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Future Demands on Energy and Environment Hydrocarbon Process Industry In Low Carbon Economy Anand Kumar Director (R&

Future Demands on Energy and Environment Hydrocarbon Process Industry In Low Carbon Economy Anand Kumar Director (R&D) Indian Oil Corporation Limited. Indian Oil : A brief Introduction Energy Scenario CO 2 / GHG Emissions Crude Oil Quality and its impact on Refining Refining Today

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Future Demands on Energy and Environment Hydrocarbon Process Industry In Low Carbon Economy Anand Kumar Director (R&

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  1. Future Demands on Energy and Environment Hydrocarbon Process Industry In Low Carbon Economy Anand Kumar Director (R&D) Indian Oil Corporation Limited Foundation Day Lecture of AICHE

  2. Indian Oil : A brief Introduction Energy Scenario CO2/ GHG Emissions Crude Oil Quality and its impact on Refining Refining Today Opportunities for Low Carbon Economy Refining in Future Contents

  3. 50 Golden YearsOf Evolution Of IndianOil

  4. IndianOil Corporate History Indian Refineries Ltd. 1958 Indian Oil Company Ltd. 1959 Merger Indian Oil Corporation Ltd. 1964

  5. IndianOil - Saga of Growth 2000 to 2009 Fortune Global 500 ranking Sustained growth in the midst of market turbulence and challenging business environment

  6. Refining capacity: 60.20 MT/annum (1.2 million barrels per day) Guwahati 1.0 IndianOilRefineries Owns 10 of India's 18 refineries Panipat12.0 2.35 BGR Digboi 0.65 Mathura 8.00 Barauni 6.00 Haldia 6.00 Koyali 13.7 Paradip 15.0 IOC Refineries Proposed Refinery Subsidiaries CPCL 9.50

  7. IndianOil Pipelines Jalandhar Downstream Industry Crude: 3987 KM (34.5 MMTPA) Product: 9454 KM (55.1 MMTPA) Total: 13441 KM (89.6 MMTPA) Ambala Bhatinda Roorkee Sangrur Najibabad Panipat Meerut Tinsukia Rewari Dadri Delhi Sanganer Mathura Siliguri Ajmer Bongaigaon Jodhpur Lucknow Tundla Digboi Chaksu Guwahati Barauni Kanpur Kot Chittaurgarh Sidhpur Ahmedabad Rajbandh Kandla Ratlam Navagam Budge Mundra Maurigram Koyali Budge Vadinar Haldia Dahej IOC Pipelines Crude: 3987 KM (34.5 MMTPA, Product: 5286 KM (27.2 MMTPA, 49%) Total: 9273 KM (61.7 MMTPA, 69%) Paradip IOC’s Pipelines (Existing) Product Crude Oil Bengaluru (Ongoing) IOC’s Pipelines Chennai Product Asanur Sankari Crude Oil R- LNG Pipeline Trichy LPG Pipeline Madurai

  8. IndianOil Marketing As on 1.4.2009 Figures in brackets indicate % share in the Industry Petrol/Diesel Outlets 18,278 (47.9%) Including 2546 KSKs LPG Bottling Plants 89 (49.2%) Bulk Consumer Pumps 7,335 (88.5%) Terminals/Depots 167(45.6%) LPG Distributorships 4,999 (53.5%) SKO/LDO Dealerships 3,963 (59.8%) Aviation Fuel Stations 101 (65.2%) Over 35,000 Marketing touch points (55.4 % share of industry)

  9. IndianOil R&D • Refinery Technology • Thermal cracking/ FCC/ Reformer/ Hydroprocessing, • Separation processes • Modeling, Catalysts Alternative Energy Biotechnology R&D • Lubricant • Technology Gasification • Fuel Additives Nanotechnology Polymers & Petrochemicals Pipelines

  10. NeedleCoke FoodGradeHexane Sweetening Process IndianOil R&D Indmax • Indadept • ATF HDT • DHDT • Isom • Delayed Coking • Indalin Catalyst Indianoil Refining Technology Basket

