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Industrial Cyber Security CONTENTS April 2018 Volume 23 Number 04 ISSN 1468-9340

03 Comment 42 Providing a guide Lydia Miller, Emerson Automation Solutions, USA, 05 World News explores how guided wave radar instruments can help a refinery make accurate level measurements in a corrosive environment. 12 On a roll or in a ditch? Gordon Cope, Contributing Editor, looks at the current 47 Handling the heat status of the oil and gas sectors in South and Central Ted Keys and Matt Coady, Delta Controls Corp., USA, American countries. discuss the proper placement of temperature instruments in a Claus thermal reactor in order to obtain accurate readings. 19 Do not be afraid to upgrade Mark Pilling, Sulzer, USA, discusses the advantages of 50 Creating a smaller footprint upgrading column internals. Adrian Finn and Terry Tomlinson, Costain, UK, discuss why hydrogen is a leading decarbonisation solution. 25 Separation: a complex conundrum Victor Scalco, General Atomics Electromagnetic 57 Melting sulfur: a new beginning Systems, USA, compares separation technologies and Casey Metheral, IPCO, Germany, looks at the different methodologies for complex solids in today’s refining issues that need to be considered when choosing a sulfur operations. melting solution, and the challenges involved in removing or preventing contaminants. 29 Capturing value Evan Sohodski, Compact Membrane Systems, USA, 63 Static electricity in sulfur introduces a membrane technology that can help to Edina Avdic, Enersul, Canada, discusses the nature of static minimise olefin losses and capture additional value. electricity in sulfur, its effects on material handling and how to mitigate the hazards. 33 Freshening fuel feedstock Rahul Iyer and Guido Radaelli, Siluria Technologies, USA, 67 Specialised solutions explain how oxidative coupling of methane (OCM) process Gobind Khiani, Fluor Canada, provides an overview of solutions can help drive the conversion of fuel streams to valves used in sulfur applications. high value chemicals. 71 Sulfur review 37 Choices, choices Hydrocarbon Engineering provides an overview of a range Bob Irving, AMETEK Inc., USA, evaluates a range of level of sulfur technologies and services that are available to measurement solutions for petrochemical production. plant and refinery operations.

Merichem Company offers the patented LO-CAT wet scrubbing, liquid redox system that converts H2S to innocuous, elemental THIS sulfur. The LO-CAT process is applicable to all types of gas streams. To treat NGLs and other liquid hydrocarbon streams, Merichem’s FIBER FILM® Contactor offers a variety of caustic and amine treating MONTH'S processes including THIOLEX, REGEN and MERICAT. In addition to its large portfolio of licensed treating technologies, Merichem provides FRONT industry leading spent caustic management services that utilise Benecial Reuse options to create a non-waste solution for spent COVER caustics. For fast, effective treating solutions, choose Merichem.

2018 Member of ABC Audit Bureau of Circulations Copyright© Palladian Publications Ltd 2018. All rights reserved. No part of this publication may be reproduced, JOIN THE stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the copyright owner. All views expressed in this follow connect like join journal are those of the respective contributors and are not necessarily the opinions of the publisher, neither CONVERSATION @HydrocarbonEng Hydrocarbon Hydrocarbon Hydrocarbon do the publishers endorse any of the claims made in the articles or the advertisements. Printed in the UK. Engineering Engineering Engineering Uncaptioned images courtesy of www.shutterstock.com. FREE OWNER OPERATOR ATTENDANCE

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MANAGING EDITOR James Little [email protected] he latest edition of DNV GL’s

EDITOR Callum O'Reilly ‘Confidence and Control’ report [email protected] makes for some positive reading.

ASSISTANT EDITOR Anna Nicklin The annual benchmark study, [email protected] Twhich is based on a survey of 813 senior ADVERTISEMENT DIRECTOR Rod Hardy industry professionals and executives, as [email protected] well as 15 interviews with a range of experts, suggests that the oil and gas 1 ADVERTISEMENT MANAGER Chris Atkin industry is greeting 2018 with a fresh sense of optimism. Indeed, 63% of [email protected] the professionals surveyed state that they are confident about growth in ADVERTISEMENT EXECUTIVE Sophie Barrett the industry, which is up from just 32% reported last year. [email protected] The downstream sector is even more bullish, with 82% of oil refining PRODUCTION Ben Munro and gas processing respondents reporting that they are confident about [email protected] the industry’s growth prospects this year. When it comes to profitability, WEB MANAGER Tom Fullerton 65% of downstream respondents believed that they would hit their [email protected] targets in 2018, compared to 49% in the upstream sector and 54% in DIGITAL EDITORIAL ASSISTANT Nicholas Woodroof midstream. [email protected] While less volatile oil prices in 2017 certainly played their part SUBSCRIPTIONS Laura White in improving industry confidence, the report suggests that another [email protected] factor may be even more vital: cost cutting and improved efficiencies. ADMINISTRATION Nicola Fuller Graham Bennett, Vice President of DNV GL – Oil & Gas, explains: “The [email protected] big change in industry confidence is not because of a belief that the oil CONTRIBUTING EDITORS price is going to rise to previous levels […] But instead because industry Nancy Yamaguchi Gordon Cope participants now have their cost levels under control and can make a reasonable margin, even at US$55 or US$65 oil.” DNV GL’s survey suggests that renewed confidence will lead to new smart investments in R&D, digitalisation and diversification, all of which will help to drive greater cost efficiency. Two-thirds of survey respondents plan to maintain or increase CAPEX this year, with the SUBSCRIPTION RATES Annual subscription £110 UK including postage downstream sector once again leading the way. Interestingly, the report /£125 overseas (postage airmail). notes that this increased spending is likely to be far more disciplined Two year discounted rate £176 UK including postage/£200 overseas (postage airmail). going forward, with 84% of those respondents that are set to increase their CAPEX this year doing so following successful cost cutting in 2017. SUBSCRIPTION CLAIMS Claims for non receipt of issues must be made within 3 months of Integrated and downstream companies are also diversifying more than publication of the issue or they will not be honoured without charge. their counterparts in the upstream and midstream sectors, with 65% of APPLICABLE ONLY TO USA & CANADA respondents suggesting that they are likely to invest in opportunities Hydrocarbon Engineering (ISSN No: 1468-9340, USPS No: 020-998) is published monthly by Palladian Publications Ltd GBR and distributed within the energy industry outside of fossil fuels, and close to 60% in the USA by Asendia USA, 17B S Middlesex Ave, Monroe NJ 08831. Periodicals postage paid New Brunswick, NJ and additional mailing reporting that they could invest outside of energy entirely. It would seem offices. POSTMASTER: send address changes to HYDROCARBON that the downstream sector is actively readying itself for the long-term ENGINEERING, 701C Ashland Ave, Folcroft PA 19032. clean energy transition, which acts as a reminder that significant challenges lie ahead for our industry. The saying goes, ‘whatever doesn’t kill you makes you stronger.’ The 15 South Street, Farnham, Surrey oil and gas industry is set to emerge from its recent troubles with new GU9 7QU, ENGLAND cost models, greater discipline and smarter ways to operate that will Tel: +44 (0) 1252 718 999 enable it to thrive in the future, whatever the challenges. Fax: +44 (0) 1252 718 992

