EPA-600/2-76-161a
June 1976
Environmental Protection Technology Series
           IMPACT OF SOX  EMISSIONS  CONTROL  ON
                      PETROLEUM REFINING  INDUSTRY
                                                 Volume I
           Study  Results and  Planning  Assumptions
                                 Industrial Environmental Research Laboratory
                                      Office of Research and Development
                                      U.S. Environmental Protection Agency
                                Research Triangle Park, North Carolina 27711

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                RESEARCH REPORTING SERIES

 Research reports of the Office of Research and Development, U.S. Environmental
 Protection Agency,  have  oeen grouped  into five series. These five  broad
 categories were established to facilitate further development and application of
 environmental technology. Elimination of traditional grouping was consciously
 planned to foster technology transfer and a maximum interface in related fields.
 The five series are:

     1.    Environmental Health Effects Research
     2.    Environmental Protection Technology
     3.    Ecological Research
     4.    Environmental Monitoring
     5.    Socioeconornic Environmental Studies

 This report has  been  assigned  to the ENVIRONMENTAL  PROTECTION
 TECHNOLOGY series. This series describes research performed to develop and
 demonstrate instrumentation, equipment, and methodology to repair or prevent
 environmental degradation from point and non-point sources of pollution. This
 work provides the new  or improved technology required for the control and
 treatment of pollution sources to meet environmental quality standards.
                     EPA REVIEW NOTICE

This report has been reviewed by the U.S. Environmental
Protection Agency, and approved for publication.  Approval
does not signify that the contents necessarily reflect the
views and policy of the Agency,  nor does mention of trade
names or  commercial products  constitute endorsement or
recommendation for use.
This document is available to the public through the National Technical Informa-
tion Service. Springfield. Virginia 22161.

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                                             EPA-600/2-76-161a

                                             June 1976
     IMPACT  OF  SOx EMISSIONS  CONTROL

     ON  PETROLEUM REFINING INDUSTRY

VOLUME I: STUDY RESULTS AND PLANNING ASSUMPTIONS
                           by

            James R. Kittrell and Nigel Godley

                  Arthur D.  Little, Inc.
                     20 Acorn Park
             Cambridge, Massachusetts  02140
              Contract No.  68-02-1332, Task 1
                  ROAPNo. 21ADC-030
               Program Element No. 1AB013
             EPA Task Officer: Max Samfield

        Industrial Environmental Research Laboratory
          Office of Energy,  Minerals, and Industry
            Research Triangle Park, NC  27711


                      Prepared for

      U.S. ENVIRONMENTAL PROTECTION AGENCY
            Office of Research and Development
                  Washington, DC 20460

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                            TABLE OF CONTENTS



                                 Volume I

                                                                      Page



I.   EXECUTIVE SUMMARY 	  1



    A.   Introduction 	  1



    B.   Scope and Approach 	  2



    C.   Conclusions 	  5



         1.    Calibrat ion Summary	  5



         2.    Qualitative Study Results 	  6



         3.    Economic Penalties 	  10



         A.    Crude Oil and Energy Penalties 	  13



         5.    Sensitivity Studies 	  13



         6.    Other Major Implications 	  15
                >                                                /       i


     D.  Recommendations for Further Action 	  16



II.  STUDY BASIS 	  17



     A.   Approach 	  17



     B.   Case Definitions 	  20



     C.   Planning Assumptions 	  25



          1.    Crude Slate Proj ections 	  25



          2.    U.S.  Supply/Demand Projections 	  28



               a.    Uniform Product Growth at 2% Per Annum	  29



               b.    Non-Uniform Petroleum Product Growth Rates 	  30



               c.    Gasoline Grade Distribution 	  32



          3.    Key Product Specifications	  32



               a.    Motor Gasoline Specifications 	  34



               b.    Sulfur Content of Residual Fuel Oils 	  37
                                     iii

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                     TABLE  OF CONTENTS  -  Volume  I  (cont.)
                                                                      Page

           4.    Processing  and Blending Routes  	   41

           5.    Calibration of Cluster  Models  	   47

           6.    Existing and Grassroots Refineries  	   50

           7.    Economic Basis for  Study  	   53

           8.    Scale Up to National  Capacity  	   59

 III.  STUDY  RESULTS  	   63

      A.   Background Discussion  	   63

      B.   Study Results 	   66

          1.    1985  Results 	   66

          2.    1977  Results 	   72

      C.   SUMMARY OF ECONOMIC PENALTIES  	   74

      D.   SUMMARY OF CRUDE OIL AND ENERGY PENALTIES  	   78

IV.   SENSITIVITY STUDY  RESULTS 	   80

     A.   Imported Crude Oil  for Grassroots Capacity 	   80

     B.   Effect of  Target Residual  Fuel Oil  Sulfur  Level 	   82

     C.   Use of Stack  Gas Scrubbing	   84

V.   DISCUSSION  	   85

VI.  REFERENCES 	   87
                                     iv

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                              LIST OF  TABLES

                                  Volume  I
                                                                     Page

TABLE 1.  Reduction of  SO  Emission Lev?! s, 1985  	   9
                         x

TABLE 2.  Penalties for the Reduction  of SO  Emissions by Jซ85  	   12
                                           x

TABLE 3.  Effect of Imported Crude Sulfur Content on 1985
          Economic Penalties 	   14

TABLE 4.  Parametric  Studies 	   22

TABLE 5.  U.S.  Refinery Crude Run 	   27

TABLE 6.  Gasoline Grade Requirements  by Percent  	   33

TABLE 7.  Motor Gasoline Survey Data 	   35

TABLE 8.  Motor Gasoline Survey,  Winter  1974-75 Average Data for
          Unleaded Gasoline in Each District 	   36

TABLE 9.  Availability  of Residual Fuel  Oil by Sulfur Level, 1973  ..   40

TABLE 10. Grassroots  Refinery Fuel Oil Sulfur Projection  - 1985
          Scenario A  -  East of Rockies Only 	   42

TABLE 11. FCC Unit Sulfur Distribution Large Midwest Cluster,
          65% Conversion 	   44

TABLE 12. Illustrative  Blending Octane Number Comparison :	1.. .   46

TABLE 13. Refineries  Simulated by Cluster Models  	   48

TABLE 14. Calibration Results for Large  Midwest Cluster 	   51

TABLE 15. Onsite Process Unit Costs 	   54

TABLE 16. Offsite and Other Associated Costs of Refineries Used in
          Estimating Cost of Grass Roots Refineries 	   56

TABLE 17. Grass Roots Refinery Capital Investment 	   58

TABLE 18. Model Scale Up Comparison, 1973 	   61

TABLE 19. Maximum Allowable Sulfur Levels of Fuels Burned in
          Refineries  	   65

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                      LIST OF TABLES - Volume I - (cont.)
                                                                    Page

TABLE 20.  SO  Emission Levels, Total U.S. Basis 1985 	  67
             x
TABLE 21.  Percentage Distribution of Sulfur - Large Midwest, 1985.  68

TABLE 22.  Sulfur Recovery, SO  Emissions, and Sulfur Content of
           Gasoline, Salable Fuel Oil, and Refinery Fuel, 1985 	  70

TABLE 23.  Sulfur Recovery, SO  Emissions, and Sulfur Content of
           Gasoline, Salable Fuel Oil and Refinery Fuel, 1977 	  73

TABLE 24.  Capital Requirements to Reduce Refinery SO
           Emission Levels 	  75

TABLE 25.  Economic Penalties for Reducing Refinery SO  Emissions  .  76
                                                      X
TABLE 26.  Breakdown of Economic Penalty to Reduce Refinery SO
           Emissions	  77

TABLE 27.  Energy Penalties for Reducing Refinery SO  Emissions ...  79
                                                    x
TABLE 28.  Effect of Changing Imported Crude Oil Type Processed
           in Grassroots Capacity on the 1985 Economic Penalty for
           Reducing Refinery SO  Emissions 	  81
                               x
TABLE 29.  Effect of Lower Target Sulfur Level of Production
           of U.S.  Residual Fuel Oil on the 1985 Economic Penalty
           for Reduction of SO  Emissions 	  83
                              x

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                              LIST OF FIGURES

                                  Volume I                           Page


FIGURE 1.  Agreement of Model Prediction with 1973 B.O.M.
           Total Refinery Raw Material Intake Data 	  7

FIGURE 2.  Control of SO  Emissions by Source, Large Midwest
           Cluster, 1985X 	  11

FIGURE 3.  Historic Trend of Heavy Fuel Oil Sulfur Content as
           Produced and Marketed in U. S	  39
                                     vli

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                                  Volume  II


                                 APPENDIX A

                                CRUDE  SLATES
                                                                     Page


 A.    METHODOLOGY	   A-l

 B.    MODEL CRUDE  SLATES	,	   A~2

 C.    CRUDE MIX FOR TOTAL  U.S.  	   A"10



                                 APPENDIX B

                       U.S.  SUPPLY/DEMAND PROJECTIONS



 A.    DEMAND ASSUMPTIONS FOR MODEL RUNS	   B-l

 B.    DETAILED U.S.  PRODUCT  DEMAND FORECAST	   B-7

      1.    Methodology  	   B-7

      2.    Product Forecast  	   B-12



                                APPENDIX  C

                          PRODUCT SPECIFICATIONS



                                APPENDIX  D

              BASE LEVEL OF  CLUSTER REFINERY  FUEL  SULFUR CONTENT



A.   METHODOLOGY  OF CALCULATIONS 	  D-2

     1.    Fuel  Oil  Sulfur Content by  State   	  D-2

     2.    Combustion Unit Size	  D-2

B.   RESULTS	  D-3

C.   CLUSTER MODEL  REFINERY FUEL SPECIFICATION 	  D-6
                                     viii

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                   TABLE OF CONTENTS - Volume II (cont.)


                                APPENDIX E

               CAPITAL INVESTMENT FOR PROCESS UNIT SEVERITY

         UPGRADING AND UTILIZATION OF CAPACITY ALREADY CONSTRUCTED
                                                                     Page


A.   CATALYTIC REFORMING	  E-2

B.   HYDROCRACKING	  E-8

C.   ALKYLATION	  E-16

D.   ISOMERIZATION	  E_!9



                                APPENDIX F

                     DEVELOPMENT OF CLUSTER MODELS


 A.  SELECTION OF CLUSTER MODELS	  F-2

 B.  COMPARISON OF CLUSTER MODEL TO PAD DISTRICT	  F-5


                                APPENDIX G

                     SCALE UP OF CLUSTER RESULTS -

        DERIVATION OF PRODUCT DEMANDS FOR GRASS ROOTS REFINERIES


 A.  INTRODUCTION 	  G-l

 B.  1973 CALIBRATION SCALE UP 	  G-l

 C.  DERIVATION OF MODEL FIXED INPUTS AND OUTPUTS FOR FUTURE YEARS .  G-6

 D.  SCALE UP OF RESULTS FOR FUTURE YEARS 	  G-10

     1.   1977 Scale Up	  G-10

     2.   1985 Scale Up	  G-12

     3.   1980 Scale Up 	  G-15

 E.  SCALE UP OF CAPITAL INVESTMENTS	  G-17
                                      IX

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                    TABLE OF CONTENTS - Volume II (cont.)


                                 APPENDIX H

                          TECHNICAL DOCUMENTATION
                                                                      Page

 A.   CRUDE OIL PROPERTIES 	    H-l

 B.   PROCESS DATA 	,	    H-2

 C.   GASOLINE BLENDING QUALITIES 	."	    H-5

 D.   SULFUR DISTRIBUTION 	    H-5

 E.   OPERATING COSTS 	    H-6

 F.   CAPITAL INVESTMENTS 	    H-6



                                 APPENDIX I

                             MODEL CALIBRATION


 A.   BASIC DATA FOR CALIBRATION 	    1-1

      1.    Refinery Input/Output	    1-1

      2.    Processing Configurations 	    1-10

      3.    Product  Data  	    1-18

      4.    Calibration Economic  Data 	    1-21

 B.    CALIBRATION RESULTS FOR CLUSTER MODELS  	    1-22


                                 APPENDIX J

                              STUDY RESULTS



A.   MASS AND SULFUR  BALANCE	    j-1

     1.   Crude-Specific Streams 	    J-2

     2.   Cluster  Specific Streams  	    J-3

     3.   Miscellaneous  Streams 	    J-4
                                      X

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                     TABLE OF CONTENTS - Volume II (cont.)







                                  APPENDIX K




                     CONVERSION FACTORS AND NOMENCLATURE







                                  APPENDIX L




                   ALTERNATE FOR REFINERY SO  CONTROL STUDY
                        '"'-""-"  L      " IL __--r- -I   - -  Tฃ              —



                     FLUE GAS DESULFURIZATION TECHNOLOGY

                                                                      Page




A.   BACKGROUNP 	  L-l




     1.   Commercial and Near Commercial Technologies 	  L-l




     2.   Initial Process Selection  	  L-3




B.   DETAILED EVALUATION OF SELECTION PROCESSES  	  L-5




     1.   Basis 	  L-5




          a.   Technical Assumptions  	  L-5




          b.   Economic Assumptions  	  L-9




     2.   Chiyoda		  L~12




          a.   Process Description  	  L-12




          b.   Process Reliability  	  L-15




          c.   Application to Refinery  SO  Control  	  L-16
                                         X



          d.   Capital and Operating Requirements  	  L-17




     3.   Dual Alkali  and Wet Lime  Scrubbing	  L-23




          a.   Process Description  	  L-23




          b.   Process Reliability  	  L~26




          c.   Application to Refinery  SO  Control  	  L-27
                                         X



          d.   Capital and Operating Requirements  	  L-28





          e.   Wet Lime  Scrubbing 	   L-33
                                        XI

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               TABLE OF CONTENTS  -  Volume^I  (cont. )




                        APPENDIX  L  (cont.)

                                                                  Page



           (1)    Process Description  	   L-33



           (2)    Process Reliability	   L-34


           (3)    Applicability  to Refinery  SO  Control 	   L-36
                                             J\


 4.    Magnesia  Scrubbing 	   L-38


      a.    Process Description  	   L-38


           (1)   SO  Absorption  	   L-40


           (2)   Slurry Processing 	   L-42


           (3)   Dewatering	   L-45


           (4)   Drying 	(	   L-46



           (5)   Calcining 	   L-46


           (6)   Slurry Makeup  	   L-48



           (7)   Sulfuric Acid Production 	   L-48


      b.    Process Reliability  	   L-50


      c.    Application to Refinery  SO  Control 	   L-54
                                     X

      d.    Capital and Operating  Requirements 	   L-57


5.    Shell/OOP  	   L-62



      a.    Process Description  	   L-62


      b.    Process Reliability  	   L-68



      c.    Application to Refinery  SO  Control 	   L-71
                                     X


      d.    Capital and Operating  Requirements 	   L-74



6.   Wellman-Lord 	   L-80



     a.   Process Description  	   L-80


           (1)   Gas  Pretreatment 	   L-81
                                   xii

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                   TABLE OF CONTENTS - Volume II (cont,)




                            APPENDIX L (cont.)
                                                                      Page
               (2)   SO  Absorption 	  L-84



               (3)   Absorbent Regeneration 	  L-86



               (4)   System Purge & Makeup 	  L-88



          b.   Process Reliability 	  L-91



          c.   Applicability to Refinery SO  Control 	  L-94
                                           X


          d.   Capital and Operating Requirements  	  L-96



               (1)   Scrubber System	  L-96



               (2)   Regeneration System	  L-99



C.   OFF-LINE COMPARATIVE ECONOMIC ANALYSIS 	  L-101



D.   CONTROL OF SULFUR PLANT EMISSIONS 	  L-110



     1.   Alternatives	  L-110



     2.   Economics 	  L-113



     3.   Claus Tail-Gas-Cleanup Processes 	  L-114



E.   INTEGRATION OF SO  REMOVAL PROCESSES 	  L-116



     1.   Davy Powergas Process 	  L-116



     2.   Process Requirements 	  L-118
                                      xiii

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                                  VOLUME II

                               LIST OF TABLES


                                 APPENDIX A

 TABLE A-l.    Bureau of Mines Receipts of Crude by Origin 1973	  A~3

 TABLE A-2.    ADL Model Crude Slates and Sulfur Contents
              for 1973	  A~4

 TABLE A-3.    Model Crude Slates - Small Midcontinent  	  A-5

 TABLE A-4.    Model Crude Slates - Large Midwest	  A-7

 TABLE A-5.    Model Crude Slates - Texas Gulf	  A-8

 TABLE A-6.    Model Crude Slates - East Coast	  A-9

 TABLE A-7.    Model Crude Slates - West Coast	  A-ll

 TABLE ..A-8.    Model Crude Slates - Louisiana Gulf	  A-12

 TABLE A-9.    Scale Up of Model Crude Slates,  Scenario A	  A-14

 TABLE A-10.  Total  Crude  Run  to Grass  Roots Refineries  	  A-15

 TABLE A-ll.  Distribution of  Sweet  and Sour Crude Run 	  A-16


                                APPENDIX B

 TABLE B-l.   Projections  of Major  Product Demand in Total U.S.
             Assumed  in Making  Model Runs	  g_3

 TABLE B-2.   A Comparison of  Projected "Simulated" Demand
             for Major Products with Results  of Detailed Forecast ....  B-5

TABLE B-3.   A Comparison of  Projected Total  Petroleum Product
             Demand in "Simulated"  Demand Case With Detailed
             Forecast	  g_6

TABLE B-4.   Projection of U.S.  Primary Energy Supplies
             with Oil as  the  Balancing Fuel	  3-9
TABLE B-5.
Forecast of U.S. Product Demand  	  B-ll
                                     xiv

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                                APPENDIX C
                                                                        Page
TABLE C-l.   Product Specifications, Gasoline 	  C-2

TABLE C-2.   Other Product Specifications 	  C-A


                                APPENDIX D

TABLE D-l.   Refinery Fuel Sulfur Regulations by State 	  D-A

TABLE D-2.   Refinery Fuel Sulfur Regulations by PAD	  D-5

TABLE D-3.   Refinery Fuel Sulfur Regulations Applicable to
             Individual Refineries in Cluster Models 	  D-7

TABLE D-4.   Base Level of Cluster Refinery Fuel
             Sulfur Content Used in Model Runs	  D-9


                               APPENDIX E

TABLE E-l.   Catalytic Reforming Capacity Availability 	  E-4

TABLE E-2.   Catalytic Reformer Investment for Capacity
             Utilization  and  Severity Upgrading 	  E-6

TABLE E-3.   Costs of Additional Reformer Capacity	  E-7

TABLE E-A.   Cost of Severity Upgrading	  E-9

TABLE E-5.   Hydrocracking Capacity Availability 	  E-ll

TABLE E-6.   Hydrocracking Investment for Capacity Utilization,
             New Capacity, and Severity Flexibility 	  E-12

TABLE E-7.   Costs of Additional Hydrocracking Capacity	  E-13

TABLE E-8.   Cost of Hydrocracker Severity Flexibility 	  E-15

TABLE E-9.   Alkylation and Isomerization Capacity Availability 	  E-17

TABLE E-10.  Utilization  of Existing Alkylation Capacity	  E-18

TABLE E-ll.  Isomerization Investment for Capacity Utilization
             and Once Through Upgrading 	  E-20

TABLE E-12.  Costs of Additional Isomerization Capacity  	  E-21

TABLE E-13.  Cost of Once Through Isomerization Upgrading  	  E-23
                                    XV

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                                 APPENDIX F
                                                                        Page
 TABLE F-l.    Texas Gulf Cluster  Processing Configuration 	  F-6

 TABLE F-2.    Louisiana Gulf Cluster  Processing Configuration	  F-7

 TABLE F-3.    Large Midwest Cluster Process Configuration	  F~8

 TABLE F-4.    Small Midcontinent  Cluster  Processing Configuration	  F~9

 TABLE F-5.    East Coast Cluster  Processing Configuration	  F-10

 TABLE F-6.    West Coast Cluster  Processing Configuration	  F-11

 TABLE F-7.    Summary of Major  Refinery Processing  Units  	  F-12

 TABLE F-8.    Comparison of Product Output  of  East  Coast
              Cluster to PAD District 1,  1973	  F~14

 TABLE F-9.    Comparison of Product Output  of  Midcontinent Clusters
              to  PAD District II,  1973	  F-15

 TABLE F-10.   Comparison of Product Output  of  Gulf  Coast  Clusters
              to  PAD District III, 1973	'.	  F-16

 TABLE F-ll.   Comparison of Product Output  of  West  Coast  Cluster
              to  PAD District V,  1973	  F-17

 TABLE F-12.   Comparison of Crude  Input of  East Coast  Cluster
              to  PAD District 1,  1973	  F-18

 TABLE F-13.   Comparison of Crude  Input to  Midcontinent Cluster
              to  PAD District II,  1973	  F-19

 TABLE  F-14.   Comparison of Crude  Input of  Gulf Coast  Clusters
              to  PAD District III, 1973 	  F-20

TABLE  F-15.   Comparison of Crude  Input to  West Coast  Cluster
              PAD District  V, 1973	  F-21
                                     xvi

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                                APPENDIX G

TABLE G-l.  ADL Model Input/Outturn Data for  Calibration -  1973	  G-2

TABLE G-2. 'Comparison of  1973 B.O.M. Data and Scale Up of  1973
            Calibration Input/Outturn 	  G-3

TABLE G-3.  L.P. Model Input/Outturns 1977 	  G-7

TABLE G-4.  L.P. Model Input/Out turns 1980 	  G-8

TABLE G-5.  L.P. Model Input/Outturns -  1985  	  G-9

TABLE G-6.  Scale Up Input/Outturns 1977 	  G-n

TABLE G-7.  Atypical Refinery Intake/Outturn  Summary 	  G-13

TABLE G-8.  Scale Up Input/Output - 1985 	  G-14

TABLE G-9.  Scale Up Input/Output - 1980 	  G-16



                                APPENDIX H

TABLE H-l.  Crude and Natural Gasoline Yields; Crude Properties  	  H-8

TABLE H-2.  Yield Data-Reforming  of SR Naphtha 	  H-9

TABLE H-3.,  Yield Data-Reforming  of Conversion Naphtha 	  H-12

TABLE H-4.  Yield Data-Catalytic  Cracking 	  H-13

TABLE H-5.  Yield Data-Hydrocracking  	  H-14

TABLE H-6.  Yield Data-Coking	  H-15

TABLE H-7.  Yield Data-Visbreaking 	  H-16

TABLE H-8.  Yield Data-Desulfurization 	  H-17

TABLE H-9.  Yield Data-Miscellaneous Process  Units	  H-18

TABLE H-10. Hydrogen Consumption  Data -  Desulfurization of  Crude-
            Specific Streams  	  H-19

TABLE H-ll. Hydrogen Consumption  Data -  Hydrocracking and
            Desulfurization of Model-Specific Streams 	  H-20

TABLE H-12. Sulfur  Removal 	  H-21

TABLE H-13. Stream  Qualities  - Domestic  Crudes  	  H-22
                                    xvii

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                             APPENDIX H  -   (cent.)