  11. IndianOil Lubricant • 4000 Formulations developed; ~ 1100 currently in market • 350 OEM Approvals • Product Line meeting latest International/ National specifications: • -Automotive & Marine • Metal working • Industrial • Defence • Aviation • Food grade • Biodegradable India’s only Super Brand Lubricants • Synthetic • Greases • 1st Asian country & 6th Globally to develop Marine Oil technology With strong R&D backup, SERVO holds 38% National Lube Business

  12. Indian Oil : A brief Introduction Energy Scenario CO2/ GHG Emissions Crude Oil Quality and its impact on Refining Refining Today Opportunities for Low Carbon Economy Refining in Future Contents

  13. Global Energy Mix World 2008 World 2030 12.0 btoe 17.1 btoe CAGR~ 1.8% Expected to grow by ~50% by 2030 and Oil & Gas to continue to lead with 60% of overall energy. At least through 2030 fossil fuels to continue to satisfy vast global demand of energy Source: BP Stat, 2009

  14. Global Energy End Use Year 2007 • Sectoral consumption share is not expected to change significantly over the years up to 2030. • In the incremental energy use, China and India would contribute • 49% (China:42% + India:7%) in the industrial sector. • 26.6% (China:22.7% + India:3.9%) in transport sector.

  15. World Oil Consumption Sector wise Other sectors include agriculture, commercial & public services, residential etc.

  16. Primary Global Energy Demand Energy demand 2007(12.0 btoe) Energy demand 2030 (17.1 btoe) References btoe: billion tons oil equivalent Source: IEA 2009 • Primary energy demand • India overtakes Japan in the year 2020 to be the 4th largest energy consumer • China overtakes USA in the year 2025 to be the no 1 energy consumer in the world

  17. World Refining Capacity Total: 87.91 mbpd (4396 MMTPA) in 2007 Sources: BP Stats 2008 • World oil demand grown faster than Refy capacity. • World average Refy capacity utilization gone up from 75% (1980) to 86% (2006)

  18. Global Oil Supply Demand Production (2007) Consumption (2007) Source: BP Stat, 2007

  19. Kuwait Iraq Iran Libya Algeria Qatar Venezuela UAE Indonesia Saudi Arabia Ecuador Nigeria Angola Proven Oil ReservesOPEC vs Others • Three-forth of world oil reserves controlled by Organization of the Petroleum Exporting Countries (OPEC), consisting of 12 nations • 6 in the Middle East, 4 in Africa; 2 in S. America • The Middle East has the dominant oil resource ~ 62% of the world • Saudi Arabia has the biggest oil reserves @ 22% followed by Iran @ 11%

  20. Indian Energy Mix Energy Mix 2007 Energy Mix 2031-32 • Primary energy demand growing @ 6.5% per year (World CAGR-1.6%) • Fossil fuels to continue their dominant role in the energy mix • High growth potential: Low per capita consumption (377 kgoe) compared to world average (1660 kgoe) • Nuclear and Gas sector to grow

  21. Indian Oil : A brief Introduction Energy Scenario CO2/ GHG Emissions Crude Oil Quality and its impact on Refining Refining Today Opportunities for Low Carbon Economy Refining in Future Contents

  22. GHG Global Warming Potential

  23. Carbon Emissions - Rising 530 ppm Atm CO2 Concentration 440 Current CO2 Conc. ~390 ppm 380 325 312 300

  24. Global Warming Challenges • Stabilizing GHG emissions to sustainable 450 ppm level, believed to be limiting temperature rise to no more than 20C above the pre-industrial level, remains a significant challenge. • By 2050 world would need twice as much energy while emitting half of today’s GHG. • Over 100 bcm of methane (~ over 1 billion tons of CO2) vented or lost through fugitive emissions annually in oil & gas sector. • Energy system, a century from now, to be very different from that of today. • But how will the transition emerge over a next few decades is not yet clear.

