New Technologies and Alternative Feedstocks in Petrochemistry and Refining DGMK Conference October 9 – 11, 2013, Dresden, Germany

Syngas – The Flexible Solution in a Volatile Feed-stock Market T. Wurzel Air Liquide Global E&C Solutions c/o Lurgi GmbH, Frankfurt a. M. Germany

Abstract The paper presents the versatility of syngas allowing the extended application of new feedstock sources such as shale gas or coal to deliver fuels and chemicals traditionally derived from crude oil. In order to provide a holistic view on this topic of current interest, the syngas market, the pre-dominant production technologies and main economic consideration for selected applications are presented and analyzed. It can be concluded that a broad portfolio of well-mastered and referenced syngas production technologies which are continuously improved to meet actual market requirements (e. g. ability to valorize biomass) will remain key to enable economic solutions in a world characterized by growing dynamics with regards to the supply of (carbonaceous) feedstock.

Introduction Today´s refineries and petrochemical producers are confronted with a couple of challenges such as constrained feedstock availability, fluctuating feedstock and product pricing as well as the requirements to “de-carbonize” final products. In short, this industry is far away from “business as usual” but experiences a high pressure to constantly focus on competitiveness. In addition to today´s solutions (e. g. economy of scale, higher level of integration between refinery and petrochemistry) the ability to tap alternative carbonaceous feedstock sources other than crude oil and the ability to arbitrate between those different feedstock sources is deemed to yield a significant competitive advantage to the industry. In order to access these feedstock sources (natural gas, coal or, in future, biomass) production technologies for syngas, mixtures of hydrogen and carbon monoxide, and its respective downstream applications will play an important role. The integration of syngas-based processes into existing refinery and petrochemical production facilities will not only help to enhance the competitiveness of these complexes but it will also decrease the level of dependence from crude oil for the production of fuels and petrochemicals.

Today´s syngas market – applications, feed-stock and regions Today´s syngas production serves basically two markets, i. e. supply of hydrogen (mainly 3 refinery and fertiliser consuming approx. 68 Mio. Nm H2/hr) and supply of carbon monoxide containing gases for the production of methanol, Fischer-Tropsch liquids and chemicals from carbon monoxide (in total estimated to be 35 Mio. Nm3 syngas/hr). Looking onto the future market growth, the market for syngas is expected to stay bullish based on following drivers:

Hydrogen demand for refinery applications will continue to grow as demand for clean fuels increases while crude oil quality is declining. Main growth regions will be CIS (implementation of clean fuel strategy), Middle East (big integrated refinery complexes) and South America (Utilisation of domestic crude reserves).

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The second driver for an increasing hydrogen demand is the augmenting need for fertilizers driven by a constantly growing world population. Even when the growth of world population is expected to reach an equilibrium level by 2050, the mid-term demand for fertilizer is reported to increase by 5 % per year.

In addition to the established markets described above, further growth impulses from hydrogen as energy carrier are expected in the long-term.

Syngas, as a flexible carbon source, will continue to be required for the production of pure carbon monoxide (main applications: oxo-synthesis, acetic acid, isocyanates), liquid fuels and methanol.

The market for carbon monoxide is to a certain extent a quite mature one offering only limited substitution potential. Due to the small market size following GDP growth, this syngas market segment has only reduced impact on the “overall” syngas market.

The demand for methanol (annual production in 2012: 51 Mio tonnes) can be segmented into two groups, i. e. “conventional” and “non-conventional” applications. While the pre-dominant conventional methanol consumers (acetic acid, MTBE, formaldehyde) follow GDP growth, the “unconventional” applications (olefins and aromatic hydrocarbon production, conversion into gasoline) show a rapidly increasing growth of 6 % per annum, in particular, in China. Looking on the various routes to convert methanol into chemicals, the combination of syngas and methanol opens a multitude of opportunities to replace crude oil for the production of base chemicals.

After the first references based on advanced catalytic system (Cobalt, low temperature) have been put into operation during the last 10 years, liquid fuel production based on Fischer- Tropsch currently attracts a lot of attention as one route to decrease dependence on fuel import.