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www.CRITERIONCatalysts.com WORLD NEWS USA | EPA proposes amendments to refinery USA | ExxonMobil emissions regulations works on potential

he US Environment Protection petroleum refineries. The proposed polypropylene TAgency’s (EPA) Administrator, amendments specifically provide expansion project Scott Pruitt, has proposed technical corrections that clarify amendments to the Petroleum the requirements for work practice xxonMobil has started engineering Refinery Sector Risk and Technology standards, recordkeeping, and Ework on a potential US Gulf Coast Review and the New Source reporting. project to expand polypropylene Performance Standards (NSPS). This action is expected to save manufacturing capacity by up to After receiving three separate approximately US$77 million in 450 000 tpy, to meet growing demand petitions for reconsideration on the capital investment and for high‑performance, lightweight, final 1 December 2015 Refinery US$11.5 million annually without durable plastics. A final decision on Sector Rule, EPA is taking action to sacrificing environmental the investment, anticipated to be address concerns regarding the protection. several hundred million dollars, is National Emission Standards for EPA will take public comment on expected later this year and facility Hazardous Air Pollutants requiring the notice for 45 days after the startup could come as early as 2021. Maximum Available Control proposed amendments are The new facility would produce Technology standards, and NSPS for published in the federal register. polypropylene products that can be used in automotive, appliance and packaging applications. The potential Saudi Arabia | Saudi Aramco and SABIC award project would create more than Wood a project management contract 600 jobs during peak construction and more than 60 permanent jobs when audi Aramco and SABIC have selection of technology providers, production starts. Sawarded Wood a contract for updating project economics and Such polypropylene materials project management and front-end performing the FEED. reduce vehicle weight, which helps engineering design (FEED) to advance By 2030, the COTC complex is improve fuel efficiency and reduce the successful implementation of expected to be a significant carbon emissions. Modern plastics and their fully integrated strategic crude contributor to the Kingdom’s gross polymer composites, which can oil to chemicals (COTC) complex in domestic product (GDP) and play a replace steel in many applications, the Kingdom of Saudi Arabia. key role in helping the continued typically comprise approximately 50% This contract follows a economic diversification away from of a new car’s volume but only 10% of Memorandum of Understanding crude exports to higher value its weight. (MoU), signed in November 2017 industrial products. This investment is one of 13 new between Saudi Aramco and SABIC, to Consistent with the Kingdom’s facilities, including two steam crackers assist in bringing the mega-project to ‘Vision 2030’, this project will in the US, planned by the company to its next stage of development. support the creation of a further grow its chemical manufacturing The contract primarily includes diversified world-leading capacity in North America and the finalisation of the project scope, downstream sector in Saudi Arabia. Asia Pacific by approximately 40%.

USA | Honeywell equipment to be installed at gas processing plant

ardinal Midstream III LLC will use that reduces project schedules and fuel-blending components and other CUOP Russell modular cryogenic delivers a custom, gas-specific plant valuable petrochemicals. equipment to process with proven uptime and reliability. The plant is designed to 200 million ft3/d of natural gas at its Cryogenic gas processing plants accommodate the NGL-rich gas in Iron Horse Gas Processing Complex cool natural gas until the heavier and Oklahoma. Its low capital and in Grady County, Oklahoma. more valuable natural gas liquids operating expense, coupled with Honeywell customised the gas (NGLs) form into liquids. These high NGL recovery, allow Cardinal to processing plant for the needs of the liquids – including propane, ethane offer gas producers competitive location, including a modular design and butanes – can be used as fuels, processing terms.

