What is petroleum coke?

1 What is petroleum coke?

Petroleum coke is a by-product of the oil refining process. Delayed coking, the most widely used process, uses heavy residual oil as a feedstock. During delayed coking, heavy residual oil is introduced into a furnace, heated to about 480 °C, and pumped into coking drums. The coking process initiates the formation of coke and causes it to solidify on the drum wall. Thermal decomposition drives off gases, which are removed continuously. When this reaction is complete, the drum is opened, and coke removal begins. Water spraying thermally shocks the coke and allows it to break off. Coke that remains on the drum walls is subsequently cut from the drum with a high pressure water jet. After the water drains, coke is transported for use or storage.

2 Petroleum coke supply and consumption

Ongoing advances in established refining technologies have markedly enhanced options for processing and economically using residues [3]. While the year-to-year additions of new bottom-of-the-barrel conversion projects and the associated changes in production of petroleum coke depend on the price differential between light and heavy crude oil, experts predict an inevitable increase in the production of heavier crude oil. This is attributed to the fact that world crude oil demand has been increasing at an annual average rate of nearly 1 x 10⁶ barrels/day since 1985, and major producer/refining companies forecast this rate of increase to continue well into the next decade [3]. Thus over the long range, production of petroleum coke is expected to increase worldwide. In the U.S. alone it has increased more than 50 percent in the last 10 years [4]. Further, because of better bottom-of-the-barrel heavy oil refining technologies, the production of petroleum coke per thousand barrels of crude oil processed has increased about 70 percent (from about 3 to 5 tonnes) in the U.S. in just 10 to 15 years [5]. Because the market for needle or anode grades of coke is limited, most of the additional coke production is expected to be of fuel grade quality.

As of January 1, 1998, total worldwide production of coke was reported to be approximately 46 x 10⁶ tonnes per annum [6]. Of this, North America (predominantly the U.S.) accounted for approximately 66.5 percent; Europe, about 17 percent; the Asia-Pacific region, about 9.5 percent; South America/Caribbean, about 4.5 percent; and the Middle East/Africa, about 2.5 percent [6]. Nearly 90 percent of the total coke produced is delayed petroleum coke. Of the petroleum coke produced in the U.S., about 66 percent is exported. Japan, Turkey, Italy, Spain, Belgium, The Netherlands, and Canada consume 75 percent of U.S. exported coke [4]. Of the approximately 10 x 10⁶ tonnes of petroleum coke consumed domestically, approximately 2.5 x 10⁶ tonnes (which is equivalent to about 1,000 MW of electric power) are used for power generation. No hard statistics are available as to how much of the world's annual petroleum coke production is currently used for power generation. However, projections of major boiler suppliers indicate that between 1,500 and 2,000 MW of additional petroleum coke-based power is expected to come on line within the next 5 years. With the maturation of petroleum coke-based power generation technologies and increased production of petroleum coke, it is expected that these numbers will grow.

3 Petroleum coke pricing and plant size

In the U.S., petroleum coke has historically been priced at a discount relative to coal because of its poorer environmental characteristics. Because of the more than 50 percent increase in petroleum coke production over the past few years, driven by the incentive to process heavier and high sulfur crude oil, its price, while cyclical, has declined steadily. Further, being a by-product, petroleum coke will be produced regardless of its market price. Thus, imbalance between supply and demand has pushed the price at some refineries (especially ones that are landlocked) below $6/tonne at the refinery, which is about 20¢s;/GJ. This price is very attractive and merits serious consideration as a fuel for power generation. It is important, however, to ascertain that a long-term supply contract can be secured.

Long-distance ground transportation (rail) in the U.S. can add about 1.7¢s;/tonne per km. Assuming the petroleum coke price at the refinery to be 20¢s;/GJ (which is about $6.00/tonne), transporting it 350 km would add another $6.00/tonne. Thus, the delivered cost of the fuel at the power plant would literally be doubled [5]. Short-distance (100 km) truck transportation can add as much as 7¢s;/tonne per km. Hence to minimize transportation cost, it is very desirable to build the plant at or adjacent to a refinery. A typical U.S. refinery of 200,000 barrels/day crude capacity that has coking facilities produces about 2,100 tonnes/day of coke, which is sufficient to support a power plant of 250 to 300 MW.

About 58 percent of U.S. refineries (95 out of 163 as of January 1, 1998) have a capacity of over 200,000 barrels/day and account for approximately 87 percent of total crude processing capacity [6]. Alternatively, coke can be contracted from two or three smaller nearby refineries, or the plant size can be made smaller to minimize fuel transportation costs. A project-specific study must be conducted to evaluate various tradeoffs to establish an optimum size.

4 Conclusions

A deterioration in the quality of crude oil and improvements in oil refining technology have led to increased production of petroleum coke. The mismatched supply and demand situation has caused the price of petroleum coke to drop, and experts predict that this situation will continue for the near-term. For regions of the world where gas prices are substantially higher than $2.30/GJ, petroleum coke can be competitive and is a viable alternative fuel. Securing a long-term supply agreement at a competitive price inclusive of transportation cost is the real challenge.