Bhavna

What is refining?
Oil or petroleum refinery.
Refining of oil by fractional distillation.

What is refining?

Refining is the process of purification of a substance
or a form by removing impurities or unwanted
elements typically as a part of an industrial process.

Broadly speaking refining of liquids is often
accomplished by distillation or fractionation, gases
by extraction and some solids by growing crystals in a
solution.


Oil Refinery
An oil refinery or petroleum refinery is an industrial
processing plant where crude oil is refined and processed
into more useful products such as petroleum, gasoline,
kerosene, diesel fuel, LPG etc.

An oil refinery is considered an essential part of the
downstream side of petroleum industry.

Oil refineries also produce various intermediate products
like hydrogen, light hydrocarbons, reformate and pyrolysis
gasoline.

Contd.
Oil refineries have extensive pipelines running
through them which carry streams of fluids between
large chemical units.

The crude oil feedstock is typically processed by an
oil production plant.

There is usually an oil depot at or near an oil refinery
for the storage of incoming crude oil feedstock as
well as bulk liquid products.
Difference between oil refinery and
petrochemical plant
A refinery processes crude oil into different
components such as kerosene, gasoline, diesel, LPG
etc.

A petrochemical plant is a chemical plant that will
use a petroleum based feedstock, such as LPG or
other products from a petroleum refinery to produce
a chemical product, such as plastic for example.

Operation
Fractional Distillation is the main operation in an oil
refinery.

Fractional distillation is the process of separation of a
mixture into its component parts or fractions by heating
it at a very high temperature.

The fractions at the top of the fractionating column have
boiling points lower than the fractions at the bottom.

The heavy bottom fractions are often cracked into
lighter, more useful products.


Contd.
However, the lighter elements form explosive vapours in
the fuel tanks and are hazardous.

Thus the hundreds of different hydrocarbon molecules in
crude oil are separated in the refineries into components
which can be used as fuels , lubricants etc in
petrochemical processes.

These processes produce products like plastics,
detergents , solvents and fibers like nylon, polyesters etc

A Fractional Distillation Column
APOORV
Oil Refining Process: Fractional Distillation
Uses of petroleum products
Petroleum derived products used in other
industries
The Oil Refining Process
What is fractional distillation?
Fractional distillation is the separation of a mixture into its
component parts or fractions.
The different hydrocarbon components of crude oil are its
fractions.
Fractional distillation is based on the principle that
different substances boil at different temperatures.
For example, crude oil contains kerosene and naphtha,
which are useful fractions. When you evaporate the
mixture of kerosene and naphtha, and then cool it, the
kerosene condenses at a higher temperature than the
naphtha. As the mixture cools, the kerosene condenses
first, and the naphtha condenses later.

Products of Fractional Distillation
Light
Distillates
Middle
Distillates
Heavy
Distillates
Gases (1-4)
Petrol (7-9)
Naphtha (6-11)
Kerosene (12-16)
Heating oil (15-18)
Petrodiesel (15-18)
Lubricating oil (18-25)
Heavy fuel oil (20-27)
Greases & Wax (25-30)
Bitumen (above 35)
* Figures in brackets indicate number of carbon atoms
per molecule
Uses of Petroleum Products
Gases- Used in making Liquefied Petroleum Gas
(LPG)
Gasoline (Petrol)- Used as Motor fuel.
Naphtha- Used to make solvents & also used in
making high octane petrol.
Kerosene- Used to make ATF (Air Turbine Fuel).
Heating Oil- Used for industrial & domestic
heating.
Petrodiesel- Widely used as a fuel in cars, trains
& military vehicles.

Contd.
Lubricating oil- Lubricants have thousands of uses, from
fixing squeaky doors to oiling industrial machines and
automotive engines.
Heavy fuel oil- These are used in large industrial boilers, in
power stations for example, and to raise steam to drive
turbines on ships. It is also known as Bunker oil.
Greases- Used for lubrication purposes.
Wax- Used to make candles, electrical insulation and
waterproof coverings for food cartons.
Bitumen- This is the heaviest product from the refinery.
When heated, it can be used in road construction and as a
waterproofing material for roofs.

