“Look What The Cat Dragged In!”

Written by: George Hoekstra, guest writer

Mr. Hoekstra retired from BP in 2009 after working 35 years in refinery process research with Amoco and BP. Turner, Mason & Company welcomes Mr. Hoekstra and his subject for this blog, “Getting the Sulfur out of Gasoline.”

In most U.S. refineries, the fluid catalytic cracker (also known as The Cat) is the main unit for converting heavy oils into gasoline and diesel.  It produces gasoline (also known as cat gasoline), which is the largest single component of the U.S. gasoline pool.  Cat gasoline contains up to 2500 ppm sulfur and must be desulfurized before blending into finished gasoline to meet the new Tier 3 gasoline specification of 10 ppm.

This desulfurization job is done in Cat gasoline desulfurizers. These units use small reactors compared to the reactors on The Cat.  On the refinery flowsheet, the cat gasoline desulfurizer is an add-on, almost an afterthought, hence its nickname, “post-treater.”  Compared to The Cat, the post-treater gets little attention from refinery engineers.  The Cat itself is where the real engineering is done, and the real money is made.

In 2015, our client group decided to do some basic engineering work on the post-treater.  The reasons were:

  1. Nobody knew exactly what was happening in the post-treater’s reactors;
  2. Refineries were paying lots of money in post-treater licensing fees and catalyst price; and
  3. Tier 3 gasoline specifications were coming soon, which would greatly increase the importance of the post-treater.

In short, the post-treater was a bit of a mystery and that made no sense.  It seemed to be a very simple process, but was surrounded by a veil of secrecy that hid its inner workings from refinery engineers.

We ran a focused three-year program of pilot plant testing, catalyst testing, analytical testing, field testing, and market analysis, all aimed at getting our arms around the post-treater and its role in making Tier 3 gasoline.

If you think of The Cat as a chain saw, the post-treater is a pruning shears.  Its job is to get sulfur out of gasoline, which is generally an easy task.  But, when the gasoline stream you’re treating is Cat gasoline, there is a twist — side reactions occur that destroy octane.

Our interest in the post-treater was driven by an overriding question which is, “How much octane will be destroyed when post-treating severity increased to make 10 ppm gasoline?”  Some people claimed to have answers to this important question, but the answers were hand-waving answers, hearsay passed around in bars at industry meetings.  Nobody could point to any hard data supporting that conventional wisdom.

For The Cat, and all other major refining processes, we have reams of pilot plant data, published reports, reactor models, many decades of first-hand experience and technical knowhow. For the post-treater, nobody had even the most basic pilot plant data to make an informed estimate of the octane loss for Tier 3 sulfur.

Because of the octane twist, desulfurizing Cat gasoline is a delicate job – you need enough reaction severity to get the sulfur out, but not so much that you destroy the octane.  It is like pruning a flowering plant without disturbing the blossoms.

In chemical engineering lingo, it is a “selective” process, meaning you want to select certain compounds (the sulfur compounds) for reaction, while simultaneously avoiding the other side-reactions that destroy octane.

In our 2015 pilot plant studies, we desulfurized Cat gasoline over a wide range of severity on four commercial catalysts.  The results are displayed in what we call the post-treater “performance curve” which is a chart of octane versus product sulfur:

In this chart, reaction severity is being increased as you move from right to left.  As severity increases, gasoline sulfur decreases, and so does octane. The green and black data points are for two different catalysts.

The normal operating window for post-treaters has historically been in the upper right region of the chart where the curve is flat, meaning little octane is lost as you increase severity to decrease product sulfur; but now, we are moving left into a new operating region for Tier 3 gasoline where our data shows octane loss is much steeper.

Two things stand out on this chart.  First, as severity increases, sulfur goes down and octane loss accelerates.  Second, the performance curve is the same for the green and the black catalysts.

The fact that octane loss starts going exponential at low sulfur levels is contrary to conventional wisdom, and an especially important new finding.

In our pilot plant program, we used the most modern 21st century chemical analyses to measure every chemical compound in Cat gasoline.  We call this analysis the “blood test,” because it is used to see what is happening in a post-treater in the same way a blood test is used to see what is happening in a body.

By comparing the blood test of the raw Cat gasoline to the desulfurized products, we learn what happens to every one of the compounds as it goes through the post treater — and this data shows clearly why octane loss starts going exponential at low product sulfur.

Industry conventional wisdom said Cat gasoline will lose 0.5 octane when severity is increased to make 10 ppm sulfur gasoline.  Our data shows it is much higher, more like 5.0 octane loss.

