ECONOMICS ESTIMATION

OF P R O D U C T I O N C O S T S OF C O M P L E X P E T R O L E U M

R E F I N I N G PROCESSES A. M. Z e n i n s k i i

a n d i. Z. N u r m u k h a m e t o v a

UDC 665.63.003.12

Today, when rentability has become the basic parameter for the operation of firms and production units, and prices are expected to reflect operational costs, the requirements for methods for the calculation of production costs have significantly increased. The correct calculation of production costs is of great importance to the petroleum refining industry where complex production processes prevait. In this branch of the industry the accuracy of determining costs of finished petroleum products depends above all on the efficiency of the method used for the distribution of production costs. The method used at present for this purpose specifies the division of products into basic and side products. Only the sum total of basic products is calculated while the side-products are assessed either from the cost of the raw materials, or as a fraction of it, or from the costs of the "anaiogicar' production of the process in question. The total production costs of the process are shared among the individual basic products according to their yield (by weight) [1]. In our opinion this method for the estimation of the cost of petroleum products is not satisfactory. There is no justification for the division of the products into basic and side-products. The division of products into these categories is continuously changing. The assessment of the side products accepted presently contains elements of a subjective approach. An overestimation or underestimation of the side production leads to a distortion of the teat cost of the basic production of a complex production program. Also incorrect is the leveling and equal sharing of costs between basic products of different quality, purpose, and value. In principle, we cannot agree that an equal sharing of costs between different products reflects the actual production costs of each petroleum product, as assumed by some authors [1-3]. The existing method of calculating the cost of pretroleum products can be improved by the development of methods for the distribution of individual costs that would allow the accurate calculation of costs for each product of a complex production program. An analysis of the structure of operational costs of the most important refining processes shows that the cost of the crude oil (63-88%) represents the major part of these costs. However, in secondary petroleum-refining processes the relative effect of the crude on the costs is smaller. In these processes the treatment costs have a significant effect on the processing costs. The major part of these costs are costs for energy (20-48%o), fuel (1.0-19.0%), amortization of equipment (12.0-24.0%), maintenance (3.0-15.0%), transport and storage of petroleum products (5.0-18.0%), etc. We have developed a method for the sharing of 0perational costs of a process among its products. *According to this method the crude oil costs of a complex refining program are shared among all products in proportion to their yields. The servicing costs of objects for the transport and storage of petroleum products are determined mainly by product quantity. Therefore, the costs of products are shared proportionally to the weight of the individual products obtained. The expenses for fuel and steam for individual products are distributed proportionally to the heat cost of the products. For this purpose the heat required for the production of each product is calculated according to the technological scheme of the units involved and the quantity and heat content of products (fractions) produced by the unit, successively for all stages of crude oil processing. For example, on the atmospheric and vacuum pipe still the successive heat consumptions in the evaporator, the atmospheric, the steam, and the vacuum columns were * The method is based on design data from refineries. Bashkir Scientific-Research Institute of the Petroleum Industry. Translated from Khimiya i Tekhnologiya Topliv i Masel, No. 11, pp. 27-31, November, 1971. 9 1972 C o n s u l t a n t s Bureau, a division o f P l e n u m P u b l i s h i n g Corporation, 227 West 17th Street, New York, N. Y. 10011. A l l rights reserved. This article cannot be reproduced for any purpose w h a t s o e v e r without permission o f the publisher. A copy o f this article is available from the p u b l i s h e r for $15.00.

836

TABLE 1. Distribution of Costs for Steam, Fuel, Water, and Electrical Energy, Equipment Maintenance, and Wages among the Products of Atmospheric and Vacuum Distillation, and Thermal and Catalytic Cracking, in % (each ~roduction unit taken as 100%) O 0 I-4

Products

o

~o

~ u m.

t~

A t m o s p h e r i c and Vacuum

Distillation

Gas . . . . . . . . . . . . Gasoline

........

Kerosene

......

Diesel fuel

......

Vacuum Bitumen Total

gas-oil . . . . ........ ........

0.7 29.0 10.9 11.5 28.0 19.9 I00.0

3.4 56.2 1, I 4.1 7.5 1' 24.S II 4.5 41 t00.0 10~

1 3

7 5 4

0

1.0 31.7 9.6 11.2 25.8 20.7 100.0

6.3 26.7 16.6 16.4 11.6 22.4 I00.0

T h e r m a l Cracking Gas and reflux . . . . . Gasoline

.........

Cracking residue . . . . Total . . . . . . . .

13.2 55.2 31.6

9.7 38.1 52.2 I00.0

;2 1~ 7 71 1 L00.0 101 0

LO0.O

12.3 58.1 29.6 I00.0

8.1 34.6 48.4 8.9 100.0

12.4 52.4 5( 0 29.~ 41 0 5.7 0 LO0.O 101 0

9.2 40.7 42.2 7.7 LO0.O

15.8 51.8 23.1 9.3 I00.0

9.7 37.2 52.7

Catalytic Cracking Gas . . . . . . . . . . . . Gasoline . . . . . . . . Light gas-off . . . . . . Heavy gas-oil . . . . Total . . . . . . . . calculated.

