Singapore: lowest-cost ulsd potential in Asia

Diesel Fuel News, Feb 17, 2003 by Jack Peckham

Except for Japan, Singapore stands out among all Asian nations for having refineries with the lowest incremental cost for producing ultra-low sulfur diesel (ULSD), a study for Asian Development Bank (ADB) shows.

The report, by consultant Enstrat International, shows that Asian refiners have relatively higher cost hurdles for ULSD compared to the high-complexity refiners of the U.S., Europe and Japan (see Diesel Fuel News 1/20/03, p1). The study shows how these costs break down by country:

Table 3.9.1

Capital Costs and Product Incremental Cost -- 50 ppm Maximum Sulphur
Limit of the Gas Oil Pool - 12 Study Asian Countries

Country                     Capital Cost,  Capital Cost,   Incremental
                              $ million      $ million    Product Cost,
                                                          US cents/litre
                            High S crude    Low S Crude    High S crude

Singapore                       375.7          374.4           2.36
Malaysia                        415.1          411.9           2.61
Thailand                        398.5          397.2           2.51
Philippines                     417.7          416.4           2.63
Indonesia                       400.1          398.4           2.52
Myanmar                         449.7          448.9           2.83
Brunei                          449.7          448.9           2.83
India                           443.3          442.4           2.79
Pakistan                        449.7          448.9           2.83
Bangladesh                      442.0          441.2           2.78
Sri Lanka                       448.2          446.5           2.82
People's Republic of China      442.0          441.2           2.78

Country                      Incremental
                            Product Cost,
                            US cents/litre
                             Low S Crude

Singapore                        2.67
Malaysia                         2.95
Thailand                         2.85
Philippines                      3.00
Indonesia                        2.80
Myanmar                          3.18
Brunei                           3.24
India                            3.14
Pakistan                         3.24
Bangladesh                       3.08
Sri Lanka                        3.13
People's Republic of China       3.09

Remarks:

- the refineries representing the average conditions of countries, which, among their refineries, include some hydro-cracking units, would need investment costs $ 50 M to $ 75 M, Out of a total of about $ 420 - 450 M.

- In all cases, the sulphur reduction was achieved through the installation of hydro-cracking units.

- the capital costs calculated for the high sulphur and low sulphur crude oils have essentially the same order of magnitude. In fact, the calculated difference ranges between $ 0.8 M and $ 3.2 M, out of a total $ 375 - 450 M.

- refineries representing the average country conditions of this study, and producing a constant amount of diesel fuel of 2,000,000 t/y, are predicted to have to invest between $ 375 M and $ 450 M, to meet a diesel fuel sulphur limit of 50 ppm maximum.

- In these conditions, the incremental diesel fuel cost is about 2.4 to 2.85 cents of US $ per litre (when running high sulphur crude oils), and about 2.7 to 3.25 cents of US $ per litre (when running low sulphur crude oils). In these situations, running Low sulphur crude oils is not economically attractive.

Singapore is relatively blessed because its refiners have relatively high hydrotreating capacity (16.2%) and better-than-average hydrocracking capacity (7.4%) among Asian nations. Only Japan has much higher hydrotreating capacity (31.8%) although it has lower hycirocracking capacity (3.3%).

In Singapore, ExxonMobil's 580,000 barrels/day refinery has 107,750 b/d of distillate hydrotreating capacity and 34,000 b/d of hydrocracking, the study shows. Shell's 405,000 b/d refinery has 77,600 b/d of distillate hydrotreating and 30,000 b/d of hydrocracking capacity. Singapore Petroleum Co.'s 285,000 b/d refinery has 78,000 b/d of distillate hydrotreating and 30,300 b/d of hydrocracking.

Even so, to produce 2 million tons/year of ULSD (as per the study assumptions) - using all current distillate streams - Singapore refineries would require further investment.

However, because of the relatively high complexity of Singapore refineries, it's hypothetically possible to produce substantial amounts of ULSD by stream-blending schemes, the study shows. In one hypothetical example, Singapore refiners could produce about 330,000 tons/year of 50-ppm ULSD, along with 212,000 tons of 500-ppm "regular" diesel and 1.5 million tons of high-sulfur (5,370-ppm) diesel.

Running either high- or low-sulfur crude won't affect ULSD output in these cases; low-sulfur crude only boosts the yield of "regular" 500-ppm sulfur diesel, the hypothetical example shows.

"Similar considerations could be made for all groups of refineries considered in this study, where gas-oil sulfur reduction units are installed, i.e. hydrocrackers or hydro-treaters," the Enstrat study concludes.