to rusnano board meeting scheduled for july 27, 2010...

© State Corporation “Russian Corporation of Nanotechnologies”, 2010

Executive Summary

to RUSNANO Board Meeting Scheduled for July 27, 2010 on the Issue of the

Roadmap to Nanotechnology Applications in Catalytic Petroleum Refining Processes

To be reviewed at RUSNANO Board Meeting scheduled for July 27, 2010 on the issue of the

Roadmap to Nanotechnology Applications in Catalytic Petroleum Refining Processes.

The Roadmap to Nanotechnology Applications in Catalytic Petroleum Refining Processes

(the "Roadmap") is a summary document describing the multi-layer system of strategic

development of the subject matter within a common timescale and showing parameters

that reflect economic efficiency of leading-edge technologies and products characterized by

a high demand potential and attractive consumer properties. The Roadmap is developed

based on the expert findings as well as the review of Russian and foreign analytic

materials.

The Roadmap describes the structure of demand for petroleum processing catalysts (the

"catalysts") and the changes taking place in the key performance characteristics of the

basic process equipment and installations where such catalysts are applied (depending on

the catalytic process layout) as well as in the key specifications of the most common types

of catalysts applied in such equipment and installations. The Roadmap shows alternative

technologies that can be used to produce the catalysts. It also gives an assessment of the

possibility to introduce in Russia different types of process lines capable to produce

catalysts whose key specifications would meet the competitiveness criteria.

For different catalyst production technologies, the Roadmap reflects the main R&D

directions pursued in Russia as well as the focal points in the import of technologies (types

of process equipment that needs to be procured from abroad). In view of the market pull

and technology push, the Roadmap gives the projection of strategic goals that can be

achieved by Russian catalyst producers in principle by the forecast horizon of 2030.

Subject Overview

Petroleum Processing Catalysts are defined as nano-structured substances that,

through a cycle of intermediate interactions, accelerate chemical reactions in petroleum

refining processes but are not themselves consumed in such reactions.

Catalysts are used in the majority of petroleum refining and petrochemical processes

playing the key role in their technology. Invention and introduction of new and

improvement of existing catalysts is the most promising direction of nanotechnology

developments in petroleum processing and petrochemical industries; this direction is seen

as the greatest contributor to solution of many problems in this sphere.

Nanotechnology Applications in Catalytic Petroleum Refining Processes Roadmap


2

The Roadmap covers the five key petroleum processing technologies whose catalyst

markets are expected to have the highest volumes within the Roadmap forecast horizon:

1. Diesel fuel hydroskimming;

2. Catalytic cracking;

3. Light gasoline cut isomerization;

4. Catalytic reforming;

5. Hydrocracking.

Besides, the Roadmap deals with the four petrochemical processes which are wide-spread

in Russia and have the highest nanotechnology application potential:

1. Associated petroleum gas processing;

2. Isobutane-butylene alkylation;

3. Production of isopropyl benzene;

4. Production of ethyl benzene.

Petroleum Refining Industry Trends and Catalyst Market

In recent years, light petroleum products have been becoming more and more important

part of the world oil refining industry's product range. Production capacities of secondary

catalytic processes are growing rapidly. This trend is expected to persist exercising

significant influence on the industry's development patterns.

Another global trend expressed most prominently in the developed petroleum product

importing countries is the introduction of more stringent environmental norms and

standards. Such norms and standards are designed primarily to reduce polluting emissions

from fuel combustion as well as to improve quality of petroleum products (transition of the

EU countries to Euro-5 fuels with extra-low sulfur content).

Market analyses show that the main contributors to growth in demand for petroleum

products in Europe are distillate diesel fuels and high-quality gasolines which are the most

important merchandise of the petroleum refining industry. Gasoline consumption in the

U.S. and the Asia-Pacific region is also growing noticeably. Growth in demand for jet fuel is

less rapid while the market volume of fuel oil has started to shrink gradually.

According to expert estimations, the world market shares of petroleum processing catalysts

are distributed as follows: hydroskimming catalysts – about 40%; cracking catalysts –

30%; hydrocracking catalysts – 7%; reforming catalysts – 5%; other catalysts – 20%.

Annual catalyst product renewal rates are estimated at 15-20%.

Figure 1 below shows a forecast of the world market of catalyst for the five key oil refining

processes in monetary terms.