HYDROCARBON 5 April 2018 ENGINEERING WORLD NEWS Kuwait | Jacobs to conduct pre-feasibility IN BRIEF study indonesia acobs Engineering Group Inc. has process configurations using an Along with its partner PT Synergy Jbeen awarded a contract for a integrated linear program model, Engineering, Add Energy has been pre-feasibility study, with the option various technical studies, licensor awarded a maintenance build of proceeding to a detailed feasibility evaluation, cost estimation, financial contract for work on BP’s Tangguh study, for Kuwait Petroleum Corp. modelling, and risk assessment and LNG expansion project in Indonesia. (KPC) and its subsidiaries. The studies management, with a focus on The work is being undertaken at will support KPC’s strategic directions increasing refining capacity and Add Energy’s engineering centre in and long-term downstream plans up optimum petrochemical integration. Aberdeen and PT Synergy’s head office to 2040. “As refiners across the industry in Jakarta. Jacobs will evaluate how look to the chemical market for domestic refining capacity can be profit growth, Jacobs leverages its china best expanded in a cost-effective proven, differentiated capabilities Eni has been awarded a contract way, while providing advantaged that have helped refiners explore by Zhejiang Petrochemicals for the feedstocks for integrated options and define strategies for construction of two refining lines, petrochemical production. optimised refinery-petrochemical based on Eni Slurry Technology. The studies will cover evaluation integration,” said Jacobs Petroleum The two production lines will have and optimisation of alternative and Chemicals President, Vinayak Pai. a refining capacity of 3 million tpy each. They will be built as part of a project for the construction of a new USA | Hydrogen plant in full operation refinery, which will have a capacity of 40 million tpy. n 2015, CHS, a global agribusiness efficiency and increase production Idiversified in energy, grain and food at its refinery. ingredients, selected TechnipFMC to TechnipFMC’s project team malaysia provide steam reforming technology deployed the use of a drone to Through its subsidiary Malaysia LNG and engineering, procurement and access the inside of the radiant box Sdn. Bhd. (MLNG), Petronas has construction for a 40 million ft3/d in order to increase worker safety signed a heads of agreement (HOA) hydrogen plant at the CHS refinery in and reduce operating costs. The with Tokyo Gas Co. Ltd to supply Laurel, Montana. TechnipFMC has drone, which captured a LNG for a period of up to 13 years. confirmed that the hydrogen plant is high-quality video of the tube Under the agreement, commencing in now in full operation and has met its surfaces, allowed the project team April 2018, supply to Tokyo Gas will performance targets. to safely inspect the condition of be approximately 0.5 million tpy for The plant will provide CHS with the reformer tubes after the first six years, with the possibility the hydrogen needed to boost installation. of a volume increase of up to 0.9 million tpy for the remaining Build as big extension period. Saudi Arabia | CLG announces start-up of india Luberef II Yanbu Refinery Expansion Petrofac has secured a contract from Hindustan Petroleum Corp. Ltd (HPCL) hevron Lummus Global LLC (CLG) technologies at the refinery’s base has announced the start up Saudi oil units in order to produce Buildas you as big dream. as you dream. for its sulfur recovery unit (SRU) C block package for the Visakh Refinery Aramco’s Luberef II Yanbu Refinery high-quality Group II/III base oils. At AECOM, we work with leading oil and gas producers to design, build, Modernisation Project (VRMP). The Expansion Project using CLG’s Saudi Aramco has always been At AECOM, we work with leading oil and gas producers to design, build, lump‑sum engineering, procurement all-hydroprocessing technologies for a producer of Group I base oils. financefinance and and maintainmaintain the the infrastructure infrastructure that that deliversdelivers raw raw productproduct toto endend and construction (EPC) project, valued the production of premium Group II CLG’s unit technology now allows at approximately US$200 million, and Group III base oils. Saudi Aramco Luberef to enter the consumers.consumers. From From wellhead wellhead to to gas gas tank, tank, from from crude crude oil oil to to recyclable recyclable includes licensing and commissioning. CLG provided the license, basic market for Group II and Group III engineering design and catalysts hydroprocessed base oils, allowing plastic water bottle, we’re meeting the challenge. for its ISOCRACKING, it to formulate premium lubricants plastic water bottle, we’re meeting the challenge. ISODEWAXING and ISOFINISHING for top-tier lubricants markets. aecom.com. SeeSee how how we we deliver deliver what what others others can can only only dream dream about about at at aecom.com. April 2018 6 HYDROCARBON ENGINEERING Build as big Buildas you as big dream. as you dream. AtAt AECOM, AECOM, we we work work with with leading leading oil oil and and gas gas producers producers to to design, design, build, build, financefinance and and maintainmaintain the the infrastructure infrastructure that that deliversdelivers raw raw productproduct toto endend consumers.consumers. From From wellhead wellhead to to gas gas