Production of hydrogen for upgrading of heavy oil: Senior design project--Spring 2009

An important technical hurdle to the production of oil from abundant oil shale resources is how to create enough hydrogen for upgrading the heavy oils produced from the shale prior to transport through pipelines. In order to avoid clogging pipelines during transport roughly 350scm (standard cubic meters) of H2 must be added to each cubic meter of raw shale oil (Kirk-Othmer, 1996). Production of the H2 required for shale oil upgrading represents a significant business opportunity. Therefore the objective of this design project was to compare two methods of generating H2, natural gas to H2 and gasification of shale oil from the oil shale itself, to determine which method is the best process (highest economic return, safest operation, and least environmental impact) for H2 production. By almost every measure (mass balance of all material, water usage, economics, etc.) the natural gas to hydrogen process is more competitive than the gasification of shale oil. Preliminary designs were created for both the natural gas and shale oil gasification processes using ProMax. These designs were created based on our review of existing processing methods, the criteria and specifications given in the problem statement, and the procedural steps of the Guthrie Method (Seider, 2004). Both flowsheets utilized Lee-Kesler property packages. Our natural gas system utilizes a natural gas boiler, methane steam reformer, water-gas shift reactor, and two flash tanks for H2 separation. The shale oil gasification process we designed includes a shale oil gasifier, water-gas shift reactor, two flash tanks, and an MEA absorber/stripper column for acid gas removal (modeled with the SRK property package). Cryogenically separating H2 from the other gaseous species initially appeared to be prohibitively expensive (approximately $115 million for both systems), but with heat integration refrigeration costs were reasonable (less than about $8 million). An economic analysis of each flowsheet reveals that the total capital investment (TCI) required for shale oil gasification is about 80% higher than the TCI for the natural gas system. This difference is due primarily to the varying bare module costs for each system. The net present value (NPV) and investor s rate of return (IRR) of the natural gas system are $96 million and 59% respectively. Unfortunately by specifying an ROI of 20% for each process in the problem statement traditional methods of quantifying profitability such as NPV and IRR become almost identical. Of course as indicated in Table 1 above, the NPV and IRR are only close if the H2 is sold at $8.47/bbl oil for the natural gas system and $15.07/bbl oil for the shale oil system. Both systems exhibit linear relationships to the price of their respective feedstocks, but even at the upper limit of prices for their feedstocks both systems retained their profitability.