 TABLE H-14.   Stream Qualities  -  Foreign Crudes  and Natural
              Gasoline 	   H-25
                                            /
 TABLE H-15.   Stream Qualities  -  Miscellaneous Streams  	   H-28

 TABLE H-16.   Stream Qualities  -  Variable  Sulfur Streams  	   H-30

 TABLE H-17.   Sulfur Distribution -  Coker  and Visbreaker  	   H-31

 TABLE H-18.   Sulfur Distribution -  Catalytic Cracking  	   H-32

 TABLE H-19.   Alternate Yield Data - High  and Low Severity Reforming
              of SR Naphtha	   H-33

 TABLE H-20.   Alternate Yield Data - High  and Low Pressure Reforming
              of Conversion  Naphtha  	   H-36

 TABLE H-21.   Operating Cost Consumptions  - Reforming 	   H-37

 TABLE H-22.   Operating Cost Consumptions  - Catalytic Cracking 	   H-38

 TABLE H-23.   Operating Cost Consumptions  - Hydrocracking 	   H-39

 TABLE H-24.   Operating Cost Consumptions  - Desulfurization 	   H-40

 TABLE H-25.   Operating Cost Consumptions  - Miscellaneous Process
              Units 	   H-41

 TABLE H-26.   Operating Costs Coefficients 	   H-42

 TABLE H-27.   Process Unit Capital Investment Estimates 	   H-43

 TABLE H-28.   Offsite and Other Associated Costs of Refineries Used
              in Estimating  Cost  of  Grassroots Refineries 	   H-44


                                 APPENDIX  I

TABLE  1-1.    Bureau of Mines Refinery Input/Output Data  for
              Cluster Models: 1973 	   1-2

TABLE  1-2.    Bureau of Mines Receipts of  Crude  by Origin 1973 	   1-3

TABLE  1-3.    Bureau of Mines Refinery Fuel Consumption for
              Cluster Models 1973 	   1-4
                                  xvriii

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                             APPENDIX * - (cent.)

                                                                       Page
TABLE 1-4.   Bureau  of  Mines Refinery Fuel  Consumption  for cluster
             Models  1973  	  I_5

TABLE 1-5.   ADL Model  Input/Outturn Data for Calibration	  1-7

TABLE 1-6.   Conversion of  BOM Input/Outturn Data  to ADL Model
             Format  	  1-8

TABLE 1-7.   ADL Model  Crude Slates  and Sulfur Contents for
             Refinery Clusters 	  1-11

TABLE 1-8.   Texas Gulf Cluster Processing  Configuration	  1-12

TABLE 1-9.   Louisiana  Gulf Cluster  Processing Configuration 	  1-13

TABLE 1-10.  Large Midwest  Cluster Process  Configuration 	  1-14

TABLE 1-11.  Small Midcontinent Cluster Processing Configuration 	  1-15

TABLE 1-12.  West Coast Cluster Model Processing Configuration 	  1-16

TABLE 1-13.  East Coast Cluster Processing  Configuration 	  1-17

TABLE 1-14.  Cluster Model  Gasoline  Production and Properties
             1973	  1-19

TABLE 1-15.  Key Product  Specifications 	  1-20

TABLE 1-16.  Cluster Model  Processing Data  - 1973  	  1-23

TABLE 1-17.  Louisiana  Gulf Cluster  Model 	  1-32

TABLE 1-18.  Texas Gulf Cluster Model 	  1-33

TABLE 1-19.  Large Midwest  Cluster Model 	  1-34

TABLE 1-20.  Small Midcontinent Cluster Model 	  1-35

TABLE 1-21.  West Coast Cluster Model 	  1-36

TABLE 1-22.  East Coast Cluster Model 	  1-37

TABLE 1-23.  Louisiana  Gulf Calibration 	<	  1-39

TABLE 1-24.  Texas Gulf Calibration  	  1-40

TABLE 1-25.  Small Midcontinent Calibration 	  1-41
                                    XIX

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                            _APPENDIX__I_ - cont.)
                                                                      Page

 TABLE  1-26.  Large Midwest Calibration 	  1-42

 TABLE  1-27.  West Coast Calibration  	  1-43

 TABLE  1-28.  East Coast Calibration  	  1-44



                                 APPENDIX J

 TABLE  J-l.   Economic  Penalty  for Reducing Refinery SO  Emissions -
             1977  	*	  J-5

 TABLE  J-2.   Economic  Penalty  for Reducing Refinery SO  Emissions -
             1985  	*	  J-6

 TABLE  J-3.   Energy Penalty for  Reducing Refinery  SO  Emissions  -
             1977	  J-7

 TABLE  J-4.   Energy Penalty for  Reducing Refinery  SO  Emissions  -
             1985  	*	  J-8

 TABLE  J-5.   Capital Investment  Requirements  to Reduce Refinery
             SO  Emission Levels 	  J-9
              x
 TABLE  J-6.   Operating Costs Required  to Reduce Refinery  SO
             Emission  Levels 	*	  J-10

 TABLE  J-7.   Basis for Cluster Capital Investment  Requirements  	  J-ll

 TABLE  J-8.   L.P. Model Results: -  Capital Investment Requirements
             and Operating Costs -  East Coast  	  J-12

 TABLE  J-9.   L.P. Model Results: -  Capital Investment Requirements
             and Operating Costs -  Large Midwest  	  J-13

 TABLE  J-10.  L.P. Model Results: -  Capital Investment Requirements
             and Operating Costs -  Small Midcontinent  	  J-14

 TABLE  J-ll.  L.P. Model Results: -  Capital Investment Requirements
             and Operating Costs -  Louisiana  Gulf  	  J-15

 TABLE  J-12.  L.P. Model Results: -  Capital  Investment:  Requirements
             and Operating Costs -  Texas  Gulf 	j_16

 TABLE  J-13.  L.P. Model Results: -  Capital  Investment  Requirements
             and Operating Costs -  West Coast	   J-17

TABLE J-14.  L.P. Model Results: -  Capital  Investment  Requirements
             and Operating Costs -  Grassroots Refinery
             East of Rockies 	           J-18


                                      XX

-------
                             APPENDIX^ J    ( cont . )
TABLE J-15.  L.P. Model Results - Capital Investment Requirements
             and Operating Costs - Grassroots Refinery -
             West of Rockies  ......................................  J-19

TABLE J-16.  L.P. Model  Results -  Fixed Inputs  and Outputs -
             East Coast  ............................................  J-20

TABLE J-17.  L.P. Model  Results -  Fixed Inputs  and Outputs -
             Large Midwest  .........................................  J-21

TABLE J-18.  L.P. Model  Results -  Fixed Inputs  and Outputs -
             Small Midcontinent ....................................  j-22

TABLE J-19.  L.P. Model  Results -  Fixed Inputs  and Outputs -
             Louisiana Gulf  ........................................  J-23

TABLE J-20.  L.P. Model  Results -  Fixed Inputs  and Outputs -
             Texas Gulf  ............................................  j-24

TABLE J-21.  L.P. Model  Results -  Fixed Inputs  and Outputs -
             West Coast  ............................................  J-25

TABLE J-22.  L.P. Model  Results -  Inputs and Fixed Outputs
             Grassroots  Refineries  .................................  J-26

TABLE J-23.  L.P. Model  Results - Processing and  Variable  Outputs
             East Coast  Cluster ....................................  J-27

TABLE J-24.  L.P. Model  Results - Processing and  Variable  Outputs -
             Large Midwest Cluster  .................................  J-28

TABLE J-25.  L.P. Model  Results - Processing and  Variable  Outputs
             Small Midcontinent Cluster ............................  J-29

TABLE J-26.  L.P. Model  Results - Processing and  Variable  Outputs -
             Louisiana Gulf Cluster  ................................  J-30

TABLE J-27.  L.P. Model  Results - Processing and  Variable  Outputs -
             Texas Gulf  Cluster ....................................  J-31

TABLE J-28.  L.P. Model  Results - Processing and  Variable  Outputs -
             West Coast  Cluster ....................................  J-32

TABLE J-29.  L.P. Model  Results - Processing and  Variable  Outputs -
             Grassroots  Refineries,  1985 ...........................  J-33

TABLE J-30.  L.P. Model  Results Summary - Gasoline Blending -
             East Coast  ............. • ..............................  J~34
                                      xxi

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                              APPENDIX J - (cont.)
                                                                        Page

 TABLE J-31.   L.P.  Model Results  -  Gasoline Blending - East Coast ....   J-35

 TABLE J-32.   L.P.  Model Results  -  Gasoline Blending - Large Midwest .   J-36

 TABLE J-33.   L.P.  Model Results  -  Gasoline Blending - Large Midwest .   J-37

 TABLE J-34.   L.P.  Model Results  Summary - Gasoline Blending -
              Small Midcontinent  	   J-38

 TABLE J-35.   L.P.  Model Results  -  Gasoline Blending -
              Small Midcontinent  	   J-39

 TABLE J-36.   L.P.  Model Results  Summary - Gasoline Blending -
              Louisiana Gulf 	   J-40

 TABLE J-37.   L.P.  Model Results  -  Gasoline Blending - Louisiana Gulf   J-41

 TABLE J-38.   L.P.  Model Results  Summary - Gasoline Blending -
              Texas Gulf 	   J-42

 TABLE J-39.   L.P.  Model Results  Summary - Gasoline Blending -
              Texas Gulf 	   J-43

 TABLE J-40.   L.P.  Model Results  Summary - Gasoline Blending -
              West  Coast 	   J-44

 TABLE J-41.   L.P.  Model Results  -  Gasoline Blending - West Coast 	   J-45

 TABLE J-42.   L.P.  Model Results  Summary - Gasoline Blending -
              Grassroots Refineries	   J-46
         I
 TABLE J-43.   L.P.  Model Results  Summary - Gasoline Blending -
              Grassroots Refineries  	   J-47

 TABLE1J-44.   L.P.  Model Results  -  Residual Fuel Oil Sulfur Levels -
              1977  	   J-48

 TABLE  J-45.   L.P.  Model Results  -  Residual Fuel Oil Sulfur Levels -
              1985  	T-49

TABLE  J-46.   L.P.  Model Results  -  Refinery Fuel Sulfur Levels -
              1977	1-50

TABLE J-47.   L.P.  Model Results  -  Refinery Fuel Sulfur Levels -
              1985	   J-51
                                       XX11

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                            APPENDIX J -  (cont.)


TABLE J-48.   Sample Calculations  for Mass  and  Sulfur Balance          Page
              Texas Gulf  1985,  Scenario B/C - Stream Values -
              Gas Oil 375-65,0ฐF 	   j_53

TABLE J-49.   Sample Calculations  for Mass  and  Sulfur Balance
              Texas Gulf  1985 B/C  - Desulfurization of
              Light Gas Oil 	   j-54

TABLE J-50.   Sample Calculations  for Mass  and  Sulfur Balance
              Texas Gulf  1985,  Scenario B/C - Feed Sulfur Levels ...   J-55

TABLE J-51.   Sample Calculations  for Mass  and  Sulfur Balance
              Texas Gulf  1985,  Scenario B/C - Stream Qualities -
              Cluster-Specific  Streams  	   J-56

TABLE J-52.   Sample Calculations  for Mass  and  Sulfur Balance
              Texas Gulf  1985   Scenario B/C - Stream Qualities -
              Cluster-Specific  Streams  	   J-57

TABLE J-53.   Specific Gravities for Miscellaneous Streams 	   J-58

TABLE J-54.   Mass and Sulfur Balance - Texas Gulf Cluster 1985
              Scenario B/C  	   J-59

TABLE J-55.   Mass and Sulfur Balance - Texas Gulf Cluster 1985
              Scenario F  	   J-67




                             APPENDIX K

TABLE K-l.    Weight Conversions 	   K-l

TABLE K-2     Volume Conversions 	   K-2

Table K-3.    Gravity, Weight and  Volume  Conversions for Petroleum
              Products 	   K-3

TABLE K-4.    Representative Weights of Petroleum Products 	   K-4

TABLE K-5.    Heating Values of Crude Petroleum and Petroleum
              Products 	   K~5

TABLE K-6.    Nomenclature  	   K-6
                                       xxiii

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                                  APPENDIX L
 TABLE L-l.


 TABLE L-2.

 TABLE L-3.

 TABLE L-4.

 TABLE L-5.


 TABLE L-6.


 TABLE L-7.


 TABLE L-8.


 TABLE L-9.


 TABLE L-10.


 TABLE L-ll.


 TABLE L-12.


 TABLE L-13.


 TABLE L-14.


 TABLE  L-15.


TABLE  L-16.


TABLE L-l7.
Development Status of Significant S02 Control
Processes 	
                                                              Page

                                                 	   L-2

 Major Sources  of  SOX Emissions  in  Refineries  	   L-6

 Refinery Sulfur Emission  Sources  	   L-7

 Unit  Costs  Applied  in Off-Line  Economics  	,	   L-ll

 Chiyoda Thoroughbred 101  Process Estimated  Capital  Cost
 and Operating  Requirements  -  Gas Side  	   L-18

 Chiyoda Thoroughbred 101  Process Estimated  Capital  Cost
 and Operating  Requirements  -  Liquor  Side  	   L-21

 Dual  Alkali Process Estimated Capital  Cost  and  Operating
 Requirements - Gas  Side	   L-29

 Dual  Alkali Process Estimated Capital  and Operating
 Costs - Liquor Side 	   L-31

 Capital and Operating Requirements - Magnesium  Oxide
 Scrubbing System	   L-58

 Capital and Operating Requirements - Magnesium  Oxide
 Regeneration System 	   L-59

 Capital and Operating Cost  Estimate  -  Shell Flue Gas
 Desulfurization Acceptor  System 	   L-75

 Capital and Operating Cost  Estimate  -  Shell Flue Gas
 Desulfurization Regeneration/Reduction Section  	   L-77

 Capital and Operating Cost  Estimates - Wellman-Lord
 Scrubbing System  	   L-92

 Capital and Operating Cost  Estimates - Wellman-Lord
 Regeneration System 	   L-97

 Flue  Gas  Desulfurization  Processes Off-Line
 Comparative Economic  	   L-102

Exxon  R and E  FCC Scrubbing System Capital  and
Operating Requirements 	   L-109

Beavon  Tail-Gas-Cleanup Process Typical Investment
and Operating  Requirements  	   L-115
                                      XXIV

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                               APPENDIX L-(cont.)

                                                                           Page
TABLE L-18.   Flue Gas Desulfurization Process Economics -
              Capital Requirements  	  L-119

TABLE L-19.   Refinery Flue Gas Desulfurization Process
              Operating Requirements  	  L-120
                                     TTXV

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                                   VOLUME II

                                LIST OF FIGURES


                                   APPENDIX F
                                                                           Page
 FIGURE F-l.    Geographic Regions Considered in Development of
               Cluster  Models  	    F-3


                                   APPENDIX I

 FIGURE 1-1.    Louisiana Gulf  Cluster Model Calibration 	    1-25

 FIGURE 1-2.    Texas  Gulf Cluster Model Calibration 	    1-26

 FIGURE 1-3.    Small  Midcontinent Cluster Model Calibration 	    1-27

 FIGURE 1-4.    Large  Midwest Cluster Model Calibration 	    1-28

 FIGURE 1-5.    West Coast Cluster Model Calibration 	    1-29

 FIGURE 1-6.    East Coast Cluster Model Calibration 	    1-30


                                   APPENDIX J

 FIGURE J-l.    Texas  Gulf Cluster 1985 Sulfur and Material Balance 	    J-52


                                   APPENDIX L

 FIGURE L-l,    Process  Flow Diagram, Chiyoda Thoroughbred 101 	    L-13
 t
 FIGURE L-2.    Chiyoda  Engineering, Capital Investment
               Scrubbing Section 	    L-20

 FIGURE L-3.    Chiyoda  Engineering, Capital Investment
               Regeneration Section 	    L-22

 FIGURE L-4.    Dual Alkali System	    L-24

 FIGURE  L-5.    Double Alkali,  Capital Investment - Scrubbing Section  ...    L-30

FIGURE  L-6.    Double Alkali,  Capital Investment - Regeneration
               Section	   L-32

FIGURE L-7.     Dual Alkali Scrubbing With Lime Regeneration 	   L-35
                                        xxvi

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                                APPENDIX L  (cont.)
                                                                            Page

FIGURE L-8.   Flow Diagram - Magnesia Slurry  Scrubbing-Regeneration  	  L-41

FIGURE L-9.   MagOx  (Chemico) Capital Investment - Scrubbing  Section  	  L-60

FIGURE L-10.  MagOx  (Chemico) Capital Investment - Regeneration Section  ..  L-61

FIGURE L-ll.  Simplified Process Flow Scheme  of SFGD  	  L-65

FIGURE L-12.  Simplified Flow Scheme of  SFGD  Demonstration Unit for
              Coal Fired Utility Boiler  at  Tampa Electric, Florida 	  L-73

FIGURE L-13.  Shell/UOP, Capital Investment - Acceptor Section 	  L-76

FIGURE L-14.  Shell/UOP, Capital Investment - Regeneration Section	>. ..  L-79
^

FIGURE L-15.  Schematic Flowsheet  - Wellman-Lord Process  	  L-82

FIGURE L-16.  Davy Power Gas, Capital Investment - Scrubbing  Section  	  L-98

FIGURE L-17.  Davy Power Gas, Capital Investment - Regeneration Section  ..  L-100

FIGURE L-18.  Typical  Flow Diagram - Exxon  FCC Caustic Scrubbing System  ..  L-107

FIGURE L-19.  Glaus  Tail Gas Cleanup - Scheme I and II	  L-lll

FIGURE L-20.  Conceptual Refinery  SOX Control System Based on
              Wellman-Lord Process 	  L-117
                                       xxvii

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                            I.   EXECUTIVE SUMMARY
A.   INTRODUCTION
     This report  summarizes  a study  performed  forป|thei Environmental
Protection Agency, which  was part  of a  three-phase program undertaken
in parallel using a  similar  conceptual  approach and data base.  The
other two studies are  entitled,  "The Impact of Lead Additive Regulations
on the Petroleum  Refining Industry"  and "The Impact of Producing Low-Sulfur,
Unleaded Motor Gasoline on the Petroleum Refining Industry."  Significant
coordination of data gathering,  scenario development, computer simulation
time and subsequent  analysis was achieved by performing the three separate
studies as part of an  integrated work program.  However, the combined
cost of implementing all  three regulations cannot be  obtained by direct
summation of the  results  of  the  three individual reports.
     Initial work on this program  began in late 1973.  An interim Phase I
report was published in May,  1974, entitled "Impact of Motor Gasoline Lead
Additive Regulations on Petroleum  Refineries and Energy Resources - 1974-
1980, Phase l", EPA  report number  450/3-74-032a.  In  this Phase I study,
the U.S. refining industry was simulated as a  single  composite model which
allowed a rapid overview  analysis, but  lacked  the desired level of precision.
     Accordingly, a  more  detailed  simulation of the U.S. refining industry
was developed via a  "cluster" model  approach which was used in this three-
phase effort.  This  project  included collection and collation of an
extensive base of refinery data  supplied by the Bureau of Mines and
individual oil companies,  which  was  used to achieve satisfactory calibration
of the cluster models.  It is felt that the development and calibration
of the cluster models  represent  a  significant  achievement in the area
of refinery simulation.
     In the present  report,  several  scenarios  are developed to describe how
                                     -1-

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 the  petroleum  refining  industry will likely operate for the next decade,
 with and  without potential regulations controlling SO  emissions from
                                                     Jx
 the  petroleum  refining  industry.  The report then summarizes the detailed
 planning  assumptions  required to execute the task, along with the
 methodology  used to develop these assumptions.  The primary study results
 are  then  presented herein, defining the impact of control of SO  emissions
                                                               X
 in terms  of  capital investment requirements, increased refining costs per
 gallon  of total refinery products, and energy penalties.  A complete
 presentation of planning assumptions, calculational methods, and study
 results is contained  in the appendices of Volume II of this report.
 B.    SCOPE AND APPROACH
      The  objective of this study is to determine the impact on the
 petroleum refining industry of a limitation on SO  emissions, within
                                                 X
 reasonable limits of  existing technology, from refinery process heaters
 and  boilers, fluid catalytic cracking units, and sulfur recovery units.
      The  specific goals of the study are to determine for the period
 through 1985 the impact of the control of refinery SO  emissions in terms
                                                     X
 of (a)  capital investment requirements; (b) composite increase in refining
 costs per gallon of total products, including return on capital, manu-
 facturing cost, and yield losses; (c) increased crude oil requirements;
 and  (d) net  energy penalties, reflecting increased crude oil requirements
 less  the  heating value  of an increase in tjhe production of refinery by-
 products  such  as liquefied petroleum gases (LPG).
      In the  study, limitations of present and future refinery configura-
 tions are  taken into  consideration.  However, considerations outside  the
 scope of  the study include availability of capital requirements, impact
 upon  the  competitive  structure of the industry, and ability of the
 construction industry to meet the associated refinery construction needs.
The study  focused upon  the large, complex refineries processing  about
 three-fourths of the  crude oil refined in the United States.  The  impact
upon  the small refineries comprising over half of the number of  U.S.
refineries has not been fully assessed.  On a relative basis, the  penalties
to the small refiner  probably exceed those reported herein.
                                     -2-

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     In approaching  this  problem,  it was recognized that there are many
complex interactions in the petroleum refining industry.  Also,  there  is
a necessity  for  consideration of the secondary impact of certain SO
                                                                    X
control techniques on refinery process units,  including consideration  of
their  capital  investments and operating costs.  Therefore,  a  standard
analytical tool  of the petroleum industry was  applied to this problem,
computer  refinery model simulation with an associated linear  programming
 (L.P=) optimization  algorithm.  This provided  an assessment of the impact
of  the control of SO  emissions with an optimal, minimum cost selection
                     X
of  processing  and blending schemes to achieve  this  end.
     Although  this analytical method has been  used  by the petroleum industry
 for more  than  a  decade for studies of individual refineries,  its use in
 simulation of  the entire  U.S. refining industry has been limited.
Therefore, one of the requirements of this program  was the  development
of  a methodology for industry-wide simulation, collection and utilization
of  a data base to confirm the utility of this  methodology,  and definition
of  a means to  utilize model results to determine national implications
of  a proposed  policy.  Equally important was the careful assessment of
the planning assumptions  regarding the constraints  which may  be  imposed
on  the petroleum refining industry over the next decade.   In  all of these
activities,  Arthur D. Little, Inc., cooperated extensively  with  representa-
tives  of  the Environmental Protection Agency and with members of a task
force  comprised  of representatives of the American  Petroleum  Institute
 (API)  and the  National Petroleum Refiners Association (NPRA).  As a result
of  these  efforts, the utility of the model in  faithfully representing
the likely behavior  of the petroleum refining  industry over the  next decade
was greatly  enhanced.
     The  modeling approach developed in this study  provided for  a specific
simulation of  the existing U.S. refining industry,  processing domestic
crude oils,  including Alaskan North Slope crude oil, to the extent avail-
able.  Any additional crude oil required to meet petroleum product demand
was assumed  to be imported.  Two simulation models, called "grassroots
models,"  were  developed to provide for any new refining capacity which
would be  required to meet product  demands in 1980/1985.   The  grassroots
model for the  western U.S. used North Slope crude oil, whereas a separate
grassroots model  for  the  eastern U.S.  used  imported oil.
                                      -3-

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      The existing U.S.  refining industry was  simulated  by six individual
 computer models,  constructed to represent clusters  of three  refineries
 each in six geographical areas of the  United  States.  These  cluster models,
 therefore, represented  refineries typical of  the  refining industry in
 terms of crude oil type, processing configuration,  and  product slate.
 They ranged in crude oil capacity from 48,000 to  350,000  bbls/day.  To
 ensure that the cluster models adequately represented the industry, an
 extensive data base on  these 18 refineries was collected  and analyzed.
 Processing yield  and property data were assimilated to  ensure  adequate
 representation of the refinery processes and  blending operations.
 Finally,  each cluster model  was  calibrated by comparison  to  the extensive
 data base.

