Published January 1985
Declining demand and changing demand patterns for most major refinery products will affect both refining economics and the structure of the refining industry. Two other major contributory factors include progressively heavier crude slate and a rapid increase in unleaded gasoline as a proportion of total gasoline sold.
Refinery capacity, most significantly in upstream processing, is already underutilized. One major task of this report, therefore, is quantitatively to evaluate the impact of these interacting trends on future refinery capacity utilization and economics. Of particular relevance to this report is the availability of surplus refinery capacity to produce petrochemical feedstocks (naphthas and gas oils--as opposed to conventional major fuel products), together with its effects on production costs and transfer prices.
In contrast with trends in the demand for conventional refinery products, the demand for both ethylene and propylene is foreseen to Increase significantly. At the same time the availability of natural gas liquids (NGLs)--currently the major U.S. source of olefins--is likely to decline slightly or at best remain static. Concurrently with increasing overall demand for propylene, declines in refinery production will need to be offset by production from olefins units. Both static NGL availability and increased emphasis on steam cracker propylene imply a trend toward greater future reliance on naphtha and gas oils as pyrolysis feedstock. Another major task of this report is, therefore, the quantification of this trend together with an economic comparison of the various available liquid feedstocks in both feed specific and feed-flexible olefins units.
Most U.S. olefins production is currently from independently operated units, predominantly from NGL (but also from liquids) purchased from other parties. On the U.S. Gulf Coast, however, significant volumes are produced from steam crackers integrated with large refineries. In view of the prospective availability of refinery capacity, this report also addresses the potential economic advantages of integrated operations.
Because of the wide ranging scope of this report attention has necessarily been focused on the U.S. situation. Similar trends are, however, discernible in both refinery and olefins operations in Japan and Western Europe.
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