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RE: CHS Coker – Asphalt vs Prod Economics

Home Forums Coking News: DCU, Upgrader 1.Coker (registered users only) CHS Coker Project Nearly Complete (Jan08) RE: CHS Coker – Asphalt vs Prod Economics


Charles Randall

Ehhnnnnt: Sorry Mr Guest wrong question but thanks for playing our Coker quiz game.  My comments were more around using the various cutters in asphalt – the higher valued asphalts like MC, RC, SC all reqire some cutter to be blended into the base asphalt & even though it is priced much higher – generally refiners lose money because of large spread in prices between blend fuels & base asphalt – until the base asphalt begins reach the ~$250/mt price level.
But to answer you question – any linear relationship or general assumptions around cokers are wrong ….. including this one!  Cokers compared to other units or processing in the Oil & Chemical industry is like comparing a platapus to duck, or unicorn to mule. I sort like unicorn label for cokers because everyone is unique due to refinery configuration up & downstream of it, the different mix of crudes & local area market product demands it supplies.  But the real gem for cokers is that they work both ends of refinery – they enable cost of crudes to be cut by runing the heaviest sourest crudes on the market at deep discounts because the Hydroskimming & Cracking refineries are unable to process it. And on the product end they take the cheapest/heavier products from the simplier refinery configurations like asphalt or Heavy Fuel Oil (HFO)/ Bunkers and upgrade them to fuel products diesel or jet or gasoline / all three – usually at a product yield pattern not far from the light sweet crudes like WTI. And if that isnt enough – the ratio of coker feed to crude feed is usually about 1:4 (CHS has higher ~1:3) so you have a leverage effect on every barrel coker charge of 2 – 3X on coker. Stated another way – even if you got asphalt or HFO price to match coker margin (big stretch) it still isnt enough to overcome the refinery crude margins at lower crude prices. Now cokers do have higher op cost due to high temps (but they are very efficient in heat recovery on various feed / product streams) and when margins collapse during times sweet crude oversupply (we wont be visiting that option very often), and demand for HFO & Asphalt are high – then there is case to loaf the coker / increase cycle time & make some heavier product available. <This would usually be a winter case where limited tankage puts constraints on thruput until peak gasoline season – aka 60% gasoline is consumed during Mar-Aug cycle but refiners now only have 5-10% spare capacity so must make enough all winter but due Account’s cost cutting Brainstorm “Just in Time inventory” there is no longer enough tankage or spare capacity at most refineries to pull that completely off.>
So overall the answer is no – byproducts like HFO, Asphalt (assuming you are in a Complex – Very Complex Refinery) or Petcoke have little impact on refinery crude or coker margins that are function of  product gasoline/diesel demand. All the new cokers going in have already taken a lot of HFO/Asphalt oversupply off the market & values will rise to discounted thresholds of what demand will pay for them (alternate value concrete for Asphalt & alternate value of Diesel for HFO). And the environmentalist are working on HFO/Marine Bunker sulfur levels as they did with gasoline & diesel – it is likely that spreads between HFO 1% & HFO 3% could widen to $10/Bbl (~cost to put in resid desulfurizers) – more likely installing a coker or switch to diesel would happen first.
Hope this helps some.

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