      In addition,  a methodology for scaling up the  results of  the cluster
 models to the entire United  States was  developed, including  these 18
 cluster model refineries as  well as atypical  refineries.   In a comparison
 with 1973 Bureau  of Mines data,  the most recent year for  which complete
 information was available, the total petroleum products output and crude
 oil  consumption predicted by the model  agreed with  Bureau of Mines data
 within 2%.   This  scale  up technique allows assessment of  the national
 impact for the four specific goals of  the present program, including an
 estimate  of the impact  on small  refiners.
      Several planning assumptions were  required;  each of  these required
 auxiliary studies  of considerable detail,  because of the  importance of
 these  planning assumptions to the study results.
      Since  the SO   emission  level from petroleum  refineries  is dependent
                 X
 on the nature of the crude oil being refined, a separate  study was made
 to determine the types  of crude  oils to be processed by the  U.S. refining
 industry  over the  next  decade.   Estimates of  domestic crude  oil avail-
 ability were made,  including quantity  and disposition of  Alaskan North
 Slope and offshore fields.   Also, estimates of world-wide crude oil
production  and disposition were  made,  taking  into account future product
demand in Europe,  Japan and  the  United States in  terms  of product  type
and sulfur  level requirements.   Likely production rates from the North  Sea,
OPEC countries, and  Far East countries, including China,  were included  in
this analysis,  as  was the likely availability of  non-oil  energy sources
                                     -4-

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such as coal and nuclear power.  When more  than one future scenario for
the next decade was likely, sensitivity  studies were included in the
current program to determine the effect  of  this uncertainty on the study
results.
     Since the total cost of controlling the refinery SO  emissions depends
directly upon the demand for petroleum products, a separate forecast was
made of petroleum product supply/demand  for the next decade.  This forecast
included an evaluation of the demand for products by individual end-use
sector, including the effects of non-petroleum energy sources, conservation,
import levels, expanded petrochemical demand for certain products, and the
future course of governmental regulation in improving energy self-sufficiency
for the U.S.
     The impact of SO  controls also depends upon certain key product
                     X
specifications on the fuel oil as well as other major refinery products.
Present and possible future octane requirements on unleaded gasoline were
evaluated.  Projections were also made of the future sulfur level require-
ments of residual fuel oil.  To assist in this evaluation, field interviews
were conducted with East Coast utilities, accounting for over 90% of the
utility fuel oil consumption on the East Coast.  Again, certain sensitivity
studies were required to define the effects of uncertainties in projections
on the study results.
     Several other significant assumptions  were made in the execution of
this program, discussed in detail in the following report.
C.   CONCLUSIONS
1.   Calibration Summary
     In order to simulate the existing U.S. petroleum industry, six cluster
models were developed to describe the regional characteristics of the
refining industry and the processing configurations typical of the industry.
Each of these six cluster models represented a cluster of three similar,
existing refineries in the United States.
     A critical component of the model development was to ensure that these
models effectively represented the refineries as well as the section of  the
United States containing the refineries.  Therefore, an extensive calibration

                                     -5-

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 effort was undertaken by Arthur D.  Little,  Inc.,  in  collaboration with
 the representatives of the  Environmental  Protection  Agency  (EPA) and a
 task force of the American  Petroleum Institute/National Petroleum Refiners
 Association.
      Data on  raw material intake,  fuel  consumption,  and product outturns
 for each of the refinery clusters  and for the  regions  of  the U.S. contain-
 ing these clusters were furnished  by the  Bureau of Mines.   Proprietary
 operating data on these refineries  were compiled  and combined  for each
 cluster by representatives  of  the  EPA.  Processing information was obtained
 from sources  in the petroleum  industry.   Using this  processing information
 the individual cluster models  were  run  on the  computer and  compared with
 the industry  data.  This task  was  continued until each cluster model was
 calibrated with the industry data.
      The results of these calibrated cluster models  were  then  scaled up to
 determine the accuracy with which  the refining districts  in the U.S. were
 described.   In Figure 1 is  shown the deviation of the  model predictions
 from the total raw material intake  for  the  several Petroleum Administration
 for Defense (PAD)  districts in the  U.S.   As noted therein,  the maximum
 deviation was 6.8% (PAD V), and the deviation  from the total U.S. raw
 material intake was 1.0%.   PAD IV  (less than 5% of U.S. crude  oil capacity)
 was not simulated  by a cluster model, but was  included in the  scale up method.
 Thus,  as a result  of this extensive calibration effort, the cluster models
 demonstrate an excellent ability to simulate the  existing U.S. petroleum
 refining industry, using processing information describing  individual
 refinery units.
 2.   Qualitative Study Results
     Refinery sulfur oxide  (SO ) emissions  emanate from three  primary  sources.
                               X.
 The  first  is  from  refinery  process  furnaces and boilers.  Control  of  these
 emissions  can be achieved either by restricting the  sulfur  level in refinery
 fuel or  by  scrubbing the stack gases prior  to  discharge into  the atmosphere.
 The second  source  of SO  emissions  is from  fluid  catalytic  cracking (FCC)
                        X
 units.   These can  be .controlled to  some extent by desulfurizing the hydro-
 carbon  feed to  the unit or  by  scrubbing the regenerator  stack gas prior to
discharge.  The  third  source of SO   emission is from the  refinery process
                                  X
                                      -6-

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                             P.A.D. III
                         0.1% DEVIATION
                                                P.A.D.V
                                            6.8% DEVIATION
          P.A.D. II
      0.7% DEVIATION
                                         P.A.D. I
                                     0.2% DEVIATION
                    U.S. Total Deviation = 1%
              •Not simulated, but included in scale-up


FIGURE 1.  AGREEMENT OF MODEL PREDICTION WITH 1973 B.O.M.
           TOTAL REFINERY RAW MATERIAL INTAKE DATA
           (Area on chart represents percentage of total U.S. refinery
           intake by P.A.D. District)
                        -7-

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 which ultimately recovers  the  sulfur  removed  in  the various treating
 processes in an elemental  form (for example,  a Claus unit).  Control of
 these emissions is  obtained  by increased  levels  of sulfur recovery or by
 stack gas scrubbing.
      Stack gas  scrubbing has not been Included as an alternative  in the
 detailed  computer model in this study of  the  control of refinery  SO
                                                                   X
 emissions, except for  Claus  units.  Preliminary  calculations have indicated
                                          f   '
 that  the  capital investment  requirements  to install stack gas scrubbing to
 control refinery SO emissions will be at least  as great as the alternatives
                    X
 of reducing refinery fuel  sulfur levels and FCC  feed sulfur levels.  Further-
 more, FCC feed  sulfur  reduction results in significant yield benefits in
 the FCC unit and would also  be required by the majority of refiners to meet
 proposed  reductions in the maximum allowable  sulfur levels in gasoline.
                                                        ,              i
      To reduce  emissions from  process furnaces and boilers, refinery fuel
 sulfur levels were  reduced consistent with potential regional regulations
 for combustion  sources.
      Emissions  from FCC units  were controlled by feed desulfurization to a
 level that was  compatible  with existing technology for the desulfurization
 of feed to FCC  units.  The FCC feed was desulfurized to a level of 0.2 wt.%
 sulfur or 85% sulfur removal,  whichever was the  lower.
      Emissions  from the sulfur recovery plants were reduced by increasing
 the level of sulfur recovery to 99.95%.   This level of sulfur removal can
 be obtained by  using the Beavon-Stretford process, for example, to clean up
 the tail  gases  from Claus  plants.
      The  effects of the imposed operational constraints on total  refinery
 SO emissions is summarized  for 1985  in Table 1  for each region in the U.S.
   X
 By reducing refinery fuel  sulfur levels,  desulfurizing FCC feed,  and
 increasing  sulfur recovery from the Claus plant, SO  emissions  from  refineries
                                                   X
were  reduced  by  76% for the  total U.S., on a  weight basis, relative  to pro-
 jected base emissions  levels.   The regional variations in percentage emissions
reduction  can be attributed  to such variables as crude  sulfur  content,  FCC
throughputs and  feed quality,  level of refinery  fuel  sulfur  allowed,  and the
ability to  dispose  of  sulfur in products,  given  product  quality constraints.
                                     -8-

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            Table 1.  REDUCTION OF BO  EMISSION LEVELS, 1985
PAD District
1
II
II
III
III
V
J-IV
V
I-V
Model
East Coast
Large Midwest
Small Midcontinent
Louisiana Gulf
Texas Gulf
West Coast
East Grassroots
West Grassroots
Total U.S. average
Reduction after SO,, control, wt.%a
/C
76
81
75
88
62
72
82
65
76
aRelative to projected base levels of SCซ emissions in petroleum refining industry (Scenario C).
                                 X
                                  -9-

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 In general,  those  clusters with high sulfur content crude slates — the
 East  Coast,  Large  Midwest and East of the Rockies grassroots — showed
 the highest  level  of  SO  emissions reduction.
                       X
      In Figure  2 is shown the disposition of sulfur oxides emissions by
 refinery source, for  the Large Midwest cluster model in 1985 with and
 without imposition of SO  controls.  The areas on this chart attributable
 to each source  of  SO   emissions are proportional to the total SO  emissions
                    x                '                          x
 levels  in tons/day.   Before controls, the Glaus plant was responsible for
 25% of  all SO   emissions in the refinery, accounting for 3.1% of the sulfur
             X
 in the  crude oil entering the refinery.  After controls, the Glaus unit was
 responsible  for 1% of all SO  emissions in the refinery, or 0.03% of the
                            X
 crude oil sulfur.  After controls, 83% of the SO  emissions from the refinery
                                                •A.
 originate in the process heaters and boilers; the sulfur limitation on the
 fuel  burned  in  these  furnaces varied from 0.3, wt.% to 0.5 wt.%, depending
 upon  the geographic region in which the refinery existed.  Obviously, a
 high  level of SO   emissions control has been attained.
                X
      In this regard,  note also that, before controls, 88% of the sulfur
 entering the refinery in crude oil is contained either in liquid products
 or as elemental sulfur product (i.e., not present as SO  emissions).  After
                                                       X
 control,  97.6%  of  this sulfur is contained either in liquid products or as
 elemental sulfur product.
 3.    Economic Penalties
      The  economic  impact by 1985 on the U.S. refining industry  for the
 control of SO   emissions is shown in Table 2.  This shows estimates of the
             x
 capital requirements  to be 4.5 billion dollars on a first quarter 1975 basis.
 The final  capital  requirements are expected to be on the order  of 8.8 billion
 dollars, based  on  the timing of the investments and forecasted  inflation  rates
 in refinery  process construction.  The additional cost to the U.S. refining
 industry is  estimated to be 0.71 cents per gallon of total products, based
on first quarter 1975 costs.  This includes an annual capital charge of  25%
of the  total additional capital investment required.
     Of this economic penalty, 65% was for investment related costs,  11% was
for increased operating costs, and 17% was for crude oil  costs.

                                     -10-

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                Glaus  emissions
                             FCC emissions
Refinery fuel  emissions
Before
 S0x
control
     After
      SOX
     control
o
                  1% of total SOX
                 0.03% of crude sulfur
                                                    16% of total SOX
                                                   0.4% of crude sulfur
                                                                                        83% of total SOX
                                                                                        2% of crude sulfur
                     FIGURE 2   CONTROL OF SOX EMISSIONS BY SOURCE, LARGE MIDWEST CLUSTER, 1985
                                (AREA ON CHART REPRESENTS RELATIVE SO  EMISSIONS LEVEL IN TONS/DAY)

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Table 2. PENALTIES FOR THE REDUCTION OF SOX EMISSIONS BY 1985a
   Capital investment required — billionscof dollars
      Non-inflated (1Q 1975 basis)
      Inflated
   Total economic penalty
      cents per gallon of total products
      (1Q 1975 basis)
   Additional crude oil required, MB/CD
   Net energy penalty (MB/CD FOE)
 4.5
 8.8
 0.71
63
96
   3 Relative to Scenario C.
                             -12-

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  4.    Crude Oil and Energy Penalties
       The  estimates of the crude oil and energy penalties for SO  emissions
  controls  are also shown in Table 2.  By 1985 it is estimated that the U.S.
  refining  industry will have to process additional crude oil in excess of
  60,000 barrels per day.  Furthermore, the model results indicate  less LPG
  is  produced, so the net energy penalty by 1985 is estimated to be nearly
  100,000 barrels per calendar day of fuel oil equivalent.
  5.    Sensitivity Studies
       A nuinber of sensitivity studies were evaluated;  as would be  expected,
  the impact of reducing SO  emissions depends upon the sulfur level of the
                           X
  crude oil being processed.  Furthermore, the study projections indicate
  that the  sulfur content of imported oil for the next  decade is uncertain.
  Since imported oil is the only source of crude oil assumed for the new
  grassroots refineries East of the Rockies, sensitivity analyses were
  conducted with this model.
       The  effects of reducing refinery SO  emissions on the East of Rockies
                                          j^
  grassroots refineries were determined by model runs for both a sweet  crude
  oil refinery (processing a 50/50 Algerian/Nigerian crude mix) and for a
  sour crude oil refinery (processing 100% Saudi Arabian Light crude).   Model
  results were scaled up for the base case on the basis that one-third  of
  East of Rockies grassroots refineries will process a  sweet crude  slate
  and two-thirds will process sour crude.  This sensitivity study examines
  the effects on 1985 economic penalties if all grassroots refineries East
  of  Rockies were based on 100% sour crude, and if all  were based on 100%
  sweet crude.
       The  results of this sensitivity analysis are shown in Table  3.   With
  grassroots capacity used for processing all sweet crude, capital  investment
  for reduction of SO  emissions would be 4.1 billion dollars (first quarter
                     A
.  1975 basis), 430 million dollars less than the base case.  If East of
  Rockies grassroots capacity is for processing sour crude, the capital
  investment for emissions reduction will be 216 million dollars higher than
  the base  case.  Similarly, the economic penalty is .04 cents lower and 0.03
  cents higher than the base case for the all-sweet and all-sour crudes,
  respectively.                         -13-

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Table 3.  EFFECT OF IMPORTED CRUDE SULFUR CONTENT ON
             1985 ECONOMIC PENALTIES

Crude oil sulfur, wt%
Capital investment
Billion dollars
(1Q 1975 basis)
Economic Penalty
Cents per gallon
total products
(1Q 1975 basis)
Base case
1.18
4.5




0.71

Crude for East of Rockies
Grassroots Model
100% Sour
1.68
4.7




0.74

100% Sweet
0.17
4.1




0.67

                     -14-

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     Thus, the sulfur content of  the  crude processed does significantly
affect the magnitude of investment and economic penalties.  Furthermore,
other changes in imported  crude type, such as higher utilization of Arabian
Heavy crude oil, would be  expected to significantly alter the investment
impact of SO  emissions controls.
            JV
6.   Other Major Implications
     The choice of six different  cluster models to represent the existing
U.S. refining industry was made to provide a reasonable representation of
the different types of refineries operating today'.  Over 80% of U.S. refining
capacity has been represented in  the  cluster models.  However, no cluster
model was constructed which  could be  considered representative of the small
refiner (less than 50,000  barrels per day), nor would such a model be
sufficient to a study of the impact on small refiners.  These refiners
represent less than 20% of total U.S. refining capacity and any understate-
ment of their penalties will not  significantly affect the overall conclusions.
However, the control of SO  emissions could have a significant impact on the
                           X
smaller refiner.  He does  not have the wide choice of blending components
available to the larger refiners and  little, if any, existing treatment
equipment.  For example, few of the small refiners have any existing Glaus
plants for sulfur recovery.  Although costs for addition of these plants have
been included in the present study, assessments have not been made of the
ultimate means of disposition of  the  sulfur product or the financing ability
of the small refiner to install these plants.  Because of these considerations
and the economies of scale,  the unit  cost to the small refiner for SO
                                                                     3C
emission control will be higher than  those indicated in this study.  This
could have a significant impact on the competitive structure of the refining
industry.
     As is apparent from Figure 1, the emissions from Claus units and FCC
units have been greatly reduced.  In  fact, the emissions from process heaters
and boilers constitute 83% of the refinery S0x emissions after S0x controls
are instituted, and these  flue gas emission controls are more stringent  than
normally in effect at the  present time in the utility industry.  This raises
the possibility that the SO  emissions control requirements of the present
study were too stringent for the Claus and FCC units, relative to  their
                                      -15-

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Importance in contributing to total refinery SO  emissions.   A detailed
                                               X
assessment of this possibility and proposals of alternative  control
strategies have not been made in the present study.
     One means of controlling SO  emissions is by hydrotreating FCC feed;
                                J\.
also, FCC gasolines constitute a primary source of sulfur in unleaded
gasoline, possibly leading to sulfate emissions from automobiles employing
catalytic converters.  Hence, significant improvement in sulfur content of
unleaded gasoline can be obtained as an indirect result of the strategy
employed herein for refinery SO  emissions control.   No economic benefit
                               X
has been included in consideration of the impact of SO  controls for this
improvement.
D.   RECOMMENDATIONS FOR FURTHER ACTION
     In order to assess more fully the impact of refinery SO  emissions
                                                            X
controls, several areas are worthy of more consideration than possible with
this study:
     1.  Exploitation of the synergy available from simultaneous
         regulations on refinery SO  emissions and sulfur content
                                   X
         of unleaded gasoline should be explored more thoroughly.
         It is possible that there is a point of minimum cost control
         for both, with sharply increasing penalties as control of
         either variable is made more stringent.  This could lead to
         a more economic level of control for both sources of sulfur.
     2.  The  impact of SO  emissions control should be assessed more
                         •*v
         fully for the small refiners processing less than 50,000
         barrels per day.  Such studies should examine the economic
         impact on the refiners as well as the likely effect on the
         competitive structure of the industry.
     3.  Studies should be conducted of interactions of SO  emissions
                                                          X
         regulations and other environmental regulations applicable
         to the petroleum refining industry.  This investigation should
         include examination of possible processing changes used to meet
         SO  regulations but which are precluded by other environmental
           X.
         regulations.
                                      -16-

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                             II.   STUDY BA^IS
 A.   APPROACH
      The  objective of this study is to determine  the  impact on the
 petroleum refining industry of a possible Environmental Protection
 Agency  (EPA)  regulation requiring the  reduction of  refinery sulfur
 oxides  emissions,  taking into consideration limitations of present
 refinery  configuration and potential grassroots refinery construction.
                                                               i   i
 Since the processing interactions in any single refinery are exceed-
 ingly complex,  and indeed even more complex for the industry as a whole,
 such  an assessment of the impact of this potential  regulation could be
 addressed by  two possible approaches.
                                                                      1 2
      First, a survey could be conducted by sending  out a questionnaire *
 to  individual refiners across the country,  requesting an assessment of
 their individual costs for meeting the potential  regulation.  The results
 could then be composited to define the cost to the  industry.  Although
 this  is a valid approach,  it is often  difficult to  determine if the
 specific  regulation is being interpreted equlvalently by all refiners
 across  the country,  if they are using  a similar analytical procedure,
 if  they are using  the most efficient means  of meeting the regulation,
 and if  they are using a common basis for cost estimation.  This method,
 however,  does have the decided attribute of allowing  each individual
 refiner to assess  his unique problems  in meeting  the  regulation.
     An alternative  approach,  used in  the present study, is to simulate
 the U.S.  refining  industry using computer models.   Computer simulation of
 individual refineries is well-known and has been  practiced for over a
 decade.   Such a simulation normally utilizes a linear programming (L.P.)
model to  represent the individual process units and the process interactions
of the  refinery.   In the present study, however,  simulation of a single
refinery  is not sufficient in that no  single refinery can be said to
                                      -17-

