Shandong’s local refineries are building ten methanol-to-hydrogen plants to supply hydrogen for the upgrading of oil products

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Hydrogen is an important raw material in the refining industry, and deep hydrodesulfurization is a key method for producing low-sulfur, clean petroleum products. As **the standards for clean petroleum products continue to improve, the demand for hydrogen in the refined oil production industry has increased. Research by Yahuazheng Consulting shows that, in addition to the traditional methods of producing hydrogen from refinery dry gas, oil, natural gas, and coal, local refineries in Shandong are now also making extensive use of the methanol-based hydrogen production method as a source of hydrogen for upgrading petroleum products. The ten methanol-to-hydrogen projects that have been completed or are planned to be built in Shandong province during 2016–2017 are listed below. 1. Shandong Shengqi Chemical Co., Ltd.’s 1.6 million tons per year heavy oil hydrogenation refining project and related facilities, including a methanol-to-hydrogen plant with a capacity of 40,000 Nm3/h; this project was completed and put into operation in 2016. 2. The 800,000 tons/year oil product upgrading and transformation project of Shandong Haike Chemical Industry Group Co., Ltd. along with its supporting projects, including a methanol-to-hydrogen plant with a capacity of 20,000 Nm3/h, was completed and put into operation in 2016. 3. The oil product hydrogenation quality improvement project of Shandong Binhua Binyang Combustion Chemical Co., Ltd. involves the construction of a diesel hydrogenation reforming unit with an annual capacity of 400,000 tons, as well as a methanol cracking hydrogen production unit with a capacity of 30,000 Nm3/h; this project was successfully put into operation in 2017. 4. The oil product quality improvement and related renovation project of Shandong Jincheng Petrochemical Group Co., Ltd., which includes a 2.2 million tons per year hydrocracking unit, a 1.2 million tons per year continuous reforming unit, and a 60,000 Nm3/h methanol-to-hydrogen plant, was successfully put into operation in 2017. 5. The 1.6 million tons per year diesel upgrading project and related facilities of Shandong Red Sea Chemical Co., Ltd.; the first phase of this project, which includes a 400,000 tons per year diesel hydroprocessing unit, an 800,000 tons per year raw material pretreatment unit, and a 15,000 Nm3/h methanol-to-hydrogen plant, was completed in 2017. 6. The 1.6 million tons per year residue hydrodesulfurization and associated hydrogen production project of Shandong Shenchili Chemical Group Co., Ltd., which includes a methanol-to-hydrogen plant with a capacity of 40,000 Nm3/h, has been completed. 7. The Oil Product Quality Upgrade Joint Facility Project of Shandong Dongfang Hualong Industry and Trade Group Co., Ltd. involves the construction of a hydrogenation reforming unit with an annual capacity of 1.6 million tons, a continuous reforming unit with an annual capacity of 1.2 million tons, and a methanol-to-hydrogen production unit with a capacity of 60,000 Nm3/h; this project is currently under construction. 8. The oil product quality improvement and related infrastructure project of Dongying Qirun Chemical Co., Ltd. involves the construction of a hydrocracking unit with an annual capacity of 1.5 million tons, a continuous reforming unit with an annual capacity of 1.2 million tons, an aromatic extraction unit with an annual capacity of 480,000 tons, an isomerization unit with an annual capacity of 250,000 tons, an alkylation unit with an annual capacity of 100,000 tons, and a methanol-to-hydrogen plant with a capacity of 30,000 Nm3/h. This project is currently under construction. 9. The 1.2 million tons per year oil upgrading facility project of Guangrao Kelida Petrochemical Technology Co., Ltd. involves the construction of a 1.2 million tons per year oil upgrading unit as well as a methanol-to-hydrogen plant with a capacity of 25,000 Nm3/h; this project is currently under construction. 10. The 100,000 tons/year light oil refining project of Binzhou Union New Energy Technology Development Co., Ltd., which includes a methanol cracking hydrogen production unit with a capacity of 1,500 Nm3/h; this project received approval for its environmental impact assessment in June 2016. 2016–2017 Shandong local refineries’ methanol-based hydrogen production projects: Company name, Hydrogen demand, Scale of methanol-based hydrogen production (Nm3/h), Methanol consumption (10,000 tons/year). Shandong Shengqi Chemical – Heavy oil refining: 40,000; 16.96. Shandong Haikewo Chemical – Improvement of oil quality: 20,000; 8.48. Shandong Binhua Binyang Fuel Processing – Diesel upgrading: 30,000; 12.72. Shandong Jincheng Petrochemical – Improvement of oil quality: 60,000; 25.44. Shandong Honghai Chemical – Diesel upgrading: 15,000; 6.36. Shandong Shenchili Chemical – Residue desulfurization: 40,000; 16.96. Shandong Dongfang Hualong Industry & Trade – Improvement of oil quality: 60,000; 25.44. Dongying Qirun Chemical – Improvement of oil quality: 30,000; 12.72. Guangrao Keliда Petrochemical – Improvement of oil quality: 25,000; 10.6. Binzhou Banglian New Energy – Light oil refining: 1,500; 0.636. Total: 321,500; 136.316. The cost of producing hydrogen using methanol is higher than that of producing it from oil, natural gas, or coal. Why then do many Shandong local refineries use methanol-based hydrogen production as a source of hydrogen for improving oil quality? Yahua Consulting believes the main reasons are as follows. 1. Methanol-to-hydrogen plants have low investment costs and a short construction period. Due to its simple process, the investment and construction time for methanol-based hydrogen production facilities are much shorter than those for coal gasification-based hydrogen production and natural gas reforming-based hydrogen production. 2. Methanol-to-hydrogen plants have flexible scales, and their raw materials are readily available. Similarly, due to the short process flow for hydrogen production via methanol cracking, the cost of producing hydrogen from methanol remains relatively constant regardless of the scale of the facility; therefore, the scale of the facility can be designed flexibly based on the hydrogen demand. Coal-based hydrogen production is only suitable for large-scale hydrogen demand. At the same time, methanol is a fully marketized commodity, and its raw materials are easier to procure and store compared to natural gas. 3. The approval process for methanol-to-hydrogen projects is straightforward. With increasingly stringent environmental regulations, project approval for hydrogen production from methanol is easier compared to other hydrogen production methods.