Catalyst selection is your key to higher refinery performance; start early!

Many refineries are postponing the selection of a new catalyst for the next change-out to the “last minute”. This behaviour often gives rise to a non-optimal choice, lower unit performance and above average catalyst pricing. We asked ourselves; (i) why is it that some refiners start late on the catalyst selection process, (ii) what are the consequences of this choice, and (iii) is there a better way?

Why do some refineries start late on the catalyst selection process?

1. Day-to-day tasks at the refinery take priority 
   
2. Assembly of a multi-disciplinary team and getting agreement on requirements is difficult 
   
3. Unknown future operating environment 
   
4. Unawareness about product lead time until it is too late 
   
5. Unawareness about the time needed to organize a laboratory activity test 
   
6. Faster deactivation or unit up-set near end of cycle necessitating an earlier change-out 
   

More urgent day-to-day tasks tend to keep everybody occupied while a catalyst change-out seems far away and it is a multi-disciplinary effort. Getting everybody together to talk about future operating conditions and production objectives is difficult as future market conditions are unknown and it is only natural to think that in three months from now we will have a better grasp of what the future will look like, thus trying to make a decision just in time. Just in time from the refiners point of view may be just too late from the catalyst vendor’s point of view, as the vendor wants to limit inventory costs and is operating his plant with a certain product lead time. It is not uncommon for a vendor to have a product lead time of 3 to 6 months for common products and even longer for certain specialties. Furthermore, the catalyst business is innovative, and it is not unlikely that one of the vendors has a new product and is promising superior performance. Then, the question presents itself whether the refinery wants to be a Guiney pig or that they want to test claims before deciding to buy this product. Doing a test takes a long lead time as capacity at third party laboratories is scarce, and several tasks need to be completed before the test can be conducted including NDA and feedstock selection as well as agreement on the protocol to be used. Finally, if a refinery is waiting for deactivation to set in before starting to look for a next batch they may be surprised by the higher rate of deactivation towards the end of the cycle caused by regular operation or made worse by unit up-sets necessitating an even earlier change-out than anticipated.

What are the consequences of the late start of the catalyst selection?

1. Lack of time resulting in a non-optimal request for quotation issued to the vendors 
   
2. Less time available for the refinery to compare offers and negotiate a better deal 
   
3. No time available to conduct a side-by-side laboratory performance test of catalysts 
   
4. Reduced choice of catalysts resulting in sub-optimal next load 
   
5. Increased price as fewer options available to refinery; reduced competition 
   
6. Reduced leverage for refiner to negotiate better guarantees and commercial terms 
   

The selection process is usually initiated by the issuing of a request for quotation (RFQ) by the refinery to different catalyst suppliers. The issuing of the RFQ is the moment the refinery needs to be precise about its future operating objectives, unit constraints, expected feedstocks to be processed and desired products and specifications to be produced. An imprecise RFQ makes it difficult for a catalyst vendor to provide the optimal catalyst solution, and what is more it makes it difficult for the refinery to make the right choice. In case the criteria are not clear any catalyst may be good enough or nothing may be good enough and there is no basis for real selection. Vagueness in the RFQ usually has to deal with operating conditions such as hydrogen availability, and the precise feedstock quality (or different qualities). This input information from the refinery directs the catalyst vendor into a certain direction in terms of the perceived optimal solution. Usually there is a clarification session between refiner and vendor to get additional information on operating conditions and objectives. Unfortunately, the process is seldom perfect and requirements may not be documented. Sharing different information with different vendors is another source of getting divergent offers. Eventually the vendors hand in their offer, and they would like the refiner to make a decision on the basis of the information provided. Often there is insufficient time to negotiate guarantees and conditions or to test the catalysts in a side-by-side laboratory test to verify vendor claims. When no testing is done the refinery has to believe the predictions made by the vendor and the quality of those predictions depends on the quality of the input data provided by the refinery, the kinetic model used by the vendor, and the vendors willingness to stretch the guarantees to win the order. Vagueness in the RFQ and lack of time to verify vendor claims can result in sub-optimal catalyst selection by the refinery. It may also be that certain catalysts solutions cannot be made available, or qualified at the short notice depending on vendor lead time for certain products and refinery acceptance procedures for new products. This limits the choice of the refinery to known, off the shelf products, which may not be the best fit for the objectives during the next cycle. In situations where competition is reduced due to lack of time and internal procedures vendors will be less inclined to offer improved technical guarantees or commercial terms, and refineries may be forced to take what they are offered. By starting the catalyst selection late, the refinery manoeuvres itself into a single supplier situation where the incumbent supplier has the best cards. If the refiner is satisfied with the performance of the incumbent that may be acceptable, however, if they are looking to improve beyond the performance they know, there is no way past a true open catalyst selection process.