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 represent  the  entire refining industry.  Therefore, eight computer models
 were  used  simulating individual refineries which, when composited, would
 be  typical of  the  industry as a whole.
      In  the use of any L.P. model, it is necessary to define the types of
 crude oils available to the model, the individual process yields, the
 streams  that can be used to connect the processes, and the products
 produced from  the  refinery.  The model then uses an optimization algorithm
 to  select  the  optimal combination of process units meeting the objective of
 the study. If all product prices are given as input to the model, the
 model will select  that set of product outturns and processing configura-
 tions which will maximize profit derived from the complex.  However, this
imethod of  L.P. optimization may not assure that the quantities of products
 being produced from the complex meet the product demands of the region
 being served by that refinery.  If this happened in the actual operation of
       i
 the refinery,  market forces would Increase the prices of those products
 in  short supply and decrease those in excess supply, so that the entire
 refinery operation would be adjusted with the product outturns just meeting
 the product demands.  In a computer simulation of a refining industry,
 however, it is very difficult to predict those product prices which are
 required to match  the product outturns with the market demands.  In the
 present  studies, an alternate approach was taken, wherein the product out-
 turns from the refinery were fixed in order to meet the projected product
 demands  imposed upon the U.S. refining industry.  Therefore, the L.P.
 algorithm  selected a set of processing configurations which allowed this
 specified  product  demand to be met at minimum cost.  However, it is
necessary  that the problem being optimized be carefully constructed such
 that  the real-world constraints on the industry in meeting these minimum
cost  objectives would be met, allowing a realistic simulation of the
operation  of the industry.  The definition and inclusion of these constraints
is an exceedingly  important component of a study of the impact of any
potential  regulation on the industry.  This activity was greatly benefited
by the results of  a Federal Energy Administration/National Petroleum
                                                               3
Refiners Association conference on refining industry modeling.
     In  order  to meet the constraints which would be imposed  upon  the
refining industry, comprised of nearly 300 individual  refineries  spread
throughout  the United States, Arthur D. Little,  Inc.,  (ADL),  representatives
                                      -18-

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of the EPA, and a task force comprised of representatives of the American
Petroleum Institute and the National Petroleum Refiners Association
selected three refineries in each of six geographic regions to simulate
the existing U.S. refining industry.  These six refinery models (cluster
models) were constructed and calibrated  Against the three actual
refineries in each region to ensure that the product blend flexibility
and the processing configuration flexibility did not exceed that available
to these refineries.  In simulating these existing refineries over the
next decade, the crude run for the individual cluster models was not
allowed to exceed the crude capacity for those refineries being simulated.
All new crude capacity required to meet increased product demand was met
by the construction of new, grassroots refineries.
     In the construction of new grassroots refineries, the refining
industry east of the Rockies was represented by a class of refineries
feeding crude oil typical of imported oil likely to be available in the
coming decade.  Another simulation model was developed for grassroots
refineries to be constructed west of the Rockies, feeding Alaskan North
Slope crude oil.  The product outturn from all of the existing refineries
(cluster models) and the new refinery installations (grassroots models)
was then composited to ensure that the overall product demand for the
United States refining industry was met.
     It is also important that the major products of the models meet
appropriate quality constraints typical of the prpduct quality demand by
the marketplace over the next decade.  Projections of future, product quality
requirements are necessary in order that the study be a realistic representa-
tion of the industry over the next decade.  Of particular importance in
this regard is the sulfur level of the residual fuel oil being produced
by the industry.  Separate studies were made of these product qualities
to determine the likely levels associated with the industry over the next
decade, discussed in the planning assumptions for the study.
     The impact upon the refining industry which is evaluated in the
present study includes:  the capital investment requirements for the
refinery to meet the potential regulation, the composite capital charge
and operating cost expressed per gallon of total product, the crude oil

                                      -19-

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 penalty,  and  the net energy penalty associated with the regulation
 (including by-products which have an energy value).
      There are other considerations important to the determination of
 the  impact of the regulation.  These other considerations were beyond
 the  scope of  the study and have not been evaluated in detail.  For example,
 the  study determines the capital outlay required to meet the potential
 regulation by the industry.  However, it is likely that, for many of the
 small refiners in the country, the projected capital outlay will require
 financing that may not be available to them at the present time.  The
 availability  of capital required by the possible regulation is specifically
 beyond the scope of this study, as was the impact of the regulation on the
 competitive structure of the industry.  Also, many of the processing
 requirements  needed to meet the regulation require significant construction
 of heavy-walled vessels.  The Impact of the regulations upon the construction
 industry, including the fabricators and vendors, is also not considered to
 be within the scope of the present study.
 B.    CASE DEFINITIONS
      The  cluster model approach used in the present study of the possible
 regulation requiring reduction of sulfur oxide (SO ) emissions from
                                                  jฃ
 petroleum refineries was also used in two other studies, which were
 conducted simultaneously:  a study of a possible regulation requiring
 reduction of  the sulfur content of unleaded gasoline, and  (2) reassessment
 of promulgated regulations relating to lead additive content of gasoline
 (Federal  Register, December 6, 1973; January 10, 1973).  To conduct  these
 studies,  iix  scenarios were created as possible modes of operation of
 the refining  industry, each of which were evaluated for 1977, 1980 and
 1985.  These  scenarios are:
      Scenario A:  Unregulated operation and expansion of refining industry
 to meet projected petroleum product demand over the next decade.
      Scenario B:  Manufacture of unleaded gasoline to meet projected
demands, with no lead restrictions on the total gasoline pool or  sulfur
restrictions on unleaded gasoline.
                                      -20-

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     Scenario C:  Manufacture of unleaded gasoline  to meet projected
demands, with phased reduction  in the  lead additive content of the total
gasoline pool, and with no  sulfur restrictions.
     Scenario D:  Manufacture of unleaded gasoline  with a maximum of 100
ppm sulfur, while reducing  the  lead  content of the  gasoline pool.
     Scenario E:  Manufacture of unleaded gasoline  with a maximum of 50
ppm sulfur, while reducing  the  lead  content of the  gasoline pool.
     Scenario F:  Reduction of  gaseous refinery sulfur-oxide emissions by
restrictions on the sulfur  content of  the refinery  fuel, by restriction of
fluid catalytic cracker regenerator  emissions, and  by restriction of sulfur
recovery (Glaus) plant emissions, while meeting all the requirements of
Scenario C.
     The complete definition of the  computer cases  to be run under these
several scenarios requires  assumptions of crude intakes to the U.S. refining
industry, processing configurations, and product outturns and qualities.
However, other planning assumptions  which have a possibility of occurring
over the next decade were also  considered.  Variations in study assumptions
were investigated by a series of parametric runs, wherein the assumptions
were modified, one at a time, to reassess the impact on the industry.  The
scope of these parametric studies is summarized in  Table 4.
     For the study of lead  in gasoline (Scenarios A, B, and C) five major
parametric studies were undertaken.  A basic premise of the study in the
base case is that unleaded  gasoline  will be produced by the industry
meeting 92 Research Octane  Number (RON) and 84 Motor Octane Number (MON).
These specifications were set one octane number higher than the
minimum required by the EPA regulation to allow for refinery blending
margin.  To evaluate the effect of producing even higher octane gasoline,
two parametric runs were conducted as  summarized In Table 4.
     Projections of the future  sulfur  content of residual fuel oil consumed
in the United States are between 1.1 and 1.4%.  As  a base planning assumption,
it was considered that the  residual  fuel oil being  consumed in the U.S.
would have a sulfur content of  approximately 1.3%.  Since this requires
extensive desulfurlzation in the new grassroots refinery facilities,

                                       -21-

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                                  Table 4. PARAMETRIC STUDIES
Lead in gasoline
Low sulfur unleaded gasoline
Refinery sulfur oxide emissions
Unleaded gasoline RON/MON = 93/85
Unleaded gasoline RON/MON = 94/86
Residual fuel oil
 sulfur level projection

Variation in product demand
Variation in imported crude slate
Residual fuel oil
Sulfur level projection

Variation in imported crude
slate

Sulfur distribution around
FCC unit

Method of FCC gasoline
desulfurization
Variation in imported crude
slate

Residual fuel oil, sulfur level
projection

Stack gas scrubbing
                                               -22-

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an additional parametric run at 1.1% sulfur was conducted to ensure that
study results were not being unduly influenced by this assumption.  It
must be emphasized, of course, that the average sulfur level of the fuel
oil consumed by all sectors in the United  States is below even 1.1%,
because of significant levels of  imports of low-sulfur fuel oil into the
United States over the next decade.
     In the base case studies defined by the above scenarios, it was
assumed that all petroleum products would  grow at a level of 2% per
annum.  This is a reasonable estimate of the growth of all petroleum
products.   However, it is likely that each individual product will not
grow at 2% per annum, so parametric runs were undertaken to evaluate the
impact of growth rates for petroleum products other than 2%.
     Arthur D. Little, Inc., has  conducted a worldwide survey of crude
oil production and disposition to the various refining regions.  This
indicated that two alternatives might be considered for the imported
crude oil into the East Coast region:  (1) the imported oil could be
of relatively high-sulfur content characteristic of Arabian crudes, or
(2) the imported oil may be of relatively  lower sulfur level characteristic
of Nigerian crudes.  There is great uncertainty as to the demand and
availability of various crude oils in the  United States,  and the ultimate
selection of crude oils would depend upon  this uncertain demand as well
as a variety of political factors.  The base case under the above scenarios
assumed a predominantly Arabian-type imported oil.   An additional  parametric
run was made with a lower sulfur oil being characteristic of the imported oil.
     In the program to evaluate the impact of a reduction of sulfur levels
in unleaded gasoline (Scenarios C, D, and  E) a similar set of parametric
studies were required.  As indicated in Table 4, projections of the refinery
residual fuel oil sulfur level and variations in imported crude slate,
discussed above, were also considered.
     The attention of the refinery industry to sulfur levels in gasoline
in general has been minimal over  the last  few decades because of  the
relative lack of importance of sulfur level as a product specification.
Therefore, there is limited information available regarding the sulfur

                                      -23-

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 level of  some  of  the high  sulfur gasoline blend  components from the various
 refinery  processes  under various conditions of operation.  One of the most
 critical  refinery units with  regard  to the sulfur content of unleaded
 gasoline  is  the fluid  catalytic cracker  (FCC).   Sulfur levels of the
 products  from  the FCC  unit were obtained by consideration of available
 data on the  FCC unit,  feeding various types of gas oil and under various
 types of  operating  conditions.  However, since there are uncertainties
 in the sulfur  content  of the  gasoline from FCC units, a parametric run
 was instituted to evaluate the impact of higher  levels of sulfur in the
 FCC gasoline than was  assumed in the base case scenarios above.  This, then,
 led to a  range of potential impact on the petroleum industry in considera-
 tion of both the  base  case sulfur level as well  as the new parametric case
 sulfur level.
                                                             i
      Because the  interest  in  the sulfur content  of FCC gasoline has been
 recent, the  most  efficient means of  desulfurizing FCC gasoline has not been
 determined.  One  attractive method of reducing the sulfur level in the FCC
 gasoline  is  by hydrotreating  the FCC feedstock.  Another method is to
 directly  desulfurize FCC gasoline, requiring  further reforming of the
 desulfurized product.  However, laboratory data  has shown that the sulfur
 distribution in FCC gasoline  is heavily weighted toward the heavy gasoline
 component.   This  suggests  that only  the heavy gasoline component need be
 directly  desulfurized, with the light FCC gasoline component going directly
 into the  gasoline blend stock.  This method of desulfurization of FCC
 gasoline  could potentially reduce the impact  on  the refining industry of
 meeting the  possible sulfur regulation.  Consequently, one parametric run
 was  made  to  determine  the  possible savings from  this method of desulfurizing
 FCC  gasoline.
      In the  study of the impact of proposed regulations reducing the sulfur
oxide emissions from refineries (Scenarios C  and F), several parametric
studies were also undertaken.  Variations in  the sulfur level of imported
crude slate and sulfur level  of the  product residual fuel oil are  clearly
of potential importance in the impact of regulations reducing refinery
sulfur oxide emissions.  These parametric studies, discussed above, were
included in this  particular task.
                                      -24-

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     It is felt that the most  likely  general means by which the refining
industry will meet possible  regulations regarding sulfur oxide emissions
is to control the sulfur level of  the refinery  fuel system, to desulfurize
the FCC feedstock (thereby reducing FCC regenerator sulfur oxide emissions),
and to add tailgas cleanup processes  to the sulfur recovery unit (Claus
process).  However, it  is also possible that the emissions from the FCC unit
and the refinery fuel system could be reduced by the utilization of stack
gas scrubbing techniques, under  extensive  study for possible application in
the utility industry.   Consequently-,  parametric runs were undertaken to
determine if the total  impact  of the  regulations reducing sulfur oxide
emissions cpulc} be diminished  by application of the utility-based stack gas
scrubbing techniques.
     The. present report deals  with the impact only of the possible regulation
                                                                      7 8
reducing sulfur oxides  emissions from the  refinery.  Companion reports '
have been produced which address the  impact of  the promulgated regulations
        i    i
for lead additives in gasoline and the consequences of a possible regulation
to reduce the sulfur content of  unleaded gasoline.  All further discussions
in the present report will be  addressed to the  possible regulation on
reduction of sulfur oxides emissions.
C.   PLANNING ASSUMPTIONS
     This subsection defines the methodology used in developing planning
assumptions required for the present  study, as  well as identifying the
primary assumptions used.  Because of the  amount of detail required in
presenting these planning assumptions, only an  outline of this information
will be presented below.  Additional  detail on  all of the topics discussed
is presented in the appendices of  Volume II of  this report.
1.   Crude Slate Projections
     Projection of the  crude slate available for the domestic U.S. refining
industry depends upon a complex  interaction of  the production capability
of domestic U.S. crudes, the demand for petroleum products, the influence
of alternate energy sources  within the U.S., the worldwide availability of
crude oils and the demand worldwide for these same international crude oils.
Arthur D. Little, Inc., investigated  the worldwide oil supply by considera-

                                      -25-

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 tion of production potential  from the  North  Sea,  OPEC  countries,  the
 United States,  South America  and  the socialist  countries.   Superimposed
 upon this production potential was the investigation of world oil demand
 forecasts and product demand  forecasts for the  major refining and consuming
 areas, i.e.,  the  U.S.A.,  the  Caribbean, Western Europe, and Japan.  These
 product demand  forecasts  Indicated, for example,  a  significant lightening
 of the future product demand  barrel in Europe,  a  similar but less significant
 change in Japan,  and virtually no change  in  the relative proportions of
 demand within the United  States.   This led to a projection  that there
 would be a tendency for heavier crudes, including Nigerian, to be attracted
 to the U.S.A. and lighter crudes, including  Algerian,  to be attracted  to
 Europe.  Crude  oil demand for Japan Included both Imports from the OPEC
 countries as  well as probable production  of  Chinese crude oil.  In addition,
 the demand for  sulfur content of  various  products were investigated, allow-
 ing an assessment of the  likely movements of crude  oils of  various sulfur
 levels into the various consuming regions in the  world.  The assessment
 of all these  factors in combination allowed  projections of  the disposition
 of the various  crude oils to  the  various  refining regions.
      Superimposed upon any such projection of the availability of crude
 oils to the United States must be an evaluation of  the proportion of the
 U.S.  refineries which can run sweet and sour crudes.   Obviously,  a refinery
 designed for  sweet crude  operation can be redesigned to allow operation
 with sour crudes,  but this would  be accomplished  only  if there is sufficient
 price driving force between the sweet  and sour  crudes.  For example, the
 NPRA has evaluated the availability of refineries which depend upon low-
 sulfur crude  oil  and have indicated that  9%  of  the  refining capacity
 would be unavailable if the industry were forced  to substitute nigh-
                                                                  ty
 sulfur crude  oil  for 20%  of the sweet  crude  they  are now running.
      After consideration  of all of these  factors  the planning assumption
 for  the crude oil to be run by the U.S. refining  industry over the next
 decade is  summarized in Table 5.   Additional detail on the  crude  oils  run
 to the refining Industry  in 1973  as well  as  the assumptions made  in
 reducing  this number of crude oils to  a smaller but still descriptive  level
 is contained  in Appendices F  and  I.  Additional detail on  the methodology
utilized  to obtain the projected  crude run shown  in Table  5 is presented in
Appendix A.
                                     -26-

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Table 5.  U.S. REFINERY CRUDE RUN
  (millions of barrels per calendar day)

Domestic
Alaskan North Slope
Other
Subtotal domestic
Domestic, percent of total
Imported
Arabian
African
South American
Other
Subtotal imported
Imported, percent of total
Total crude run
1977

_
9.4
9.4
70.7%

2.1
0.8
0.5
0.5
3.9
29.3%
13.3
1980

1.3 '
9.0
10.3
70.1%

2.7
1.3
0.4
-
4.4
29.9%
14.7
1985

1.5
8.5
10.0
61.0%

4.0
2.0
0.4
-
6.4
39.0%
16.4
                  -27-

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      In addition to the overall crude slate to be processed by the U.S.
 refining  industry, a breakdown between the crudes being' processed by
 existing  refineries and those to be processed by new grassroots refineries
 over  the  next decade must be specified.  As described below, the existing
 U.S.  industry is simulated by means of six cluster models.  The cluster
 models process all available domestic crude over the time span of the next
 decade and  use imported crude as required to meet overall product demand.
 In the base case, these imported crudes were assumed to be comprised pre-
 dominantly of Arabian Light crude oil.  The grassroots model on the West
 Coast processes only Alaskan North Slope crude oil, because projections
 indicate  an ample supply of North Slope crude oil to meet the demands of
 PAD District V.  Note, however, that although some published reports
 indicate  an ample supply of North Slope crude oil for PAD District V
 (even leading to planning for a pipeline transport of excess North Slope
 oil to the Midcontinent), there is not a consensus among the major U.S.
 refiners  as to whether the North Slope crude will be sufficient to exceed
 the petroleum product demand in District V.
     The  crude oil to be processed in the new grassroots refineries east
 of the Rockies is assumed to be imported oil, predominantly Arabian Light
 crude oil.  However, as noted above, a parametric run was made to investigate
 the impact of importation of lower sulfur crude oils, such as Nigerian-
 type oils.  This parametric run would also be indicative of the effect of
 introducing Alaskan North Slope crude oil into the midcontinent, used in
 new grassroots refinery construction east of the Rockies.
 2.   U.S. Supply/Demand Projections
     Prior to 1973, forecasting the oil demand in the United States was a
 straightforward exercise, involving the application of historically
determined growth rates to base year consumption data.  However, the pattern
of continuous growth was interrupted by massive increases in foreign oil
prices (and later domestic decontrolled prices), the Arab oil embargo, and
a period of economic recession.
     The general approach which has been used by ADL in product demand
forecasting is to conduct an indepth analysis of total energy requirements
                                     -28-

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by individual end-uses, which  are  then matched with projections of supplies
of basic energy sources,  including oil,  gas,  coal, nuclear and hydroelectric
power.  Because of  the stimulus  of high  oil prices and considerations of
security of supply, non-oil  energy supplies are developed as rapidly as
possible, limited only by technical,  environmental, governmental, and
resource considerations on the one hand,  and  by end-use considerations on
the other, such as  the nuclear contribution being limited to the base load
electric power generation.   The  availability  of non-oil energy sources are
also evaluated in the light  of the recent declines of United States natural
gas production, potential environmental  constraints on exploitation of
coal reserves, inflation-caused  reappraisal of the capital intensive new
energy forms such as oil  shales, and  failure  to meet targets for nuclear
generation capacity.  Furthermore, the product demands incorporate recent
changes in the structure  of  energy use within end-use sectors, such as
increased electricity consumption  in  the domestic sector and an increased
use of oil as petrochemical  feedstock.   Also  included is the effect of energy
conservation.  Of course,  the  impact  of  energy conservation is difficult to
assess from recent  product demand  data because of the simultaneous
occurrence of economic recession,  mild winters, and high oil prices.
     In the current study the  demand  forecast for the United States refining
industry was obtained by  two different approaches.  To facilitate the
task of combining the demand forecast with the scale up of the cluster
models (Appendix G), one  simplistic forecasting approach was utilized which
led to a growth rate of 2% per annum  for all  products from the domestic
refining industry.  However, to  ensure that the study results were not
unduly influenced by this  simplistic  approach, parametric runs were under-
taken to evaluate the affect of  a  more sophisticated forecasting technique.
Each of these forecasting  techniques  will be  discussed in summary form here,
while additional information of  a  detailed nature is presented in Appendix B.
a.   Uniform Product Growth  at 2%  Per Annum -
     Since the demand forecasts  are intended  simply to identify differences
in refining requirements  among the six scenarios, the actual demand fore-
cast for each product may  be relatively  unimportant.  Therefore, the
methodology, discussed in  additional  detail in Appendix B, contains three

