- Email: [email protected]
Planning models for petrochemical complexes
ENERGY
PLANNING MODELS FOR PETROCHEMICAL COMPLEXES M.Z. Dajani and N .S. Kittani Industrial Consultants Group, Inc., P. O. Box 36543, Kuwait
Abstract
use of modern Petrochemicals models as a planning tool. In that respect they would like to share their experiences to a wider group of professionals and planners.
Some aspects of modern planning techniques for petrochemicals industry is exposed herein. The authors' experience in developing planning models in third World (OPEC) countries is also outlined. I.
11.
INTRODUCTION
As part of our planning activities, we have been actively engaged in studying the pr o blems of integrated petrochemical complexes. The technical features and the economies of such integrated complexe s are extremely difficult to handle, due t o the large amount of options avail a ble, which makes long and tedi o us any evaluation by hand calculations, Fig. (1)
Planning for petrochemical complexes in oil producing countries presents an array of inter-related complex of problems. Aside from the delicate financing and difficult marketing projection problems, the planner is confronted with a huge number of questions due to: the flexibility in choosing feedstock (gas, naphthas, kerosene and gas oil);
The necessity wa s incre a singly felt for an analytical tool, in o rder t o be able to effectively e v aluate the petrochemical industry.
the large number of intermediates, and final products and the possibility of obtaining one product by many processing technologies;
Prior to the description of this analytic approach, it is important to point out some particular a spects o f the Petrochemical Industry.
the opened o ptions of whether to stop at production of intermediates or t o go on processing it further to final petrochemical products;
11.1
Integration
The integration within Petrochemical Industry is a means of assuring reliable sources and utilization for available raw materials a t stable prices, and also, maximizing net pr o fits and minimizing marketing effort for by-products.
flexibility in selecting major product lines, process technology and process capacity; The inter-dependence of all these important planning factors call for the adoption of a systematic planning methodology that integrates their respective effects.
11.2
By-Products Utiliz a tion
It is one of the most import a nt factors to be considered in a n economical operation, and it would be worthwhile the effort to have a fuller knowledge of the economics of some of the major by-products if used as r aw materials for other petrochemical processes, instead of their mixing in the gasoline pool.
In this short paper a modest attempt is made to expose the mathematical models methodology and their applicability to petrochemical planning. This paper in no way claims academic originality. However, the authors had undergone a unique experience in third World standards in attempting to conceive, build, and promote the
OSAFD-Y
THE SCOPE OF PETROCHEMICAL COMPLEXES PLANNING
321
322
11.3
M.Z. Dajani and N.S. Kittani
Raw Materials
Raw materials availability is also a major concern for Petrochemical Industry. The Petrochemical Industry's need for petroleum by-products in the recent years has grown at a faster rate than the Petroleum Industry as a whole. It is clear that raw materials for petrochemical production whose origin is from crude oil and/or natural gas processing, are controlled by Petroleum Industry. However, the technological trend in Petroleum Refining leads to the assignment of a greater proportion of crude oil into higher value, energy markets, and less into the raw materials for petrochemicals. 11.4
Diversification and Marketing
Diversification and intensive marketing are also a characteristic of the Petrochemical Industry. This is due to possibility of filling varying needs with technically specific but alternate products: solvents, fibers, plastics. This means that smaller degrees of physical differences in the end-product sometimes lead to significant differences in end-use value. Furthermore, this diversification leads to meet only a short term future needs with calculated risks, and provides smaller cash flows than the large and concentrated expenditures of the Petroleum Industry. It remains to be determined if this approach is not to be revised in the light of the new prevailing trends. It results from the short preceeding analysis, that the very nature of the problem raised by petrochemical complex evaluation calls for the use of linear programming techniques, which will take a particular account of the following points: (a)
the large number of process units involved, and the variety of options, for manufacturing end-products;
(b)
the difficulties raising from the utilization of by-products which often are the key to most economical operation and economic size determination for process units;
(c)
the impact of pricing for raw materials, intermediate products (transfer prices) and finished products on profitability analysis. The analysis of L.P.
marginal values (or added-value) will be of prime interest for this purpose, (d)
the inter-dependences of products flows in an integrated complex.
(e)
the integration of both technical, economical, and investment factors in the planning process.