Petroleum derived products used in
other industries
Agriculture- One of the most important uses of
petroleum is in the production of ammonia to be
used as the nitrogen source in agricultural
fertilizers. Pesticides are almost all produced from
oil.
Plastics- Plastic is a staple of modern life. Nylon,
which is in everything from stockings to
mechanical gears and even in car engines, is the
most successful petroleum-based plastic to date.
Most plastics come from olefins, which include
ethylene and propylene.
Contd.
Tires- Synthetic rubber is used for car tires and
rubber soles on shoes. The demand for synthetic
rubber is four times greater than that for natural
rubber.
Pharmaceuticals- Mineral oil and petrolatum are
petroleum by-products used in many creams and
topical pharmaceuticals. Acetylsalicylic acid
(ASA), the active ingredient in many pain reliever
medicines, is manufactured from petrochemicals.
Other Products
One 42-gallon barrel of oil creates 19.4 gallons
of gasoline. The rest is used to make things
like:
Sports items- Basketballs, footballs, golf bags,
golf balls, skiis, roller skates etc.
Consumer products- Shampoo, deodorant,
lipstick, cold creams, shaving creams etc.
Sports car bodies, dashboards & Car enamel.
Cassettes, CD players & Movie films.
Contd.
Plastic wood
Rubber Cement
Antifreeze
Artificial limbs
Anesthetics
Solvents
Linoleum

Abhishek
Refineries
Gross Refining Margin



GRM is the difference between crude oil price
and total value of petroleum products produced by
the refinery.


One of the major parameters to evaluate the
performance of a refinery .

If a refinery receives $80 from the sale of the
products refined from a barrel of crude oil that
costs $70/bbl, then the Refinery Gross Margin is
$10/bbl.

Now suppose if the operating cost of the
refinery and the other accounting losses are
$2/bbl then margin is $8/bbl.

Example
Factors affecting GRM
Cost of sourcing the crude oil.

Manufacturing Reliability and Efficiency

Ability to transport quality fuels.

Nelson complexity.

Customs Duty Structure
Nelson Complexity
The Nelson Index is a measure of the complexity of
an oil refinery. Refineries that are higher on the
Nelson Index are valued higher relative to their
peers.

For example, high Nelson Index refineries may be
able to refine lower quality crude oil, or be capable
of producing higher value end products.

And higher the valuable products higher is the GRM.
How customs duty affects ?
For petro products manufactured in India, oil
refineries in India are paid the import parity
price, the international price plus the insurance
and freight cost plus the customs duty.

Thus, higher the customs duty, higher will be the
gross refining margin.
GRMs of some companies:-
Reliance:- $8.1/bbl ( 4 th quarter of 2013-2014)

BPCL:- $4.7/bbl

IOCL:-$4.24/bbl

Essar Oil :- $7.7/bbl

HPCL:- $3.71/bbl


AZLAAN
The 10 biggest refining countries
1. USA
2. China
3. Russia
4. Japan
5. India
6. South Korea
7. Italy
8. Saudi Arabia
9. Germany
10. Canada


United States possesses the largest refinery
capacity in the world with refinery capacity of 17.38
million barrels per day approximately 18.8% of the
world's total refinery capacity

India holds the world's fifth largest refinery capacity
with 4.1Mbd in 2012, claiming 4.4% of the global
refinery capacity per day. India refined 894,000
barrels of crude oil.


Refining capacity

Shell 4 million barrels/day

ExxonMobile : 1.95 million barrels/day

British petroleum ; 92,531 barrels/day

Global refinery sector this year
The global refining and marketing industry will
continue to see pockets of earnings growth over the
next year, but flat conditions overall, with product
demand expected to increase modestly this year by
1.2 million b/d, according to a recent report from
Moodys. That demand increase will be roughly in
line with net global capacity additions, Moodys said.
The outlook reflects Moodys expectations for the
fundamental business conditions in the industry over
the next 12-18 months, during which time it expects
the R&M sectors earnings before interest, taxes,
depreciation, and amortization (EBITDA) to remain
volatile but to rise by about 8% through mid- to late-
2015


Indias refining capacity;

215.066 MMTPA at present, Comprising-

22 refineries

17 under Public Sector,
3 under private sector
2 in Joint Venture (JV)
INDIAN REFINERY SECTOR -

REFINING CAPACITIES :

IOCL :- 65.7 Million Metric Tonnes per Annum
(MMTPA)
HPCL :- 14.8 Million Metric Tonnes per Annum
(MMTPA).
BPCL :- 20.0 Million Metric Tonnes per Annum
(MMTPA)
Reliance:- 60.0 Million Metric Tonnes per Annum
(MMTPA)
Essar:- 20.0 Million Metric Tonnes per Annum
(MMTPA)