                                      -29-

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 key  simplifying assumptions:   (1) demand for all products grows at one
 uniform  rate of 2% per annum between 1975 and 1985;  (2) demand growth
 occurs in  equal increments throughout this forecasting period; and (3)
 product  imports are maintained at 1973 levels.
      From  the base year, 1973, product demand was forecast to realize zero
 growth over 1974 and 1975, and average 2% per annum  thereafter.  Beyond
 1975, published projections of oil demand growth rate range between 1% and
 3.5% per annum, depending upon assumptions regarding oil prices, consumer
 price sensitivity, conservation incentives, the availability of alternate
 energy forms, and U.S. government policy.  An estimate of 2% average annual
 growth was selected to reflect generally slower than historical growth rates
 resulting  from higher oil prices, but assuming some  optimism regarding the
 future economic growth of the country.
      It  is not likely that this demand forecast will closely approximate
 the  real growth of petroleum products over the next  decade; however, this
 was  demonstrated elsewhere  to be an adequate assumption of this product
 growth rate.  To arrive at this conclusion, a parametric run was made
 utilizing  more detailed evaluations of product demand growth, the methodology
 for  which  is discussed below.
 b.    Non-Uniform Petroleum Product Growth Rates -
      In  this more sophisticated projection of product demand growth rate, two
 sets of  assumptions were used to develop a definitive range of energy
 supply/demand balances.  In one case, economic growth was assumed to be
 somewhat slower than historical rates, but high enough to permit a rising
 standard of living.  Higher energy prices alone (but not governmental action)
 are  assumed to result in consumer energy conservation.  Likewise, higher
 energy prices provide the incentive for the development of domestic energy
 resources.  A second case was defined in which economic and total energy
 growth fall further off historic rates as a result of both strong governmental
 action and higher energy prices.  Government action  in the form of
 conservation incentives, selective taxes on oil, import tariffs on oil, etc.,
is taken to enhance the effects of higher prices in  dampening  demand  and
stimulating the development of domestic resources.
                                      -30-

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     In both of these categories, coal production and consumption, which
have declined in recent years, are expected to be rejuvenated as a result
of higher energy prices.  After development of the coal industry, production
capacity will no longer be such a severe limitation on coal consumption
after 1980.  Natural gas is assumed to be supply-constrained throughout the
forecast period, as production from the contiguous United States fields
continues to decline and is not offset by volumes from Alaskan sources
until very late in the forecast period.  Nuclear power is expected to be
the most rapidly growing primary energy form, showing '25- to 30-fold increase
over the forecast period.  Nonconventional energy sources, such as solar,
are not expected to play a significant role during the time frame of this
forecast.
     The demand for energy was developed by breaking down the total energy
consumption into demand by various end-use sectors (e.g., transportation,
industrial, residential/commercial, etc.).  At the end-use sector level,
the historical growth trends in energy consumption were identified and then
modified in line with the basic assumptions described above.  The modifica-
tion of historic growth rates took into account our expectations of the
impact of consumer conservation, government policy, energy prices, and
macro-economic conditions.
     The breakdown of oil demand by product was accomplished by examining
the oil consumption patterns of specific end-use sectors.  To project future
oil consumption patterns in the transportation sector, for example, separate
forecasts were developed for automotive, rail, marine, and air transport,
and the fuels were projected accordingly, taking into account any efficiency
improvements expected.
     The product forecast from this analysis is shown in detail in Appendix
B.  Imported petroleum products were assumed to be constant in the results
of both of these demand forecasts at the 1973 level, as a result of govern-
mental policy considerations.  It is therefore possible to compare product
imports with the domestic U.S. demand to arrive at the domestic refinery
demand for the next decade.  These refinery production expectations were
used in the L.P. model studies.
                                      —31—

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 c.    Gasoline Grade Distribution -
      For both of these demand forecasts,  it  is  necessary  to project  the
 gasoline grade requirements  over the  next decade,  under the scenarios
 pertaining to lead regulations.   By consideration  of  the  expected  growth
 rate of introduction of new  cars (requiring  unloaded  gasoline), new car
 imports, and automotive distribution  by weight,  the grade distribution
 under these scenarios was  projected as  defined  in  Table 6.
 3.    Key Product Specifications
      The definition of future product specifications  is quite  important to
 the successful operation of  the  cluster and  grassroots models.  For  example,
 in  the study of regulations  on sulfur oxides emissions, the most likely
 method to reduce fluid catalytic cracker  (FCC)  regenerator sulfur  oxides
 emissions is to hydrotreat the fluid  catalytic  cracker feedstock.  When this
 hydrotreating is accomplished, the sulfur levels of all of the FCC products
 are diminished, including  the sulfur  levels  of  blending components in the
 fuel oil pool.  To actually  represent the cost  of  emissions reduction,
 therefore, a specification must  be placed to prevent  the  fuel  oil  pool sulfur
 level from changing.   Hence,  in  any study of the impact of a potential
 regulation on the refining industry,  accurate definition  of the product
 inspection for the major petroleum products  must be considered in  order
 that the computer model operate  in a  fashion which would  be realistic in
 terms of petroleum industry  flexibility or market  demand.
      The importance of economic  factors in the  determination of petroleum
 product specifications is  well known.  For example, there is usually a price
 premium associated with the  lower sulfur  levels of heavy  fuel  oil.  In
 addition,  there are performance  requirements for certain  product  specifica-
 tions,  such as the distillation  and volatility  characteristics of motor
 gasoline.   In recent  years,  however,  the  impact of governmental regulations
 on  the  specifications for  petroleum products has become  increasingly
 pronounced,  a regulation which would  specify the lead level  of motor
 gasoline.   Hence,  an  assessment  is required  of  the likely future course  of
 governmental regulations on  all  major products  over  the  next decade.
      Complete identification of  product specifications in the computer models
 is  contained in Appendix C.   The highlights  of  the analysis  and the principal
product specifications  used are  summarized here.
                                       -32-

-------
                                   Table & GASOLINE GRADE REQUIREMENTS BY PERCENT
Grade Distribution %
A. No lead regulations
Premium (100 RON)
Regular (94 RON)
Unleaded (92 RON)
B. Unleaded with no lead phasedown
Percent of pool
Premium
Regular
Unleaded
C. Unleaded with lead phasedown3
Promulgated lead
phasedown pool
average, grams/gal.
Allowable grams of
lead per gallon of leaded gasoline
1977
PAD I II III IV V

27 16 25 13 38
65 76 68 80 52
8 8 7 7 10


15 5 13 3 22
54 63 56 66 42
31 32 31 31 36

1.0
-

1.74
~
1980
I II III IV V

33 22 31 19 44
64 75 67 79 52
33224


41315
37 39 38 40 31
59 60 59 59 64

0.5


1.66

1985
I II III IV V

40 29 38 26 50
58 69 60 72 48
22222


00000
ooooo
100 100 100 100 100

b


b

U.S. average
1977

24
68
8


12
56
32

1.0 ~


1.74

1980 1985

30 37
68 61
3 2


3 0
37 0
60 100

0.5 b


1.66 b

asame distribution pattern used as in unleaded (Item B.)
b100% unleaded gasoline

-------
 a.    Motor Gasoline  Specifications -
      Among the most  important product  specification for motor gasoline in
 such a study is  the  octane number of the several grades of motor gasoline
 to  be produced from  the  refining industry.  Survey data on the three grades
 of  motor  gasoline  is shown in Table 7.  In the modeling studies of the
 present investigation, the projected research and motor octane numbers for
 regular,  premium and unleaded gasoline, respectively, over the remainder
 of  the decade varied by  region  (Appendix C), but were approximately 93/85,
 99/91,  and 92/84.  Some  studies  '   may be interpreted to indicate that
 the unleaded gasoline octane numbers shown in Table 7 will be increased
 over the  next decade to  satisfy the octane requirements of an aging auto-
 motive fleet.  Evaluation of the impact of producing higher octane unleaded
 gasoline  is discussed elsewhere.
      In Table 8  are  shown selected results of a survey on unleaded gasoline,
 broken down by district.  It is apparent that the 92/84 specification on
 the research and motor octane numbers  used in this study describes a large
 fraction  of the  United States marketing area, particularly since MON is the
 limiting  specification.  The average sensitivity is somewhat larger than
 used in the present  study.  This will  make the study results conservative
 in  principle; in practice, it will have no effect due to MON being the
 limiting  specification.
      The  Reid vapor  pressure of the gasoline pool, as shown in Table 7,
 varies significantly between summer operation and winter operation.  Previous
       12
 studies    have shown that the summer/winter operation can be effectively
 simulated  by means of an average Reid  vapor pressure, reflective of both
 summer and  winter operations.  Consequently, in the present program all
 gasoline  specifications were set at 10.5 Ibs. RVP.
                              13
      It has also been reported   that  realistic distillation specifications
on motor  gasoline must be used in computer simulations to ensure that  the
model adequately represents the refining industry.  Table 7 provides
historical  data on distillation specifications for comparison  to those
placed on gasoline products as follows.  For premium gasoline  the  150ฐF
distillation  temperature is reached between 20 and 28% distilled overhead,

                                      -34-

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                   Table 7. MOTOR GASOLINE SURVEY DATA




Research octane no.
Motor octane no.
Lead, g/gal
Reid vapor pressure, Ib.
Distillation, ฐF
20% evaporation
30% evaporation
50% evaporation
Grades of motor gasoline
Regular
Winter
1974-1975
93.4
86.1
1.58
12.0

129
152
202
Summer
1974
93.4
85.9
1.90
9.6

142
164
211
Premium
Winter
1974-1975
98.9
91.6
2.10
11.8

134
161
210
Summer
1974
98.9
91.5
2.32
9.7

146
172
217
Unleaded
Winter
1974-1975
92.3
84.0
0.02
10.9

139
166
214
Source: U.S. Dept. of Interior, Bureau of Mines, Petroleum Products Survey Motor Gasolines,
       Summer 1974 and Energy Research & Development Administration,
       BER C/PPS-75/1  - Motor Gasolines, Winter 1974-75.
                                   -35-

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            Table 8. MOTOR GASOLINE SURVEY. WINTER 1974-75
                   AVERAGE DATA FOR UNLEADED GASOLINE IN EACH DISTRICT
District name
Northeast
Mid-Atlantic Coast
Southeast
Appalachian
Michigan
North Illinois
Central Mississippi
Lower Mississippi
North Plains
Central Plains
South Plains
South Texas
South Mountain States
North Mountain States
Pacific Northwest
North California
South California
Average
Gr.,
ASTM
D287
ฐAPI
59.2
60.2
59.8
60.6
61.7
61.2
62.5
61.2
63.3
65.1
63.9
60.6
61.9
63.8
61.8
56.9
59.0
61.3
Sulf.,
ASTM
D1266
wt.%
0.029
.027
.024
.022
.033
.026
.024
.034
.052
.037
.033
.019
.038
.033
.010 i
.016
.044
.029
Octane number
RON
ASTM
D2699
92.8
92.5
92.5
92.9
91.9
92.3
92.0
92.5
92.0
92.0
92.0
92.0
91.5
91.5
92.7
93.2
92.5
92.3
MON
ASTM
D2700
83.9
83.8
83.7
84.5
83.9
84.3
83.8
83.8
84.3
84.3
84.6
83.7
83.4
83.6
84.7
83.9
83.5
84.0
R+M
2
88.4
88.2
88.1
88.7
87.9
88.3
87.9
88.2
88.2
88.2
88.3
87.9
87.5
87.6
88.7
88.6
88.0
88.2
RVP,
ASTM
D323
Ib
11.0
11.4
11.0
11.8
12.1
12.2
10.9
11.5
11.1
10.8
10.8
11.1
9.7
10.0
11.0
9.4
9.7
10.9
Source: Energy Research & Development Administration, BER C/PPS—75/1 — Motor Gasoline,
       Winter 1974-1975.
                                -36-

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and the 210ฐF distillation temperature  is  reached between 42 and 54%
distilled overhead.  With regular and  unleaded grades  the 150ฐF
distillation point is reached between 20 and  30% distilled overhead,
whereas the 210ฐF specifications were identical to those of the premium
grade gasoline.
b.   Sulfur Content of Residual Fuel Oils  -
     As indicated above, one of the key product specifications required
to ensure that the model approximates realistic operation is the sulfur
level of the residual fuel oil.  This specification is  important because
the minimum cost approach of the LP model  is  to produce higher sulfur
fuel oils rather than adding desulfurization  and Glaus plant investment.
This subsection summarizes the methodology and results of our forecast
for the U.S. fuel oil demand of differing  sulfur contents.  Of particular
emphasis here is the sulfur level of residual fuel oils produced from
domestic U.S. refineries, in contrast to the  sulfur level of total U.S.
residual fuel oil demand, which is influenced by imported fuel oils.
     To determine the allowable sulfur content of fuel oil to be burned
as refinery fuel (and not marketed) for each  of the cluster models, an
evaluation was made of the existing state  regulations on allowable SO
                                                                     X
emissions.  This analysis included an investigation of  the regulations
applicable to the particular refineries being simulated in the cluster
models as well as those for the PAD district  the model was intended
to simulate.  From this analysis of regulations, sulfur specifications
were determined for refinery fuel for each cluster model, ranging from
0.6% to 1.5% depending on the geographical location of  the cluster model
simulation.  A complete discussion of the  methodology and results of this
analysis is presented in Appendix D.
     The remainder of this section deals with the sulfur specification
of residual fuel oils manufactured and marketed in the  U.S. (as distinguished
from fuel oils burned within the refinery  or  imported for domestic sales).
     The forecast of the sulfur level of residual fuel  oils manufactured
and marketed in the U.S. was based upon an analysis of  the current air
quality regulations required by federal, state, and city agencies; the

                                      -37-

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 current  status  of  these  regulations, with particular attention to variances
 being  granted;  the likely  future  trend of environmental regulation; and
 the  overall  economic environment.  In the course of this program, discuss-
 ions have  been  held with federal, state, and city environmental protection
 authorities.  A program  of interviews with East Coast electric utility
 companies, accounting  for  over  90% of the total fuel oil consumed by
 East Coast utilities,  was  also  conducted.
     The current inflationary tendency in the United States and the U.S.
 policy of  energy independence could be contributory factors to the relaxation
 of air pollution regulations, particularly if the use of domestic coal is
 to be  emphasized.   Tendencies to  use higher sulfur fuel oils when meteor-
 ological conditions are  favorable and lower sulfur oils when meteorological
 qonditions are  adverse will also  play a potential role in the average
 sulfur level of the fuel oil burned in the U.S. during the next decade.
 On the other hand,  environmental  regulations now in effect will not be
 rapidly  changed.   Most of  the existing variances are temporary and there
 will still be areas in the United States which are unlikely to grant or
 renew  exemptions.
     The historic  trend  of the  sulfur content of heavy fuel oils manu-
 factured and marketed  in the United States is shown in Figure 3.  It is
 apparent that the  sulfur content  of the lighter grade fuel oils has
 diminished considerably  in the  last five years.  Howeverf the trend of
 the  heavier  grade  fuel oils is  less evident.  Table 9 shows the availability
 of residual  fuel oil by  sulfur  level for the year 1973 and it is apparent
 that the refinery  residual fuel oil production in each of the PAD districts
 has  been at  relatively high sulfur levels, between about 1 and 1.5% on
 average.  However,  considerable quantities of imported low sulfur oil is
 marketed, which allows the burning of fuel oils that will meet the state-
wide sulfur  regulations  discussed in Appendix D.
     Our projections of  future  sulfur levels for U.S. fuel demand stem  from
 the foregoing discussion and also draw upon more detailed information about
likely developments in individual states.  From a consideration of such
factors, it was  projected  that  the sulfur content of the U.S.  residual  fuel
oil demand would be between 1.1 and 1.4%.

                                      -38-

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                              Grade 4 Burner Fuel Oils
         0.6
            1962     1964     1966     1968     1970    1972     1974
                           Grade 5 (Light) Burner Fuel Oils
         1.2
            1962    1964     1966     1968     1970    1972     1974
                            Grade 5 (Heavy) Burner Fuel Oils
/.u
1.8
1.6 i
1.4
1 •?


s



• 	 H



/



^



•^1


/
/


^
s



, — '



^N



S


S
^


\
\

            1962    1964     1966    1968     1970    1972     1974
                              Grade 6 Burner Fuel Oils
            1962     1964     1966    1968     1970    1972     1974
  Source:  U.S. Dept. of Interior, Bureau of Mines, Petroleum Products Survey, Burner Fuel Oils, 1974
FIGURE 3    HISTORIC TREND OF HEAVY FUEL OIL SULFUR CONTENT AS PRODUCED
             AND MARKETED IN U.S.
                                   -39-

-------
O
                                       Table 9.  AVAILABILITY OF RESIDUAL FUEL OIL BY SULFUR LEVEL, 1973
                                                                 (Thousands of Barrels)
P.A.D. District
1

II

III

IV

V

U.S. Total

Fuel oil source
Refinery production
imports
Refinery production
imports
Refinery production
imports
Refinery products
Imports
Refinery production
Imports
Refinery production
Imports
Sulfur content, wt%
0-0.5
11,743
232,889
985
1,654
12,790
201
824
0
70,348
9,542
96,690
244,286
0.51-7.00
15,834
130,258
30,368
1,964
26,462
2,303
2,451
0
7,385
32
82,500
134,557
1.01-2.00
16,112
74,732
25,952
1,719
9,927
547
3,323
0
47,528
1,464
102,842
78,860
over 2.00
8,569
160,814
13,815
770
39,276
1,408
3,266
0
7,639
221
72,565
163,212
Total
52,258
598,912
71,120
6,107
88,455
4,459
9,864
0
132.900
11,259
354,597
620,736
                           Source:  U.S. Dept of Interior, Bureau of Mines, Availability of Heavy Fuel Oils by Sulfur Level, Dec, 1973.

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     For purposes  of  this  study we  assumed an overall U.S.  average  sulfur
content for residual  fuel  oil  of  1.3  wt.%, representing maximum sulfur
levels of 1.4 wt.% east of the Rockies  and 0.9 wt.% west  of the Rockies.
A parametric analysis assumed  a U.S.  average residual fuel  sulfur content
of 1.1 wt.%, the weighted  average of  1.2  wt.% sulfur  east of the Rockies
and 0.75 wt.% west of the  Rockies.
     The importance of testing the  sensitivity of  study results to  the
overall U.S. average  residual  fuel  sulfur level  is highlighted  in Table 10
for the East of Rockies grassroots, Scenario A.  It can be  seen that the
impact on the industry simulation for variations between  1.4% (base case)
                                                             v
and 1.2% (parametric  run)  sulfur  level  of the East of Rockies residual
fuel oil pool is quite marked.  As  shown  in that table, the imported
residual fuel oil  and the  production  from existing refineries must be
added to the production from new  East of  Rockies grassroots refineries
in 1985 to match the  total residual fuel  oil sulfur content on  the East
Coast.  Because of the leverage effect  of the small volume  of residual
fuel oil produced  from grassroots refineries versus the volume available
from imports and existing  refineries,  the variation in sulfur content  of
residual fuel oil produced in East of Rockies grassroots refineries  is  from
about 0.6 wt.% to  1.8 wt.% depending upon whether the East of Rockies pool
is at 1.2 wt.% or  1.4 wt.% (corresponding to overall U.S.  pool averages
of 1.1 wt.% and 1.3 wt.%,   respectively).  Obviously the cost of  desulfur-
ization capability in the  grassroots refineries varies accordingly.
4.   Processing and Blending Routes
     The computer  simulation of the U.S.  refining  industry  utilized
cluster models, chosen to  represent the existing refinery structure, and
grassroots models, chosen  to represent  either new  grassroots refinery
constructions or major expansions of  existing refineries.   The  cluster
models were allowed to add new downstream process  equipment of  reasonable
economic size.  Accordingly, these models had essentially the same
processing and blending capability  during the study period.
     The unit yields  and product  properties were obtained from  a variety
of petroleum industry sources.  The ability of the cluster  models to
represent actual refineries  when  using  these unit  yields  and product
properties was confirmed in  calibration studies, discussed  below.   These

                                    -41-

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            Table 10. GRASSROOTS REFINERY FUEL OIL SULFUR PROJECTION - 1985
                                 SCENARIO A - EAST OF ROCKIES ONLY
Total East-of-Rockies3
. Sulfur content
(wt%)
1.2
1.4
Fuel oil
(MBPD)
2,852
2,852
Imports
Sulfur content
(wt%)
1.28
1.28
Fuel oil
(MBPD)
1,797.7
1,797.7
Existing refineries'5
Sulfur content
(wt%>
1.44
1.44
Fuel oil
(MB/CD)
561.3
561.3
Grassroots refineries'5
Sulfur content
(wt%)
0.63
1.78
Fuel oil
(MBPD)
493
493
aFuel oil produced in refineries plus imports
 ''Fuel oil produced and marketed in U.S.

