Call it what you wish – 6 Oil, Fuel Oil, RSFO, HSFO, LSFO, or even Burner Oil.  The one thing that’s certain is that if your refinery produces this product, you likely have wide room for improving how you optimize fuel oil blend operations. 

Desipite all the talk these days about investment requirements needed to meet IMO Regulatory changes, let's ensure that we're minimizing the inefficiencies in our current business. 

opportunity for refiners is viscosity.  As a rule of thumb, my advice generally is to maximize the gasoil/resid cutpoint and then use distillate to cut the remaining resid. 

Maximizing gasoil recovery from resid makes a lot of sense since refiners can crack gasoils into gasoline and distillates.  Gasoil is also a very poor cutting agent, so higher fuel oil production results from leaving gasoil in resid.  This cutpoint giveaway can be worth $0.5 Million per year for 1 KBD fuel oil production or $5 Million per year for 10 KBD fuel oil production.

Most refiners understand the value in maximizing the gasoil/resid cutpoint.  However, a subtle variable not often accounted for is the quality of fuel oil cutter.  Like any other blend parameter, bunker oil cutter optimization requires deep technical scrutiny to capture maximum benefits.  However, it’s a fact that many refiners meet fuel oil specs with minimum effort.

Let’s take a quick look at some fuel oil blends and get a feel for how much volume is required for different cutter streams.
 

It’s obvious that using gasoil as a fuel oil cutter stock is very inefficient for meeting viscosity specs; hence, maximizing the gasoil to resid cutpoint is critical.  But compare the cutter efficiency of diesel to cycle oil, and even between two different types of cycle oil. 

Comparing all of the alternative cutters to “LCO A” as the optimal cutter, you can see that very slight changes in viscosity can result in significantly higher amounts of cutter.  1 centistoke difference in cutter quality results in close to 15% cutter efficiency decrease.  On 10 KBD resid production, this is 600 barrels per day more distillate downgraded to bunker oil!

Translating cutter efficiency into bottom-line dollars will make my point more clear, so let’s take a look at the chart below.  The lost opportunity cost for blending with a less efficient cutter stock is shown below in terms of how much money is lost annually.

On 5 KBD resid production, sub-optimized fuel oil cutter usage can result in $2 Million per year loss for 1 centistoke viscosity difference.  Since viscosity blending is not linear, this cost escalates to $9 Million per year for 2.5 cST difference on the same 5 KBD resid make. 

For a refinery that produces as much as 10 KBD resid, the opportunity cost for fuel oil blend optimization is just tremendous!  Looking at the opportunity costs in the chart above, have you now found religion in optimizing bunker blending? 

Small differences in cutter properties goes a very long way, and it’s often not understood how much of a bottom-line impact this can have on refinery profitability.

We all know that traditionally speaking cokers make a lot of money because they can upgrade resid to higher valued products.  Taking the fundamentals of that logic, and focusing on minimizing how much fuel oil your refinery produces through bunker blend optimization has tremendous value potential.

Meeting fuel oil specs efficiently should be a high priority...today...and after 2020!