  25. Energy Solutions are enormously Challenging Must address all three Imperatives

  26. Upcoming Alternatives Demand pressure will stimulate alternate supply and more efficiency in its use

  27. CO2 Emissions by Region India ~ 4.0 % 28 962 Mt of CO2

  28. Global Warming Indian Perspective & Actions • Indian per Capita CO2 emissions low (tons): • Current: 1.0-1.2 (US 20, World average 3.0) • 2.0-2.5 by 2020 • 3.0-3.5 by 2030 • CO2 emissions ~ 1.5 b tons (US 6.0, Global ~29) • India committed to reduce carbon emission by 20-25% by 2020 over 2005 levels • The Prime Minister's Council on Climate Change was constituted on the eve of World Environment Day (5th June) to coordinate national action plans • Carbon intensity of five major sectors set to improve by 19% by 2020 (33% between 2005 and 2031) With Indian GDP growth 6% faster than the US, its total emissions will equal those of the US over the next two decades.

  29. Indian CO2 Emissions Sector wise

  30. Indian Oil : A brief Introduction Energy Scenario CO2/ GHG Emissions Crude Oil Quality and its impact on Refining Oil Refineries - Today Opportunities for Low Carbon Economy Oil Refineries of Future Contents

  31. Impact Of Crude Oil On Refining • Crude oil to continue to be the prime source of transport fuel • Refineries will continue to be affected by • Quality of Crude oil • Price of Crude oil • Availability of Crude oil

  32. Future Petroleum Sources 100 Oil Price ($/BBL) 80 60 50 40 30 20 Ultra Deep Water Shale Oil Oil Sands Deep Water Oil res (Bn/BBL) 10 conventional 0 1000 2000 3000 4000 5000 6000 7000 Cum. Demand By year 2020 2050 2075 2100 Source : THE BOSTON CONSULTING GROUP

  33. Indian Oil : A brief Introduction Energy Scenario CO2/ CHG Emissions Crude Oil Quality and its impact on Refining Refining Today Opportunities for Low Carbon Economy Refining in Future Contents

  34. Complexity of a Refinery • The combination of refining processes and operations employed (complexity) varies from one refinery to another. • Driven by Quality and Environmental Issues, the Refineries Today are highly complex, energy and capital intensive. Factors Deciding Complexity of a Refinery • Nature/ source of Crude Oils- flexibility to process variety of crude oils (Differential in FOB cost of LS and HS crude oils varies from 2-12 $ per barrel) • Demand pattern • Product quality - current/ future • Quality of Intermediate feed-stocks • Inter-fuel substitution • Environmental stipulations

  35. Indian Refining Industry :Current status & Trend • Coexistence of older small with new, large and complex refineries, • Fuel Quality improvement achieved in short span of time incurring huge expenditure • Adoption of state of the art Technologies • Complexity Factor from 5-14 as against, 7-8 for Japanese and 10 for US refineries. • Integration of refinery with petrochemicals • Building Additional Refining Capacity: India – An Asian Oil Refining Hub

  36. Global Refining Scenario – Towards Economic Size Smaller refineries shutting down Source: BP/OGJ

  37. Indian Refineries Refineries No. MMTPA IOC Group 10 60.2 BPC group 3 22.5 HPC 2 13.0 ONGC/MRPL 2 9.8 RIL (Pvt.) 2 62.0 ESSAR 1 10.5 Total 20 178.0 BHATINDA (9.0) PANIPAT (12.0+3.0) BONGAIGAON (2.35) DIGBOI (0.65) MATHURA (8.0) NUMALIGARH (3.0) GUWAHATI (1.0) BARAUNI (6.0) BINA (6.0) BARODA (13.7) JAMNAGAR (RIL 33.0 + 29.0) ESSAR 10.5+ 3.5) HALDIA (6.0+1.5) PARADEEP (15.0) MUMBAI (BPC 12.0) (HPC 5.5+ 2.4) VISAKH (7.5+0.8) Existing IOC TATIPAKA (0.08 + 0.08) MANGLORE (9.69 +5.31) Subsidiaries of IOC CHENNAI (9.5+ 1.7) Others New / Additions KOCHI (7.5 + 2.0) NARIMANAM (1.0) IOC Operates 10 of India’s 20 refineries. Group’s refining Capacity: 60.2 MMTPA (1.2 mbpd)

