November 08, 2001

TO:

Dave A. Jacober

FROM:

Norco LSG Process Engineer

SUBJECT:

Phillips vs. CDTech LSG Technology Economic Analysis

Attached is the Phillips S Zorb vs. CDTech CDHydro/CDHDS LSG Technology Economic
Analysis for Motiva Norco. In this report is a brief summary of the results, a case study
analysis, and a detailed economic analysis of both technologies. Attached is the
spreadsheet developed to perform the analysis.
Please contact me if there are any comments or questions.
Steve Haik
ATTACHMENT
CC: With Attachment (by email)
Motiva Norco Refinery
S. K. Auld
N. J. Brignac
C. J. Lloyd
D. L. McNeill
D. M. Moss
R. J. Poulos

Norco Refining

P. O. Box 10

15536 River Road

Norco, LA 70079

Phillips S Zorb Vs CDTech CDHydro / CDHDS R00

SUMMARY:
The economic comparison between CDTech's CDHydro / CDHDS Technology and Phillips S
Zorb indicates that the Phillips technology is a more cost-effective compliance option with
higher risk. The potential value of the Phillips technology does not warrant changing
Norco's current LSG technology choice, CDTech. CDTech's CDHydro / CDHDS Technology
is preferred for Motiva Norco over the Phillips S-Zorb for the following reasons:

Changing technology choices at this time could jeopardize Norco's ability to produce
LSG by the 2004 EPA requirement.
The Phillips S Zorb Technology is a higher risk technology choice. The Alliance has
implemented both CDTech CDHydro and CDHDS technologies, however there is
very limited industry experience with the Phillips S Zorb technology.
Both CDTech and Phillips LSG technologies are competitive solutions however
Norco has completed the costly FEL and AFE for the CDTech LSG solution.
The estimated NPV benefit of the Phillips S Zorb technology over the CDTech
technology is 16%, however when using a more realistic Phillips capital cost, vs.
their advertised cost, the NPV benefit is only 3%.
The Phillips technology is not proven on high sulfur feeds thus this technology
potentially limits Norco's future RCCU feed sulfur selection.
The Phillips technology is more complex, thus higher operations and maintenance
costs are likely with lower unit reliability.
Use of a common CDTech technology to all sites allows for improved unit
optimization and reliability across the Alliance while reducing installed costs.

The net present value of the capital, expenses, and product costs are $209 MM for the
Phillips S Zorb technology and $244MM for the CDTech CDHydro/CDHDS to meet Norco's
LSG requirements. The CDTech unit has a much lower utility cost of 0.44 cpg versus 0.79
cpg for the Phillips unit. However, the CDTech unit has a higher yield loss and less octane
retention at a cost of 1.25 cpg vs. the Phillips unit cost of 0.41 cpg.
The Phillips unit uses a fluidized bed technology, similar to that of a Fluidized Catalytic
Cracker. The Phillips fluidized bed technology is generally more complex and historically
less reliable than CDTech's reactive distillation technology. Also, the Phillips technology is
not proven in industry, whereas the Alliance has implemented both CDTech CDHydro and
CDHDS technologies successfully.
BACKGROUND:
In 1999, Westhollow Technology Center performed the Motiva Low Sulfur Fuels Study to
determine the most cost effective compliance options for the Motiva Refineries to produce
30 ppm sulfur gasoline. The study determined that CDTech's CDHydro / CDHDS
Technology was the clear winner over all other technologies available at that time. However
in the past year, another LSG technology, Phillips S-Zorb, has become commercially
available and appears to be competitive with the CDTech CDHydro / CDHDS LSG Solution.
TECHNOLOGY:
Phillips S-Zorb
S Zorb Sulfur Removal Technology uses a proprietary sorbent that attracts sulfur-containing
molecules and removes the sulfur atom from the molecule. The sulfur atom is retained on

Phillips S Zorb Vs CDTech CDHydro / CDHDS R00

the sorbent while the hydrocarbon portion of the molecule is released back into the process
stream. This allows the Philips technology to reduce sulfur down to 10 ppm with a less yield
loss and higher octane retention vs. CDTech's technology. The only Phillips unit in
operation is a small pilot plant at Phillips Borger whereas the Alliance currently owns and
operates CDTech units very similar to those proposed in the CDTech LSG technology
solution.