The next step was to see whether this important finding holds true in commercial post-treaters. In 2016 and 2017, we did field tests on many commercial Cat gasoline desulfurizers, ran the blood test on the raw and post-treated samples, and confirmed the pilot plant findings — commercial post-treaters also lose 5 octane when severity is increased to make 10 ppm sulfur gasoline, and the blood test shows us why.

Not all refineries will lose 5 octane, only those that are not well-equipped to make 10 ppm sulfur reliably and profitably. The octane loss in each case depends strongly on the configuration of The Cat’s process train, the composition of the raw Cat gasoline, and the design of the post-treater.

The 0.5 conventional wisdom number is an ideal case.  The 5.0 number is typical. We have seen numbers over 10 on some commercial units.  It is highest for units that sometimes run heavy, high sulfur feeds, in which case The Cat drags in a lot of heavy sulfur compounds that don’t belong in any gasoline, and the post-treater has to work hard to clean up The Cat’s mess.

Exponential octane loss has big implications for the cost of Tier 3 gasoline, the U.S. octane supply, and the price of premium gasoline.  To get a handle on this, we developed a model of the U.S. refining system that factors in the different configurations of Cat processing trains in U.S. refineries and their capabilities for making 10 ppm gasoline reliably and profitably. It suggests that full implementation of Tier 3 sulfur will be accompanied by the destruction of $7 billion/year of U.S. octane supply.

Many refineries are under-prepared for Tier 3 sulfur because they have been relying on the industry consensus that says all is well for octane.  We disagree strongly.  For three years, we have been sounding the alarm, and our clients are responding by making new investments to improve octane/sulfur performance.

Among their alternatives are to build new post-treaters, or revamp existing post-treaters, to allow deeper desulfurization with less octane loss.  Big performance improvements can be achieved with relatively low-cost capital investments, as indicated by this chart showing the estimated upward shift in the performance curve for one of our clients who is considering a new process being marketed by Haldor Topsoe called High Octane Process or “HOT”:

The solid black curve is the performance curve for the post-treater in its current form and the dashed purple curve is our estimate of what can be achieved with the more selective Haldor Topsoe process.

Investments for Tier 3 sulfur are coming rather late in the game, considering the Tier 3 standard was finalized in 2014, leaving five years for the industry to prepare for full implementation.  We expect a flurry of new investments in post-treaters as reality sinks in.

Many refiners expect to use the EPA’s sulfur credit trading feature to balance off under- or over-performance against the Tier 3 sulfur specification.  We have analyzed the supply and demand for these credits and have been predicting that the price of Tier 3 credits will go up substantially as we approach full implementation of the Tier 3 standard in 2020.  The first Tier 3 credits won’t exist until later this year, but some refiners have been making contractual agreements to exchange them in the future at prices agreed to today.  These prices are not publicly available, but are occasionally reported by industry consultants and trade media using unnamed sources.  Our market intelligence indicates the price of these credits has already quadrupled since 2016, supporting our analysis.

This is a shared-cost program.  All our analyses and models are supported by a database of pilot plant and field tests on post-treaters representing catalysts from all major suppliers, including blood tests on 70 gasoline samples, and all of it is available to anyone at a small fraction of its cost.  Those interested should see the Table of Contents for our three annual reports on this topic, and contact George Hoekstra any time by phone or email, George.hoekstra@hoekstratrading.com, +1 630 330-8159.

George Hoekstra

President, Hoekstra Trading LLC

Mr. George Hoekstra is currently an independent consultant specializing in hydroprocessing technology.  George’s company does independent pilot plant testing, laboratory testing, field testing, and market research studies in hydroprocessing.  His company sponsors the industry’s only open-market, shared cost catalyst testing program for independent refiners. He has served on many industry panels and councils as an expert in hydroprocessing technology and refining catalysts over the years. George has a Bachelor of Science degree in chemical engineering from Purdue University and an MBA from University of Chicago.

TM&C constantly monitors changes and proposed changes in regulations which can impact all segments of the petroleum industry.   Many of these are associated with transportation fuels, affecting not only demand, but also production costs, compliance challenges, and other aspects of petroleum refining.  We include our independent analyses of these impacts in our semiannual Crude and Refined Products Outlook (the 2018 Edition is scheduled to be released in mid-February 2018) and our various other studies. TM&C also assists clients involved in all aspects of transportation fuel production, blending activities, planning and compliance-monitoring. More information on these publications and our other work involving oil industry developments and dynamics can be obtained by contacting either one of us, visiting our website at turnermason.com or calling Cindy Parker at 214-754-0898.