Ill. 111.1
METHODOLOGY OF PETROCHEMICALS PLANNING MODEL Scope of the Model System
The Petrochemical Model system is developed so as to fulfill the potential needs by petrochemical planners/decision-makers for an assisting planning tools. It involves a complete mathematical description of the petrochemical and refining industry, starting from the crude oil availability up to the manufacturing of end use petrochemicals, thus performing the technical and economic integration of four (4) industrial complexes, crude oil refinery steam cracker plant aromatics production plant downstream units complex The model is using Linear Programming Techniques so as to formulate and optimize the material and economic balances of a complex on a yearly basis. A maximum flexibility of utilization has been provided, through the division of the Model into four blocks which can be operated independently to solve specific problems of Refining, steam cracking, Aromatics production or petrochemical downstream units. 111.2
Model's Computerized Structure and Description
In order to take full advantage of computer's huge and fast processing capabilities, the model is organized into four (4) modular basic blocks as depicted in Fig. (2) and as follows: 111.2.1
Date Base:
Is a computerized data bank that includes all practical relevant technical information and the corresponding economical facts. Feedstock specifications, operating conditions and technical description for each process in the petrochemical complex; the resulting yields, material and energy balances and utilities
Planning Models for Petrochemical Complexes
consumption for a given operating condition (severity), for example, are some of the introduced technical information. The corresponding operating costs, off-sites and infrastructure costs, capital investments and marketing parameters are typical data for the economic part in this data base. Fig. (3). 111.2.2
111.2.3
Report Generator:
Whose function is to translate the L.P. optimizer results into clear management tables and reports. Note that the most crucial steps in the model building efforts is in gathering the most accurate techno-economics information that goes into the data base and matrix generator as well as the skillful formulation of the mathematical model which requires a combination of good engineering sense and thorough knowledge of the subject. IV.
DIFFICULTIES IN APPLYING MODERN PLANNING TECHNIQUES, MODELS, IN THIRD WORLD/OPEC COUNTRIES
Even if financial resources and top management are abundantly available, successful and serious utility of such modern planning tools, though indespensible for the systematic development process, is very limited, indeed. The intrinsic reasons behind this sceptic remark are the following points: (1)
The difficulty in building such strategic decision making tools with out having in-home resources for the data base: investment, marketing, technical, economical, accurate, nonacademic information. However, such problem cannot be resolved until an honest effort is made to start somewhere and build-up on local, or better regional data banks.
(3)
Serious shortage of competent top management that believes in its own cadres, and the sincere will to create them if they are not available or at the required level of expertise. What is more ironic, is the fact that, although most of the existing managers of the OPEC countries can not, or are not willing to, use such modern planning tools. However, one can spot so many contracts that have been signed with non-local consulting bureaus for building exactly such tools, to be later shelved and moth-balled.
(4)
Serious shortage of highly qualified engineers to build and later run such sophisticated large-scale models. More importantly is the incompetency of management to form interdisciplinary teams for such an end.
(5)
Lack of support for local consulting bureaus by local planners. This, in itself, is a serious hinderance to any serious development in a given country. As we believe the big local organization, although they can self breed competent teams, however their usefulness and costing is not very impressive due to so many different reasons. The local private consulting bureaus have everywhere proved to be more effective and less expensive than in house consulting teams, or foreign consulting bureaus. Of course, we are not claiming here that at the moment this is true. However, if serious effort is made to cooperate with local consulting bureaus, a new and very efficient breed will be created that can justify our analysis, especially in an era of tremendous expansion in huge development projects and available investment capital to fuel
Linear Programming Optimizer:
Is an advanced computer software package for the solution of the linear programming problem. The result of which gives, the optimal value for all the variable parameters, which are restricted by the linear constraint equations (or inequalities), that will optimize the ob~ec tive criterion, for example, maxlmum available cash flow, minimize capital investment, or minimum operating costs ... etc. The solution, of course, will vary depending on the choice of the objective criterion, and the planning problem in question. 111.2.4
(2)
Matrix Generator:
Is the mathematical formalism for all the petrochemical complex and associated planning acticities, whether it is technical or economical. This large set of linear algebraic equations confirm to the information in the data-base and process licensors' supplied information.
The great wide gap between model builders and petrochemicals decision-makers, this is especially true in most OPEC countries.
323
it.