  38. Refining Industry in IndiaDeficit to surplus * * * Conservative estimates; may go up by 5-6% • POL - single largest export commodity today; India will continue to be product surplus • Surplus refining capacity is expected to increase to 140 MMTPA by 2030 • Import/Export requirement for crude/products to be quite substantial– Sound port/shore facilities and control over shipping fleet critical for competitiveness Source: PPAC; XI Plan Document; Internal estimates

  39. Evolution of Refinery Processes Gasoline LPG Isom, (1940) Alkylation Solvents Aromatics (BTX) CRU (1952) Naphtha CDU Gasoline Kerosene/ATF/MTO H2 Gas Oil DHDS PPF LPG HSD VGO Naphtha FCC 1942 1954 TCO VDU 1870 CLO AR Gasoline HC 1960 VR HSD Catalytic Dewaxing 1975 Coker 1932 Gasoline Coke

  40. Oil Refining : What Next? • Zero residue Refineries (Distillate yield -90%) • From physical separation to molecular transformation: Understanding molecular composition and transformation using different catalysts, which are cost effective, more active and more selective etc., to play increasingly important role in development of new technologies. • Nanoscienceto reducing cost and improve efficiency of catalysts and additives

  41. Indian Oil : A brief Introduction Energy Scenario CO2/ CHG Emissions Crude Oil Quality and its impact on Refining Refining Today Opportunities for Low Carbon Economy Refining in Future Contents

  42. Challenges & Opportunity Of Low Carbon Economy • Technology selection increasingly be influenced by taxes (that may be imposed) on polluters, carbon credits, governmental mandates for reduction of pollution and use of fuels derived from renewable sources. • Technologies, that do not address the concern of global warming, to lose their relevance. • Development and Realigning of technological options having least carbon& Environmental footprint • Shift towards cleaner fuels richer in hydrogen and renewable. • Growing need for economies of scale Lower carbon & Environmental foot print to Drive Technologies of future

  43. Challenges & Opportunity Of Low Carbon Economy • Will see more C1 Chemistry and • Technology • Mega methanol plants ~ 1.5 mtpa • Large Capacity DME plants for • LPG and Diesel • Methanol to ethylene/propylene or • aromatics Lower carbon & Environmental foot print to Drive Technologies of future

  44. Challenges & Opportunity Of Low Carbon Economy IGCC Syn-Gas • F-T • Alcohols • Olefins • Diesel • Can Come From • COAL • Agro waste • UCG of un-mineable coal Lower carbon & Environmental foot print to Drive Technologies of future

  45. Challenges & Opportunity Of Low Carbon Economy Gasification for Syn-Gas will Require : • Large Volume O2 • PSA for O2 • Coastal location having imported LNG, will support • low cost O2 , utilizing low temp refrigeration. • Coastal location will have ‘mega Sulphuric Acid Plant - >1 • mtpa , based on Ref Sulfur ( local or imported), link it to • Import phosphate rock & export power at > 20MW; • linked to phosphoric acid and phosphate fertilizer plant

  46. Challenges & Opportunity Of Low Carbon Economy • HYDROGEN: Huge Requirements • Prime Uses: • Ammonia ( Along with nitrogen) • Methanol (Along with CO + some CO2) • F-T synthesis: expanding ( Along with CO) • Hydrotreatment in refineries ~ 44% • Hydrogenations ~ 4% • Syn-gas/ hydrogen for Sponge iron • Richest source of hydrogen in nature: • Methane (Natural gas) – 25 % by Wt • SUSTANABLE SOURCE ?

  47. Challenges & Opportunity Of Low Carbon Economy

  48. Refinery Hydrogen Balance Modern refinery is Hydrogen Centric and can consume 1% by wt of crude oil: H2 producers H2 consumers hydrocracking Catalytic reforming hydrotreating hydroconversion Recovery from H2 rich off-gases hydrofinishing H2 plant

  49. Hydrogen Production Routes

  50. Opportunity In Low Carbon Economy Oil Refining: • Increasing Complexity factor • High level of integration to reduce Capex and Opex (from topping refinery to integrated petrochemical complex) • Heavier Crude Oil • Product Quality Improvement • Improving efficiency of hardware and operations • Refinery operation are energy intensive • Fuel & Loss accounts for 5-10% depending upon complexity and size

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