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Fuel Oil A Refiner’s Perspective . Gary Wright ConocoPhillips. Fuel Oil / Energy Buyers Conference Miami, Florida October 2007. Typical Fuels Refinery . Crude Oil Distillation . P LPG. LPG . Light St. Run. Gasolines. Naphthas. Jet Fuel / Kero. Distillates. Further Refining .

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fuel oil a refiner s perspective

Fuel Oil A Refiner’s Perspective

Gary Wright

ConocoPhillips

Fuel Oil / Energy Buyers Conference

Miami, Florida

October 2007

typical fuels refinery
Typical Fuels Refinery

Crude Oil Distillation

PLPG

LPG

Light St. Run

Gasolines

Naphthas

Jet Fuel / Kero

Distillates

Further

Refining

Diesel /

Heating Oils

Crude Oil

Gas Oils

Bunker/Fuel Oils

Residual

(0 - 40%)

Misc. Products

Coke (carbon)

Sulfur

slide3

Crude Oil Yields

LPG

Lighter

LSR

Naphtha

Kero

Diesel

API Gravity

Gasoil

Resid

Heavier

API=27.6

Sulfur = 1.1%

API=21.3

Sulfur = 3.5%

API=15.3

Sulfur = 2.5%

API=47.3

Sulfur = 0.3%

Low

High

Refinery Complexity

nyh 6 3 2 1 brent crack
NYH 6:3:2:1 Brent Crack

Overall refining margins have increased

1 fuel oil vs brent price
1% Fuel Oil vs Brent Price

Fuel oil price relative to crude has declined

gasoline and fuel oil price history
Gasoline and Fuel Oil Price History

Spread between gasoline and fuel oil has widened

making resid upgrade highly desirable

slide9
Fuel Oil Components

And Processing Options

fuel oil blend components
Light Cycle Oil (LCO) – from FCC

Used as cutter for viscosity

Desirable for ULSD feedstock if hydrotreater is capable of converting

Heavy Cycle Oil (HCO) – from FCC

Heavier cut still a good cutter stock

Decant / Slurry Oil – from FCC

Potential carbon black feedstock

Fuel oil cutter stock

Atmospheric Gas Oil – may be used if needed for gravity / viscosity control

Undesirable due to large downgrade relative to cat cracking

Vacuum Resid

Has the most processing optionality

Fuel Oil Blend Components
refinery options for resid
Blending to Bunker Fuel & Utility Fuel Oil

Asphalt Production

Resid Conversion to Gasoline / Diesel

FCC Feed (light straight run resid)

Delayed Coking (heavy, sour resid)

Visbreaking

Refinery Options for Resid
refinery options for resid fuel oil blending
Advantages

Low capital requirements to process

Provides outlet for non-clean product streams

Disadvantages

Negative margin relative to crude

May require downgrade of lighter products to meet gravity / viscosity specifications

Refinery Options for Resid - Fuel Oil Blending
refinery options for resid asphalt production
Advantages

Provides opportunity for product upgrade vs fuel oil

May be able to run advantaged crude slate

Disadvantages

May result in gas oil downgrade from cat cracking to asphalt to meet specifications

May limit crude selection

Specifications more difficult to meet

Refinery Options for Resid - Asphalt Production
refinery options for resid catalytic cracking
Advantages

Upgrades resid to gasoline and diesel

Improved clean products yield

Improved margin

Disadvantages

Resid feed rate limited by concarbon - air blower limit

Feed rate may also be limited by metals in resid – higher catalyst additions or metals passivation

Can impact crude selection requiring more expensive, higher quality crudes to accommodate processing

Refinery Options for Resid - Catalytic Cracking
refinery options for resid delayed coking
Advantages

Enables processing of cheaper heavy sour crude

Upgrades resid to gasoline and diesel

Disadvantages

Requires significant capital investment

Additional hydrotreating

Sulfur processing

Amine treating

Sour water processing

Refinery Options for Resid - Delayed Coking
fuel oil sales
Sales are the best option when:

Running low resid yielding crudes

Clean products yield is high (>90%)

Capital investment for resid conversion is not desirable

The refinery has waterborne product distribution options

Fuel Oil Sales
if fuel oil sulfur is regulated to 1 5 sulfur
A Refiner’s Options:Economic Option?

Sell to export market Possible

Blend with low-sulfur streams A few refineries?

Switch to lower-sulfur crudes A few refineries?

Asphalt market Limited market

Resid Desulfurization Unlikely / costly

Resid Destruction Possible

….If Fuel Oil Sulfur is Regulated to 1.5% Sulfur
a refiner s decision
Where will market economics steer us?

Relative Prices

Crude Oil vs. Fuel Oil vs. Motor Fuels

Cost of Capital Investment

Operating Cost

A Refiner’s Decision
slide19
Thank you !.

Special thanks to Steve Smith and Marla Benyshek at ConocoPhillips for their help

refining margins
East Coast 6:3:2:1 Brent crack (or margin)

6 Barrels of sweet crude produces:

3 barrels of gasoline

2 barrels of heating oil

1 barrel of fuel oil

6:3:2:1 = (3 x gasoline price + 2 x diesel price + 1 x fuel oil price – 6 x Brent crude price) / 6

Refining Margins