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 same unit yields  and  product  properties were also used in the  grassroots
 refinery simulations.   A complete discussion of the unit  yields and
 product properties  available  in the computer program is contained  in
 Appendix H.
     Hydrogen  generation in the cluster models  was obtained solely from
 refinery gas or imported natural gas.   In  the grassroots  refinery, the
 first option was  also allowed,  as well  as  the ability to  generate  hydrogen
 from petroleum naphtha.
     Coking capacity  for the  cluster refineries was maintained at  a level
 similar to that derived during  the calibration  runs.   No  coker capacity
 was allowed to be constructed in the East  Coast grassroots refinery,
 because of market demand considerations.   Coker capacity  in the West
 Coast grassroots  refineries for the several  scenarios discussed above was
 not allowed to exceed that  available from  Scenario C.   There was a tendency
 for coker capacity  to be greatly increased as an  inexpensive means to
 remove sulfur  for Scenario  F, resulting in coke production exceeding likely
 West Coast demand capabilities.   Visbreaking and  solvent deasphalting were
 not allowed in the  grassroots models.
     In the cluster refineries  desulfurization  of atmospheric bottoms and
 vacuum bottoms was  not allowed,  because the  cluster refineries were
 Intended to be descriptive  of the current  operation of certain existing
 refineries.  In the grassroots  refineries, both atmospheric and vacuum
 bottoms desulfurization were  allowed.
     As discussed above,  the  properties of the  primary products and by-
 products from  the fluid catalytic cracking (FCC)  unit are particularly
 significant to the  assessment of the impact  of  the possible EPA regulation.
 For reasons already described,  the sulfur  distribution of the products
 from this processing  unit is  not well defined at  present.  Moreover, FCC
 gasoline is a  major source  of sulfur to the  unleaded  gasoline pool and
 the combustion of coke in the regenerator  is a  major  source of gaseous
 sulfur oxides  emissions  in  the  refinery.   In a  parallel study on reducing
                            Q
sulfur in unleaded  gasoline,  the sulfur distribution among several products
of the FCC unit were  varied in  a parametric  run,  with the distribution shown
in Table 11.   It  can  be  seen  that the percentage  of feedstock  sulfur going
                                     -43-

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   Table 11.  FCC UNIT SULFUR DISTRIBUTION
LARGE MIDWEST CLUSTER, 65% CONVERSION
Stream

H2S
Gasoline
Gas oil
Clarified oil
Coke
Percentage distribution of feed stock sulfur
Base, 1985
39.7
4.3
27.7
22.5
5.9
Parametric run
40.0
6.0
33.0
15.0
6.0
                    -44-

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to coke does not change  considerably  between  the base case and parametric
run.  Hence, the effect  of  FCC  sulfur distribution on reducing sulfur oxides
emissions was not further examined  in a parametric study.  Additional detail
on the product properties for the FCC unit as well as the many other units
used in the models are discussed in Appendix H.
     Another unit critical  to the success of any study of the refining
industry is the catalytic reforming unit.  A significant amount of effort
was expended in the development and confirmation of the yields and properties
of this particular unit.  Yields for  low pressure operation, high pressure
operation, and an average operation of reformers across the industry were
simulated in detail for  several different cases to ensure that the
assumptions made in the  yield patterns of this critical unit did not
significantly detract from  the assessment of the impact of the possible
regulation under consideration.  A  detailed discussion of the reformer
evaluations is contained in Appendix  H.
     Another factor critical to the success of the impact study is the
blending octane numbers  of  reformate,  FCC gasoline, etc., for the variety
of feedstocks, operating conditions,  and gasoline pool compositions used
in the study.  Because of their importance, blending numbers used in this
study were circulated to representatives of the API/NPRA Task Force
assisting in the study.  In general there was good agreement between the
blending numbers utilized in the present study and the suggestions made
by members of this task  force, as summarized in Table 12.
     In the model, two distinct hydrogen systems were employed.  A high
purity hydrogen system was  fed by steam-methane reforming and was delivered
to high pressure desulfurization and  hydrocracking units.  The low purity
hydrogen system was produced from catalytic reformer units and was dis-
tributed to low pressure desulfurization units.  Allowances were provided
fpr interchanges from the high purity hydrogen system to the low purity
hydrogen system.  In addition normal  allowances for solution losses and
flaring circumstances were  also provided.  Careful analysis of this hydrogen
distribution system indicates that  it is a reasonable simulation of refinery
systems and will be an adequate description for the purposes of the study.
If additional purification  of the low purity hydrogen system is required

                                      -45-

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Table 12.  ILLUSTRATIVE BLENDING OCTANE NUMBER COMPARISON
                 (Clear Motor Octane Number)
Stream
90 Sev. reformate
100 Sev. reformate
FCC gasoline (full range)
Alkylate
ADL model
80.1
86.0
80.0
89.8
Ethyl
81-82
87-88
80
-
DuPont
82
87
79-80
-
Marathon
-
-
82-83
92-93
Citgo
—
87.1
79.9
88.7
                         -46-

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cryogenic  units  can be added without  having a major  impact on the overall
capital  Investment penalty  associated with the  potential regulations.
5.   Calibration of Cluster Models
     The U.S. refining industry is  composed of  nearly 300 individual
refineries scattered  throughout the country,  each  characterized by a unique
capacity,  processing  configuration, and product distribution.  There are,
however, logical regional groupings of major  refineries with similar crude
supply patterns, processing configurations,  and product outputs.  There-
fore, the  cluster model  approach was  developed  for this study, in which
the existing U.S. refinery  industry was simulated  by the average operation
of three similar refineries located in each of  six selected regions.  The
selection  of the three refineries as  well  as  the six selected regions was
accomplished with the assistance of the API/NPRA Task Force cooperating
in this  study.   The most important  criteria guiding the selection of these
cluster  models were:  (1) each  cluster model  was to represent, as closely
as possible, a realistic mode of operation, in  that processing units were
to be of normal  commercial  size and that plants would be allowed normal
flexibility in regard to raw material selection and product mix, (2) the
cluster  model crude slate,  processing configurations, and product outputs
were to  bracket  has best as possible, those variations peculiar to each
geographic region.
     The final selection of refineries to  be  represented by the cluster
models is  shown  in Table 13.
     PAD District I was  simulated by  three refineries in the Philadelphia-
New Jersey area  with  capacities ranging from  160,000 to 255,000 bbls/day.
PAD District II  was characterized by  two refinery  clusters, one represented
by the Large Midwest  cluster model  simulating the  Indiana/Illinois/Kentucky
district and processing  high sulfur crudes.   The Small Midcontinent cluster
was also used to represent  PAD  II,  simulating refineries in the Oklahoma/
Kansas/Missouri  district.   This Small Midcontinent model was also used to
represent  small  refiners in PAD District II,  as described in Appendix G.
PAD District III, which  represents  about 40%  of the U.S. refining capacity,
was simulated by two  models because of its overall importance and because

                                       -47-

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             Table 13.  REFINERIES SIMULATED BY CLUSTER MODELS
PAD district
Cluster identification
    Refineries simulated
    1973
Crude capacity,
   MB/CD
    III
              East Coast
               Large Midwest
              Small Midcontinent
              Texas Gulf
Louisiana Gulf
              West Coast
Arco - Philadelphia, Pa.
Sun Oil - Marcus Hook Pa.
Exxon — Linden, New Jersey

Mobil — Joliet, Illinois
Union — Lemont, Illinois
Arco - East Chicago, Illinois

Skelly - El Dorado, Kansas
Gulf Oil - Toledo, Ohio
Champlin — Enid, Oklahoma

Exxon — Baytown, Texas
Gulf Oil - Port Arthur, Texas
Mobil - Beaumont, Texas

Gulf Oil — Alliance, La.
Shell Oil - Norco, La.
Cities Service — Lake Charles, La

Mobil — Torrance, California
Arco — Carson, California
Socal — El Segundo, California
    160.0
    163.0
    255.0

    160.0
    140.0
    135.0

     67.0
     48.8
     48.0

    350.0
    312.1
    335.0

    174.0
    240.0
    240.0

    123.5
    165.0
    220.0
                                         -48-

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 differing types of refinery configurations could be identified.   The  Texas
 Gulf  cluster was typified  by a crude capacity exceeding 300,000  bbls/day
 and heavy involvement  In petrochemicals,  lubes and other specialty products.
 The Louisiana Gulf Coast cluster represented refineries between  174,000
 and 240,000  bbls/day and processed a single source of sweet  crude.  PAD
 District  V was simulated by a West Coast  cluster model and was represented
 by refineries in the Southern California  area.   PAD District  IV  was not
 explicitly simulated because it represents less than 5% of the total U.S.
 refining  capacity.  It was included in  the scale up,  however, as discussed
 in Appendix  G.
     Additional  detail on  the development of the cluster model concept is
 contained in Appendix F.
     Upon completion of  the development of the  cluster refinery  modeling
 concept,  an  extensive calibration effort  was undertaken by ADL with the
 assistance of the Bureau of Mines,  Environmental Protection Agency, and
 the API/NPRA Task Force.   A complete discussion of  the calibration effort
 is contained In  Appendix I.   Only the highlights of this effort  will be
 summarized here.
     The  annual  refining surveys  published in the Oil  and Gas Journal were
 used as the  basic reference source  for  determining  the cluster model process-
 ing configurations, allowing simulation of those refineries listed in Table
 13.  This  source also .provided the  processing unit  capacity available in
 these cluster refineries,  used to limit the available  capacity in the
 cluster models.
     The  1973 annual input and output data was  furnished by the  Bureau of
Mines for  the aggregate  of the three specific refineries comprising each
 individual cluster model (Table 13).  These data included the following:
 (1) crude  oil and other  raw materials fed to the refineries, broken down
by individual state of origin for domestic crudes and  by country of origin
 for foreign  sources; (2) statistics on  fuel consumed  for all purposes in
 the refineries;  and (3)  all petroleum products  manufactured by refineries
 for the year.
     Each  individual oil company  furnished EPA  the  following proprietary
data for  1973:   (1) gasoline grade  distribution and the associated octane

                                      -49-

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 levels  and  lead  levels  for each grade;  (2) total gasoline volumes and
 average sulfur contents;  (3) crude slates and sulfur levels; and (4)
 intakes and operating conditions on selected units.  The EPA averaged
 these data  to obtain information representing the cluster models, and
 supplied these data to  ADL.
     As summarized in Appendix I, four main areas were considered to
 compare the degree of calibration to the cluster models.  These were:
 (1)  overall refinery material balance  (i.e., volume of the crude intake
 required to balance specified product demands and internal fuel require-
 ments);  (2) refinery energy consumption; (3) processing configuration,
 throughputs and  operating severities; and (4) key product properties
 (e.g.,  gasoline  clear pool octanes, lead levels, etc.).
     A  selected  result  showing a portion of the calibration results for the
 Large Midwest cluster is presented in Table 14.  Shown here is the crude
 intake,  as  specified by the Bureau of Mines data and industry data to pro-
 vide a  given product outturn, as well as a result of the computer model
 simulation.  Also shown is the energy consumption required for this crude
 intake  and  product outturn, and a summary of the principle refinery process
 operations.  It  is apparent that the agreement of the model prediction and
 the data base for this  Large Midwest cluster is excellent.  Additional
 detail  on other  clusters as well as other calibration criteria are contained
 in the  discussions of Appendix I.
 6.   Existing and Grassroots Refineries
     The existing U.S.  refinery industry was simulated by means of the
 six cluster models, as  discussed above.  New grassroots capacity was
 required when atmospheric distillation requirements exceeded 90% of the
 calendar day capacity listed in the Oil and Gas Journal for the specific
 refineries being simulated by these cluster models.  In practice, operation
 at 100%  of the calendar day capacity cannot be achieved due to unscheduled
 refinery  turnarounds, limitations on secondary processing capacity imposed
by product specifications, variations in crude slate, crude supply re-
strictions, regional and logistical constraints, and imbalances between
 individual product output and market demand.  The industry has historically
                                            14
achieved  about 90% of calendar day capacity,   so this  limitation was used

                                     -50-

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      TabU 14. CALIBRATION RESULTS FOR LARGE MIDWEST CLUSTER


Material balances
Total crude intake MB/CD
Energy consumption
Purchased natural gas MB/CD (F.O.E.)
Total fuel consumption MB/CD (F.O.E.)8
Electricity MKWH/D

Processing summary
Catalytic reforming Intake MB/CD
severity RON
Catalytic cracking Intake MB/CD
conversion % vol .
Alkylation Production MB/CD
Coking Intake MB/CD

BOM Data

146.1

.2
8.1
843
Oil and gas
capacity MB/SD

32.7
-
55.0
-
13.4
15.8
Industry
data

145.5

-
-
-
Industry
data

27.8
90.7
51.2
74.9
11.4
13.6
Model
run

145.5

.2
8.4
545
Model
run

27.6
90.0
48.7
74.3
12.0
14.1
aExdudei catalyst coke
                              -51-

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 to provide a conservative assessment of when new capacity is required,
 thereby providing a conservative assessment of the penalties associated
 with  the potential regulation.  However, since all penalties are reported
 as differences between the various scenarios considered, a precise figure
 of calendar day utilization is unnecessary.
      To meet increased product demand and provide additional crude required
 when  reducing refinery SO  emissions, an increase in crude run to each
                         X
 cluster is required as the decade proceeds.  The existing refining industry
 (cluster model) is allowed to expand down-stream processing capacity as
 required to meet these constraints.  However, when the crude run reaches
 the limitation of the atmospheric distillation capacity, the expansion
 of the cluster model is no longer allowed, and new grassroots facilities
 must  be constructed.
      The grassroots models used in this study represent either new, basic
 grassroots refineries to be built in the United States over the next
 decade or major expansions in crude distillation capacity in existing
 refineries.
      Those major expansions of existing refining capacity which have taken
 place within the last few years are often noted by new atmospheric dis-
 tillation capacity, new tankage requirements, and frequently new or greatly
 expanded production of refinery products which have otherwise been only a
minor component of total product outturn.  An example of such major new
 expansion is the production of large quantities of low sulfur fuel oil.
 In any event, this type of new major refinery expansion frequently exhibits
relatively little interaction with existing refinery processing units, and
little additional flexibility for product blending over that of a refinery
built on a segregated grassroots basis.  Therefore, any requirements for
distillation capacity in the industry were simulated by addition of new
grassroots capacity.  The product outturn and therefore the crude run
required for this new grassroots capacity was chosen to be sufficient  to
balance the product demand and product quality requirements for the United
States as a whole.  New grassroots construction was simplified by con-
sideration only of a location typified as "east of the Rockies" and another
location typified as "west of the Rockies", each location with its own
crude slate as discussed in Appendix A.

                                      -52-

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     The yields and product qualities for new capacity additions were
Identical to those provided in the cluster model operation, with the
exception of catalytic reforming, wherein all new capacity was assumed
to utilize a yield structure and Investment representative of low pressure,
bimetallic reformers.
     The refinery fuel system for both the cluster models and the grassroots
models was constrained to meet environmental regulations typical of the
refining regions in which these models operated.  A complete discussion
of the allowable refinery fuel sulfur level and the methodology by which
it was determined is contained in Appendix D.
                                                  . i
7.  _ Economic Basis for Study
     The estimation of capital investments and operating costs for petroleum
processing units is difficult at the present time because of the rapid rate
              •
of inflation and the long elapsed time that it takes to build a large and
complex petroleum refinery.  Investment estimates were obtained by using
                                                                     t
data from a variety of literature sources, such as the Oil and Gas Journal,
and by extensive discussions with process licensors and contractors.  In
order to minimize the effect of future cost  escalations on the cost
estimations, the Investment estimates were made on a 1975 first quarter
basis.  This investment estimate will be applicable for refineries which
were conceived, designed, equipment ordered, and constructed all within
the first quarter of 1975.  Escalation of these costs are reported
separately in order to allow recalculation of these ultimate investments
on other inflation schedules if so desired.
     Onslte capital investments were estimated by compositing the information
available from these several sources.  The onsite process unit estimates
used In this study are typified in Table 15.  Additional detail of  the
specific information on capital investments is contained in Appendix H.
     The primary purpose of the economic study was to determine the capital
investment and operating costs associated with the reduction of refinery
SO  emissions.  Consequently, economic penalties for the cluster models
  Jnn
were determined by comparing Scenario F with Scenario C.  Therefore, for
the cluster model, only the incremental downstream capacity required for
                                      -53-

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                  Table 15. ONSITE PROCESS UNIT COSTS
Process unit
Atmospheric distillation
Vacuum distillation
Catalytic cracking
Catalytic reforming (low pressure)
Alkylation (product basis)
Isomerization — once through
Isomerization — recycle
Hydrocracking (high severity)
Naphtha hydrotreating
FCC/coker gasoline hydrotreating
Light distillate hydrotreating
Heavy distillate hydrotreating
Vacuum gas oil desulfurization (also FCC feed)
Atmospheric residual desulfurization
Vacuum residual desulfurization
Coking — delayed
Hydrogen generation - Methane $/MMSCF/SD
- Naphtha $/MMSCF/SD
Sulfur recovery (95% removal) - $/short tons/SD
"Sulfur recovery (99.95% removal) - $/short tons/SD
Size basis, MB/SD
100
40
40
20
10
10
10
25
20
15
30
30
25
50
15
10
50
50
100
100
Investment, $/B/SD
1975, 1st quarter
165
185
925
800
1,400
620
1,240
1,400
235
320
230
250
370
775
1,500
930
230a
260a
25,000
50,000
a$/MSCF/SD
                                  -54-

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Scenario F versus Scenario C was determined and costed.  As part of this
analysis, charges were assessed for the Utilization of spare, idle
capacity which was available in 1974 but was incrementally consumed at
a faster rate for Scenario F than for Scenario C.  Any processing unit
severity upgrading that was required was also costed.  For example, if
the severity of the catalytic reforming unit required was higher in
Scenario F than in Scenario C, then the incremental cost was charged
to Scenario F for upgrading this existing catalytic reformer capacity.
To determine whether or not the catalytic reformer severity needed to be
upgraded, discussions were held with industry sources, who estimated that
approximately 25% of the existing catalytic reformer capacity was already
capable of 100 RON severity operation.  Therefore the remaining 75% of
catalytic reformers which were not capable of this mode of operation
required an upgrading cost if 100 RON severity were required.  Additional
discussions of the method of calculation for spare capacity utilization
and severity upgrading for all the refinery processing units is contained
in Appendix E.
     Associated with the onsite costs of incremental downstream capacity
in the cluster models is the cost requirement for offsite investment and
working capital.  As discussed in Appendix E, these costs were taken as
a constant 40% of the onsite costs for the cluster models.
     For the grassroots models the complete refinery was costed as required
for each scenario.  For example, the capital cost for the grassroots
refinery in Scenario F was then compared to that of Scenario C to determine
the incremental costs associated with the potential regulation.  In this
case the onsite process costs were determined in a fashion analogous to
that discussed for the cluster model.  However, the offsite costs were
determined by the Nelson complexity factor approach   and a separate
assessment of working capital requirements was made, at approximately 70%
of the total onsite capital investment.  A summary of the items included
is shown in Table 16.  The net effect of this method of calculation was
that offsite and associated costs (including working capital) were approxi-
mately 200-300% of onsite costs.  For these grassroots refineries the
complete onsite plus offsite refinery costs range from about $2900 per barrel
                                      -55-

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                Table 16. OFFSITE AND OTHER ASSOCIATED COSTS OF REFINERIES USED IN
                           ESTIMATING COST OF GRASS ROOTS REFINERIES
                                        1st Quarter 1975 Basis
                                           (% onsite cost)
Type of cost
Mainly complexity-related offsites, %
Utilities, safety, fire and chemical handling
Buildings
Piping, product handling
Site preparation, blending, roads and others
Subtotal, complexity-related
Other offsites, %
— Includes tankage, ecology and land
Total offsites
Associated costs
Chemicals and catalysts
Marine or equivalent facilities
Working capital
Other
— Includes training, spares, autos, telephone,
domestic water, cafeteria and recreation
Total associated
Refinery complexity8
3

61.0
14.0
40.0
23.0
138.0

87.0
225.0

6.0
20.0
70.0
20.0


116.0
4

51.4
9.8
26.0
15.8
103.0

67.0
170.0

5.0
15.5
70.0
20.0


110.5
5

46.2
8.2
21.4
13.1
88.9

59.0
147.9

4.5
12.8
70.0
20.0


107.3
6

41.0
6.6
16.8
10.3
74.7

51.0
125.7

4.0
10.0
70.0
20.0


104.0
7

39.2
6.2
15.6
9.4
70.4

48.0
118.4

3.8
8.8
70.0
20.0


102.6
8

36.9
5.6
14.1
8.3
64.9

44.2
109.1

3.5
7.8
70.0
20.0


101.3
9

35.7
5.2
13.2
7.6
61.7

42.0
103.7

3.3
6.8
70.0
20.0-


100.1
10

34.0
4.7
12.0
6.7
574

39.0
96.4

3.0
5.8
70.0
20.0


98.8
aSee reference #17.

-------
per day  for  a  low  sulfur  crude  up  to  about  $3500  per  barrel  per  day for a
high  sulfur  crude,  on a 1975  first quarter  basis.   An illustration of  the
investment requirements for a grassroots  refinery of  the present study is
shown in Table 17.
      Operating costs  were determined  by a direct  assessment, on  a unit-by-
unit  basis,  of either the additional  downstream processing requirements of
the cluster  models or the complete refinery requirements for the grassroots
models.   Catalysts and chemicals,  cooling water and electricity  were
determined from the processing  unit intakes themselves and tetraethyl  lead
was determined as  required to meet the  gasoline blend requirements.
Maintenance  and manpower  assessments  were determined  on an off-line basis,
i.e., they were not determined  by  the computer model  directly.   Manpower
requirements were  determined  both  for severity upgrading and for new unit
construction by examination of  operating  requirements of the particular
units under  consideration. Maintenance costs were assessed at a level of
3% of onsite investments  and  1.5%  of  offsite investments.
      In  addition a capital charge  was assessed for new investment in any
processing unit, either in a  cluster  model  or a grassroots model.  The
capital  charge was taken  to be  25% of the total capital investment, which
is approximately 12%  rate of  return,  on an  after  tax, discounted cash  flow
basis.   The  same capital  charge was applied to both the downstream capacity
additions in the cluster  model  and new  grassroots facilities in  a grassroots
model, on the  philosophy  that the  amortization for both types of investments
must  be  approximately equivalent in the present economic climate. A typical
level of cash  operating expenses (exclusive of capital charge) for the
grassroots refinery was approximately 80<: per barrel  of crude capacity.

