The U.S. oil refinery business is up against the wall for profiting, coping with oil prices and the economic atmosphere.  Regulatory issues raised by every government from local to federal have imposed requirements, compliance, and regulations across the full imaginable board – each with increased costs and inefficiencies.  It’s a miracle there’s any gasoline or diesel to buy at all.

They’re closing down; several northeast refineries are closed or have announced closing.  Some are large ones, too.  As they close the pipelines from the Gulf of Mexico coast try to make up the supplies, but factually the pipeline capacity is maxed out.  Policy is just about to have serious economic impacts in the Northeast, but the press isn’t likely to do any journalism to identify the basic problems.  Getting any policy change would take years, so such an effort could be just fruitless or too late.  In most meaningful ways, it’s too late now.

Rakesh Agrawal, the Winthrop E. Stone Distinguished Professor of Chemical Engineering at Purdue who is working with doctoral student Vishesh Shah and funded by the U.S. Department of Energy’s Industrial Technology Program have published research that appeared online this month in the AIChE Journal, the official peer-reviewed journal of the American Institute of Chemical Engineers, and will be included in a future issue of the print journal.

The research is showing refineries could trim millions of dollars in energy costs annually by using a new method the pair developed to rearrange the distillation sequence needed to separate crude petroleum into products.

Agrawal says, “This is important because improving efficiency by 10 percent at a refinery processing 250,000 barrels per day would save in excess of $12 million a year if oil were priced at $70 a barrel. And that’s just a single refinery. For the U.S. petroleum industry as a whole, this is a huge potential savings.”  It would be 4 to 5 times that impact worldwide.

Refineries spend from 50 percent to 70 percent of their energy in distillation separations, which are required to separate a crude oil into various products. Four distillation columns are needed to separate raw crude into five separate components – naphtha, kerosene, diesel fuel, gas oil and heavy residue. Crude petroleum is fed into the system, heated and vaporized. Vapor rises up the first column, and the product is collected in a condenser at the top. The process is repeated in additional columns, with the number of columns depending on how many components are to be separated.  It’s from these components gasoline and diesel are made.

“Improving efficiency by only a few percentage points translates into major savings. For every 100 barrels of oil distilled, nearly two barrels go into supplying energy for distillation. That’s a lot of oil,” says Agrawal.

The research is showing the distillation can be more energy efficient depending on the order in which the columns are operated.  Agrawal says, “There are many ways to arrange the columns.  Once we know all of the possible ways they can be arranged, then we can tell you which ones have the potential to be the most energy efficient.”

As a matter of fact, petroleum refineries have been using the same sequence for about 75 years, and it is currently the most energy efficient of the sequences known to the industry. That knowledge sets a basis for the research as the Purdue researchers confirmed using their new method.

For discovering a new method Shah built a computer algorithm that identifies all of the possible sequences and then determines which require the least heat and energy. The Purdue researchers used their new technique to determine there are nearly 6,000 possible sequences for the four columns used in petroleum distillation.

The pair identified 70 new sequences that have potential to consume less energy than the sequence now used by industry. Those 70 sequences range from being 6 percent to 48 percent more energy efficient than the method currently in use. That does speak well of the current industry engineering.

Agrawal says, “However, just because a particular sequence would be more energy efficient doesn’t mean it would be practical for industry to implement. There are a lot of challenges. Some are easy to build and just involve trivial retrofitting, and some are more difficult. So we’ll need to work with companies and refinery experts to determine which sequences could be built.”

While this might seem trivial, crude refining is a business of huge capital investment and profit margins that are usually very thin with brief periods of high profits and losses.  Over a daily U.S. consumption of 19 million barrels of crude, 2% still works out to more than 380 thousand barrels a day worth something nearing $28.5 million a day or over $10.4 billion annually.  Cutting that by up to 48% is worthwhile.  Plus the saved heat energy would back on the market. It would be like discovering a large oil reservoir that would not decline.

If the worldwide industry can engineer in just half of the potential savings it could mean almost 400 thousand barrels a day world wide – about ten mature offshore oil platforms of production and another half percent of margin between supply and demand.  It’s one more way to buy time for alternatives in fuels and other efficiencies.


3 Comments so far

  1. MattMusson on December 30, 2009 7:39 AM

    Build a better mousetrap….

    But, that does not really apply when people and systems are entrenched. I once created a program to adjust butterfat in Ice Cream. It would have saved 1 to 2 cents on every gallon of ice cream made. But, I was told repeatedly that if there was a better way to do the job – they would already be doing it that way.

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