Phillips S Zorb LSG Technology

Gasoline from the Fluid Catalytic Cracker unit is combined with a small hydrogen stream
and heated. The vaporized gasoline is injected into a fluid bed reactor where the proprietary
sorbent removes sulfur from the feed. A disengaging zone in the reactor removes
suspended sorbent from the vapor, which exits the reactor to be cooled.
The sorbent (catalyst) is continuously withdrawn from the reactor and transferred to the
regenerator section where the sulfur is removed as SO2 and sent to an existing sulfur
recovery unit. The cleansed sorbent is reconditioned and returned to the reactor. The rate of
sorbent circulation is controlled to help maintain the desired sulfur concentration in the
product.
CDTech CDHydro / CDHDS
CDHydro and CDHDS are catalytic distillation processes, which basically combine
distillation and hydrotreatment in a single step. The catalyst is loaded into a distillation
column using proprietary structures developed by CD Tech. Among other advantages, the
concept reduces capital costs and improves octane retention; however, catalyst costs are
higher due to the proprietary devices.

Phillips S Zorb Vs CDTech CDHydro / CDHDS R00

CDHydro removes mercaptan sulfur from the light cat cracked naphtha without the loss of
octane, and at removal rates greater than is possible with extractive caustic treatment
options. The mercaptans simply react with di-olefins, present in the FCCU gasoline, to form
sulfides in the catalyst bed. The sulfides are fractionated out the bottoms of the CDHydro
column with the heavy gasoline, and are readily removed by the subsequent CDHDS step.
Conventional bulk nickel catalyst is used for this reaction called thioetherification.
The optional hydroisomerization feature increases the octane number of the light gasoline
by upwards of one number. This palladium catalyst bed, which promotes the shift of the
double bonds from the alpha position to the beta position, will be added within the CDHydro
column on top of the nickel mercaptan removal bed.

CD Tech Hydro / HDS Technology

CDHydro

Hydrogen

FCC C5+
Gasoline

AmineTreat
and Recycle

CDHDS

LCN

POLISHING
REACTOR to
achieve Ultra Low S levels

Mercaptans + di-olefins
form sulfides, which
distill down to the
bottom of column.
(Thioetherification)

Hydrogen
MCN

MCN + HCN

HCN from Main

Fractionator Sidedraw

Hydrodesulfurization

Hydrogen

HCN
MCN + HCN

CDHDS is a hydrodesulfurization process, employing conventional cobalt-molybdenum

catalyst and requiring hydrogen, which converts sulfur-containing compounds to H 2S and
other hydrocarbons. While conventional HDS processes saturate olefins as an unwanted
side-reaction, thus causing severe loss of octane, CDHDS preserves a greater amount of
the contained olefins, thereby minimizing octane loss. CDHDS accomplishes this by
combining fractionation and the hydrotreatment function which basically exposes the lighter
portion of the mid cat cracked gasoline stream, taken overhead from the CDHDS column,
to lower temperatures and less severe conditions, compared to the heavier bottoms which is
exposed to much higher temperatures. It is the heavy portion of the gasoline that contains
more sulfur as well as the hard-to-remove sulfur compounds. The temperature in the
CDHDS column ranges from 450 to 650 Deg F.
The polishing reactor employs a low severity fixed bed reactor to hydrodesulfurize the
residual sulfur remaining after the prior CDHDS step. This stage also employs conventional
cobalt-moly hydrotreating catalyst; typical operating conditions are as follows: 510 Deg F,
320 psig, 5-10 liquid hourly space velocity (LHSV). The polishing reactor reduces octane
loss even further (compared to CDHDS alone) by balancing severities between the CDHDS
and the polishing reactor. The polishing reactor is also needed to achieve sulfur levels of

Phillips S Zorb Vs CDTech CDHydro / CDHDS R00

30 ppm or less in the Cat Cracked mid plus heavy naphtha and is capable down to less
than 10 ppm S. For Norco, the polishing reactor is not recommended from both a
performance perspective, since the design sulfur level of the treated Cat Cracked naphtha
product is above 30 ppm S, and an octane recovery standpoint due to lower severity
operation required (lower feed sulfur). However, a polishing reactor can be easily added to
Norco's CDTech technology.
ECONOMIC ANALYSIS:

Norco LSG Technology Economic Comparison

Phillips S Zorb vs. CDTech CDHydro / CDHDS
Phillips S Zorb

CDTECH CDHydro / CDHDS

Norco Equivalent
Linear Estimate
From Published

Norco Case

Project Economics
ISBL Capital Cost, $MM
NPV of Annual Costs, $MM
NPV of -1% Reliably for S-Zorb, $MM
Total NPV Without Reliability $MM
Total NPV of LSG Technology (Cost), $MM