To conclude, the syngas market can be partitioned into two areas. The first segment addresses those applications in which the syngas constituents, hydrogen and carbon monoxide, are utilised as “utility molecules” to up-grade conventional fuels (hydrogen) or to deliver small volumes of specialty chemicals (carbon monoxide). The second dimension of the “unconventional” syngas market is to provide alternatives to the traditional production of petrochemicals or fuels. While the first market element is governed growth and region-wise by the industry requiring the “utility syngas” (e. g. refineries, integrated chemical complexes), the “unconventional” syngas market follows the (cost-competitive) availability of carbonaceous feedstock material. In this regard, significant activity is particularly observed in two regions:

China: Due to abundant coal reserves (summing up to 13.3 % of the world coal reserves, BP, 2013) and a high dependence on crude oil import, the Chinese Coal-to-Chemicals industry based on syngas utilisation has evolved tremendously over the last 10 years. Table 1 indicates the proportion of coal-derived syngas for the production of base chemicals.

Table 1 Relevance of coal for the production of base chemicals in China (Plotkin, 2012) Product Proportion of coal as feed-stock Methanol 77 % Ammonia 77 % Benzene 26 % (mainly from coal tar) Ethylene 20 % (projected for 2016) Propylene 17 % (projected for 2016)

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Due to the increasing energy and chemicals demand in China, a further increase of the coal- based “syngas-economy” in China is expected. However, beside the pure economical strategy to increase independency from crude oil, additional factors such as CO2-footprint, environmental aspects and sustainable product economics as well as increasing shale gas reserves are expected to have a long-term bearing on the perspectives of coal-based chemicals as well.

North America: Due to the discovery and exploitation of huge “shale gas” reservoirs over the last years, a new cheap carbon-containing feedstock has been made available to the North American market. The economic potential of shale gas is based on the significant price differential between crude oil and natural gas as depicted in Fig. 1. With this attractive feedstock cost a change in the US-based chemical industry has been initiated turning the US into a net-producer of syngas-based chemicals such as methanol and ammonia. At the same time, the US-based petrochemical industry will benefit from the natural gas liquids (a valuable “by-product” of shale gas production) as an alternative cracker feedstock enhancing ethylene production (while shortening the supply of higher olefins such as propylene or butadiene). In addition, GTL as well as Methanol-To-Gasoline projects are mushrooming as well in order to tap this valuable feedstock material for supplementing the US-American transportation fuel pool.

Fig. 1 Price differential between crude oil and shale gas (Source: Bloomberg)

Against this background, further materialisation of the present potential for gas-based projects in the US is expected to be very likely. First projects under implementation or planning such as new Ethane crackers, new GTL facilities, new or revamped fertiliser or methanol complexes based on shale gas testify impressively that a new syngas market is emerging. Based on these growth opportunities a “syngas boom” in the US is very likely and visible today.

Overview of proven syngas production technologies As stated above, there is a strong market pull for syngas as a proven route to convert alternative carbonaceous feedstock material into valuable products. Dependent on which feedstock material is available, the appropriate technologies have to be selected. In case, different feedstock material would be available, a detailed techno-economic analysis applying project-specific evaluation criteria is required in order to yield the most competitive solution (examples are given in this paper).

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Fig. 2 summarizes the different routes to produce syngas from different carbonaceous feedstock material from natural gas, LPG or coal. This illustration highlights the unique feature of syngas which is to make carbon in it various forms accessible to the chemical and petrochemical industry, i. e. convert a broad feedstock basis with changing and partially unknown chemical composition into a tailored intermediate with defined composition as demanded by its down-stream consumer. When the syngas production is combined with the appropriate emission control (gas cleaning in general, CO2 and sulfur management, etc.) a competitive and environmentally sound solution can be implemented. Consequently, the syngas route, especially when serving the “unconventional” market (see above) this route is expected to play a central role in mastering the challenges pertaining to the visions called “beyond petroleum” or the German “energy turn-around”.

Fig. 2 Technology routes for the production of syngas from various feedstock material

As detailed description of the various syngas production technologies is given elsewhere (e. g. Olah et al., 2006; Liu et al., 2010; Bertau et al., 2013).

Natural gas (or shale gas): The standard technology for the conversion of natural gas into syngas is the steam methane reformer (SMR). A typical process flow diagram and a photograph are shown in Fig. 3. This configuration is also suitable to produce syngases with higher Carbon monoxide content or pure Carbon monoxide by means of CO2-recycle (carbon yield!) and cryogenic separation. As the main consumers of hydrogen (refineries) are increasingly “short” in hydrogen (fuel specification, refinery complexity, etc.) solutions are requested to enhance utilization of refinery off-gases (through separation or through conversion into hydrogen) or to co-feed LPG and other ligher hydrocarbons to the SMR facility. Depending on the carbon number of these raw materials, adiabatic pre-reforming might become necessary as well.

