Swedish refinery due hydrocracking plant

Swedish refiner Preem Petroleum AB, a wholly owned subsidiary of Corral Petroleum Holdings AB, Stockholm, and US-based project developer Beowulf Energy LLC, New York, have signed a cooperation framework agreement to examine the possibility of installing a residue hydrocracking plant that will be equipped with process technology from Chevron Lummus Global LLC (CLG) at Preem’s 220,000-b/d refinery in Lysekil, Sweden.

Intended to enable the refinery the upgrade as much heavy oil as possible into sulfur-free gasoline and diesel fuels to help meet rising demand, the proposed hydrocracker would be based on CLG’s proprietary LC-SLURRY technology, which would equip the refinery to produce 100% ultralow-sulfur products from its vacuum residue, CLG said.

Alongside technology licensing, CLG—a 50-50 joint venture of Chevron USA Inc. and CB&I Technology Ventures Inc.—will partner with Preem and Beowulf on design and permitting support for the project, the licensor said.

Preem’s decision to explore adding a residue hydrocracking plant at Lysekil comes amid potential impacts from new rules that require lower sulfur-content specifications for bunker fuels in 2020-25, which will reduce overall market demand for heavy oil, according to Preem and Corral 2015 annual reports.

Preem plans to reach final investment decision on the project following further analyses, detailed engineering, and permitting activities for the proposed plant, which likely will take 2-3 years to complete.

Should results of preliminary studies confirm the project as economically attractive, however, the investment would align well with the company’s strategies of maximizing value of its raw materials, minimizing its environmental impact, and increasing refining flexibility and competitiveness for the future, said Petter Holland, chief executive of Preem, in a May 16 press release.

Preem currently is moving forward with a project to expand capacity of its vacuum distillation unit (VDU) at the Lysekil refinery to boost vacuum gas oil production that will be used as feedstock elsewhere in the plant, Corral said.

The expanded VDU is targeted for startup during fourth-quarter 2018, Corral said.

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