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Economic Framework of Refining

EAV/EFR
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Who should attend?

  • This course provides a complete view of all the fundamental aspects and challenges of the economic framework in which the refining industry is evolving.
Audience :
  • Technical, operating and engineering personnel working in the refining industry, trading and commercial specialists, independent consultants, process licensors, catalyst manufacturers and refining subcontractors.

Level : Foundation

Course Content

  • TECHNICAL OVERVIEW

      • Brief technical presentation of the main refining units: distillation, conversion, blending, etc.
      • Refinery scheme evolution.

  • OIL MARKETS & TRADING

      • Oil supply and demand fundamentals and evolution.
      • Petroleum physical trading (spot, forward).
      • Crude oil and petroleum product pricing: benchmark, quality differential, etc.
      • Financial trading (futures) and hedging strategies for a refiner.

  • REFINING CONTEXT

      • World petroleum product demand.
      • Refining supply: overcapacity, types and quantity.
      • Main challenges: deep conversion, new product specifications, petrochemical integration, environment, etc.
      • Projects and perspectives.

  • REFINING MARGINS & COSTS

      • Refinery margins and costs: definitions and evolution worldwide.
      • Unit margins and intermediate product valuation.
      • Case studies: crude oil arbitrage, Fluid Catalytic Cracking (FCC) unit margin.

  • REFINERY BLENDING SIMULATION

      • Case study: managing the blending operation of a refinery taking into account the economic and technical (product specifications, capacities, etc.) constraints.

  • OPTIMIZATION OF REFINING OPERATIONS - LINEAR PROGRAMMING

      • Linear programming (LP) principles: linear equation, objective function, profit maximization or cost minimization, Simplex method, graphic interpretation, etc.
      • Analysis of the LP results: optimum properties, marginal costs, domain of validity of the results, etc.
      • Case study on Excel: explanation of a refinery model matrix (material balances, product specifications, utilities consumption, objective function, etc.); team work on the optimization of a cracking refinery and on the result analysis.

  • OPTIMIZATION OF REFINERY OPERATIONS - SCHEDULING

      • Principles of refining management: constraints, operational organization.
      • Monthly program to daily operations.
      • Optimization of margins from different process units.
      • Case study: management of typical sequential constraints (delays, processing problems, etc.).

  • INVESTMENT PROFITABILITY STUDIES

      • Value creation and capital cost, cash flows, discounting principle and inflation impact.
      • Standard global profitability analysis: cash flow schedule, economic criteria (net present value, internal rate of return, etc.).
      • Introduction to risk analysis.
      • Exercises on various investment profitability studies for refineries and petrochemical plants.

Learning Objectives

  • Upon completion of the course, participants will be able to:
  • calculate product marginal value, refinery margins and process unit margins,
  • identify cost savings in order to improve margins,
  • simulate refinery operations and product blending,
  • simulate and optimize refinery operations, crude oil selection and product manufacturing,
  • analyze the result of a linear programming model optimization,
  • evaluate project profitability.

Ways & Means

  • Case studies and exercises derived from present refinery situations.
  • Economic optimization using Excel.
  • Quiz.