3

Figure 1. World Market of Catalysts for the Most Promising

Oil Refining Processes

Diesel Fuel

Hydroskimming

Catalytic cracking

Hydrocracking

Light Gasoline Cut

Isomerization

Catalytic Reforming

$ b

ln

Diesel Fuel

Hydroskimming

Catalytic cracking

Hydrocracking

Light Gasoline Cut

Isomerization

Catalytic Reforming

$ b

ln

Development of the world catalyst market within the Roadmap forecast horizon is expected

to be affected by the following major trends:

Diesel fuel hydroskimming:

Total diesel fuel hydroskimming capacity will grow by 25% by 2030;

Consumption of sulphide diesel fuel hydroskimming catalysts is expected to grow both

in physical and monetary terms;

Catalyst prices will generally remain stable at the current level.

Catalytic cracking:

Total catalytic cracking capacity will remain at the current level up to 2030;

Consumption of cracking catalysts is expected to grow slightly;

The market volume in monetary terms will grow significantly by 2030 due to anticipated

increase in catalyst prices.

Light gasoline cut isomerization:

By 2030, the world isomerization catalyst market is expected to grow by 40-50%;

The most advanced and promising technology in this sphere is the low-temperature

isomerization.



4

Catalytic reforming:

By 2030, total reforming capacity is expected to grow by 20%;

The most advanced technology in this sphere is the moving-bed catalytic reforming;

Annual consumption of catalysts will grow both in physical (capacity expansion) and

monetary (accelerated price growth) terms.

Hydrocracking:

Hydrocracking is one of the most promising technologies: by 2030, hydrocracker

capacity is expected to double in size;

Annual catalyst consumption is also expected to double.

Russian Petroleum Refining industry and Catalyst Market

In recent years, the Russian petroleum refining industry is showing obvious improvements

reflected both in growth of processing volumes and gradual increase in quality of motor

fuels. A number of Russian oil refineries are being upgraded to incorporate new oil

processing facilities with higher conversion ratio some of which have already been

commissioned.

The basis of the Russian petroleum refining industry is formed by 27 large oil refineries

whose total throughput is 260 mta which is 95-98% of all petroleum processed in Russia.

In 2009, primary processing throughput of Russian refineries was about 236 mt.

However, the Russian petroleum refining industry lags significantly behind the same

industries of the developed countries. The main problems faced by the Russian petroleum

refining industry include:

Poor oil conversion performance (small share of secondary oil refining processes);

Relatively low quality of produced petroleum products;

Obsolete production pattern;

High degree of deterioration of production facilities and equipment;

Low energy efficiency / high power consumption.

Because of their poor conversion performance, Russian oil refineries are currently utilized

by 70-75% of their design capacity while today's strong demand and high prices for

petroleum products ensure that utilization of a typical world-class refinery is close to 100%

(e.g., average oil conversion rate in Russia is 66-72%, in Europe – 86-88%, in the U.S. –

89-92%).



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The range of petroleum products exported by the Russian petroleum refining industry is

dominated by low-value commodities including straight-run gasoline, vacuum gasoil, low-

quality (compared to European standards) diesel fuel with relatively high sulfur content,

fuel oil, base oils. The share of high-value petroleum products is very small.

One of the gravest problems currently faced by the Russian petroleum refining industry is

the high degree of deterioration of production facilities and equipment estimated at 80% as

well as the use of obsolete energy-consuming and uneconomical technologies (in six of the

thirteen Russian catalytic crackers, the obsolete bead-catalyst units are used). This results

in high energy costs and low economic efficiency of the Russian petroleum refining

industry. In active Russian refineries, per-unit energy consumption is two-three times

higher than the one in foreign installations.

The serious problems related to uneven distribution of large-scale oil refineries in Russia

contribute to growth of the number of small-scale refineries (as of now, over 150

installations) with throughputs ranging from 10 to 700 kta. These days, such small-scale

refineries produce about 2-5% of all Russian petroleum products. As a rule, small-scale

refineries are involved in low-margin refining of crude oil at a very poor conversion ratio.

Operation of such refineries is typically very harmful for the environment.

Nevertheless, in recent years there has been a general trend to improvement across the

Russian petroleum refining industry manifesting in:

Considerable increase in investments of Russian oil companies in petroleum refining

facilities;

Growth in petroleum refining volumes;

Gradual improvement in quality of produced motor fuels due to cease of production of

leaded gasoline;

Increase in the share of high-octane gasoline and environmentally friendly diesel fuel.

However, these positive trends have virtually nothing to do with Russia's own R&D

achievements. The majority of technologies and equipment used in Russian refineries are

procured from the leading western manufacturers which also supply to the Russian market

up to 55-70% of all petroleum processing catalysts. Annual catalyst market renewal rate in

Russia is about 4%.

Figure 2 below shows a forecast of the Russian market of catalyst for the five key oil

refining processes in monetary terms.



