Crude oil-to-chemicals: The future of refining in a changing energy landscape

In an era of declining fuel demand and growing petrochemical needs, the refining industry is undergoing a significant transformation. NexantECA's comprehensive report on Crude Oil-to-Chemicals (COTC) technology reveals how refineries are pivoting from traditional fuel production to higher-value chemical outputs. 

The Evolution of Crude Oil Utilization 

The journey from conventional refineries to COTC complexes reflects changing market dynamics. Early refineries in the 1920s focused almost exclusively on fuel production, with simple atmospheric distillation and thermal cracking. By the 1970s, partially integrated plants emerged, still emphasizing fuels but with some chemical production capabilities, yielding 10-20% chemicals from crude oil. 

Today's integrated COTC plants represent a dramatic shift, capable of producing 40-70 percent chemicals from the same crude oil input. This evolution has been driven by several factors: improved fuel efficiency, transportation electrification, decarbonization initiatives, and sustained demand for petrochemicals like ethylene, propylene, benzene, toluene, and xylenes. 

The COTC Advantage 

Modern COTC complexes integrate multiple specialized process units to maximize chemical yields: 

• Hydrocrackers for distillates and gas oils 

• Residue hydrocrackers or delayed coking units for vacuum residue 

• Solvent deasphalting units 

• Aromatics complexes 

• Steam crackers 

• Fluid catalytic crackers 

• Propane dehydrogenation units 

These configurations can be optimized to emphasize either aromatics or olefins production, depending on market conditions and strategic goals. 

Economic Analysis 

NexantECA's economic assessment compared three configurations across different regions: 

1. Case 1: Conventional refinery maximizing fuel production  

1. Case 2: COTC plant maximizing aromatics production  

1. Case 3: COTC plant maximizing olefins production  

The analysis revealed that China currently offers the highest return on investment driven by low capital costs. Other Asia regions also show higher margins for COTC plants (Cases 2 and 3) compared to conventional refineries, indicating better returns for chemical-focused operations. 

Historical data shows that COTC plants enjoyed significantly higher returns from 2014 to 2021, which drove major investments in facilities like those by Hengli Group and Zhejiang Petrochemical in China. However, the resulting capacity additions created a global supply glut, reducing margins. 

Technological Innovations 

Several cutting-edge technologies are being developed to improve COTC economics: 

1. Thermal Crude-to-Chemicals (TC2C™) by Aramco, Chevron Lummus Global, and Lummus Technology - integrates crude separation, conditioning, and steam cracking to optimize chemical conversion with claimed yields of 75-80%. 

2. Naphtha-to-Ethane/Propane (NEP) process by Honeywell UOP - converts naphtha to ethane and propane for targeted ethylene and propylene production. 

3. Direct catalytic conversion approaches by Dalian Institute of Chemical Physics, CAS, SABIC, Sinopec, and CPCC - using specialized catalysts and reactor designs to convert crude oil directly to chemicals. 

Future Outlook 

Despite current lower returns, the long-term trend toward COTC remains strong as fuel demand continues to decline. Future improvements will likely focus on: 

1. Increasing chemical yields by recycling streams like light fuel oil, LPG, and C9+ aromatics 

2. Reducing capital costs through innovative technologies that eliminate capital-intensive equipment 

3. Developing direct crude-to-chemicals processes with specialized catalysts 

The industry is also exploring more sustainable approaches, including integration with renewable feedstocks and carbon capture technologies. 

As refiners navigate this transition, those who successfully adapt their operations to emphasize chemical production while controlling capital costs will be best positioned to thrive in the evolving energy landscape. The COTC revolution represents not just a response to changing market conditions, but a fundamental reimagining of how we utilize our crude oil resources. 

About Us - FGE NexantECA is the leading advisor to the energy, refining, and chemical industries. Our clientele ranges from major oil and chemical companies, governments, investors, and financial institutions to regulators, development agencies, and law firms.  Using a combination of business and technical expertise, with deep and broad understanding of markets, technologies, and economics, FGE NexantECA provides solutions that our clients have relied upon for over 50 years.