Integrated Refinery-Cracker The New Paradigm

Osman Aboul-Nasr, PhD Fluor Greenville, SC. USA

Fluor makes no representation or warranty, expressed or implied, as to the accuracy or completeness of the information contained herein and nothing contained herein is, or shall be relied upon as a promise or representation to be used in connection with any proxy, proxy statement, proxy soliciting materials, prospectus, Securities Registration Statement or similar document without the express written consent of Fluor, except as may be required by law.

AIChE Annual Spring Meeting San Antonio, TX, March21-25, 2010

13th Topical on Refinery Processing. Paper 148b
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Agenda
Fluor Brief Overview A Union of Equals: A Wedding Announcement The Big Picture The New Paradigm The Challenges Enter the PMC Contractor

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Fluor Overview
One of the worlds largest publicly owned engineering, procurement, construction and maintenance companies 2008 revenue of $22.3 billion 2008 new awards: $25.1 billion 2008 backlog: $33.2 billion More than 46,000 employees worldwide Offices in more than 25 countries Fluors safety performance record consistently makes it one of the worlds safest contractors Nearly 100 years of experience

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Fluors Locations

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Comprehensive Services
Program/Project Management

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THE BIG PICTURE

Where We Are Now?

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The Solar System Refinery and Petrochemicals

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The Big Picture

Refinery Products Mo Gas, Kerosene ATK Diesel HS EGO Fuel Oil Gas Oil Wash Oil Bitumen Coke Sulfur CGO VGO H Oil
Commodity/Intermediates/Derivatives

Speciality/End Use Products Polyacetals Formaldehyde Fertilizers x Amino Acids Urea-Formaldehyde

Methanol Ethanol Acetic Acid Ammonia Urea Nitric Acid Polyethylene Ethylene Glycol Ethylene Oxide Linear Alpha-Olefins EDC/VCM/PVC VAM Acetic Acid Polypropylene Propylene Oxide Polyols Oxy-Alcohols ACN HMDA Methyl Methacrylate Acrylic Acid/Esters Butadiene Butenes MTBE

PET Resins and Fibers Detergent Additives Polyvinyl acetate/alcohol Ethoxylates Automoitve Applications

Petrochemical Feedstock Fuel Gas LPG Ethane Propylene Naphtha

Polyurethanes Acrylic Fibers Carbon Fibers Paints Flooring Furniture

Rubbers Maleic Anhydride SBR Resins Butanediol-THF Styrenics Nylon-66 Nylon-6 Polyesters Adhesives Plasticizers Polyurethanes Aniline

Additional Petrochemical Feedstock Natural Gas Butanes Pentanes Naphtha Aromatic Streams Resid Oil

EB/SM Cyclohexane Adipic Acid Cumene/Phenol/BPA Caprolactam Xylenes PTA IPA MDI/TDI

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The Old Paradigm Molecule Exchange

Light/Heavy Naphtha FCC Propylene Dry Gas Light Ends UCO

Hydrogen LPG C4 C5/C7 Toluene C9+Aromatics PyGas Fuel Oil

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THE NEW PARADIGM

Why the Union

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The New Paradigm

Not Just Molecules Not Just Neighbors But members of the same corporate family

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The Links that Bind

Backward and forward integration Less volatile feedstock supply More secure outlet for products Take advantage of local and global flexibility within the corporation Dampen price cycles

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Its All about Money

Shared utilities systems
Lower investment Less variable cost

Common storage
Significant capital cost savings Lower working capital

Lower transportation cost

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More Synergy
Integrated presents opportunities for savings
Low grade heat Waste stream neutralization Fuel

Centralized common services

Maintenance Engineering SHE

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A Shot-Gun Wedding?
A response to market demand
Lean, mean and GREEN!

Lower gasoline consumption growth Tighter ethane supplies Higher demand for polymer-grade propylene Higher demand for aromatics

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A Union of Necessities?
Carbon leakage legislation Consolidation of competition Middle East planned complexes threaten smaller refineries worldwide Many European refineries operate independent of petrochemicals The trend is here: Planned Integration

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Planned Integration
Mega Refineries / Petrochemical Complexes
Petro-Rabigh, Rabigh, Saudi Arabia Ras Tanura, Jubail, Saudi Arabia Aramco, Jazan , Saudi Arabia Al Zour, Kuwait Formosa Plastics, Mai Liao, Taiwan Reliance, Jamnagar, India Others?

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THE CHALLENGES

Mars and Venus

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Logistics
Different philosophies; manageable differences Pre-investment philosophy Footprint philosophy
Petrochemicals are generally more compact Refineries are more spacious Safety first

Waste streams and emissions

Refinery waste streams more benign Petrochemicals have experience handling their streams

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Operation
Complexity of refinery operation
Seasonal Feedstock dependent Entire refinery is one big unit

Crackers may have flywheel products PONA in ppm out

Cracker by-products are harder to handle

But not impossible

How big is a barrel?

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Business Aspects
Transfer prices Business cycles may squeeze one product or the other Petrochemicals usually operate on slimmer margins Multiple JV partners Financing Schedule
Manpower Equipment delivery Unforeseen market swings On Stream sequencing

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ROLE OF PMC CONTRACTOR The Marriage Counselor

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Or Wedding Planner
AKA Consultant Critical to successful integration Must have diverse capabilities A single Master Plan Manage organization Predict, evaluate and mitigate execution risk

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Questions?
(Or forever hold your peace!)

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