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Fig. 3 Simplified process scheme of a SMR based syngas plant (Source: Air Liquide Global E&C Solutions, Lurgi GmbH) and photograph of a top-fired SMR (Source: Air Liquide Global E&C Solutions, Lurgi GmbH)

In case, larger syngas flows are required (e. g. world scale Methanol plant for olefin production, Fischer-Tropsch) autothermal reforming (ATR; catalytic syngas generation under partial oxidation conditions) turns into the technology of choice. Dependent on the final application syngas requirements (such as H2/CO ratio, stoechiometric number, Riblett-ratio etc.) either pure (stand-alone) ATR or in combination with steam reforming (“combined reforming”) can be applied. Typical flow scheme I shown in Fig. 4.

Fig. 4 Simplified process scheme of an ATR based syngas plant (Source: Air Liquide Global E&C Solutions, Lurgi GmbH)

Oil residues: In light of the increasing pressure on refineries to maximize the output per barrel of crude, the valorization of refinery residues becomes crucial. With a stagnant market for the cement industry (one of the traditional off-takers for petcoke) or more and more stringent maritime fuel specification, new outlets for refinery residue need to be explored. In this context, residue gasification has gained substantial momentum in the recent past. Special focus has been paid to opportunities to further integrate the residue valorization into the refinery complex via co- and poly-generation. One of the flagship projects in this regards

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the world largest IGCC project in Saudi-Arabia (for Saudi-Aramco). Despite the interesting opportunities, it has to be kept in mind that these projects are characterized by a high absolute and specific investment cost which asks in the context of cost-competitive gas costs for a detailed case study to identify suitable opportunities.

Coal. In order to convert coal into syngas (non-catalytic) gasification is the technology of choice. Due to a broad spectrum of different coal compositions (and, ever more important, different ash properties) determining the gasification performance, different types of tailored gasification processes need to be applied. These technologies differ, among other parameters, in the temperature applied (typically in the range between 900 °C and 1250 °C), the type of reactor (fixed or fluidized bed vs. entrained flow) or the coal feeding technology (continuous vs. batch, dry vs. slurry feeding system). A comprehensive description is given elsewhere (Higman and van der Burgt, 2008). While coal gasification was only considered as a strategic “back-up” technology in some geographies over the last 30 years, numerous projects have been implemented in China over the last 10 years. This wave of new projects has also attracted new (international and domestic) players to further push the limits of gasification, in particular with regards to pressure (up to 110 bar) and throughput (> 2000 tons per day). However, the big number of implemented projects also put the focus on the high water demand to sustain coal gasification projects which, in turn, intensified the efforts to develop water neutral or zero discharge process concepts.

To summarize, a wealth of proven and fully referenced technologies is available to convert gas, residue or coal into syngas and to condition and process this syngas into valuable products. This technological know-how is further endorsed by a long lasting operation track record in the industry which helped to master the inherent process challenges such as safe handling of reformer tube metallurgy, reformed gas boiler design, burner design, metal dusting, boiler fouling or safe handling of oxygen under high pressures and temperatures.

The supplemental step to complete the syngas portfolio will be the conversion of biomass. So far, the necessary technologies are under development and not commercially applied. A status on these activities is reported in elsewhere (Biorefinery Roadmap, 2012).

Economic examples for syngas use

In the following section some examples are summarized to illustrate the versatility of the syngas toolbox and the economic impact of the solution selected. In total, 3 cases will be reviewed:

• Hydrogen production from coal and natural gas, respectively • Propylene production from natural gas (via Methanol-To-Propylene technology) and via PDH (propane dehydrogenation), respectively • Syngas production from biomass for fuel production, respectively

Hydrogen from coal and natural gas. This example applies to China specifically, but in general to all markets where natural gas is constrained (but still available in some areas), liquid feedstock is too valuable to be converted into hydrogen only and coal is available, but typically land-locked. The results from a typical benchmark exercise, in which the hydrogen production cost applying the SMR-based route were compared to hydrogen generation using (entrained flow) coal-gasification, are summarized in Fig. 5.