Acknowledgement The credit for the background work of this paper goes also to K.I.S.R., Kuwait, and B.E.I.C.I.P., France.
M.Z. Dajani and N.S. Kittani
324
FIGURE 3 LOGICAL STEP-BY-STEP PROCEDURE OF TOTAL MODEL CONSTRUCTION PRICES STRUCTURE, AND INVESTMENT SUBMODEL ;'I OFF-SITES SUBMODEL
J1 OPERATING COSTS SUBMODEL
/1 TECHNICAL SUBMODEL
TOTAL MODEL
DOWN-STREAM INDUSTRIES FOR FIGURE 1
BL OCK DIAGRAM
ETHYLENE-BASED PRODUCTS GAS FEEDSTOCKS
STEAM CRACKER FURNACE
~
"GASES"
(
PROPYLENE-BASED PRODUCTS
C4-BASED PRODUCTS
.1\
REFINERY I-
rV
STEAH CRACKER FURNACE "LIQUIDS"
1\ ~~
v'
CS+-BASED PRODUCTS
BENZENE-BASED PRODUCTS
CRUDE OIL FEEDSTOCK
~ AROMATIC COMPLEX
~
r---v
TOLUENE-BASED PRODUCTS
XYLENE's-BASED PRODUCTS
Planning Models for Pe tr ochemica l Complexes
325
FIGURE 2 PETROCHEMICAL MODEL COt-1PONENTS SIMULATOR RESULTS
INPUT DATAl \ .
n'
~
DATA- BASE
MAT R I X GENERATOR
v'
OPTHlIZATION
\ I
CRITERION
L.P.
(MPS ' X)
OPT HlIZER
OPTIMm1 SOLUTION ~
ACCEPTABLE (ex it )
-;I
~
1
~
NOT
~
/
/
NEW PROBLEM DEFINITION & CRITERION
vt l\rACCEPTABL~ ~
I I I I
~
,
/~ECISION- "
I I
''r/
~/
I I I
-+HIGHER POLICY CRITE RION
I
I
I 1 1 1
IL
1'\
I
If-
REPORT GENERATOR
MAKING ON VALIDITY OF ' , RESULTS / /
(co ntinu e)
START
,,
This part is not included
~
END
PLANNING MODELS FOR PETROCHEMICAL COMPLEXES M.Z. Dajani and N .S. Kittani Industrial Consultants Group, Inc., P. O. Box 36543, Kuwait
Abstract
use of modern Petrochemicals models as a planning tool. In that respect they would like to share their experiences to a wider group of professionals and planners.
Some aspects of modern planning techniques for petrochemicals industry is exposed herein. The authors' experience in developing planning models in third World (OPEC) countries is also outlined. I.
11.
INTRODUCTION
As part of our planning activities, we have been actively engaged in studying the pr o blems of integrated petrochemical complexes. The technical features and the economies of such integrated complexe s are extremely difficult to handle, due t o the large amount of options avail a ble, which makes long and tedi o us any evaluation by hand calculations, Fig. (1)
Planning for petrochemical complexes in oil producing countries presents an array of inter-related complex of problems. Aside from the delicate financing and difficult marketing projection problems, the planner is confronted with a huge number of questions due to: the flexibility in choosing feedstock (gas, naphthas, kerosene and gas oil);
The necessity wa s incre a singly felt for an analytical tool, in o rder t o be able to effectively e v aluate the petrochemical industry.
the large number of intermediates, and final products and the possibility of obtaining one product by many processing technologies;
Prior to the description of this analytic approach, it is important to point out some particular a spects o f the Petrochemical Industry.
the opened o ptions of whether to stop at production of intermediates or t o go on processing it further to final petrochemical products;
11.1
Integration
The integration within Petrochemical Industry is a means of assuring reliable sources and utilization for available raw materials a t stable prices, and also, maximizing net pr o fits and minimizing marketing effort for by-products.
flexibility in selecting major product lines, process technology and process capacity; The inter-dependence of all these important planning factors call for the adoption of a systematic planning methodology that integrates their respective effects.
11.2
By-Products Utiliz a tion
It is one of the most import a nt factors to be considered in a n economical operation, and it would be worthwhile the effort to have a fuller knowledge of the economics of some of the major by-products if used as r aw materials for other petrochemical processes, instead of their mixing in the gasoline pool.