Thus, a diesel oil fraction is withdrawn from the atmospheric c o l u m n (K-3) at a temperature of 280~

(heat content 156.6 kcal/kg), at a rate of 26,470 kg/h. Therefore, the heat required to isolate this fraction is 4,145.000 kcal/h (26,470 • 156.6). The heat consumption of other :fractions is determined in the same way. The heat lost by vapor-liquid exchange in the columns is added to those fractions (in proportion to their heat content) in whose rectification they occurred. Having thus shared the total heat of the process among all products and having excluded the heat quantity reused in the process, we can now determine the total heat required for the production of each product. The calculated total heat losses in the pipe still of 29,421.000 kcal/h are distributed as follows (in thousand kcal/h and %): basic products: gasoline 8532.8 (29%), kerosene 8195.5 (10.9%), diesel fuel 3402.8 (11.5%), and vacuum gasoil 8241.8 (28%), total 79.4%; side products: bitumen 5851.0 (19.9%), and gas 197.2 (0.7%). The distribution of energy costs is based on the quantity of steam, water, and electrical energy used in the production of each product. For example, for the cooling of gasoline, diesel fuel, and vacuum fractions,4480, 564, and 1890 thousand m s of water are used, respectively, in the cooler-condensers of the pipe still. Taking into account the total amount of water used to cool each product produced by the unit, the following distribution is obtained: for gasoline 56.2%, for kerosene 4.1%, for diesel fuel 7.5%, for vacuum gas-oil 24.8%, and for bitumen 4.5%. On the pipe still electrical energy is used mainly for the transfer of bitumen (46.4% of the total consumption), vacuum gas-oil (16.5%), diesel fuel (14.7%). etc. The cost of equipment maintenance is shared among all products produced with a given equipment. In the case where the equipment produces several products, the maintenance and amortization costs are distributed among the products according to their fraction by weight of the total products obtained with this equipment. 837

TABLE 2. Cost Distribution per Ton of Product for Atmospheric and Vacuum Distillation and for Thermal and Catalytic Cracking Cost items, rubles Products

~, 1~.~

= I~.~ ~ Io_

o o"~'u ~

~I j

I

Atmospheric and Vacuum Distillation Gasotine Kerosene Diesei fuel Vacuum gas-oil Gas Bitumen Thermal Cra,ekingL Gasoline Gas and reflux Cracking residue Catalytic Cracking Gasoline Light gas-oil Gas Heavy gas-oil