From this analysis it can be concluded that the coal based route starts to be competitive with (low cost) coal when gas prices would exceed approximately 6.9 €/MMBTU (which is currently the case in China). This conclusion is confirmed by the fact that the majority of hydrogen production (> 75 %) in China is coal-based. However, it has to be stated that the

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economic feasibility is not the sole criterion for the technology selection. Other criteria such as plot requirements, CO2-footprint or complexity of project implementation will have to be considered as well for a specific investment decision.

Fig. 5 Economic assessment of hydrogen production based on coal and natural gas

Propylene from Syngas. While coal-derived propylene (through MTP® or MTO) is well referenced in China, the natural gas based opportunities are not tapped as yet. In particular in regions where “wet” natural gas (containing Propane) is available, PDH is considered to be an on-purpose propylene source which needs to be bench-marked against MTP®. A summary of the economic comparison is given below.

Fig. 6 Economic comparison between gas-based MTP® (GTP®) vs. PDH

This comparison yields that the IRR for the GTP®-route is robust with regards to gas and propylene price although the investment cost for GTP® is higher compared to the PDH route. In turn, the economic performance of PDH process is more impacted by fluctuations in the natural propane and propylene pricing which are both following the crude price, hence, there is no leverage potential on the existing price differential between natural (shale) gas and crude oil.

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Syngas from biomass for fuel production. In addition to lowering the average fleet consumption, reduction of the carbon footprint of transportation fuels has a significant nd potential to decrease the CO2-emissions related to mobility. In this context (2 generation) biofuels produced from syngas are preferred compared to bio-diesel and bio-ethanol. However, the cost of producing these environmentally friendly fuels is today significantly higher compared to conventional Diesel., In-house studies indicate that the (untaxed, ex works) cost per Liter of (high Cetane, ultra-low) Diesel varies between 1.25 €/l and 1.60 €/l, respectively. These costs are significantly higher compared to the ex-works cost of “conventional” Diesel which explains that the number of publically discussed BTL-projects (especially in Europe) has substantially decreased over the last 3 years. However, this consolidation does not automatically mean that the concept of BTL has become obsolete, but it may ask for a reset with regards to project location (preferred: South America) and scale (preferred large-scale).

Summary and Conclusion In a world constrained by crude oil, the market for syngas and syngas derivatives develops increasingly bullish as alternative (carbonaceous) feedstock sources such as coal or shale gas need to be tapped in order to meet the growing demand for chemicals and fuels. The syngas boom triggered by North American shale gas reserves or the Chinese coal-to- chemical strategy are clear indications that a new era of “syngas chemistry” has begun already. These new opportunities are based on the ability to flexibly utilize local feedstock material and will continue to give raise to a new growth cycle in the chemical industry.

One of the main criteria to be fulfilled before taking the necessary investment decision is the stable supply of feedstock and stable (long-lasting) political as well as economic frame conditions. Hence, the observation that the “central hubs” of cost-competitive feedstock supply have changed with an estimated time constant of approx. 10 years (mid 1990s: natural gas in Middle East, mid 2000s: Coal in China, mid 2010s: shale gas in the US) may have to be considered during the planning and decision process investment-intense chemical projects.

It can be concluded that a broad portfolio of well-mastered and referenced syngas production technologies which are continuously improved to meet actual market requirements (e. g. ability to valorize biomass) will remain key to enable economic solutions in a world characterized by growing dynamics with regards to the supply of (carbonaceous) feedstock.

References

Bertau, M., Offermanns, H., Plass, L., Schmidt, F., Wernicke, H. J. „Methanol: The Basic Chemical and Energy Feedstock of the Future”, Heidelberg, 2013 (to be published) Higman, C, van der Burgt, M. „Gasification“, 2nd edition, Amsterdam, 2008. Plotkin, J. “China invents and reinvents coal to chemicals”, article accessible via: http://www.icis.com/Articles/2012/04/16/9549986/china+invents+and+reinvents+coal+to+che micals.html Liu, K., Song, C., Subramani, V. „Hydrogen and Syngas Production and Purification Technologies“, New York, 2010. Olah, G. A., Goeppert, A., Prakash, G. K. S. „Beyond oil and gas – the methanol economy”, Weinheim, 2006. Wagemann, K. “Biorefinery Roadmap”, Berlin, 2012.

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