In this short paper a modest attempt is made to expose the mathematical models methodology and their applicability to petrochemical planning. This paper in no way claims academic originality. However, the authors had undergone a unique experience in third World standards in attempting to conceive, build, and promote the
OSAFD-Y
THE SCOPE OF PETROCHEMICAL COMPLEXES PLANNING
321
322
11.3
M.Z. Dajani and N.S. Kittani
Raw Materials
Raw materials availability is also a major concern for Petrochemical Industry. The Petrochemical Industry's need for petroleum by-products in the recent years has grown at a faster rate than the Petroleum Industry as a whole. It is clear that raw materials for petrochemical production whose origin is from crude oil and/or natural gas processing, are controlled by Petroleum Industry. However, the technological trend in Petroleum Refining leads to the assignment of a greater proportion of crude oil into higher value, energy markets, and less into the raw materials for petrochemicals. 11.4
Diversification and Marketing
Diversification and intensive marketing are also a characteristic of the Petrochemical Industry. This is due to possibility of filling varying needs with technically specific but alternate products: solvents, fibers, plastics. This means that smaller degrees of physical differences in the end-product sometimes lead to significant differences in end-use value. Furthermore, this diversification leads to meet only a short term future needs with calculated risks, and provides smaller cash flows than the large and concentrated expenditures of the Petroleum Industry. It remains to be determined if this approach is not to be revised in the light of the new prevailing trends. It results from the short preceeding analysis, that the very nature of the problem raised by petrochemical complex evaluation calls for the use of linear programming techniques, which will take a particular account of the following points: (a)
the large number of process units involved, and the variety of options, for manufacturing end-products;
(b)
the difficulties raising from the utilization of by-products which often are the key to most economical operation and economic size determination for process units;
(c)
the impact of pricing for raw materials, intermediate products (transfer prices) and finished products on profitability analysis. The analysis of L.P.
marginal values (or added-value) will be of prime interest for this purpose, (d)
the inter-dependences of products flows in an integrated complex.
(e)
the integration of both technical, economical, and investment factors in the planning process.
Ill. 111.1
METHODOLOGY OF PETROCHEMICALS PLANNING MODEL Scope of the Model System
The Petrochemical Model system is developed so as to fulfill the potential needs by petrochemical planners/decision-makers for an assisting planning tools. It involves a complete mathematical description of the petrochemical and refining industry, starting from the crude oil availability up to the manufacturing of end use petrochemicals, thus performing the technical and economic integration of four (4) industrial complexes, crude oil refinery steam cracker plant aromatics production plant downstream units complex The model is using Linear Programming Techniques so as to formulate and optimize the material and economic balances of a complex on a yearly basis. A maximum flexibility of utilization has been provided, through the division of the Model into four blocks which can be operated independently to solve specific problems of Refining, steam cracking, Aromatics production or petrochemical downstream units. 111.2
Model's Computerized Structure and Description
In order to take full advantage of computer's huge and fast processing capabilities, the model is organized into four (4) modular basic blocks as depicted in Fig. (2) and as follows: 111.2.1
Date Base:
Is a computerized data bank that includes all practical relevant technical information and the corresponding economical facts. Feedstock specifications, operating conditions and technical description for each process in the petrochemical complex; the resulting yields, material and energy balances and utilities
Planning Models for Petrochemical Complexes
consumption for a given operating condition (severity), for example, are some of the introduced technical information. The corresponding operating costs, off-sites and infrastructure costs, capital investments and marketing parameters are typical data for the economic part in this data base. Fig. (3). 111.2.2
111.2.3
Report Generator:
Whose function is to translate the L.P. optimizer results into clear management tables and reports. Note that the most crucial steps in the model building efforts is in gathering the most accurate techno-economics information that goes into the data base and matrix generator as well as the skillful formulation of the mathematical model which requires a combination of good engineering sense and thorough knowledge of the subject. IV.
DIFFICULTIES IN APPLYING MODERN PLANNING TECHNIQUES, MODELS, IN THIRD WORLD/OPEC COUNTRIES
Even if financial resources and top management are abundantly available, successful and serious utility of such modern planning tools, though indespensible for the systematic development process, is very limited, indeed. The intrinsic reasons behind this sceptic remark are the following points: (1)
The difficulty in building such strategic decision making tools with out having in-home resources for the data base: investment, marketing, technical, economical, accurate, nonacademic information. However, such problem cannot be resolved until an honest effort is made to start somewhere and build-up on local, or better regional data banks.