     An assessment  of  cost escalations  over  the next  decade was made to
reflect the actual  capital investment which may be  required in the time
interval in which the  actual  refinery construction will take place.  This
escalation of costs can result  from increases in the  costs of refinery
equipment which outpace the general inflationary trend in the United States.
As a basis for this cost escalation, an approach  similar to the  usual
construction S-curve escalation  analysis  was conducted, in which the annual

                                      -57-

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  Table 17.  GRASS ROOTS REFINERY CAPITAL INVESTMENT
Location:
Crude processed:
Refinery complexity:
East of Rockies
Arabian Light
7.01
Scenario: C

Process unit
Atmospheric distillation
Vacuum distillation
Catalytic reforming
Catalytic cracking
Hydrocracking
Isomerization-recycle
Alkylation (product basis)
Hydrogen manufacture
(MMSCF/SD)
Desulfurization
Full range naphtha
Straight run distillate
Vacuum residue
Sulfur recovery and amine
treat (short tons/SD)

Throughput
(MB/SD)
231.7
100.1
52.2
47.4
26.6
11.5
14.9

62.1

62.9
26.4
21.1

366

Total onsite investment
Off site and associated costs at 151.0% onsite
investment
Working capital at 70.0% onsite investment
Total cost
Investment/B/SD
Onsite investment
(millions of dollars)
28.1
12.5
36.5
42.0
32.2
13.8
17.8

13.3

9.4
6.7
27.0

9.4
248.7

375.6
174.1
798.4
3,446
                            -58-

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escalation for the years 1975-1985 were taken to be 20%, 17%, 15%, 10%, 10%,
10%, 9%, 9%, 8%, 8%, 8%.  Clearly, assessments of the rate of cost escalation
for the coming decade are highly intuitive and will depend upon a variety of
factors, such as further increases in foreign oil prices, general inflationary
tendencies in the United States, and many others which are difficult to
predict with any degree of precision.  Indeed, cost escalation now appears
to be flat through 1975.  Therefore, the impact of the potential regulation
on the refining industry will be summarized in the following body of the
report both on a 1975 first quarter basis and on an escalated basis, with
the above assumed escalation schedule.
8.   Scale Up to National Capacity
     In the cluster model approach, the U.S. refining industry has been
simulated by six individual cluster models, each cluster representing three
existing refineries in different regions of the United States.  To
represent the impact on the U.S. refining industry, it is necessary to scale
up the results of the cluster model analysis to a regional and a national
basis.  From this estimate of the total production capability of the existing
U.S. refining industry, requirements of the new grassroots models are
obtained by subtracting existing capability from the total product demand
of the U.S. refining industry.  Appendix G discusses the scale up method
and the derivation of product demands foe grassroots refineries in detail.
     The general method employed in scaling up data from the cluster runs
to the existing U.S. refining industry is to compare the gasoline outturn
of the region being simulated by the cluster model to that of the cluster
model itself.  For example, the East Coast cluster represents the refineries
in PAD District I, so a scale up factor in 1973 of 7.127 is used, since this
is the ratio of gasoline production of District I to the gasoline production
of the East Coast cluster.  However, the cluster model used for PAD I is
known to be typical only of the major gasoline producing refineries in that
region.  Therefore, there is, by definition, a quantity of atypical refining
capacity which is not represented by the yields used in the East Coast
cluster model.  Hence an estimate was made also of the atypical refining
capacity in PAD I, to be included as a component of the scale up of the
East Coast cluster model results to PAD I.

                                      -59-

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      PAD II is  represented  by  two  cluster models.   It has been assumed  In
 scale up that the  Small Midcontinent  cluster represents operations of the
 Oklahoma/Kansas/Missouri  district  and that  the balance of District II is
 represented by  the Large  Midwest cluster.   Similarly, in PAD  III, it has
 been assumed that  the Louisiana Gulf  cluster represents the Louisiana Gulf
 refining district  and the Texas Gulf  cluster represents the balance of
 PAD III.
      The West Coast cluster is assumed to represent  the operation of PAD V.
 PAD IV was not  represented  by  a specific cluster model so that the total
 refining capacity  of PAD  IV was similarly included  as an atypical factor
 in the scale up analysis.
      The results of the application of this scale up method,  when composited
 for the total U.S. refining industry  are shown in Table 18, for  1973.   Here,
 the crude consumption by  the cluster  models agrees  with the Bureau of Mines
 data to within  about 2% and the total refinery intake agrees  to  within
 about 1%.
      The major  refinery products agree with the Bureau of Mines  data within
 about 5%, with  the exception of LPG (which  was a swing product in the
 computer runs)  which deviates  from the Bureau of Mines data by about 15%.
 The total product  outturn agrees with the Bureau of Mines data to within
 about 2%.  Therefore, it  is felt that the model scale up method  is calibrated
 well with the Bureau of Mines  data for the  purposes of the present study,
 which emphasizes total energy  penalties of  the refinery and addresses  itself
 to gasoline production capability.  For other types of studies,  the  scale up
 method could be further refined, if so desired, to  provide a  closer match
 of the other minor products from the  refining industry.
      Model  results for the  study years of 1977, 1980, and 1985 were  scaled
 up  using the atypical refining concept described above.  In 1977 scale  up
 factors  were based on meeting  gasoline demand for the total U.S. For  1980
and 1985, however,  the scale up factor approach was based on  total crude run
in each  cluster  and  the effective  crude oil distillation capacity for  the
region being  simulated by that cluster.  The scale  up factors used were
calculated by making  the  crude run in each  region equal to the effective
                                      -60-

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Table 18.    MODEL SCALE-UP COMPARISON, 1973
  U.S. total input/output data, thousands of barrels
Refinery intakes/outturns
Intakes:
Crude oil
Butanes
Natural gasoline
Other
'Total intake
Outturns:
LPG
Gasoline
. Naphtha
BTX
Distillate fuel oil
Residual fuel oil
Other
Total outturn
^^^^^^^^^^^^^^^•••^••••••••^(^^•^•••••^^•^••••••••••••••••••••i
Cluster
model
results

12,713.6
254.2
365.2
167.6
13,500.6

401.2
6,572.1
227.5
164.5
3,157.9
956.0
1,886.7
13,365.9
^^•^^•••••^•^••••••••••••••••••••••^•••••••••••••••••H
Bureau of
Mines data

12,430.7
219.8
439.2
281.3
13,371.0
\
349.8
6,572.2
234.7
156.7
2,992.8
971.5
1,849.7
13,127.4
I II II -'- ••IIIIPII 	 "IN
Deviation of
model from
B.O.M. data (%)

2.3
15.6
16.8
-
1.0

14.7
0
3.1
5.0
5.5
1.6
-
1.8
	 U"T ' 	 — ^— ^— '
                    -61-

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crude oil distillation capacity for that region, defined as 90% of the
calendar day rated capacity.
     As discussed in Appendix B, the import levels of products were held
constant at the 1973 level for the coming decade.  Therefore, after scaling
up of the cluster results, adding atypical factors, and adding import levels,
the product outturn from the grassroots refineries could be obtained by
difference from the forecast total petroleum products demand.  The results
showed that by 1980 seven new grassroots refineries at approximately
200,000 BPD each would be required in PAD Districts I through IV and two
new refineries would be required to meet PAD District V product demands.
By 1985, a total of fifteen new refineries were required for PAD Districts
I through IV and a total of three refineries were needed for PAD V.
     The utilization of such scale up factors allowed a direct assessment
of the total energy penalties associated with each of the scenarios under
discussion, as well as an assessment of the operating costs required to
meet the possible regulation.  However, capital investments .were not
determined solely by a direct utilization of the scale up approach,
because this approach does not weigh  sufficiently heavily the capital
requirements of the small refineries simulated by the Small Midcontinent
cluster.  Therefore, an additional factor was utilized in a scale up for
capital costs, as discussed in detail in Appendix G.  Such an approach
adequately includes the dollar cost to the small refiner as a component
of the overall cost to the industry, because his percentage of the total
cost is relatively small.  However, it does not adequately address the total
impact on the small refiner nor the possible impact on the competitive
structure of the petroleum industry.
                                      -62-

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                          III.  STUDY RESULTS

A.   BACKGROUND DISCUSSION
     SO  emissions in refineries emanate from three distinct sources.  The
       x
first is from refinery process furnaces and boilers.  Control of these
emissions can be achieved either by restricting the sulfur level in
refinery fuel or by scrubbing the stack gases prior to discharge into the
atmosphere.  The second source of SO  emissions is from fluid catalytic
                                    X
cracking (FCC) units.  These can be controlled to some extent by limiting
the sulfur content of the feed to the unit or by scrubbing the stack gas
                                                           (
prior to discharge.  The third source of SO  emissions is from the refinery
                                           X
process which ultimately recovers the sulfur removed in the various treating
                                                                         i
processes in an elemental form (commonly known as the Glaus unit).  Control
of these emissions is obtained by increased levels of sulfur recovery or
by stack gas scrubbing.
     With the exception of the Claus plant application, stack gas scrubbing
has not been included as an alternative in the computer model in this study
of the control of refinery SO  emissions.  Preliminary calculations have
                             X
indicated that the capital investment requirements to install stack gas
scrubbing to control refinery SO  emissions will be at least as great as
                                X
the alternatives of reducing refinery fuel sulfur levels and FCC feed
sulfur levels.  Furthermore, FCC feed sulfur reduction results in signifi-
cant yield benefits in the FCC unit and would also be required by the
majority of refiners to meet possible reductions in the maximum allowable
sulfur levels in gasolines.
     Since natural gas fuel for refineries was displaced by residual fuel
oil over the study period (due to assumed natural gas curtailment), SO
                                                                      X.
emissions from process furnaces and boilers became relatively large over
the study period.   To reduce emissions from process furnaces and boilers,

                                      -63-

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 refinery fuel sulfur levels  were  reduced consistent with  potential  regional
 regulations for new sources  (as discussed in Appendix D).   Table  19
 summarizes the existing and  potential  future regulations  (used  for  planning
 assumptions in the present study)  on maximum allowable sulfur levels  of
 refinery fuels applied to each computer model.  All .cluster models  and
 the West of Rockies grassroots model have refinery fuel sulfur  levels
 which are consistent with regulations  for their respective  PAD  districts
 (see Appendix D).   For the East of the Rockies grassroots,  representing
 new capacity in Districts I-IV, the maximum allowable  refinery fuel  sulfur
 content under a reduced SO  emissions  scenario was based  on the average of
                           x
 PAD I-IV.  In all  models the sulfur level of residual fuel  oils produced
 was also controlled to levels specified in Appendix C to  prevent  reduction
 of emissions by increasing the sulfur  level of this product.
      Emissions from FCC units were controlled by  feed desulfurization to a
 level that was compatible with existing technology for the  desulfurization
 of feed to FCC units.   The FCC feed was desulfurized  to a level of  0.2 wt.%
 sulfur or 85% sulfur removal,  whichever was the lower.
      Emissions from the sulfur recovery plants were reduced by  increasing
 the level of sulfur recovery to 99.95%.   This level of sulfur removal can
 be obtained by using the Beavon-Stretford process, for example, to  clean up
                                  18
 the tail gases from Claus plants.
      The approach  taken in this study  on reducing refinery  SO  emissions
                                                              X
 levels was thus to impose constraints  on the operations of  the  three
 sources of SO  emissions as  discussed  above,  within reasonable  limits of
              X
 existing technology.
      Finally,  it should be pointed out that this  study was  conducted  in
 parallel with studies  on the impact of unleaded gasoline  production and
 lead  phase down.   Gasoline and LPG production by  the  cluster models were
 therefore allowed  to vary in reaching  an optimal  solution when  changing
 operations  from the base level of  emissions without the above controls
 (Scenario  C)  to  the controlled level of emissions (Scenario F).  Loss of
 gasoline  production as  a result of the control of refinery  SO  emissions
                               •                               X
was then  assumed to be  made  up with the grassroots models.
                                      -64-

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  Table 19. MAXIMUM ALLOWABLE SULFUR LEVELS OF FUELS BURNED IN REFINERIES
Region (cluster)
East Coast
Large Midwest
Small Midcontinent
Louisiana Gulf
Texas Gulf
West Coast
West of Rockies Grassroots
East of Rockies Grassroots
Sulfur maximum wt %
Estimated existing regulations8
0.6
1.5
1.5
0.9
0.9
0.7
0.7
1.0
Potential future regulations
0.3
0.5
0.5
0.5
0.5
0.3
0.3
0.4
aSee Appendix D.
                                  -65-

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      Detailed results  showing unit  throughputs,  severities,  gasoline
 blends,  inputs and outputs,  costs,  etc.,  are  given  in Appendix J  for  the
 base case (Scenario C)  and for the  reduction  of  SO   emissions  (Scenario F).
                                                  A.
 Below is a discussion  of  those results.
 B.    STUDY RESULTS
 1.    1985 Results
      The effects on an aggregate U.S. basis of the  imposed operational
 constraints on total refinery SO  emissions is summarized for 1985  in
                                x
 Table 20.  By reducing refinery fuel sulfur levels  as specified previously,
 desulfurizing FCC feed, and increasing  sulfur recovery  from  the Glaus
 plant, SO  emissions were reduced by 76%  for  the total  U.S.  relative  to the
          X
 base case of Scenario  C.   The regional  variations in percentage emissions
 reduction can be attributed to such variables as crude  sulfur content, FCC
 throughputs and feed quality, level of  refinery  fuel sulfur  allowed,  and
 the ability to dispose of sulfur in products, given product  quality con-
 straints.  In general,  those clusters with high  sulfur  content crude
 slates—the East Coast, Large Midwest and East of Rockies grassroots—showed
 the greatest amount of  SOX emissions reduction.
      There are significant changes  in the disposition of sulfur and its
 distribution between recovered elemental  sulfur,  SO emissions and  product
                                                    3t
 outturns.   Table 21 shows sulfur distributions for  the  base  case  (Scenario
 C)  and the reduced emissions case (Scenario F) for  the  Large Midwest
 cluster.   Sulfur disposed in all products was, of course, essentially
 unchanged with reduced  SO  emissions.   Elemental sulfur production  was
                          X
 increased from 59% to  69% of total  sulfur output, while sulfur in SO
                                                                    X
 emissions  was  reduced  from 12.4% to 2.4%  of the  total sulfur entering the
 model  refinery.   In Table 21 it can also  be seen that the dominant  source
 of  SO  emissions  changed  considerably.  In the base case over half  the
     X
 sulfur in  SO   emissions originated  in the FCC and Claus plants.   By
            X
 controlling SO  emissions,  over 80% of  the sulfur in SO emissions
originated from  the  combustion of process refinery  fuel.  Similar results
are found  in the other cluster models.
                                      -66-

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Table 20. SO.. EMISSION LEVELS, TOTAL U.S. BASIS 1985
Model
East Coast
Large Midwest
Small Midcontinent
Louisiana Gulf
Texas Gulf
West Coast
West Grassroots
East Grassroots
Total U.S.
Short tons/day
Before control
449
1,323
393
188
1,019
572
165
1,335
5,444
After control
107
254
98
23
387
158
57
240
1.324
Reduction, wt%
76
81
75
88
62
72
65
82
76
                         -67-

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Table 21. PERCENTAGE DISTRIBUTION OF SULFUR - LARGE MIDWEST, 1985

Sulfur output
To products
Elemental sulfur
SOX emissions
from FCC plant
from Glaus plant
from refinery fuel
Total
Total sulfur output
Percent of Total SOX emissions
From FCC plant
From Glaus plant
From refinery fuel

Scenario C
% of total

28.3
59.3
3.8
3.1
5.5
12.4
100.0

30.4%
25.2
44.4
100.0
Scenario F
% of total

' 28.3
69.3
0.4
2.0
2.4
100.0

15.6%
1.4
83.0
100.0
                             -68-

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     Although the total sulfur disposed in final products did not change
greatly, the distribution of the sulfur among individual products changed
considerably in all clusters.  The sulfur contents both before and after
S0x emissions reductions for gasoline, residual fuel oil and internally
consumed oil for refinery fuel are given in Table 22.  Also shown are
total elemental sulfur recovered (indicative of Glaus plant throughput)
and SO  emissions.  In all clusters the sulfur in gasoline was reduced
      X
significantly when SO  emissions were controlled.  The reduction in gaso-
                     X
line sulfur content ranged from a 61% decrease in the Louisiana Gulf to a
94% decrease in the West Coast.  FCC gasoline contributes the major portion
of sulfur to be found in gasoline.  Desulfurization of FCC feed to reduce
SO  emissions also reduces the sulfur content in the total gasoline pool.
  X
Some reductions in residual fuel oil sulfur content similarly took place.
     To reduce SO  emissions the cluster models did not require significant
                 J\,
changes in the processing configurations other than the FCC feed desulfuri-
zation and the Beavon-Stretford tail gas cleanup on the Glaus plants.
     In the East Coast cluster catalytic reformer and hydrocracker through-
put remained essentially the same under a reduced emissions scenario
versus the base scenario.  FCC throughput was increased 5.9 MB/CD.  A 2.4
MB/CD drop in alkylation was balanced by a 2.7 MB/CD increase in isomer-
ization.
     The major processing change in the Large Midwest cluster was a decrease
of 10.2 MB/CD in FCC throughput and a subsequent 1.1 MB/CD drop in alkylation
throughput, resulting in lower gasoline production.  Catalytic reformer and
isomerization throughputs increased by 4 MB/CD and 0.5 MB/CD respectively.
     For the Small Midcontinent cluster there were small throughput increases
totaling 1.2 MB/CD in catalytic reforming, FCC, and isomerization.  A 1.3
MB/CD decrease in alkylation and reduced FCC conversion resulted in a drop
in gasoline production, to be made up in the grassroots refineries.
     In the Louisiana Gulf cluster, FCC throughput was reduced 3.9 MB/CD
and catalytic reforming was correspondingly increased 3.6 MB/CD.  Isomer-
ization and alkylation were reduced a total of about 1 MB/CD.
                                      -69-

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                                 Table 22, SULFUR RECOVERY, SOX EMISSIONS, AND SULFUR CONTENT OF GASOLINE.
                                               SALABLE FUEL OIL, AND REFINERY FUEL, 1985

Scenario
Elemental sulfur produced
(T/D)
SOX emissions {T/D)
Sulfur content
Gasoline (PPM)
Salable fuel oil (%wt.)
Refinery fuel (%wt.)
Maximum allowable sulfur
Salable fuel oil (% wt.)
Refinery fuel oil (% wt.)
Cluster
East Coast
C F
114 185
59 14
394 57
1.8 1.03
0.6 0.3
2.0
0.6 0.3
Large
Midwest
C F
174 204
73 14
746 148
0.98 1.13
1.5 0.5
1.5
1.5 0.5
Small
Midcontinent
C F
19 27
24 6
237 65
0.33 0.45
1.4 0.5
1.5
1.5 0.5
Louisiana
Gulf
C F
60 71
24 2
217 84
0.61 0.30
0.4 <0.1
1.5
0.9 0.5
Texas
Gulf
C F
173 229
92 35
309 65
1.22 1.42
0.9 0.5
1.5
0.9 0.5
West
Coast
C F
171 187
47 13
779 47
0.69 0.87
0.7 0.3
1.0
0.7 0.3
	 . • ' — •• . — — • • ' 	 - 	
Grassroots
East of
Rockies
Sour
C F
31 1 365
118 22
433 40
1.97 2.12
1.0 0.4
1.97 2.12
1.0 0.4
East of
Rockies
Sweet
C F
12 18
30 12
70 7
0.41 0.36
0.5 0.4
0.82 0.96
1.0 0.4
West of
Rockies
C F
141 207
55 19
331 31
1.63 1.16
0.7 0.3
1.63 1.16
0.7 0.3
o

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     A  FCC  throughput  increase for the Texas Gulf  cluster was  essentially
balanced by a  drop  in  volume  conversion to gasoline.   Alkylation was  reduced
by 2.3  MB/CD.  Catalytic  reforming and hydrocracking were decreased 1 MB/CD
and 0.4 MB/CD  respectively, and isomerization was  increased  .8 MB/CD.
     In the West  Coast cluster,  catalytic  reforming and  isomerization were
reduced a total of  1.8 MB/CD.   FCC throughput was  decreased  by 4.3 MB/CD,
however, conversion to gasoline was raised to 72.5% from 68.6% in the base
case.
     In the grassroots models,  comparisons of process  configurations  are
less meaningful since  some differences will result from  the  variations in
the cluster model gasoline production.  Specifically,  due to the purpose of
the grassroots refineries of  balancing total demand and  refinery outturn
from existing  clusters under  the two scenarios,  grassroots refinery gaso-
line requirements for  Scenario F were higher than  those  under  Scenario C.
In general, however, the  East of Rockies grassroots cluster  representing
sour crude  refining showed increases in the throughput of conversion
processes but  alkylation  was  decreased,  as well  as FCC conversion.  The
major change in both the  East of Rockies grassroots processing sweet  crude
and the West of Rockies grassroots was an  increase in  catalytic cracker
conversion. All  three grassroots clusters showed  changes in hydrocracking
throughput—the East grassroots with sour  crude  increased hydrocracking
3.9 MB/CD,  the East grassroots with sweet  crude  decreased 4.1  MB/CD and
the West grassroots raised hydrocracking throughput 17.7 MB/CD.
     Hydrogen  production  was  either decreased slightly or showed no change
in all  but  the Large Midwest  and grassroots clusters.  The East of Rockies
sour crude  grassroots  and West of Rockies  grassroots increased hydrogen
generation  12.1 MMSCF/CD  and  33.3 MMSCF/CD respectively.  This is to  meet
higher  hydrocracking throughputs mentioned previously  in addition to  extra
hydrogen needs for  desulfurization.   In the East of Rockies  sweet crude
grassroots  the drop in hydrocracker utilization  resulted in  a  decrease of
7.4 MMSCF/CD of hydrogen  manufacture.   For the Large Midwest cluster, 15.4
MMSCF/CD of additional hydrogen manufacture was  necessary to meet the
increased desulfurization requirements.
                                      -71-

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      Desulfurization  of  straight  run distillate and heavier naphtha
 fractions was  increased  slightly  in the East Coast, Large Midwest, Louisiana
 Gulf, and East of  Rockies  grassroots models.
      In summary, apart from installation of FCC feed desulfurization
 capacity, major processing changes did not occur with reductions in SO
                                                                      A
 emissions.
 2.    1977 Results
      In general, the  results of reducing refinery SO  emissions in 1977
                                                    X
 directionally  followed those of 1985.  The major processing configuration
 differences  were those associated with catalytic cracking of desulfurized
 feed.  As in 1985,  additional desulfurization of heavier naphtha and
 distillate cuts was required for  the East Coast, Large Midwest and
 Louisiana Gulf cluster as  well as the Texas Gulf cluster.
      It is expected that certain  processing changes will be required
 relative to  1985 results,  since the gasoline pool in that year was 100%
 unleaded whereas in 1977 about 70% of the gasoline produced was leaded.
 For  example, in 1985  the base scenario of the Texas Gulf cluster was
 operating at a higher level of conversion in order to meet the required
 volume of high clear  octane product.  In 1977, only 31% of the Texas Gulf
 gasoline pool  was  unleaded and hence, total gasoline requirements could
 be met at a  lower  level of cat cracker conversion.
      Table 23  shows the 1977 cluster results for elemental sulfur recovery
 and  SO  emissions  as  well  as the  sulfur contents of the total gasoline
       X
 pool,  residual fuel oil and refinery fuel.  As in 1985, some trade-offs
 were  achieved  in redirecting high sulfur fuel streams to blending for
 residual  fuel  oil product,  given  reduced allowable refinery fuel sulfur
 levels  and the capability  to absorb additional sulfur in the residual  fuel
 oil.  Again, the gasoline  pool sulfur content has been significantly re-
 duced with catalytic  cracking of  desulfurized feed.
     Although  desulfurization of  FCC feed to 0.2 wt. % sulfur and 99.95%
 sulfur  recovery are possible with existing technology, these operations
are not commonly practiced  at present.  Hence, it may be unrealistic  to
expect  that significant installation of these units could practically
                                      -72-

