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In recent decades, we’ve seen some of the most advanced refineries and petrochemicals plants globally coming on line in India, China, and Saudi Arabia. These include really impressive, world-scale projects utilizing advanced technologies for more environmentally responsible operations such as Reliance Industry’s Jamnagar Refinery in India; the Zhanjiang refinery in China (a JV between Sinopec and Kuwait Petroleum); the Yanbu Refinery in Saudi Arabia (a JV between Saudi Aramco and Sinopec); and the Sadara chemical complex, also in Saudi Arabia (a JV between Saudi Aramco and Dow Chemical); to name just a few.
But while Asia and the Middle East had been dominating the recent project landscape, it’s possible that the Dangote Refinery, now under construction in the Lekki Free Trade Zone in Lagos State in Nigeria (yes, Nigeria!) could outshine many other recent high-profile projects…not to mention the majority of hydrocarbon processing plants previously commissioned in the more developed regions of the world.
This new, $10 billion, 650,000 barrel-per-day refinery, along with associated world-scale petrochemical and fertilizer plants and subsea pipeline project (which the company claims will be the world’s largest), represent the vision of the Dangote Group, one of Africa’s largest conglomerates. According to the company, the privately held Group focuses on local, value-added products and services that meet the needs of the African population. Its goal is to make Nigeria self-sufficient in cement, fertilizers, petroleum products, and other commodities. In this instance, the “need” is to meet Nigeria’s shortage of effective refining capacity to reduce its current reliance on expensive imported petroleum products. While the country is Africa’s second largest producer of petroleum, producing several million barrels per day, due to poor maintenance and upgrade practices over the past 20 years, Nigeria’s four existing state-owned refineries (with combined designed capacity of well over 400,000 bpd) are barely operational and the country must import most of its gasoline, diesel, and other refined products.
Advanced processing and automation technologies for production flexibility and environmentally responsible operations
It appears that the Dangote Group and its Dangote Oil Refinery Company Ltd. subsidiary are sparing no expense to implement the latest processing, analytical, automation, and environmental technologies at the new single-stream refinery. The refinery is being designed to accommodate multiple grades of domestic and foreign crude (including shale oil) and process these into high-quality gasoline, diesel, kerosene, and aviation fuels that meet Euro V emissions specifications, plus polypropylene. It will include a crude distillation unit, single-train residual fluid catalytic cracking unit, diesel hydrotreating unit, continuous catalyst regeneration unit, alkylation unit, and a polypropylene unit. According to the company, the refinery, will be able to adjust its production of different products to match market demands.
Achieving this degree of production flexibility from a single processing stream will certainly be challenging and is not without risk, since if any critical unit in the plant should become unavailable, production would likely drop to zero. What’s more, according to one refinery executive, to maximize profits, “The refinery is going to operate at 110 percent of its capacity at the minimum.” Clearly, whether or not the refinery can achieve, much less maintain, this level of production for any length of time (as one of my colleagues likes to say) “remains to be seen.”
In 2014, Engineers India Ltd. (a public-sector undertaking of the Government of India) was awarded a contract valued at $139 million to provide project management consultancy (PMC) and engineering, procurement, and construction management (EPCM) services. While this appears to be the largest PMC-type contract that EIL has ever received, the company has an impressive track record of major projects – both upstream and downstream - in India and elsewhere.
In addition to the project management and engineering contracts awarded to EIL in 2014, several other critical contracts were announced in 2017:
- DuPont Clean Technologies has been commissioned to provide proprietary equipment for the alkylation, sulfuric acid regeneration (SAR), sulfur recover, tail gas scrubbing units, and fluid catalytic cracking unit (FCCU) stack scrubbing to help the refinery meet gasoline pool octane and emissions requirements. According to a DuPont news release, “The new 27,000 bpd alkylation unit and the 260 mtpd SAR unit will allow the facility to produce high octane, low sulfur, low RVP alkylate with zero olefins.” The equipment was designed to meet world standards for particulate matter and SOx emissions. (Note that other licensors will supply the actual SRU and FCCU units).
