Developing methodology for baseline energy consumption for petroleum refinery subsector Table of contents 1. Report background and objective ..................................................................................... 5 1.1 Background of this report .......................................................................................... 5 1.2 Objective of the report .............................................................................................. 5 2. An overview of refineries in India ..................................................................................... 6 2.1 Significance of petroleum refinery subsector in Indian economy ..................................... 6 2.2 Present status of refineries in India ............................................................................. 6 3. Refinery processes and energy consumption .................................................................... 9 3.1 Refinery production processes ................................................................................... 9 3.2 Output vs throughput in a refinery ............................................................................ 12 3.3 Selection of MBN as indicator for specific energy consumption .................................... 13 4. Methodology to calculate baseline MBN in a refinery ........................................................ 14 4.1 Work steps for baseline MBN calculation................................................................... 14 5. Statistical analysis on factors affecting MBN .................................................................... 20 5.1 Selection of factors for statistical analysis .................................................................. 20 5.2 Establishment of correlation between selected parameters and MBN through statistical analysis …………………………………………………………………………………………………………………………………………… 21 5.3 Outcome of Regression Analysis .............................................................................. 27 5.4 Regression analysis and outcomes for two other refineries ......................................... 29 6. Normalization of MBN ................................................................................................... 31 6.1 The need for normalization ...................................................................................... 31 6.2 Algorithm for normalization ...................................................................................... 31 6.3 Normalization of MBN against capacity utilization, NRGF & density of crude ................. 32 7. View of industry experts ................................................................................................ 36 8. Linkage with Standardized Baseline ............................................................................... 38 Appendix A ……………………………………………………………………………………………………..44 Developing methodology for baseline energy consumption for petroleum refinery subsector Page 1 Glossary List of Exhibits Exhibit 1: Breakup of petroleum products consumption (million tonnes) in the country in 2011-12 7 Exhibit 2: Process flow diagram of Refinery 1 (Larger and more complex) .................................. 13 Exhibit 3: Process flow diagram of Refinery 2 (Smaller and less complex) .................................. 14 Exhibit 4: Methodology work steps .............................................................................................. 16 Exhibit 5: MBN vs Capacity utilization plot .................................................................................. 37 Exhibit 6: MBN vs NRGF plot ...................................................................................................... 38 Exhibit 7: MBN vs Density of Crude plot ...................................................................................... 39 List of Tables Table 1: List of refineries in India with their capacities ................................................................... 8 Table 2: Increase in capacity planned during 12th Plan Period (2012-2017) ................................. 9 Table 3: New refineries to be set up during 12th Plan Period (2012-2017) ................................. 10 Table 4: Factors for normalization & corresponding parameters ................................................. 24 Table 5: MBN spread of Indian refineries over 5 year period ...................................................... 25 Table 6: Capacity utilization of refineries ..................................................................................... 26 Table 7: Analysis of different foreign crudes ................................................................................ 27 Table 8: Refinery data set for year 1 .......................................................................................... 28 Table 9: Refinery data set for year 2 ........................................................................................... 29 Table 10: Refinery data set for year 3 ........................................................................................ 29 Table 11: Refinery data set for year 4 ......................................................................................... 29 Table 12: Refinery data set for year 5 ......................................................................................... 30 Table 13: Representative data from a refinery ............................................................................ 36 Table 14: Set of normalized MBN ............................................................................................... 39 Table 15: List of approved standardized baseline ....................................................................... 42 Table 16: Refinery 2 data set ...................................................................................................... 44 Table 17: Refinery 3 data set ...................................................................................................... 45 Developing methodology for baseline energy consumption for petroleum refinery subsector Page 2 List of Abbreviations BEE Bureau of Energy Efficiency BPCL Bharat Petroleum Corporation Limited BRPL Bongaigaon Refinery and Petrochemical Limited CDU Crude Distillation Unit CHT Center for High Technology CPCL Chennai Petroleum Corporation Limited DC Designated Consumer EII Energy Intensity Index EIL Engineers India Limited GOI Government of India HPCL Hindustan Petroleum Corporation Limited IOCL Indian Oil Corporation Limited MBN Thousand British Thermal Unit per Barrel per Energy Factor (MBTU/BBL/NRGF) MoP Ministry of Power MMTPA Million Metric TonnesPer Annum MRPL Mangalore Refinery and Petrochemical Limited NRL Numaligarh Refinery Limited ONGC Oil and Natural Gas Corporation PAT Perform, Achieve and Trade RPL Reliance Petroleum Limited SEC Specific Energy Consumption VDU Vacuum Distillation Unit Developing methodology for baseline energy consumption for petroleum refinery subsector Page 3 Acknowledgement Shakti Sustainable Energy Foundation works to strengthen the energy security of India by aiding the design and implementation of policies that support energy efficiency and renewable energy. Ernst & Young LLP have provided technical assistance in research, analysis and preparation of this report for Shakti Sustainable Energy Foundation. Developing methodology for baseline energy consumption for petroleum refinery subsector Page 4 1. Report background and objective 1.1 Background of this report The Government of India (GOI), under the leadership of the Ministry of Power (MoP) and Bureau of Energy Efficiency (BEE), has framed the Perform, Achieve and Trade (PAT) scheme. PAT is a market based mechanism to facilitate energy efficiency measures in energy- intensive large industries in a cost effective manner. In the first phase of PAT scheme implementation, startingApril 2012, 8 sectors have been identified,and Designated Consumers (DCs) under each sector have already been informed of the specific energy reduction target based on their baseline specific energy consumption level. In the second phase of PAT, which would be effective from 01/04/2015 onwards, it has been envisaged that petroleum refineries will be inducted under the umbrella of the scheme. 1.2 Objective of the report Shakti Sustainable Energy Foundation (SSEF)/ ClimateWorks Foundation (CWF) has appointed Ernst & Young LLP to develop a methodology for calculation of baseline energy consumption in petroleum refinery sector and identification of various factors affecting it and impact thereof. The overall baseline shall be based on various section-wise energy consumptions. The methodology for establishing the baseline energy consumption should be simple, robust, practical and user friendly. The baseline energy consumption calculated under this study would support BEE in formulating energy saving targets at the sub-sector level of petroleum sector, which would be included under the PAT scheme (Phase II). Developing methodology for baseline energy consumption for petroleum refinery subsector Page 5 2. An overview of refineries in India 2.1 Significance of petroleum refinery subsector in Indian economy Petroleum refinery is a vital industry which assumes significant strategic importance in Indian economy. The estimated consumption of crude oil in India has steadily increased from 18.38 MTs during 1970-71 to 211.42 MTs during 2011-12 with CAGR of 5.99%. As per report released by US Energy Information Administration, India was the fourth