(3)
Serious shortage of competent top management that believes in its own cadres, and the sincere will to create them if they are not available or at the required level of expertise. What is more ironic, is the fact that, although most of the existing managers of the OPEC countries can not, or are not willing to, use such modern planning tools. However, one can spot so many contracts that have been signed with non-local consulting bureaus for building exactly such tools, to be later shelved and moth-balled.
(4)
Serious shortage of highly qualified engineers to build and later run such sophisticated large-scale models. More importantly is the incompetency of management to form interdisciplinary teams for such an end.
(5)
Lack of support for local consulting bureaus by local planners. This, in itself, is a serious hinderance to any serious development in a given country. As we believe the big local organization, although they can self breed competent teams, however their usefulness and costing is not very impressive due to so many different reasons. The local private consulting bureaus have everywhere proved to be more effective and less expensive than in house consulting teams, or foreign consulting bureaus. Of course, we are not claiming here that at the moment this is true. However, if serious effort is made to cooperate with local consulting bureaus, a new and very efficient breed will be created that can justify our analysis, especially in an era of tremendous expansion in huge development projects and available investment capital to fuel
Linear Programming Optimizer:
Is an advanced computer software package for the solution of the linear programming problem. The result of which gives, the optimal value for all the variable parameters, which are restricted by the linear constraint equations (or inequalities), that will optimize the ob~ec tive criterion, for example, maxlmum available cash flow, minimize capital investment, or minimum operating costs ... etc. The solution, of course, will vary depending on the choice of the objective criterion, and the planning problem in question. 111.2.4
(2)
Matrix Generator:
Is the mathematical formalism for all the petrochemical complex and associated planning acticities, whether it is technical or economical. This large set of linear algebraic equations confirm to the information in the data-base and process licensors' supplied information.
The great wide gap between model builders and petrochemicals decision-makers, this is especially true in most OPEC countries.
323
it.
Acknowledgement The credit for the background work of this paper goes also to K.I.S.R., Kuwait, and B.E.I.C.I.P., France.
M.Z. Dajani and N.S. Kittani
324
FIGURE 3 LOGICAL STEP-BY-STEP PROCEDURE OF TOTAL MODEL CONSTRUCTION PRICES STRUCTURE, AND INVESTMENT SUBMODEL ;'I OFF-SITES SUBMODEL
J1 OPERATING COSTS SUBMODEL
/1 TECHNICAL SUBMODEL
TOTAL MODEL
DOWN-STREAM INDUSTRIES FOR FIGURE 1
BL OCK DIAGRAM
ETHYLENE-BASED PRODUCTS GAS FEEDSTOCKS
STEAM CRACKER FURNACE
~
"GASES"
(
PROPYLENE-BASED PRODUCTS
C4-BASED PRODUCTS
.1\
REFINERY I-
rV
STEAH CRACKER FURNACE "LIQUIDS"
1\ ~~
v'
CS+-BASED PRODUCTS
BENZENE-BASED PRODUCTS
CRUDE OIL FEEDSTOCK
~ AROMATIC COMPLEX
~
r---v
TOLUENE-BASED PRODUCTS
XYLENE's-BASED PRODUCTS
Planning Models for Pe tr ochemica l Complexes
325
FIGURE 2 PETROCHEMICAL MODEL COt-1PONENTS SIMULATOR RESULTS
INPUT DATAl \ .
n'
~
DATA- BASE
MAT R I X GENERATOR
v'
OPTHlIZATION
\ I
CRITERION
L.P.
(MPS ' X)
OPT HlIZER
OPTIMm1 SOLUTION ~
ACCEPTABLE (ex it )
-;I
~
1
~
NOT
~
/
/
NEW PROBLEM DEFINITION & CRITERION
vt l\rACCEPTABL~ ~
I I I I
~
,
/~ECISION- "
I I
''r/
~/
I I I
-+HIGHER POLICY CRITE RION
I
I
I 1 1 1
IL
1'\
I
If-
REPORT GENERATOR
MAKING ON VALIDITY OF ' , RESULTS / /
(co ntinu e)
START
,,
This part is not included
~
END