tank, tank, from from crude crude oil oil to to recyclable recyclable plasticplastic water water bottle, bottle, we’re we’re meeting meeting the the challenge. challenge. aecom.com. SeeSee how how we we deliver deliver what what others others can can only only dream dream about about at at aecom.com. WORLD NEWS USA | Chevron Phillips Chemical commences IN BRIEF operation of new ethane cracker uae hevron Phillips Chemical Co. LP has Ethylene produced by the new The Abu Dhabi National Oil Co. (ADNOC) Csuccessfully introduced feedstock ethane cracker will be used to meet has announced its intention to move further and commenced operations of a new the needs of the company’s downstream, as the company pivots to ethane cracker at its Cedar Bayou derivative units, including the two take full advantage of the rising demand facility in Baytown, Texas. At peak new polyethylene units in for higher value refined and petrochemical production, the unit will produce Old Ocean, which are capable of products, particularly in the growth 1.5 million tpy. It will be one of the producing a variety of products – economies of China and Asia. largest and most energy efficient ranging from metallocene linear crackers. low-density polyethylene to china In September 2017, the company advanced dual loop bimodal The Sinochem Group has successfully announced the successful polyethylene resins. started up a new MECS® DynaWave® wet commissioning and start-up of two new The ethylene will also feed the gas scrubbing unit, installed as a Claus tail Marlex® polyethylene units in Old company’s AlphaPlus® normal alpha gas treatment process. The Sinochem Group Ocean, Texas, based on its MarTech® olefins plants, which are used for awarded DuPont Clean Technologies the technologies. Together, these assets polyethylene comonomers, contract to supply the technology license, form the bulk of the company’s US Gulf plasticisers, synthetic motor oils, engineering and proprietary equipment for Coast Petrochemicals Project (USGCPP), lubricants, automotive additives, this scrubbing system last year to ensure the which was first announced in 2011. surfactants, etc. refinery complies with increasingly strict sulfur oxide emission regulations. India | Petrofac wins EPC contract uk A recent survey from Marsh, entitled ‘Could harat Petroleum Corp. Ltd (BPCL) assistance with commissioning at Energy Industry Dynamics Be Creating an Bhas awarded Petrofac a BPCL’s Kochi Refinery. Impending Cyber Storm’, suggests that lump-sum 27-month engineering, The contract is for the addition procurement and construction (EPC) of a new Motor Sprit (MS) block of energy executives are increasingly concerned The TM about the impact of cyber attacks on their contract, valued at approximately refining units, which aim to increase US$135 million. the current output of the facility to operations. Over three-quarters (76%) of chemistry of results respondents to the survey cited business The scope of work encompasses meet India’s BS-VI automotive fuel interruption (BI) as the most concerning EPC, pre‑commissioning and quality. consequence of a cyber attack for the SOLUTIONS TO COMPLEX, PETROCHEMICAL CHALLENGES energy industry. Canada | SNC-Lavalin to supply two gas worldwide cracking furnaces to NOVA Chemicals Boiling Water Systems Waste Water Systems Fractionators The International Energy Agency (IEA) Cooling Towers Amine & Caustic Units Light End Units is reporting that global energy demand n consortium with TechnipFMC, Prior to this award, TechnipFMC rose by 2.1% in 2017, more than twice the ISNC-Lavalin has been awarded a provided the associated process Dilution Steam Systems Cracking Furnaces Process Gas Compressors previous year’s rate, boosted by strong global lump sum engineering, procurement technology under a separate licensing economic growth. According to the IEA’s and construction contract to supply agreement with NOVA Chemicals; NOVA Chemicals with two gas both TechnipFMC and SNC-Lavalin Athlon Solutions is a premier provider of specialty water and process treatment chemicals, ‘Global Energy and CO2 Status Report, 2017’, over 70% of global energy demand growth cracking furnaces. This award supports supported the company in the customized engineering solutions, and services to the industrial sector, including the refining, was met by oil, natural gas and coal, while the recently-announced third-phase of front-end engineering development for renewables accounted for almost all of the the conversion and expansion of the gas cracking furnaces. petrochemical, chemicals, ammonia/fertilizer, and power/utilities industries. rest. Improvements in energy efficiency NOVA Chemicals’ Corunna cracker, Under this agreement, TechnipFMC slowed down last year. As a result of these which is expected to increase the will have primary responsibility for the unit’s current ethylene capacity by detailed engineering and procurement Visit our website to learn how we can help drive results for you. trends, global energy-related CO2 emissions increased by 1.4% in 2017, after three years of more than 50% and is linked to the aspects of the work, while SNC-Lavalin remaining flat. construction of a new polyethylene will be responsible for the modular facility being developed by the fabrication, erection, construction and athlonsolutions.com company. pre-commissioning. [email protected]