6

Figure 2. Russian Market of Catalysts for the Most Promising

Oil Refining Processes

Diesel Fuel

Hydroskimming

Catalytic

cracking

Hydrocracking

Light Gasoline Cut

Isomerization

Catalytic

Reforming

$ m

ln

Diesel Fuel

Hydroskimming

Catalytic

cracking

Hydrocracking

Light Gasoline Cut

Isomerization

Catalytic

Reforming

$ m

ln

Development of the Russian catalyst market within the Roadmap forecast horizon is

expected to be affected by the following major trends:

Diesel fuel hydroskimming:

Total hydroskimmer capacity is expected to grow steadily;

Increase in production capacity will be due mainly to wider application of alumina-

supported cobalt-molybdenum catalyst;

By 2030, experts predict introduction of the crucially new catalyst production

technology based on oxidation reactions;

By 2030, development of a new type of catalyst carrier (e.g., nano-structured titanium

dioxide) is anticipated.

Catalytic cracking:

According to experts, total catalytic cracking capacity will grow steadily;

By 2030, all bead-catalyst crackers will be decommissioned;

Increase in cracking capacity will take place mainly due to wider application of

microspheric aluminosilicate zeolite-containing catalysts with average particle sizes of

10 to 150 mkm.



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Light gasoline cut isomerization:

By 2030, the number of isomerization plants in Russia is expected to double and reach

30;

Catalyst consumption is expected to increase significantly both in physical and

monetary terms;

Catalyst prices are predicted to grow due to elevation of prices for precious metals.

Catalytic reforming:

Total reforming capacity will grow significantly by 2030;

In the near future, the industry will see a massive replacement of existing obsolete

equipment to new modern installations;

Capacity growth will be in large part related to the growth in the number of oxide

catalyst installation;

Catalyst prices are predicted to grow due to elevation of prices for precious metals.

Hydrocracking:

In Russia, this process is not yet widely applied;

By 2030, the number of hydrocrackers in Russia is expected to reach seven;

Catalyst prices up to 2030 are not predicted to change substantially;

Strategic Goals of Russian Producers

The Roadmap covers the five key petroleum processing technologies whose catalyst

markets are expected to have the highest volumes within the Roadmap forecast horizon.

Table 1 below contains strategic goals recommended for Russian catalyst producers that can

be achieved within the Roadmap forecast horizon.



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Table 1

Strategic Goals of Russian Catalyst Producers

Die

sel

fuel

hyd

roskim

min

g

Cata

lyti

c c

rackin

g

Isom

eri

zati

on

Cata

lyti

c

refo

rm

ing

Hyd

ro

crackin

g

20

10

20

15

20

20

20

30

20

10

20

15

20

20

20

30

20

10

20

15

20

20

20

30

20

10

20

15

20

20

20

30

20

10

20

15

20

20

20

30

Marketing

80-100% share of Russian market

60-80% share of Russian market 65 80 80 65 80 65

40-60% share of Russian market 40 50 60 50 50 50 50

20-40% share of Russian market 30 30 40

Up to 20% of Russian market 20 20 – –

Quality

Leading edge + + + + + + + + + + + + + +

Slightly lagging behind the leaders + + +

Lagging behind the leaders + – –

Technology

Introduction of Russia's own full-

cycle catalyst production

technology

+ + + + + + + + + + + + + + + +

Application of purchased foreign

technologies + + + +

Main Directions of R&D Activities and Technology Import

According to study findings, in order to overcome the current technological backwardness

and make Russian catalysts a competitive commodity on the domestic market a package of

measures needs to be implemented:

Drafting and accomplishment of Russia's own R&D plans in the key research

directions;

Arrangement of technology import (procurement of process equipment) required for

comprehensive modernization of production facilities.

The key directions of Russia's own R&D activities and groups of key process equipment

recommended to be procured from abroad are listed in Table 2 below.