10,34 0,1 10,34 0 , t 10,34 10,34 10,34 10,34

0,57

D,43 0,06 0,43 0,17 0,43 0,02 0,43 0,03 0,26 0,01

3,34 O,42 9,10 0,29 0,19 0,10

13,33 1,187. 14,02 1,248 11,2t 0,998 12,79 0,139 11,94 1,062 11,23 1,000

0,62 0,29 0,04

0,94 0,46 0,24

18,30 14,65 13,08

1,000

0,54 0,17 0,36 0,17

1,65 t ,18 0,65 0,58

28,20 20,63 17,54 17,08

1,651 1,208 t ,027 1,000

0,7 0,0 0,4 0,1 0,0

0,90 0,10 0,56 0,23 0,t2

1140

0,88 0,49 0,17

O, ).6 0,23 O, [5 0,07 O, )3 0,t4

1,77 1,00 3,35

0,44

1,40

1,4 0,7 0,2

3,67 4,76 3,67 3,67 3,67

0,33 0,33 0,18 0,15

0,91 0,90 0,49 0,42

O,q O, 28 0, ]8 0, [4

1,70 1,09

3,47 2,55

0,46 0,46

o- 1

1,81 1,18

o76

1.40 0,3,

D,06 3,15 0,03 0,07

),50 ),64 ),08 ),41 9,26 3,09

0 ,' t6 O, 4 0,!)3 0,',!1 0,,~7 O,')l

0 , 4 84

073 074

1,399 1,120

The labor costs for the technical personnel in petroleum processing are not determined by the yield by weight of the products, but by purity requirements, sharpness of fractionation, etc. Therefore, the labor costs are distributed among the products according to the effort required to carry out the technological operations required to produce these products [4]. Data on the labor and material costs for individual products of atmospheric and vacuum distillation, and of thermal and catalytic cracking are given: in Table 1. The cost of chemicals and catalysts is shared directly among the products to be treated. For example, in the case of atmospheric and vacuum distillation, and of thermal and catalytic cracking, the cost of caustic soda and catalyst is charged to gasoline. The plant and general refinery costs are shared between the products of a given process in proportion to the total operational costs (excluding costs of crude oil, chemicals, and catalysts) of the individual products obtained. Addition of all costs shared among the products according to the proposed method gives the refinery cost of a given product of a given technological process. Using this method, the actual production costs of a given refining process are calculated, and from these the coefficients for the distribution of the total operational costs among the individual products are obtained (Table 2). In Table 3 the production costs of atmospheric and vacuum distillation and of thermal and catalytic cracking are presented, as determined by the existing and the proposed methods.* It may be noticed that the production costs of individual products differ from process to process. For example, calculations have shown that the costs of straight-run diesel fuel and vacuum gas-oil are lower by 4-15%o, and of light gas-oil from catalytic cracking by 27% than the cost of gasoline from these units. An analysis of the data in Table 8 shows that the existing method of production cost estimation of complex petroleum refining processes distorts the actual costs of their products. For example, comparison of the cost of basic products, determined by the existing method, with the costs calculated by the proposed method for straightrun distillates,shows that the costs of gasoline and kerosene are higher by 14-26%, and that the costs of residual products and gas are lower by 40.4 and 19.4%, respectively. In the case of thermal cracking the cost of gasoline is lower by 43,5%; in the case of catalytic cracking the cost of light gas-off is higher by 22.8%,of gas higher by 35.0%, and of heavy gas-oil lower by 70.8%.

* Based on data from a Soviet refinery.

838

TABLE 3. Production Costs of Atmospheric and Vacuum Distillation and of Thermal and Catalytic Cracking, as Determined by the Existing and the Proposed Methods. Cost per ton, runes Products

Deviation: +decrease, -increase

existing methods

%

14.95 14.71 15.14 14.91 8.00 10.00

+10.8 + 4.7 +25.9 +14.2 -40.4 -19.4

12,75 10.00 14.73

-43.5 -30.8 + 0.6

30.29 26.72 10.00 27.00

+ 6.9 +22.8 -70.8 +35.0

Atmospheric and Vacuum Distillation Gasoline . . . . . . . . . . . . . . Kerosene . . . . . . . . . . . . . Diesel fuel . . . . . . . . . . . . Vacuum gas-oil . . . . . . . . . . Bitumen . . . . . . . . . . . . . Gas~176176174 Thermal Cracking Gasoline . . . . . . . . . . . . . Cracking residue . . . . . . . . Gas and reflux . . . . . . . . . Catalytic Cracking Gasoline . . . . . . . . . . . . . Light gas-oil . . . . . . . . . . . Heavy gas-oil . . . . . . . . . Gas..~176

Such a production cost estimation in petroleum refining does not allow the establishment of correct prices for petroleum products. For example, according to the existing method the cost of the finished A-66 gasoline is higher by 22% than the actual cost, the cost of A-72 gasoline by 10O]o,and of bitumen lower by 20%, etc. It is our opinion that the proposed method of cost estimation, based on corresponding coefficients for all petroleum products (including the basic products), reflects correctly the actual production costs of each petroleum product, since it is based on the real production costs of each product of a complex production program. Such calculations carried out for a large number of identical production units will lead to coefficients for each process that will allow the proportional distribution of the total production costs. Such coefficients can be based on the actual production costs of units, calculated by the proposed method. For example, if the production costs of residual products (bitumen for a pipe still, cracking residue for thermal cracking, and heavy gas-oil for catalytic cracking) are taken as the reference values equal to unity, the coefficients will have the values shown in Table 2. Such coefficients can be established for each type of processing unit (in some cases even for individual regimes) that are identical for all refineries and are valid for a long time. They would change only with technical progress in the petroleum refining industry. It must be pointed out that our method is somewhat complicated and that it requires a significant effort for the calculation of the coefficients. However, the application of computers, now coming into wide use, can greatly simplify this task and thus improve the existing method for the calculation of production costs in petroleum refining. CONCLUSIONS 1. The existing method for the calculation of production costs of complex processes is inadequate since it is based on the division of products into basic and side products and does not reveal the real costs involved in the production of individual products. The production costs established by this method cannot be used to calculate the price of petroleum products. 2. The method proposed by the authors for the estimation of production costs in petroleum refining allows the accurate calculation of actual costs for each product of a compiex production program. The new method for the estimation of costs will assist in the establishment of prices of petroleum products based on scientific facts. 839

LITERATURE I. 2. 3.

Z.I. Guttsait and B. N. Davydov, Ekonornika, Organizatsiya i Upravlenie v Neftepererabatyvayushchei i Neftekhimicheskoi Promyshlennosti, No. 4 (1967). A. Kh. Khairullin, Neft' iGaz, No. 2 (1966). E.A. Shapiro, Calculation of Operational and Capital Costs of Complex Production Programs in the Petroleum Refining Industry, [in Russian], TsNIIT~neftekhim (1967). A.S. Eigenson and A. M. Zeninskii, Ekonomika, Organizatsiya i Upravlenie v Neftepererabatyvayushchei i Neftekhimicheskoi Promyshlennosti, No. 1 (1967). I

4.

840

CITED