April 2018 8 HYDROCARBON ENGINEERING The TM chemistry of results SOLUTIONS TO COMPLEX, PETROCHEMICAL CHALLENGES

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athlonsolutions.com [email protected] WORLD NEWS China | Yokogawa to supply gas DIARY DATES chromatographs to downstream complex 15 - 18 April 2018 GPA Midstream Convention okogawa China Co. Ltd has won Zhejiang Petrochemical’s refining Austin, Texas, USA Yan order to supply the gas and petrochemical complex will www.gpamidstreamconvention.org chromatographs (GCs) for the first eventually have an overall refining phase of a project to construct an capacity of 40 million tpy. The facilities 15 - 19 April 2018 integrated refinery and being built include a crude oil terminal, Corrosion 2018 Phoenix, Arizona, USA petrochemical production complex oil refining and petrochemical www.nacecorrosion.org that is being undertaken by production process units, storage Zhejiang Petrochemical Co. Ltd at a tanks, and transport and service 23 - 25 April 2018 new industrial site in the Zhoushan installations. The units constructed in Sulphur World Symposium 2018 archipelago. For the first phase of the first phase will have the capacity to Philadelphia, Pennsylvania, USA this project, Yokogawa China will refine 20 million tpy of crude oil and www.sulphurinstitute.org supply 190 Yokogawa GC8000 produce 1.4 million tpy of ethylene. process GCs – the company’s largest The first phase is due for completion 23 - 27 April 2018 order of GC8000 GCs to date. by the end of December 2018. Hannover Messe 2018 Hannover, Germany www.hannovermesse.de USA | 29 April - 3 May 2018 US gasoline and diesel exports to Latin SOGAT America to remain stable Abu Dhabi, UAE www.sogat.org n its recently published ‘One-Year In 2018, Latin America’s gasoline Speed and Quality in IGlobal Fuels Outlook’, ESAI Energy and diesel deficits are forecast to 16 - 18 May 2018 notes that US exports of gasoline remain steady as a marginal recovery GPA Europe Annual Conference and diesel to Latin America will in regional throughput is offset by a Rome, Italy www.gpaeurope.com remain stable this year, near historic rise in demand for the two products. highs achieved in 2017 of over With the US’ gasoline and diesel Separation by Design 22 - 25 May 2018 1.6 million bpd combined. surpluses also expected to remain International Downstream Week Over the last two years, US more or less stable, ESAI Energy Prague, Czech Republic producers have sent increasingly large Analyst Ian Page states that: “US www.europetro.com volumes of both diesel and gasoline producers will continue to send to Latin America to satiate that historically large volumes of gasoline 31 May - 1 June 2018 region’s growing import requirement. and diesel Southwards.” Downstream Conference & Exhibition Galveston, Texas, USA www.downstreamevent.com At Sulzer we develop, design and produce mass transfer equipment and offer solutions for all USA | McDermott and CB&I making progress your separation problems. Our portfolio includes state-of-the-art products for distillation, absorption, 11 - 13 June 2018 stripping, evaporation, phase separation, liquid-liquid extraction, crystallization, and membrane separation. ILTA International Operating Conference & in their combination Trade Show Because life is fluid – www.sulzer.com Houston, Texas, USA cDermott International Inc. and enterprise value of approximately www.ilta.org/aocts MCB&I have received antitrust US$6 billion. clearance in Russia for their proposed Under the terms of the proposed Europe, Africa, Russia Middle East and India North and South America Asia Pacific 11 - 15 June 2018 combination. With this clearance, the combination, upon completion, it is Sulzer Chemtech Ltd. Sulzer Chemtech Middle East SPC Sulzer Chemtech USA, Inc. Sulzer Shanghai Engin. & Mach. Works Ltd. ACHEMA 2018 companies have received all of the estimated that McDermott Neuwiesenstrasse 15 3rd Floor Jawhara Plaza 1 Sulzer Way No.1688, Feizhou Road, Nanhui District 8401 Winterthur P.O. Box: 21558 Al Spef Tulsa, OK 74131 Shanghai, 201306 Frankfurt, Germany required competition authority stockholders will own approximately Switzerland Kingdom of Bahrain USA China www.achema.de approvals for the transaction. 53% of the combined company on a Phone: 0041 52 262 50 28 Phone: 00973 1756 8400 Phone: 001 918 446 6672 Phone: 0086 21 3807 1000

As announced in December 2017, fully diluted basis and CB&I [email protected] [email protected] [email protected] [email protected] 12 - 14 June 2018 McDermott and CB&I agreed to shareholders will own approximately Global Petroleum Show 2018 combine in an all-stock transaction 47%. Calgary, Canada www.globalpetroleumshow.com to create a vertically integrated The combination is expected to onshore‑offshore company, with an be completed in 2Q18.

April 2018 10 HYDROCARBON ENGINEERING Speed and Quality in Separation by Design

At Sulzer we develop, design and produce mass transfer equipment and offer solutions for all your separation problems. Our portfolio includes state-of-the-art products for distillation, absorption, stripping, evaporation, phase separation, liquid-liquid extraction, crystallization, and membrane separation.

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Europe, Africa, Russia Middle East and India North and South America Asia Pacific Sulzer Chemtech Ltd. Sulzer Chemtech Middle East SPC Sulzer Chemtech USA, Inc. Sulzer Shanghai Engin. & Mach. Works Ltd. Neuwiesenstrasse 15 3rd Floor Jawhara Plaza 1 Sulzer Way No.1688, Feizhou Road, Nanhui District 8401 Winterthur P.O. Box: 21558 Al Spef Tulsa, OK 74131 Shanghai, 201306 Switzerland Kingdom of Bahrain USA China Phone: 0041 52 262 50 28 Phone: 00973 1756 8400 Phone: 001 918 446 6672 Phone: 0086 21 3807 1000 [email protected] [email protected] [email protected] [email protected] April 2018 12 HYDROCARBON ENGINEERING Gordon Cope, atin American countries, including Mexico, Venezuela, Brazil, Argentina and Colombia, account for almost 10% of global crude Contributing Editor, production. The region also has a bounty of natural gas. Yet, looks at the current Latin America imports much of its fuel and petrochemical Lproducts. Some countries are rapidly expanding their ability to feed status of the oil domestic demand, while others are sliding into near chaos. The difference and gas sectors in between success and failure depends on many elements. South and Central Mexico American countries. Starting in 2013, Mexico’s President Enrique Pena Nieto spearheaded a reform of the oil and gas sector, ending a decades’ long monopoly over hydrocarbon production, refining and sales. The move was instigated by falling production at state-owned Pemex, from 3.4 million bpd in the early 2000s to 1.9 million bpd in late 2017. Since then, several public auctions have been held, attracting billions of dollars in foreign investment and activity. Houston-based Talos Energy and partners Sierra O&G and Premier Oil discovered the Zama field 60 km off the coast in the Gulf of Mexico. The field holds approximately 1.4 billion bbls of light, sweet crude and associated gas. The field extends into a block owned by Pemex, which means that the company may have a claim to the discovery. The partners are awaiting resolution by the Energy Ministry before constructing production facilities. ENI made an offshore discovery in the Bay of Campeche at its Mizton prospect. The Italian company, which drilled a delineation well in 2017, estimates that the field holds around 350 million boe. Its total holdings in

View from Corcovado moutain, Rio de Janeiro, Brazil.