- UOP, a division of Honeywell International, Inc., was awarded a contract to provide critical equipment, technology licensing, and design services. This includes several UOP-proprietary processes and packaged equipment. According to the Honeywell news release, “The proprietary specialist equipment includes catalyst regeneration and dryer regeneration control systems, high-performance column trays, and heat exchanger tubes.” The packaged equipment includes a modular CCR unit, catalyst coolers, a third-stage separator system for the RFCC units (which upgrades heavy oil), and two pressure swing adsorption units to purify hydrogen.
- Schneider Electric was awarded a contract to supply its EcoStruxure system architecture and platform, including a Foxboro distributed control system, Triconex process safety systems, PIONIR analytical fuels blending systems, and a suite of SimSci and Wonderware software solutions. This includes unified supply chain management and operations management software…”to drive supply chain and operational efficiency, reliability and profitability improvements” at the new refinery. While the Schneider Electric news release mentioned the company’s IoT-enabled, EcoStruxure open and interoperable system architecture and platform, plus the company’s capability to manage and control business performance in real time, it didn’t provide any details about how these capabilities could play out at the Dangote Refinery. This will be interesting to follow given the deep refining industry domain knowledge and experience with these types of world-scale projects that Foxboro, Triconex, and SimSci bring to the table.
- Aspen Technology, Inc. announced that Dangote Oil Refining has standardized on its Aspen PIM-AO refinery optimization software for feedstock selection, product slate optimization, and economic and production planning. This is not surprising given that AspenTech’s optimization solutions have been well-proven in numerous refineries and petrochemical plants around the world.
Addressing the skills gap
Recognizing the increasing domestic (and global) shortage of engineers, operators, and maintenance technicians with the knowledge and expertise needed to operate and maintain a refinery of this scale and complexity, Dangote Oil Refining is working to get ahead of this particular challenge before the refinery goes on stream by sending graduate engineers from Nigeria abroad for appropriate training. This will also help the company meet the need to promote local content by developing indigenous talent.
The company recently announced that 150 Nigerian engineers had received training by Bharat Petroleum Corporation Ltd. in India, where they had “acquired fundamental practical knowledge in refinery operations with a strong bias for the Dangote refinery spec.” The engineers had two months of classroom training, followed by two months of on-the-job training in different Bharat refineries in India. The company expects these engineers to transfer the skills to other Nigerians once the facility starts up.
The US Trade and Development Agency (USTDA) is also providing support for training at the Dangote refinery. According to a 2015 news release, USTDA is providing a grant to fund a multi-year program to train over 100 Dangote company staff on refinery fundamentals. The news release did not indicate whether this grant related to the Bharat-provided training or represented a separate human resources development program.
Reaching too high?
While the Dangote Refinery vision certainly is exciting, making it a reality will not be without challenges. First consider that before construction could even begin, the company had to dredge up and haul in many thousands of tons of sand just to fill in the very large, swampy site to bring it above the flood zone. Then consider the extreme shortage of skilled engineers, technicians, and operators in Nigeria, the lack of supporting infrastructure, and major supply chain challenges. For example, even after the refinery comes online, there’s no guarantee that it will be able to ensure adequate quantities of feedstocks to enable it to meet its production targets.
Then there are the O&M challenges. While the business benefits are obvious, I’m not aware of too many (if any) world-scale, single-stream refineries that can accommodate the multiple feedstock grades and production flexibility envisioned at Dangote. Hopefully, the refinery is planning to take advantage of some of the advanced capabilities available to them to support both intelligent operations and IIoT-enabled condition-based, predictive, and or prescriptive maintenance approaches. Certainly, the capabilities resident at Schneider Electric, AspenTech, and other advanced OT and IT suppliers should help here.
On the other hand, the company appears to be doing many of the right things to minimize the obvious risks. This includes obtaining government support, initiating negotiations for domestic and international supply contracts, developing its own petroleum production and midstream assets (pipelines, marine terminal, gas processing, etc.), selecting well-proven service and technology suppliers, and getting a head start on meeting the human resources challenge.
We’ll continue to follow the progress of this interesting project. If you have any additional insights to share about it, please feel free to contact me at pmiller@arcweb.com.