Table Of ContentPetroleum Refining
Technology, Economics, and Markets
Sixth Edition
Petroleum Refining
Technology, Economics, and Markets
Sixth Edition
Mark J. Kaiser, Arno de Klerk, James H. Gary,
and Glenn E. Handwerk
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Dedication
In memory of James Gary, an inspiration to his many students
and colleagues over the years, and whose refining book guided
thousands of readers toward a reliable understanding of the field.
James H. Gary Glenn E. Handwerk
September 4, 1924 to
June 22, 1918 to
February 29, 2004
June 8, 2015
Contents
List of Boxes .............................................................................................................................xxv
Preface.....................................................................................................................................xxvii
Authors .....................................................................................................................................xxxi
PART I Markets and Economics
SECTION I Industry Structure and Characteristics
Chapter 1 Performance ............................................................................................................5
1.1 Refinery Supply Chains ................................................................................5
1.1.1 Input–Output Model ........................................................................5
1.1.2 Infrastructure ...................................................................................7
1.1.3 Location ...........................................................................................8
1.1.4 Commercial Requirements ..............................................................8
1.2 Performance..................................................................................................9
1.3 Refinery Economics ...................................................................................11
1.4 Refining Yields ...........................................................................................13
1.5 Refining Margins ........................................................................................15
1.5.1 Gross Margin .................................................................................15
1.5.2 Net Margin and Netback ...............................................................15
1.5.3 Application ....................................................................................16
1.6 Margin Comparisons ..................................................................................17
1.6.1 Sweet vs. Sour Crude ....................................................................17
1.6.2 Cracker vs. Coker Refinery ...........................................................18
1.7 Factors That Impact Margins .....................................................................19
1.8 Crack Spreads .............................................................................................20
1.9 Market Data ................................................................................................22
1.10 Eagle Ford Marker Price ............................................................................23
References .............................................................................................................26
Chapter 2 Products .................................................................................................................27
2.1 Overview ....................................................................................................27
2.2 Petroleum Gases .........................................................................................28
2.2.1 Methane .........................................................................................29
2.2.2 Ethane ............................................................................................30
2.2.3 Propane ..........................................................................................31
2.2.4 Butane ............................................................................................31
2.2.5 Natural Gas Liquids ......................................................................33
2.3 Light Distillates ..........................................................................................33
2.3.1 Naphthas ........................................................................................34
2.3.1.1 Light Naphtha ................................................................34
2.3.1.2 Heavy Naphtha ..............................................................34
vii
viii Contents
2.3.2 Gasolines .......................................................................................35
2.3.2.1 Motor Gasoline ..............................................................35
2.3.2.2 Aviation Gasoline ..........................................................37
2.4 Middle Distillates .......................................................................................38
2.4.1 Jet Fuel ...........................................................................................38
2.4.2 Kerosene ........................................................................................39
2.4.3 Automotive Diesel .........................................................................39
2.4.3.1 High-Speed Diesel .........................................................40
2.4.3.2 Light Diesel Oil .............................................................41
2.4.3.3 Gas Oil ...........................................................................41
2.4.4 Marine Diesel ................................................................................41
2.4.5 Light Fuel Oil ................................................................................43
2.5 Heavy Fuel Oils ..........................................................................................43
2.6 Specialty Products ......................................................................................45
2.6.1 Base Oils and Lubricants ..............................................................45
2.6.2 Engine Oils ....................................................................................46
2.6.2.1 Single Grade ..................................................................47
2.6.2.2 Multigrade......................................................................47
2.6.3 Greases ..........................................................................................49
2.6.4 Waxes ............................................................................................49
2.6.5 Bitumen .........................................................................................50
2.6.6 Petroleum Coke .............................................................................50
2.6.7 Carbon Black .................................................................................52
References .............................................................................................................52
Chapter 3 Processes ...............................................................................................................55
3.1 Overview ....................................................................................................55
3.2 Separation ...................................................................................................56
3.2.1 Perfect Batch Distillation ..............................................................56
3.2.2 Distillation Curves ........................................................................56
3.2.3 Fractions ........................................................................................58
3.2.4 Atmospheric Distillation ...............................................................59
3.2.5 Vacuum Distillation .......................................................................60
3.3 Conversion ..................................................................................................62
3.3.1 Thermal Cracking .........................................................................63
3.3.2 Catalytic Cracking.........................................................................66
3.3.3 Hydrocracking ...............................................................................67
3.3.4 Coking ...........................................................................................67
3.4 Finishing .....................................................................................................70
3.4.1 Hydrotreating ................................................................................71
3.4.2 Catalytic Reforming ......................................................................72
3.4.3 Alkylation ......................................................................................73
3.4.4 Isomerization .................................................................................74
References .............................................................................................................76
Chapter 4 Prices .....................................................................................................................77
4.1 Introduction ................................................................................................77
4.2 Price Formation ..........................................................................................78
4.3 Global Oil and Product Markets.................................................................79
Contents ix
4.4 Price Characteristics ...................................................................................80
4.4.1 Prices Are Volatile ........................................................................80
4.4.2 Prices Are Unpredictable ..............................................................80
4.4.3 Business Cycle Impacts Are Periodic ...........................................81
4.4.4 Price Shocks ..................................................................................81
4.4.5 Market Factors Dominate Price Signals .......................................82
4.4.6 Private Factors Are Secondary in Price Formation ......................82
4.5 Supply and Demand ...................................................................................84
4.5.1 Supply Curves ...............................................................................84
4.5.2 Demand Curves .............................................................................85
4.5.3 Three Laws of Economics .............................................................85
4.6 Market Factors ............................................................................................85
4.6.1 Demand .........................................................................................85
4.6.2 Supply ............................................................................................87
4.6.3 Production Cost .............................................................................87
4.6.4 OPEC .............................................................................................88
4.6.5 Spare Production Capacity ............................................................88
4.6.6 Supply Disruptions ........................................................................88
4.6.7 Technology Impacts ......................................................................89
4.7 Private Factors ............................................................................................89
4.7.1 Quality ...........................................................................................89
4.7.1.1 API Gravity ....................................................................89
4.7.1.2 Sulfur Content................................................................90
4.7.1.3 Naphthenic vs. Paraffinic Crudes ..................................90
4.7.2 Yield ..............................................................................................91
4.8 World Production circa 2018 ......................................................................94
4.9 Refined Product Prices ...............................................................................96
References ............................................................................................................101
Chapter 5 Potpourri .............................................................................................................103
5.1 Business Model .........................................................................................103
5.1.1 Required Spending ......................................................................103
5.1.2 Discretionary Spending ...............................................................103
5.1.3 Capital Investments .....................................................................104
5.2 Company Classification ............................................................................105
5.2.1 Firm Type ....................................................................................105
5.2.1.1 Integrated .....................................................................105
5.2.1.2 Government-Sponsored ...............................................105
5.2.1.3 Independents ................................................................106
5.2.1.4 Joint Ventures ..............................................................106
5.2.2 Ownership ...................................................................................107
5.2.3 Level of Integration .....................................................................107
5.2.4 Business Objectives .....................................................................109
5.3 U.S. and World Capacity Trends ...............................................................110
5.3.1 Distillation ....................................................................................110
5.3.2 Coking ..........................................................................................111
5.3.3 Catalytic Cracking........................................................................112
5.3.4 Hydrocracking ..............................................................................112
5.3.5 Hydrotreating ...............................................................................113
5.3.6 Reforming, Alkylation, and Isomerization ..................................115