HYDROCARBON 13 April 2018 ENGINEERING the Bay of Campeche’s Contractual Area 1 now amounts to the upcoming federal elections threaten to undo the reforms. 1.4 billion boe, primarily light crude. ENI is also currently But, overall, Mexico has done an admirable job at opening its oil developing its Amoca field, located near to the Mizton and gas sector to private investment. prospect. In late 2016, Pemex selected BHP Billiton to be its partner in Venezuela developing the deepwater Trion discovery, which is estimated With the world’s largest crude reserves, Venezuela is in dire to hold 485 million boe. Pemex is also looking for a partner to straits. The country, which has been under the control of former develop its Nobilis-Maximino deepwater project. The discovery President Hugo Chavez and his successor Nicolas Maduro for holds approximately 502 billion boe of reserves, and would the last two decades, has seen oil production plunge from require US$10.7 billion to develop. The company estimates that 3.5 million bpd in the early 2000s to 2.1 million bpd in late 2016; the field could produce up to 174 000 bpd by 2026 (Pemex a decrease of 490 000 bpd in 2017 alone reduced production by recently delayed the search, citing low oil prices as the main early 2018 to slightly more than 1.6 million bpd. The country concern). now has US$140 billion in debt, with little prospects of Mexico is modernising its utility infrastructure, converting repayment. bunker fuel fired electricity plants to natural gas. As a result, US Financial liquidity has all but disappeared in the oil and gas gas pipeline export capacity to the country is expanding sector. Sinopec, for instance, is suing PDVSA for US$23.7 million rapidly. In early 2017, capacity was over 7 billion ft3/d, an almost after it was not paid for an order of steel rebar. The lawsuit is 100% increase in the last five years. In addition, there is over indicative not only of the parlous state of Venezuela’s finances, 3 billion ft3/d under construction in Texas, and over but of the strained relationship between the country and its 3 billion ft3/d in the planning stage. Total capacity is expected largest creditor. Over the last decade, Chinese firms have to be near 14 billion ft3/d by the end of the decade. invested over US$50 billion in various joint ventures (JVs) and Downstream, Mexico has six major refineries with a total promises of crude deliveries, only to receive a host of nameplate capacity of 1.25 million bpd, all operated by Pemex. problems. They include the Tula refinery (315 000 bpd), the Salina Cruz Sinopec is not the only disgruntled partner; various refinery (227 000 bpd) and the Salamanca refinery international service companies have suspended work and (152 000 bpd). Years of underinvestment have resulted in removed rigs. Mature fields are no longer getting infill drilling; capacity levels falling well behind consumption; Mexico now Rystad Energy, a consultancy, believes that some field declines imports over 700 000 bpd of gasoline and diesel, primarily could hit 30% annually, which would reduce output to slightly from the US. more than 1 million bpd by 2021. In order to modernise refining capacity, Pemex has On the downstream side, PDVSA operates seven refineries partnered with Japan-based Mitsui to install a US$2.6 billion in Venezuela with a total of 2.5 million bpd nameplate capacity, coking plant in its Tula refinery. Pemex has already spent including the Paraguana refinery complex (956 000 bpd) and the US$1.24 billion; Mitsui will be required to find the rest. The Tula Amuay-Cardon-Bajo Grande complex (950 000 bpd). refinery, located 60 km north of Mexico City, has a nameplate Underinvestment (and a major fire at Paraguana) means that the capacity of 315 000 bpd, but has only averaged 219 000 bpd in country produces slightly less than 1 million bpd of refined 2017. Pemex expects the new coking plant to increase gasoline products. output by 40%. The work is expected to be completed by 2021. Corruption is rife throughout the country. A congressional Because domestic consumption is growing faster than report found that PDVSA’s former president Rafael Ramirez was refining, companies are working to improve fuel import responsible for wrongdoing that cost the state oil monopoly infrastructure. Sempra Energy and its Mexican partner IENOVA US$11 billion. The charges involved pricing of drilling rigs and are planning to build a liquid fuels marine terminal in the Gulf money laundering in Andorra. Because much of the alleged of Mexico port of Veracruz, as well as inland storage facilities in ill-gotten gains passed through the US financial system, several Puebla and Mexico City. The projects have a budget of federal agencies, including Homeland Security and the FBI, are US$275 million. The marine terminal will have a capacity of investigating activities that date back to 2005. 1.4 million bbls of gasoline, diesel and jet fuel. The inland For the last year, Venezuelan citizens, fed up with soaring facilities will have capacities of 500 000 bbls in Puebla and inflation and chronic lack of essentials, have taken to the streets. 800 000 bbls in Mexico City. IENOVA expects the network to Regulatory institutions and the judicial system are under control enter operations by early 2019. by the Maduro regime. As a result, Venezuela is considered a Retailing is also set to expand. Mexico has a population high risk climate for international investment in either exceeding 120 million, and the number of cars on the road is exploration, refining or petrochemicals. growing rapidly. However, Pemex has only 12 000 service stations throughout the country, a fraction of the coverage Argentina experienced in the US and Canada. ExxonMobil has begun to In the late 1990s, Argentina produced over 900 000 bpd and ship product by rail to Grupo Orsan, a Mexican retailer with 4.5 billion ft3/d of gas. Under the Kirchner regimes, however, the 140 stations, and plans to open many more. BP intends to open oil and gas sector was partly renationalised and generally 1500 branded stations; Chevron and Royal Dutch Shell also mismanaged, to the point where production fell to current have plans. The Oxxo convenience store chain, with levels of 523 000 bpd, and gas to 3.5 billion ft3/d; the country 13 000 stores, is also arranging to sell fuel. relies heavily on imports to meet its domestic needs. Challenges still remain. Fuel theft is rampant, thousands of Argentina’s fortunes are beginning to turn around. The people involved in Narco-gang wars, and some candidates in country has immense unconventional resources; the