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I
-J
                             Table 23.  SULFUR RECOVERY, SOX EMISSIONS, AND SULFUR CONTENT OF GASOLINE,
                                             SALABLE FUEL OIL AND REFINERY FUEL, 1977
                                                             Cluster
Scenario
Elemental sulfur produced
(T/D)
SOX emissions (T/D)
Sulfur content
Gasoline (PPM)
Salable fuel oil (% wt.)
Refinery fuel (% wt.)
Maximum allowable sulfur
Salable fuels (% wt.)
Refinery fuels (% wt.)
East Coast
C F
104 185
51 13

324 58
2.00 1.30
0.6 0.3

2.0
0.6 0.3
Large Midwest
C F
156 174
61 13

738 171
0.48 0.94
1.5 0.5

1.5
1.5 0.5
Small
Midcontinent
C F
14 21
21 5

178 58
0.33 0.23
1.3 0.5

1.5
1.5 0.5
Louisiana Gulf
C F
58 71
18 2

258 74
0.60 0.11
0.2 <0.1

1.5
0.9 0.5
Texas Gulf
C F
186 233
74 25

401 75
1.43 1.29
0.9 0.5

1.5
0.9 0.5
West Coast
C F
198 221
46 10

673 111
0.12 0.43
0.7 0.3

1.0
0.7 0.3

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 be realized by 1977.   This  factor  has  been  taken  into  account  in  the
 analysis of economic  penalties,  discussed below.
 C.   SUMMARY OF ECONOMIC PENALTIES
      The economic impact of reducing refinery  SO   emissions via the methods
 studied here were determined for the total  U.S. refining  industry by
 scaling up the results of the cluster  models  (Appendix G).
      Table 24 shows that the capital investment required  to reduce refinery
 SO  emissions will be 4.5 billion  dollars (first  quarter  1975  basis) by
   x
 1985.   Taking into account  the timing  of investment  and inflation in re-
 finery construction costs the estimate of ultimate capital investment by
 1985 is 8.5 billion dollars.   This figure assumes that emissions  reductions
 as defined in the study could be achieved by 1977.   Under this assumption,
 69% of total investment (on a first quarter 1975  basis) would  be  required
 in 1977.   A second estimate of inflated capital investment is  provided
 in Table 24 which assumes that all capacity needed by  1985 is  installed in
 1980.   Under this assumption the inflated capital investment for  the
 aggregate U.S.  is 8.8 billion dollars.
      The economic penalties on a cents per  gallon of total products basis
 for reduction of SO   emissions is  given in  Table  25.   By  1985  the additional
                   X
 costs  required to reduce emissions is  estimated to be  0.71 cents  per gallon
 of total products produced.   This  figure is in terms of first  quarter 1975
 cost levels and would be increased about two and  one-half times to reflect
 inflated costs.   The  cents  per gallon  penalties are  calculated on the basis
 of five factors—capital charge, operating  costs,  crude penalties, LPG
 credits and sulfur credits—and  are given in more detail  in Appendix J.
 The capital charge has been set  at 25% of investment,  crude oil has been
 valued  at  $12.50/bbl,  and LPG and  sulfur have  been valued at $8.75/bbl
 and  $10/short  ton, respectively.
     Table  26  shows the breakdown  by component of the  total penalties  for
 1985.   The  largest component  of  the additional cost  is the  investment-
 related penalty  at 65% of the total economic penalty.   Although on a  total
U.S. basis  there is a  26,000  dollars per day credit  for sulfur output  in
1985 (as shown  in Appendix  J), when spread  among  total U.S. products  the
credit essentially disappears.
                                        -74-

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                                 Table 24.  CAPITAL REQUIREMENTS TO REDUCE REFINERY SOV EMISSION LEVELS3
                                                                                          A


                                                                     millions of dollars

Uninflated
(1st Qtr 1975 basis)
1977
1985
Total
Inflated
1977
1985
Total
Alternate inflated
total b
Clusters representing PAD I-IV
East
Coast


397
38
435

557
113
670
850
Large
Midwest


1,017
(49)
968

1,428
(146)
1,282
1,891
Small
Midcontinent


415
(67)
348

583
(199)
384
680
Louisiana
Gulf


304
7
311

427
21
448
608
Texas
Gulf


599
263
862

841
783
1,624
1,684
Grassroots
PAD I-IV


-
874
874

-
2,604
2,604
1,708
Total
PAD I-IV


2,732
1,066
3,798

3,836
3,176
7,012
7,421
Cluster
PADV
West Coast


389
31
420

546
92
638
821
Grassroots
PADV


-
275
275

-
819
819
537
Total
PADV


389
306
695

546
911
1,457
1,358
Total
U.S. A.


3,121
1,372
4,493

4,382
4,087
8,469
8,779
Ln
            aRelative to Scenario C.



             Assumes all capacity needed by 1985 is installed by 1980.

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   Table 25.  ECONOMIC PENALTIES FOR REDUCING REFINERY SOV EMISSIONS3
                                                             JC
                      (cents per gallon total products)

1977
1985
PAD I-IV
0.60
0.71
PADV
0.33
0.72
Total U.S.A.
0.55
0.71
aRelative to Scenario C.
                            -76-

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     Table 26.  BREAKDOWN OF ECONOMIC PENALTY TO REDUCE
                     REFINERY SOX EMISSIONS3
                     (1st quarter 1975 cost basis)

Capital charge"
Operating costs
Crude penalties
LPG penalties (credits)
Sulfur credits
Total
1985
Cents/gallon total products
0.46
0.08
0.12
0.05
-
0.71
% of total penalty
65
11
17
7
-
100
aRelative to Scenario C.
b25% of capital investment required.
                               -77-

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D.   SUMMARY OF CRUDE OIL AND ENERGY PENALTIES
     As with economic penalties, model results have been scaled up to
give an estimate of total crude oil and energy penalties to the U.S.
refining industry for reducing SO  emission levels.  Energy penalties
                                 X
are comprised of additional crude oil processed and additional purchased
power required.  Also, an energy credit is taken for additional LPG pro-
duced, or if LPG production is less than that in the base scenario, a
penalty is incurred.  Table 27 summarizes the scaled up penalties for 1985.
By that year, additional crude oil processing required as a result of re-
ducing emissions will be in excess of 60 MB/CD.  Because LPG production
decreased 39.3 MB/CD relative to the base scenario, an additional energy
penalty was incurred.  The total U.S. net energy penalty amounts to nearly
100 MB/CD of fuel oil equivalent.
     Appendix J contains more detail on the 1985 energy penalties as well
as those for 1977.
                                      -78-

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                Table 27. ENERGY PENALTIES FOR REDUCING
                        REFINERY SOX EMISSIONS3

Basis
Additional crude
oil required MB/CD
Additional LPG
produced MB/CD
Additional purchased
power required MKWH/CD
Energy penalties
10ฎ BTU/CD
Crude oil
LPG
Purchased power
Total 109 BTU/CD
Total MB/CD of fuel oil
equivalent
1985
PAD I-IV


47.4

(38.8)

7,891

265
155
79
499

79
PADV
i
*
15.2i

(0.5)

2,224

85
2
22
109

17
Total U.S.A.


62.6

(39.3)

10,115

350
157
101
608

96
aRelative to Scenario C.
                                  -79-

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                      IV.  SENSITIVITY STUDY RESULTS

A.    IMPORTED CRUDE OIL FOR GRASSROOTS CAPACITY
      The effects of reducing refinery SO  emissions on the East of Rockies
                                        2v
grassroots refineries were determined by model runs for both a sweet crude
oil refinery (processing a 50/50 Algerian/Nigerian crude mix) and for a
sour  crude oil refinery (processing 100% Saudi Arabian light crude).  Model
results were scaled up on the basis that one-third of East of Rockies grass-
roots refineries will prpcess a sweet crude slate and two-thirds will process
sour  crude, to derive the final results presented in Section III.  This
sensitivity study examines the effects on 1985 economic penalties if all
grassroots refineries East of Rockies were based on 100% sour crude, and
if all were based on 100% sweet crude.
      The results of this sensitivity analysis are shown in Table 28.  With
grassroots capacity used for processing all sweet crude, capital investment
for reduction of SO  emissions would be 4.1 billion dollars (first quarter
                   X
1975  basis), 430 million dollars less than the base case.  If East of
Rockies grassroots capacity is for processing of sour crude, the capital
investment for emissions reduction will be 216 million dollars higher than
the base case, or 16% higher than for sweet crude.  Similarly, the economic
penalty is .04 cents lower and 0.03 cents higher than the base case for the
all-sweet and all-sour crudes, respectively.
     Thus, the sulfur content of the crude processed does significantly
affect the magnitude of investment and economic penalties.  It is expected
that processing of crude oils such as Arabian Heavy would have a further
significant effect.
                                     -80-

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Table 28. EFFECT OF CHANGING IMPORTED CRUDE OIL TYPE PROCESSED
  IN GRASSROOTS CAPACITY ON THE 1985 ECONOMIC PENALTY FOR
              REDUCING REFINERY SOX EMISSIONS


Crude oil sulfur, wt%
Capital investment
million dollars
(1Q 1975 basis)
Economic penalty
cents per gallon
Total products
(IQ 1975 basis)

Base case
1.18
4,493

0.71



Imported crude for grassroots
100% sour
1.68
4,709

0.74



100% sweet
0.17
4,063

0.67



                             -81-

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 B.    EFFECT  OF TARGET  RESIDUAL  FUEL OIL  SULFUR LEVEL
      The  sulfur levels of  the residual fuel oils produced in  the cluster
 models  were  allowed  to vary  but not to exceed a reasonable maximum specified
 for each  cluster model.  The grassroots  models were then used to balance
 the volume of  residual fuel  oil required from U.S. refineries and also to
 balance the  sulfur level of  the fuel oil.  Hence,  the sulfur  level of re-
 sidual  fuel  oil produced in  the grassroots models  will depend on the target
 sulfur  level set for the residual  fuel oil produced from all  U.S. refineries.
 A small change in the  target sulfur level on residual fuel oil for the whole
 U.S.A.  will  have a significant  effect on the sulfur level required of
 residual  fuel  oil  produced  in  the grassroots models because  of the leverage
 effect  of total U.S. residual fuel oil production  compared with grassroots
 residual  fuel  oil production (see  Table  10).
      The  base  case study assumed residual fuel oil sulfur target levels of
 1.4 wt. % East of the  Rockies and  0.90 wt. % West  of the Rockies.  This re-
 sulted  in an East of the Rockies grassroots residual fuel oil sulfur level
 of  2.12 wt.  %  when reducing  refinery SO   emissions.  West of  the Rockies re-
                                       X
 quired  a  residual fuel oil sulfur  level  of 1.16 wt. % for emissions re-
 duction.
      This sensitivity  study  examines the effect of meeting target residual
 fuel oil  sulfur levels for the  whole of  the U.S. of 1.2 wt. % East of the
 Rockies and  0.75 wt. % West  of  the Rockies.  This  required the East of the
Rockies grassroots models to produce residual fuel oil with a sulfur level
of 0.96 wt.  % when reducing  SO  emissions.  West of the Rockies required
                              x
a residual fuel oil  sulfur level of 0.53 wt.  % for reduction  of emissions.

      The  results of  the sensitivity study are provided in Table 29.  The
effect is to increase  the capital  investment about 100 million dollars, with
no change in the economic penalty.  Thus, the target residual fuel oil
sulfur level has a relatively small impact on the  cost of reducing refinery
SO  emissions.
  x
                                      -82-

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 Table 29. EFFECT OF LOWER TARGET SULFUR LEVEL OF PRODUCTION
    OF U.S. RESIDUAL FUEL OIL ON THE 1985 ECONOMIC PENALTY
                FOR REDUCTION OF SOX EMISSIONS
                             Base case
                     Lower residual
                     fuel oil sulfur
Capital investment
  Millions dollars
  (IQ 1975 basis)

Economic penalty
  Cents per gallon
  Total products
  (IQ 1975 basis)
4,493
0.71
4,603
0.71
                                     -83-

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C.   USE OF STACK GAS SCRUBBING
     A detailed investigation was made of the potential of stack gas
scrubbing as a means to control refinery SO  emissions, as reported in
                                           3C
Appendix L.  The results indicated that the capital investment require-
ments to install stack gas scrubbing will be at least as great as the
alternatives discussed herein.  Since the route of desulfurizing FCC
feedstock also results in significant yield benefits in controlling FCC
emissions, stack gas scrubbing was not allowed in the computer model studies
of the FCC unit.  Since the cluster models represent existing refineries
with many dispersed stacks, it was also not used to control emissions from
process furnaces and boilers.  However, stack gas scrubbing was used in
the model to control Claus plant SO  emissions.
                                   x
                                     -84-

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                              V.   DISCUSSION

      The intent of this study was to assess the impact  of  imposing
 operational  constraints on the three sources of refinery SO  emissions—
 process  furnaces and boilers, FCC units,  and Glaus plants.  On a total
 U.S.  basis,  final results indicate that a 76% reduction in SO  emissions
                                                             x
 below estimated current levels can be achieved within reasonable limits
 of  existing  technology but with substantial investment  of capital by the
 refining industry.   This assumes the control of SO  emissions by reducing
 refinery fuel  sulfur content, by desulfurization of FCC feed, and by
 increased sulfur recovery in Claus plants.
      To  effect even greater levels of emissions reductions would require
 stack gas scrubbing.   As discussed in Section III, capital investment re-
 quirements for installation of stack gas  scrubbers are  anticipated to be
 at  least as  high as the alternatives of reducing refinery fuel and FCC
 feed  sulfur  levels.   In addition,  FCC feed  desulfurization exhibits yield
 benefits that,  given the concerns  of Project Independence, cannot be over-
 looked.   FCC feed desulfurization also contributes a substantial reduction
 of  sulfur in the gasoline pool and in fact  would be required by a majority
 of  refiners  to meet possible regulations  on maximum allowable unleaded
 gasoline sulfur contents.   Finally,  although stack gas  scrubbing plants
 have  been employed  in the utility  industry,  they have not been widely
 demonstrated in the petroleum refining industry.  Extensive discussion of
 the evaluation of the applicability of stack gas scrubbing to the refining
 industry is  contained in Appendix  L.
      The results  of  our sensitivity analysis on the type of crude oil
processed  indicate  that the impact of emissions reduction will vary de-
pending  on the  sulfur content of crudes available to particular refiners.
As discussed in Section III,  all model runs  were required to remove at least

                                      -85-

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85% of sulfur in FCC feed.  However, some Middle East type cuts would
require 95% desulfurization to reach the target 0.2 wt. % FCC feed sulfur
level.  This would, of course, involve greater operating costs and invest-
ment penalties.
     This study did not specifically address the impact of reducing SO
                                                                      X
emissions on the small refiner by simulation of his operations.  Penalties
were adjusted by giving greater weight to results from the Small Midcontinent
cluster to take account of higher costs due to economies of scale.  Since
these small refineries represent a relatively small percentage of total
U.S. refining capacity, any underestimation of penalties to the small
refiner will not appreciably alter the overall results of this study.  This
is not to say that the small refiner would be uneffected, for impacts on
the total U.S. refining industry would translate into higher relative
economic penalties for the small refiner which could be difficult to
finance, would require installation of Glaus plants often not now in place,
and could require difficult means to dispose of elemental sulfur produced.
These factors could have a significant effect on the competitive structure
of the petroleum refining industry.
                                     -86-

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                                  VI.  REFERENCES


 1.   "U.S. Domestic Petroleum Refining  Industry's Capability to Manufacture
      Low-Sulfur, Unleaded Motor Ga'soline", NPRA Special Report No. 4,
      August 30  (1974).

 2.   Oil and Gas Journal. 72, No.  36, p.  48, September 9  (1974).

 3.   Transcript of FEA & NPRA Refinery  Studies Conference on Methods for
      Evaluating Policy Impact on the Refinery Industry, Arlington, Va.,
      September 4-5 (1974).

 4.   Johnson, W. A. and J.R. Kittrell,  Transcript of FEA/NPRA Refinery Studies
      Conference, p.  170, Arlington, Va.^ Sept. 4-5 (1974).

 5.   Oil and Gas Journal, 7j3, No.  45, 159 (1975).

 6.   Oil and Gas Journal, ^3_, No.  42, 25  (1975).
                                                      i
 7.   "The Impact of Lead Additive Regulations on the Petroleum Refining
      Industry",  EPA-XXX/X-XX-XXX,  December (1975).

 8.   "The Impact of Producing Low-Sulfur, Unleaded Motor Gasoline on the
      Petroleum Refining Industry",  EPA-rXXX/X-XX-XXX, December (1975).

 9.   Oil and Gas Journal, 71, No.  21, p.  76, May 21 (1973).

10.   Stahman, Ralph C., "Octane Requirement Increase with Unleaded Fuel",
      U.S. EPA Office of Air and Waste Management, Ann Arbor, Michigan, July
      19 (1975).

11.   "Octane Requirements of 1975  Model Year Automobiles Fueled with
      Unleaded Gasoline", Technology Assessment and Evaluation Branch, Emission
      Control Technology Division,  Office of Mobile Source Air Pollution
      Control, EPA, August (1975).

12    "Impact of Motor Gasoline Lead Additive Regulations on Petroleum Re-
      fineries and Energy Resources - 1974-1980, Phase I", EPA-450/3-74-032-a,
      May (1974).

13.   Unzelman, G.H., G.W. Michalski, and W.W. Sabin, Transcript of FEA/NPRA
      Refinery Studies Conference,  p. 236, Arlington, Va., Sept. 4-5  (1974).
                                         -87-

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14.   Peer, E.L. and F.V- Marsik, "Trends in Refinery Capacity and Utilization",
      Office of Oil and Gas, Federal Energy Administration, June (1975).

15.   Ruling, G.P., J.D. McKinney, and T.C. Readal, Oil and Gas Journal, 73,
      No. 20, May 19 (1975).

16.   Blazek, J.J., Oil and Gas Journal, 69, No. 45, Nov. 8 (1971).

17.   Nelson, W.L., Oil and Gas Journal, 72, No. 29, July 22 (1974)

18.   "Characterization of Claus Plant Emissions",  EPA-R2-73-188,
      EPA Office of Research and Monitoring, April  (1973).
                                          -88-

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                                 TECHNICAL REPORT DATA
                          ft lease read Instructions on the reverse before completing)
 REPORT NO.
EPA-600/2-76-161a
4. TITLE ANDSUBTITLE
                           2.
                Impact of SOx Emissions Control on
Petroleum Refining Industry
Volume I.  Study Results and Planning Assumptions
                                                       3. RECIPIENT'S ACCESSION-NO.
                                                      5. REPORT DATE
                                                        June 1976
                                                      6. PERFORMING ORGANIZATION CODE
1. AUTHOR(S)

James R.  Kittrell and Nigel Godley
                                                      8. PERFORMING ORGANIZATION REPORT NO.
9. PERFORMING OR9ANIZATION NAME AND ADDRESS
Arthur D. Little, Inc.
20 Acorn Park
Cambridge,  Massachusetts  02140
                                                      10. PROGRAM ELEMENT NO.
                                                      1AB013;  ROAP 21ADC-030
                                                      11. CONTRACT/GRANT NO.
                                                      68-02-1332, Taskl
12. SPONSORING AGENCY NAME AND ADDRESS
 EPA, Office of Research and Development
 Industrial Environmental Research Laboratory
 Research Triangle Park, NC  27711
                                                      13. TYPE OF REPORT AND PERIOD COVERED
                                                      Task Final; 9/73-5/76	
                                                      14. SPONSORING AGENCY CODE
                                                       EPA-ORD
  i SUPPLEMENTARY NOTES IERL_RTP Task officer for this repOrt is Max Samfield, Mail
Drop 62, (919) 549-8411, Ext 2547.
16. ABSTRACT The repOrt gives results of an assessment of the impact on the U.S.  petro-
leum refining industry of a possible EPA regulation limiting the level of gaseous
refinery sulfur oxide (SOx) emissions.  Computer models representing specific refi-
nerie^ in six geographical regions of the U.S. were developed as the basis for deter-
mining the impact on the existing refining industry.  New refinery construction during
the period under analysis (1975-1985) was also considered by development  of computer
models representing new grassroots refineries.  Control of refinery SOx emissions
from both existing and new refineries was defined for  the purposes of this study by
maximum sulfur levels on refinery fuel and on fluid catalytic cracking unit feedstock
and by increased sulfur recovery in the Glaus plant.  The computer models thus
constrained were utilized to assess investment and energy requirements to meet the
possible regulation and the incremental cost to manufacture all refinery products as
a result of the regulation.  Parametric studies evaluated the impact of variations in
the types of imported crude oils available for future domestic refining and the projec-
ted sulfur level of residual fuel oil manufactured in the U.S.
17.
                              KEY WORDS AND DOCUMENT ANALYSIS
a.
                 DESCRIPTORS
Air Pollution
Sulfur Oxides
Petroleum Industry
Petroleum Refining
Refineries
Catalytic Cracking
                                           b.lDENTIFIERS/OPEN ENDED TERMS
                                                                   c. COSATI Field/Group
                                          Air  Pollution Control
                                          Stationary Sources
                                          Refinery Fuel
                                          Claus Plant
                        13B
                        07B
                        05C
                        13H
                        131
                        07A
18. DISTRIBUTION STATEMENT

 Unlimited
19. SECURITY CLASS (This Report)
Unclassified
                                                                        116
                                          20. SECURITY CLASS (Thispage)
                                           Unclassified
                                                                   22. PRICE
EPA Form 2220-1 (9-73)
                                           89-

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