Reformer Optimization and Ethanol Uplift Considerations

July 27, 2015

The need for reformers to support low octane pools has diminished ever since the EPA introduced the requirement of ethanol in gasoline. The greater ethanol content has increased the octane pool dramatically, as ethanol typically has an octane number of ~110. This has caused refineries to re-evaluate the need to run their reformers at maximum yields. Depending on the severity of the reformer, a refinery may lose up to 10% of its liquid yield. The loss in liquid yield needs to be carefully considered when determining hydrogen severity and reformer output economics.

There are three considerations that are of importance when making reformer yield decisions: 1) market economics for fuel Gas; 2) market demand for reformer output (heavy reformate); 3) renewable identification number (RIN) prices and arbitrage opportunities.

1)      Market Economics for Fuel Gas: Although running your reformer at a higher severity results in higher hydrogen production, it also results in higher liquid loss. Additionally, the market demand for LPG fuel gas alternatives is currently low. These market dynamics may favour propane selection over hydrogen production from the Reformer.

It is also important to consider whether the fuel gas stream is too “rich” or too “lean”. Production that is at the end of the fuel gas stream spectrum will affect a refinery’s per barrel margin.

2)      Market Economics for Reformer Output: Reformer production increases the octane pool, thus promoting component trading or premium gasoline production. Market stagnation in PADD 1-3 for premium gasoline demand has shifted commercial’s focus to component trading opportunities as opposed to premium gasoline sales. Refineries with waterborne access may elect to trade high and low octane component inventories in an attempt to balance their octane pool. Having a large storage capacity for component inventory increases the likelihood of generating value in the component market by taking advantage of distressed refineries experiencing unit upsets. Refineries need to carefully evaluate the economics of high octane components to ensure that they cover their losses in liquid yield and hydrogen production incentives over/under LPG for fuel gas.

3)      Renewable Identification Number Prices: RINs were introduced by the EPA in 2005 and 2007. Refineries need to consider the financial incentives from blending ethanol into gasoline. Arbitrage opportunities must be considered when blending ethanol or purchasing RINs.

Overall, it is important to take a holistic approach when determining reformer yields and severity. Refineries need to incorporate fuel gas economics, the octane pool, and blending considerations into their economic decisions for reformer optimization. In addition, if the intended reformer yield deviates from historical yields, it is important to reconsider catalyst selection.

By: Peter Hryniak