60.5

59.9

137.5

184.0

11.0

198.0

243.8

$ 209.0

$ 243.8

CASE 1: $1200/BBL Phillips S Zorb ISBL Capital Cost

ISBL Capital Cost, $MM
NPV of CPG Cost, $MM

87.6
137.5

NPV of -1% Reliably for S-Zorb, $MM

Total NPV Without Reliability $MM
Total NPV of LSG Technology (Cost), $MM

59.9
184.0

11.0

225.1

243.8

$ 236.1

$ 243.8

CASE 2: $2.50/MMBTU Fuel Cost Applied to CDTech

ISBL Capital Cost, $MM
NPV of CPG Cost, $MM
NPV of -1% Reliably for S-Zorb, $MM
Total NPV Without Reliability $MM
Total NPV of LSG Technology (Cost), $MM

60.5
137.5
11.1

198.0

233.6

$ 209.0

$ 233.6

NOTES:
1 - Base Case S Zorb Capital Cost is $840/BBL
2 - Base Case CDTech Fuel Cost is $3.80/MMBTU. The Fuel Cost Basis for Phillips S Zorb is unknown

ECONOMIC ANALYSIS ASSUMTIONS:

Feed Properties -

59.9
173.7

Phillips S Zorb Vs CDTech CDHydro / CDHDS R00

The Norco Phillips S Zorb Technology is based on a linear estimate from the two
published case studies. The cases are 300 ppm and 1500 ppm sulfur, while Norco's
design feed sulfur for the CDTech unit is 645 ppm S.
Both Phillips cases are for a 35,000 bpd unit, while the CDTech technology is based
on the 73,000 bpd design basis. The cost (or benefit) of scaling up the Phillips
design is unknown, therefore no adjustment was made.

Product Properties The Phillips technology is advertised to reduce sulfur levels down to 10 ppm,
however Norco only requires 40 ppm. It is not known if there is a benefit from
operating the Phillips unit at higher product sulfur, therefore no adjustment was
made.
The treated FCC naphtha value estimate is $24/bbl.
The octane value estimate is 0.8 cents/octane gallon.
Utilities The value of hydrogen is based on the price of fuel gas, $3.80/MMBTU, and is
linked in the spreadsheet. The cost of hydrogen BTU multiplier used is 1.4 (SMR
Hydrogen) basis information from Norco's planning organization.
The fuel gas consumed is only that fired in the furnace.
The fuel gas produced includes the vent streams to fuel and the hydrogen purge
from the CDTech unit.
The $3.80/MMBTU fuel gas value is the burner tip value from Norco's planning and
business development.
The electricity cost of $49.85/MWh is from Norco's planning and business
development.
The cooling water estimate is very rough, however Norco Refinery has limited
cooling water availability, therefore a large cooling water load increase (Phillips) may
require a new cooling water tower.
The steam cost is based on the price of fuel gas, $3.80/ MMBTU, and is linked to the
fuel gas price. A 89.5% efficient boiler is assumed.
The nitrogen costs are based on 4 year historical Norco data.
Costs The capital cost for the Phillips unit is from published data, however it is believed
that this cost could be much greater than advertised. The CDTech capital cost is
from the AFE estimate of $60MM, +/-10%.
The operating cost for Phillips is from an advertisement and is not based upon a
known fuel price. The Phillips sorbent cost is back calculated from the utility costs
calculated in this analysis from a total operating cost, plus 0.1 cent per gallon.
The CDTech catalyst cost is based on the lease cost for the catalyst and packing.
The CDTech maintenance cost is based on a rough estimate of $0.5MM for years
without a turnaround and $2.25MM for years with a turnaround. A 5 year
turnaround cycle assumed.

Project Economics The annual cost is the total cost of processing plus the cost (loss) of product yield
and/or quality.

Phillips S Zorb Vs CDTech CDHydro / CDHDS R00

The incremental S-Zorb reliability cost is an estimated 97% stream factor, vs. 98%
for CDTech. The value is estimated to be 3.65 days of lost opportunity at $5/bbl.
The installed ISBL cost is the $/BBL capital cost for a 73,000 bpd unit.
The interest rate is assumed to be 10.5% - the assumed interest rate for the PAM
runs developed for the Norco AFE.
The Multiplier is the ratio of NPV of an annual cost for 20 years divided by the
annual cost.

ATTACHMENT:

CDTech-SZorb.xls