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Table 2

Own R&D and Imported Technologies Required to Promote Catalyst

Production in Russia

Diesel fuel Hydroskimming

Own R&D Technology Import

Development of sulphidation regimes Complete process lines

Optimization of drying conditions

Development of bimetallic compound

synthesis methods

Development of activation technologies

and equipment

Development of methods to control

carriers' honeycomb structure

Development of active component

synthesis technologies

Development of oxidative

desulfurization technologies

Catalytic Cracking


Optimization of baking conditions Pulp filtration (centrifugal separation)

equipment

Development of compound

homogenization technologies

Baking equipment (including drum

furnaces) and filters

Development of technologies for baking

in controlled gas environments

Spray drying equipment

Development of catalysts resistant to

metal poisoning (vanadium, nickel) to

process fuel oil

Zeolite synthesis equipment

Synthesis of various types of zeolite,

including those with wide mesopores,

for catalytic cracking of heavy crude oil

and for the "mili-second" process

Thermocouple stabilization equipment

Blending equipment

Matrix modification



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Light Gasoline Cut Isomerization


Development of methods for

simultaneous application of precious

metals and sulfate

Equipment for wet formation of bead

catalyst in oil column

Improvements in wet formation of bead

catalyst in oil column

Scroll centrifuges for continuous filtration

and washing of wet synthesized products

Development of technologies for

catalyst granulation without binding

agents

Belt-type baking furnaces for continuous

baking at temperatures up to 600 С

Improvement of continuous zeolite

synthesis technology

Agitating autoclaves with a heating range

of up to 200 С for zeolite synthesis

Catalytic Reforming


Development of catalysts with

improved mechanical strength and high

catalytic activity for moving-bed

installations

Carrier production equipment

Development of catalysts ensuring high

octane numbers at smooth processing

regimes

Drying equipment

Development of hydrogen yielding

catalysts

Equipment for reduction in hydrogen

stream

Hydrocracking


Development of technologies to form

catalysts in solutions of bimetallic

compounds with particle sizes of about

1 nm

Equipment for catalyst impregnation

(fixation of bimetallic compounds on

carrier surface)

Main Conclusions



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By results of the studies performed, the following main conclusions can be drawn:

With respect to catalyst production technologies:

On the horizon of up to 2030, no radical changes in the catalyst production

technologies portfolio are expected;

Technology improvements and developments will be localized mainly in separate

process stages or technical methods;

Russian catalyst production technologies generally lag behind the world leaders

(obsolete equipment, low capacity utilization);

The major bottleneck in the chain of development and application of Russian

catalysts is the transition from R&D stage to industrial implementation. Russian R&D

institutes are substantially short of pilot production facilities which makes them

unable to prove scalability of their solutions. This problem could be solved through

introduction of large engineering centers.

With respect to oil refineries' demand for catalysts:

Petroleum conversion ratio needs to be increased through improvement and wider

application of cracking processes. This would allow releasing more crude oil for

export abroad;

Introduction of more stringent regulatory requirements to motor fuels, transition to

Euro-4 and 5 standards highlight the need for production of cleaner fuel. To produce

such cleaner fuel, sulfur content will be reduced mainly by means of hydroforming

processes.

With respect to Russian catalyst production development prospects:

Russia has a number of promising newly developed technologies whose level is not

lower and sometimes even higher than those of the world leaders;

These technologies can be recommended for industrial implementation including with

RUSNANO support;

The most efficient form of such support would be participation in the establishment

of special-purpose engineering companies intended to design package solutions for

oil refineries on the basis of R&D findings.

Roadmap Visualization Description

Presented below, is the Roadmap structure with its main elements outlined.



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Figure 3. Roadmap Structure

The Roadmap visualization includes four major sections (see Figure 3):

A Scientific and Technical Development

B Catalyst Production Technologies

C Processes and Catalysts (Compounds)

D Catalyst Markets

The Roadmap visualization illustrates the correlations between the key technologies which

the catalyst production industry relies on, the existing and future catalysts and their

characteristics, the behavior of Russian and world catalyst markets.

A short description of the Roadmap sections is given below.

Section A. Scientific and Technical Development

The Section includes:

1. Process equipment and systems needed to be procured from abroad to promote catalyst

production in Russia;

2. The most promising R&D directions recommended to be pursued in Russia within the

Roadmap horizon (up to 2030) to revive development and production of Russian

catalysts.

Section B. Catalyst Production Technologies

This sections describes the main catalyst production technologies.

For all technologies described in the Roadmap this Section gives an assessment of current

values of their key technical and economic characteristics as well as a forecast of their

changes within the Roadmap horizon.

The Section also gives a description of existing or advanced catalyst production process

lines for each of the analyzed technologies.

Section C. Processes and Catalysts (Compounds)



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This Section deals with the main types of catalytic processing equipment and catalysts used

in such equipment. To be included in this Section, a "process-catalyst" system must have a

significant portion of realized nanotechnology applications.

Section D. Catalyst Markets

This Section gives an assessment and forecast of the basic behavioral parameters of the

catalyst market as of today and within the Roadmap horizon.

It also reviews the topmost strategic goals of Russian catalyst producers that can be

achieved within the specified timeframe.

to rusnano board meeting scheduled for july 27, 2010...

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