Installing More Storage than Necessary is Simply a Waste of Capital
Opgrade Performance study of an existing plant
50 Words or Less
Management wants only as much storage as is necessary, yet operations is asserting they need as much as storage as can get. Through our Opgrade methodology, our client’s management and operations teams learned only 50% of their planned asphaltene storage is truly beneficial to the bottom line.
Without the ability to optimize tank sizes, many facilities install more tanks than are necessary.
Our client, a Canadian energy company, has a facility in Alberta to recover and upgrade oil-sands (bitumen) reserves. When the bitumen arrives at the upgrading facility, it is separated into distillate and residues through a process called distillation. The distillate is then sent to a Hydrocracking (HCR) Unit using hydrogen, heat and catalyst to upgrade longer hydrocarbon molecules (distillate) into shorter molecules (Premium Synthetic Crude), which are then pumped to a pipeline for sale at roughly the WTI (West Texas Intermediate) spot price for crude.
The stickiest, heaviest portion of the bitumen, the asphaltenes, are separated from the residues and are too thick to be transformed into Premium Synthetic Crude (PSC). Instead, this facility uses these asphaltenes as fuel for a gasification process that breaks down the asphaltenes into hydrogen and carbon monoxide in the presence of sub-stoichiometric oxygen, high temperatures and catalyst. This process converts what would otherwise be a low-value byproduct into something with a much higher value, make-up hydrogen for the HCR.
To maximize production and profits, the HCR Unit needs a consistent and continuous input stream of both bitumen and make-up hydrogen to replace the hydrogen consumed by the process. Any reduction in either the distillate or make-up hydrogen roughly translates to a roughly equivalent reduction in HCR production. Unfortunately, nothing in a plant is perfectly reliable, so frequent and lengthy outages substantially reduce HCR production and therefore profits.
To smooth out the input flows to the HCR, distillate tanks are in place to theoretically decouple distillation and the HCR, allowing the HCR to continue running if distillation has an outage, or to allow distillation to continue running if the HCR has an outage. The problem, however, is when distillation has an outage, the gasifiers lose their feed and shut down, thus forcing the HCR to shut down as a reaction. Similarly, if the HCR shuts down, the gasifiers cannot send hydrogen to the HCR, which means they cannot accept feed, thus forcing distillation to shut down too.
Without a means to store asphaltenes, distillation and the HCR remain coupled, meaning the whole plant shuts down anytime any individual area experiences an outage. But how big should the tanks be? In industry, most calculations for tank sizes are based on either:
Tribal knowledge (guessing)
Single-point improvements (ignoring system effects)
The natural goal of this study is to optimize the size of the new asphaltene storage tanks by calculating how variations on the design capacity will affect revenue. Specifically:< > 10% of the tank design capacity 50% of the tank design capacity 80% of the tank design capacity 100% of the tank design capacity 120% of the tank design capacity
Simulation provides an effective means to empirically evaluate plant performance to both improve confidence and reduce risk. Outside of our Opgrade methodology, however, there isn’t a unified simulation method to both properly and empirically account for all of the complexity of the real world when evaluating how tank sizes affect plant performance.
The natural goal of this study is to optimize the size of the new asphaltene storage tanks by calculating how variations on the design capacity will affect revenue. Specifically:
10% of the tank design capacity
50% of the tank design capacity
80% of the tank design capacity
100% of the tank design capacity
120% of the tank design capacity
Where 100% design capacity is the size as calculated by our client’s engineers.
Figure 1 – A simplified Block Flow Diagram of the facility with new capital in red.
Figure 1 above is a simplified Block Flow Diagram (BFD) of the modeled system. Though the actual model includes many more elements than are shown here, including upstream bitumen recovery units and certain utility or support units, this figure represents the configuration of the critical units in the system.
With all reliability-based studies, good failure data is fundamental to providing meaningful results. As the adage goes, garbage in: garbage out. For all Opgrade studies, we prefer to use actual operational data, but when that data is not available, we use a combination of trusted failure data sources from industry and vendor databases.
Regardless, all data undergoes a thorough vetting process with the project team before it is used in any study.
Tank Volume Work-Off Ability
To maximize the utility of any tank, it is imperative to retain or create the ability to work-off accumulated volumes of a full tank, or refill an empty tank, during normal operations. Waiting for an upstream or downstream outage to cause a tank to empty or fill is never the best use of that tank. For this study, tanks can fill or empty at 10% over normal operations.
To evaluate the possible tank capacities, sensitivity case models were run that varied the size of the tank. As illustrated in the chart below, the changes in revenue generate a curve of diminishing returns. If PSC sells for $100 per barrel, a 50% capacity tank only reduces average annual revenues by 0.1% or $1.6 million.
Chart 1 – Diminishing Returns
Since a 100% capacity tank would really be two 50% capacity tanks physically costing about $20 million each, deleting one of the 50% tanks will significantly improve the ROI of this capital project.
Maximize Return on Investment
Now that Opgrade can more accurately predict how tank sizes affect revenue our clients can allocate tankage with confidence and maximize their expected ROI like never before.
To learn more about Opgrade studies contact our team today!