Naphtha production from U.S. refineries is now significantly influenced by the increased production of domestic light crude oil and LTO volumes processed through many of the nation’s 139 refineries. Tight oils tend to be high in API gravity. Processing these crude oils (> 46 °API) rather than heavier crude oils may mean that refineries will need additional naphtha and distillate processing capabilities. Changes in crude oil composition resulting from changes in diluent composition in dilbit (70% bitumen: 30% condensate) and from increased processing of LTOs are likely to result in greater naphtha production at the refinery. Because of this significant shift in feedstock characteristics and resulting naphtha volumes that were not really on anybody’s radar screen just a few years ago, refinery planners will have to do the needful in ensuring benzene removal facilities are still adequate to meet gasoline specifications.
Closely tied in to this surge in naphtha production, the 10 ppm sulfur levels required by the EPA’s Tier 3 gasoline regulations will require additional desulfurization of FCC gasoline, particularly light FCC naphtha that has typically by-passed FCC naphtha hydrotreaters under current regulations. With the 10 ppm sulfur limit, even lower sulfur blending components such as light, straight-run (LSR) naphtha and alkylate may require additional hydrotreating to reduce sulfur and RVP even further. Some traditional alkylate components, such as isopentane may have to be reduced to meet lower vapor pressure limits.
It appears that on a global basis, naphtha production will remain robust. For example, a recent study by Ken Research predicted that naphtha production from the refineries in the top 5 Middle East countries will grow at a phenomenal CAGR of 16.7% during 2014-2018. The interesting aspect about the Middle East naphtha market and production is that the refineries in the Middle East producing such high volumes of naphtha are highly integrated with petrochemical complexes and chemical plants utilizing the refinery naphtha. The Middle East countries are concentrating their efforts to produce more naphtha from their refineries and utilize it in the petrochemical complexes, whereas in the U.S., at least seven new world-scale ethylene steam crackers have been announced that will process shale based ethane rather than refinery naphtha.
So, where will increased U.S. refinery naphtha production go? How much U.S. naphtha can the global markets absorb? Will higher global naphtha production mark a return to heavier feedstocks or stall investment plans for crackers that run lighter? Where are the opportunities for U.S. producers? The current consensus is that surplus U.S. refinery naphtha could be exported to the “surviving” European steam crackers that are designed to run on relatively high volumes of naphtha feedstock, such as the Total ethylene steam cracker in Antwerp. These topics will actually be discussed in detail at the November 12-14 Argus Condensate & Naphtha Markets conference in Houston (www.argusmedia.com).