracking
  - Delayed coking
  - Fluid coking
  - Visbreaking
  - Solvent deasphalting
  - Resid hydrocracking
- Upgrading Processes
  - Hydrotreating
  - Catalytic reforming
  - Isomerization
  - Alkylation
- Supporting Processes
  - Acid gas removal
  - Sulfur recovery
  - Hydrogen production
  - Pressure swing adsorption
  - Utilities and offsites
  - Product blending

The technology is described along with important feedstock characteristics and typical product yields.

Refinery types, complexity
Refineries vary in type and complexity depending on many factors such market demand and company investment objectives.
- Refinery types
  - Topping
  - Hydroskimming
  - Cracking
  - Coking
- Nelson complexity index

Other related technology
A number of refineries around the world produce petrochemicals in addition to transportation fuels. The technology involved in producing these products are discussed. An overview of biofuels is also presented.

Petrochemicals
- Aromatics
- Olefins
Biofuels
- Ethanol
- Biodiesel

Refinery margins
Refiners use several types of refinery margins to describe their profitability. Each of these margins is described and how each is applied.

Gross
Variable
Net
Incremental

Refinery Planning and Economics
This session will begin with an overview of refinery economics modeling which involves the linear programming technique. Refinery planning applications are then discussed in detail.
- Linear programming
- Refinery modeling
- Planning applications
  - Crude oil evaluation
  - Production planning
  - Product blending
  - Shutdown planning
  - Configuration studies
  - Technology evaluation

Best practices regarding model building, crude oil evaluation, and other key economics planning applications are also discussed.

Refinery project economics
A case study for a new refinery project is presented.
- Configuration study
- Utility balance
- Capital cost
- Operating cost
  - Fixed
  - Variable
- Yearly cash flow projection
- Discounted rate of return

Options for Improving Refinery Profitability
This session will include a discussion of several means refiners are using to improve profitability
- New technology for maintaining more accurate planning models
- Refinery/petrochemical integration
- Energy efficiency

COURSE INSTRUCTOR
Dave Geddes is an economics and planning consultant for the refining and petrochemical industry. His previous experience includes 20 years at Bechtel Corporation. He has worked on feasibility studies and economic evaluations of oil refineries and petrochemical plants in the United States, Asia, the Middle East, and South America. While at Bechtel he also managed the group that developed, marketed, and supported the PIMS linear programming system that is now widely used for refinery and petrochemical economic studies and other planning applications. Mr. Geddes received a B.S. in Petroleum Refining from the Colorado School of Mines, and an M.S. in Chemical Engineering from the University of Colorado.

FOR WHOM INTENDED
In addition to oil refining personnel, other individuals who interact the industry will benefit from this course. This includes petrochemical producers, oil refinery suppliers, insurance, finance and engineers who have limited refinery experience. A technical background is not required for course participants.

COURSE SCHEDULE
Class hours are 8:30 am to 4:30 pm each of the first two days and 8:30 am to 11:45 am the third day. There will be half-hour breaks in the morning and afternoon, and a one-hour break for lunch. Check-in will begin at 8:00 am the first day.

LOCATION
The class will be taught on the CSM campus. The campus is in Golden, Colorado, at the foot of Lookout Mountain, 13 miles west of downtown Denver on the Front Range of the Rockies.

REGISTRATION FEE
The registration fee is $1,095 (U.S.), which includes tuition and text materials. It does not include meals or lodging. Enrollment is limited and applications will be accepted in the order received.

You may register electronically or by sending to the address below for a brochure with registration form. The sponsor reserves the right to cancel the course and return registration fees if enrollment is insufficient. Payment and/or purchase order or training order must be mailed in additionally to complete electronic registration.

Register

Cancellations or transferring of registration fee will be charged a $150 fee. No refunds will be made to registrants who fail to cancel 5 working days prior to course delivery. Personnel substitutions may be made at any time without cost penalty.

COURSE CREDIT
CSM will award 1.8 Continuing Education Units (CEU’s) for participation in this course.

ACCOMMODATIONS
Registrants are responsible for making their own lodging and travel arrangements. For accommodations and travel information, visit our home page.

FOR FURTHER INFORMATION
For further information concerning the technical program, contact Dave Geddes at davegeddes@comcast.net. For registration information contact:

Office of Special Programs and Continuing Education
Colorado School of Mines
Golden, CO 80401
Phone: 303/273-3321
Fax: 303/273-3314
E-mail: space@mines.edu

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