What can be done to have a better catalyst selection process?

1. Start early to gain time
2. Monitor the unit to know performance of the incumbent catalyst and identify areas for improvement
3. Be precise in RFQ with respect to the constraints and objectives of the unit
4. Be clear internally about the selection criteria and link the performance of the unit to the refinery profitability
5. Test competitive grades in an independent laboratory
6. In case of a group of refineries operating similar units share your resources and identify a number of qualified suppliers to reduce selection costs
7. Develop a relationship with a catalyst supplier
8. Outsource your selection to an independent catalyst consulting company

First of all the refiner needs to realize that catalyst selection is a long process and that if you want to give it the attention it deserves one needs to start early or even maintain a continuous screening process to be aware of developments in the catalyst market. This is especially true for large units, such as ULSD and residue units, and units with a major impact on the refinery profitability such as hydrocrackers. To provide sufficient time for all tasks involved in a proper selection a good recommendation would be to start 1.5 to 2 years before the next catalyst change-out. Monitoring the performance of the unit is important so that the refinery knows what the catalyst does well and what it does not so well, this monitoring will help to predict the end of cycle and also indicate areas where the refiner would like to see improvements based on operation of the catalyst in their unit. Be precise in describing the unit constraints and the operating objectives, so that vendors have best available input data to feed their models. Less ambiguity will result in accurate offers and better guarantees. Sharing monitoring data with the incumbent supplier may be a good idea in case the vendor provide useful advice on how the refiner can optimize the current cycle. Performance of the refinery depends on the performance of the units and a catalyst change-out is an opportunity to improve the performance of that particular unit. The performance targets for the next cycle should be precisely formulated in the RFQ. This may be the processing of a more difficult feedstock or a longer cycle length (activity), or it may be a higher selectivity towards desired products (selectivity), or a better resistance towards coking or poisoning (stability). Once the anticipated operating conditions are clear (this can be several scenarios) and the targets are clear the vendor can optimize their offer. The vendor does not need to know the financial impact of each optimization they propose, but the refinery needs to understand how catalyst performance is linked to future profitability as that will drive the selection much more than catalyst price. Once the offers are in, it is time to compare the offers and decide which offers meet the selection criteria best. Although catalyst vendor models are good, it may be worthwhile to perform a side-by-side test with the intended feedstock and refinery operating conditions to verify the performance claims. Sometimes the results of a test differ significantly from a vendor prediction. Testing by independent laboratories takes several months to prepare (NDA, feedstock, samples, agreement on protocol, unit availability) and one should calculate with 6-9 months depending on the type of test. Groups of refineries can share the cost of catalyst selection and contract negotiation if their units and operating objectives are similar. Pooling of future demand also gives leverage to refinery groups when they negotiate supply frame agreements. A single refinery may decide to go the opposite way and develop a close relationship with the incumbent vendor and share performance data and future objectives during the cycle. A better exchange of information allows an incumbent vendor to get to know the unit and the way the unit is being operated by the refinery. This information can be used to assist the refinery on a regular basis as some vendors now start to do with connected plants, where monitoring data are shared with the vendor, and feedback / recommendations are provided back to the refiner. This allows refineries to make informed decisions based on big data and models owned and controlled by catalyst vendors / service providers. Finally, there is the possibility to outsource the catalyst selection to an independent consultant who can help you formulate the future requirements, get a description of the likely feedstock specifications and different scenarios and assist with testing, comparison, and even negotiation. Catalyst Intelligence has several independent consultants with many years of experience in the refining industry and the catalyst business and we can extensive experience formulating precise performance requirements, comparing test results and negotiating supply conditions.

In summary: starting catalyst selection early creates opportunities to improve refinery profitability

Catalyst selection is your key to improved refinery performance. Refineries are advised to start early to avoid a sub-optimal selection resulting in reduced refinery margins and above average catalyst costs. Based on our experience we recommend refineries to start with the selection some 1.5 to 2 years before the expected catalyst change-out. Once the future operating objectives and selection criteria are set the rest will fall in place. It is important to allow at least some 6 to 9 months for comparative testing and an additional 6 months product lead time from date of PO. It is easy to do this selection yourself, but it is also possible to outsource this work to experienced consultants in case other urgent issues take up your staff time at the refinery.

 

Catalyst-Intelligence is a consulting company providing independent & comprehensive advice on fixed bed catalysts to refineries and petrochemical plants. For more information on how we can help you we refer to our website: www.catalyst-intelligence.com