April 2018 14 HYDROCARBON ENGINEERING Latest News 2018

BIDS SUBMITTED FOR STAKE IN INDENI PETROLEUM REFINERY Seven firms have submitted bids to buy a majority stake in Zambia’s Indeni Petroleum Refinery. Zambia Development Agency (ZDA), which is responsible for handling the bidding, reports that bids have been submitted by Glencore Energy UK Ltd, Vitol SA, China Petroleum Technology & Development Corp., Philia Trading, Joint Stock Company Global Security of Russia, Sahara Energy CADWorx Plant Professional Resources Ltd, and a consortium of Beijing Huiersanji Green Chem Co. Ltd and makes the creation of AVIC International Holding. intelligent plant designs quick and easy. It has helped ﬁrms FLUOR AWARDED CONSTRUCTION CONTRACT FOR MEG FACILITY produce the high-quality MEGlobal, a wholly-owned subsidiary of EQUATE Petrochemical Co., has awarded deliverables their customers Fluor Corp. a contract for the mechanical construction of its new monoethylene have come to rely on for over ﬁfteen years. glycol (MEG) manufacturing facility in Freeport, Texas, US. Fluor’s mechanical construction scope includes the installation of equipment, steel and piping for the MEG process unit. Operations are expected to begin in 2019. Capabilities

AutoCAD® or BricsCAD® Platform ENERKEM PRODUCES NEW HIGH-OCTANE BIOFUEL Intelligent 3D Piping Design Enerkem Inc. has succeeded in producing a new high-performance biofuel that On-the-ﬂy Collision Checking could improve the octane rating of fuels sold on the market and reduce their Structural Steel carbon footprint. The process uses its waste-to-biofuel technology to Equipment Ducting/Cable Trays produce a new biofuel with a Research Octane Number (RON) of up to 112. Isogen® Isometrics This is 20 points higher than the average octane rating found in regular motor P&ID Creation and Links gasoline. Links to Stress Analysis Design Review AXENS TECHNOLOGY SELECTED FOR PETROCHEMICAL SITE SOCAR Turkey Energy has selected Axens’ ParamaX® Technology Suite for its hexagonppm.com/cadworx project of aromatics and purified terephthalic acid (PTA) complex at the future petrochemical site in Aliaga, Turkey. When the final investment decision is taken, this complex will aim to satisfy domestic market needs in PTA.

For further information go to: © 2018 Hexagon AB and/or its subsidiaries and affiliates. AutoCAD is a registered trademark of Autodesk, Inc. www.hydrocarbonengineering.com BricsCAD is a registered trademark of Bricsys. All rights reserved. Petrochemicals and LNG ExxonMobil is also investing heavily in shale plays in Latin America has several significant petrochemical Argentina, having spent US$500 million on initial lease facilities. Pemex produces 815 000 tpy of polyethylene in procurement and pilot wells. It plans to spend several billion high density (HD), low density (LD) and linear low density more in order to drill 300 horizontal wells. (LLD) in Mexico. Chevron has also been working with YPF over the last Braskem has 3.2 million tpy of HD, LD and LLD five years to develop the Vaca Muerta. It has managed to bring capacity in Brazil. Dow produces 581 000 tpy of HD, LD the cost of a well down from US$16.2 million to US$8 million. and LLD in Argentina and Pequiven makes 430 000 tpy of The partners have added a third drill rig to the Loma Campana HD, LD and LLD in Venezuela. In addition, Braskem-Idesa concession and intend to spend US$500 million in 2018 to has just launched a new petrochemical complex in the further develop the field. Gulf of Mexico port of Coatzacoalcos. The 1 million tpy There are eight major refineries in Argentina, with a total of facility produces HD and LD polyethylene. over 600 000 bpd nameplate capacity. They include YPF’s Economic growth in Latin America has been steady La Plata Refinery (189 000 bpd), Royal Dutch Shell’s Buenos Aires over the last decade, with standards of living rising at a Refinery (110 000 bpd) and the Esso Campana Refinery significant pace. According to Platts, a consultancy, (84 000 bpd). Royal Dutch Shell has announced plans to invest Latin America consumes 1.5 million tpy more US$300 million on exploration, refining, distribution and petrochemicals than the region produces. The region marketing in the country over the next three years. also has an abundance of natural gas feedstock; the EIA Many international oil and gas firms see the fiscal and estimates that Argentina alone has 774 trillion ft3 of regulatory climate under President Mauricio Macri as a unconventional gas. significant improvement. The country’s Energy and Mining Several companies have tentative plans to build new Ministry expects investments between US$12 billion and capacity in Brazil, Argentina and Venezuela. However, US$15 billion in 2018, and US$20 billion from 2020 onwards. except for the Braskem-Idesa plant in Mexico, no new plants are expected to come onstream in the near future. Brazil International manufacturers began building facilities in Brazil, which has billions of barrels of reserves locked away in the US when the shale gas revolution in North America offshore presalt structures, has been on a construction spree, caused feedstock prices to plunge. Capacity in building offshore production platforms, floating production, North America is now sufficient to deliver low-cost storage and offloading (FPSO) unit and drill ships. petrochemicals to markets in Latin America. Much of the work was stimulated, in part, by the country’s Although Latin America has several LNG regulatory regime, which stipulated that a significant percentage regasification facilities, the region has only one LNG of oil and gas manufacturing be done domestically. This has led liquefaction plant. Peru LNG is located on the Pacific to higher prices, delays and bribery. Numerous politicians and coast 350 km south of Lima, and has a nameplate Petrobras executives have been charged and sentenced in what capacity of 4 million tpy. The US$3.8 billion facility, is called the Lava Jato (car wash) corruption scandal. In early 2018, owned by Hunt Oil, SK Energy, Shell and Marubeni, Petrobras paid out US$2.95 billion to North American investors entered operation in 2010. It uses gas from the giant who claim that they lost money as a result of the corruption. Camisea field, located 400 km inland in Peru’s Amazon The Brazilian Congress moved to relax domestic content rules in basin, east of the Andes. an effort to reduce the potential for further malfeasance. Mexico’s energy secretary is in talks with US shale Downstream, all of Brazil’s refineries are owned and operated drillers and pipeline companies over exploring the by Petrobras. A total of 11 plants around the country have a development of an LNG plant in Mexico. US LNG plants nameplate capacity of 2.8 million bpd. They include the REFAP currently ship their product to Asia via the Panama refinery in Canoas (201 000 bpd), the REPLAN refinery in Paulinia Canal, but a plant on Mexico’s west coast would cut the (415 000 bpd), and the REDUC plant in Rio de Janeiro journey by several weeks. While the plan is in its early (242 000 bpd). stages, there are already several major pipeline Petrobras, which also owns a wide array of energy-related construction projects underway in Mexico to deliver gas assets, is in divestment mode in order to meet fiscal obligations. to utilities and industry in central Mexico. By reversing a In late 2016, it sold its stake in ethanol producer Guarani SA and branch line that currently runs from a regasification two petrochemical facilities in northeastern Brazil for a total of facility in Colima state to Guadalajara, operators could US$587 million, capping off over US$13 billion in divestitures. The build an LNG plant in the port of Manzanillo. company has plans to sell assets and develop partnerships worth US$21 billion over the next several years. In the meantime, development of immense offshore US Energy Information Administration (EIA) has estimated that resources moves ahead. In late 2017, Petrobras announced that it the Neuquen basin’s Vaca Muerta formation alone has over had brought production onstream at the deepwater Libra field in 16 billion bbls of recoverable oil and 300 trillion ft3 of natural gas. the presalt Santos basin. The field is being produced by the In 2017, Argentina’s state-controlled YPF announced that it 50 000 bpd Pioneiro de Libra FPSO. The field is estimated to would invest US$21.5 billion between 2018 and 2022 in order to hold up to 12 billion boe, and Petrobras and its partners Total, drill and develop 1600 new oil and natural gas wells. YPF is the Shell and CNOOC are in discussions regarding the timetable for main company exploring the Vaca Muerta shale in Neuquen building a 150 000 bpd FPSO. The partners expect that further Province. FPSOs will be built to realise the field’s full potential.

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Layout.indd 1 19/03/2018 15:34 Colombia Barrancabermeja’s capacity to 300 000 bpd, and Cartagena’s Colombia produced over 1 million bpd of crude in 2015, but to 165 000 bpd. output has since fallen to just over 850 000 bpd by late 2017. Although it will be many years before Colombia is unable to There are several reasons for the decline: meet refining demand with its own resources, it needs to find a nn The fall in commodity prices in 2015 curtailed much of way to expand reserves. Recently, the CEO of Ecopretol said the international investment that had flowed into the that Colombia’s estimated shale oil reserves had been calculated country after fiscal and regulatory changes made under between 2.5 billion bbls and 7 billion bbls, putting the country in President Álvaro Uribe’s administration in the 2000s. second place for unconventional reserves in South America, nn Increases in existing field production due to modern infill behind Argentina. But, as operators have found in most drilling technologies, such as that used by Pacific Rubiales, unconventional plays, it can take years to bring costs down to plateaued. competitive levels, especially if oil remains in the US$60 price nn Although the government has signed a peace treaty with range. the Revolutionary Armed Forces of Colombia (FARC) guerrilla group, years of non-investment in FARC-controlled regions has had an impact. The future Latin America has much to offer in terms of international But one of the most significant challenges has been the investment in the oil and gas and petrochemical sector. Many inability to expand the country’s known reserves. In 2014, of the economies in the region are expanding at significant recoverable reserves stood at a modest 2.3 billion bbls. By 2017, rates, and citizens are becoming more affluent. But many that had dropped to 1.67 billion bbls. Large international firms countries in the region lag in terms of the kinds of regulatory have been targeting investment where they have the potential and fiscal regimes that spur international investment. National to find big reserves in the billion-barrel range, such as offshore champions, such as Petrobras, have significant budget issues Mexico and Brazil. The mid-sized independents who operate that impair their abilities to attract major JV partners. Although in the country have had significant successes, but not on the several countries, like Colombia, have made admirable steps to scale to tip Colombia’s reserves meter in any meaningful curb internal strife, First Nation settlements and growing manner. environmental opposition impede development in many Colombia has five refineries capable of handling a total of nations. 340 000 bpd, the majority of which are owned and operated While Mexico has proven that reforms can achieve by Ecopetrol. They include the Barrancabermeja-Santander success, many other countries in Latin America face significant refinery (252 000 bpd) and Reficar’s Cartagena refinery challenges. For the foreseeable future, growth in demand is (80 000 bpd). Plans are underway to expand most likely to be met with increased imports from the US.

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