Petroleum coke (known as petcoke or “coke”) is produced by refinery coker units that break up residual fuel oil to squeeze out the last drops of lighter components used to make gasoline and diesel – leaving a solid carbon based residue. Petcoke is also the only commercial source of material used to manufacture electrolytic anodes that play a critical part in making aluminum. As a result – these industries are effectively joined at the hip - although you wouldn’t know it because the two rarely cooperate. As we explain in today’s blog - that may need to change going forward because a looming petcoke shortage could disrupt aluminum production and prices.
This blog series is based on the recently published “Alliance Anode Coke Study” prepared by Turner, Mason and Company, AZ China Ltd and Cascade Resources. For more information about the study please contact [email protected]
How Is Aluminum Made?
For those of you wondering why RBN Energy’s blog would suddenly veer off into the world of metals and in particular aluminum – tighten your seat belts and bear with us while we explain the relationship between crude oil and aluminum. Aluminum is almost exclusively made using the Hall-Heroult electrolysis process where electricity at very high currents is passed through a molten electrolyte containing dissolved alumna (a compound of aluminum and oxygen produced from bauxite) at around 960 oC (1,760 oF). The alumina is reduced to its component parts – with the aluminum accumulating in reduction cells on one electrode (the cathode that transmits the current). The other electrode (the anode) is comprised of multiple blocks of carbon – typically around 1 metric tonne (MT) in weight – suspended in the electrolyte. These anodes are primarily manufactured from petcoke as well as a pitch based binder. The anodes are consumed during the electrolysis by reaction with oxygen to form CO2. Around 0.4 to 0.45 MT of carbon anode are consumed to produce 1 tonne of aluminum metal. Bottom line – you need about half a tonne of petcoke to make a tonne of aluminum. Who knew?
Anode Grade Petcoke
Refineries produce petcoke in a delayed coking unit (DCU) – commonly referred to as a coker. The primary purpose of the coker is not to produce petcoke but rather to upgrade residual fuel oil produced by upstream units in the refinery into lighter, more valuable components such as naphtha and distillate that can be treated to make gasoline and diesel (see Refining 101 for more on complex refining processes). Only the most sophisticated refineries have coker units and since they are used to upgrade fuel oil – refineries that have these units tend to process heavy crudes that have a high residual fuel oil yield after primary (atmospheric) and secondary (vacuum) distillation. The coker unit thermally cracks (breaks apart with heat) the large fuel oil molecules into smaller molecules to make gasoline, diesel and other products. The schematic in Figure #1 shows the process. The fuel oil feedstock is heated first to 482 oC (900 F) by the furnace and then introduced into the coke drum (the cracking doesn’t start until it gets to the coke drum – hence the term “delayed” coker – if you were wondering). As the heavy molecules fracture, the lighter molecules vaporize and exit through the top of the coke drum and are split into components in the fractionator. The liquid yield from a coker is typically around 70-80% of the fuel oil feedstock volume. As a side reaction single carbon atoms break apart from the larger molecules to form petcoke. Being a solid the coke gradually fills the coke drum. When full the heated fuel oil stream is diverted to a second drum and the coke is removed from the first drum. Now you know.
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About the song
"I'd Like to Buy the World A Coke” is an iconic jingle used in the groundbreaking 1971 "Hilltop" television commercial for Coca-Cola written by Bill Backer. The popularity of the jingle led to it being re-recorded by The New Seekers and by The Hillside Singers as a full-length song, dropping references to Coca-Cola. The song became a hit record in the US and the UK. More recently the song was played at the end of the final episode of the hit TV drama Mad Men.
Comments
You make it sound like all refineries with cokers might choose to make anode grade or electrode grade (which you didn't mention much) coke. But there is always the tension between the petcoke business and the rest of the refining business as to what crude to use - - lower cost (high sulfur/metals & fuel grade coke) for refined products, higher cost for (low sulfur/metals & anode grade coke) for the coke manager. Can the 5% of crude outturn that coke represents swing the rest?
In reply to petcoke by William Leffler
Yes - refiners have different interests and different margin calculations than aluminum makers. It is unclear at what price anode grade petcoke would encourage refiners to concentrate on making it - to the detriment of other refined product output.
In reply to Yes - refiners have different by Sandy Fielden
Does switching to an anode-grade-coke-suitable-crude mean a trade off with other oil products produced? Isn't it a trade off between the cost of general refining crude versus the (ususally higher) cost of an anode-grade-coke-suitable-crude. That is, a crude that makes green coke versus one that can make anode grade coke.
In your next episode, if you can put emphasis on how China's reduced demand will impact Aluminum’s global demand, it will be a more intriguing analysis. It is possible that the Aluminum's demand might reduce so dramatically that supply constraints on GPC might be a moot point. Hence it is very well possible that the supply of Aluminum might not fall short of demand by end of 2016. If my findings are right, China consumes 54% of the aluminum produced worldwide.
In reply to Aluminium Demand - China by Kishore Kalva
You have to be careful here. China is exporting a large quantity of fake semi finished aluminum. If for whatever reason China reduces production of aluminum,then smelters in other parts of the world will pick up the slack and fill the need. Demand for aluminum is globally going to grow between three and 7% per year. These estimates or from respected analysts at Harbor intelligence, CRU, Alcoa, RTA, etc. that growth in demand for primary aluminum is predicated not only on China but also on increased demand from the automotive, aerospace, and construction sectors worldwide. Where they produced in China or not primary limiting needs half a kilo of green anode grade petcoke in order to produce 1 kg of primary aluminum. That equation will not changeregardless of what happens in China.
All estimates of global aluminum primary demand (not recycled material) reflect a growth rate of between 3 - 7% annually for the foreseeable future. Estimates by Harbor Intelligence, CRU, ALCOA and other organizations confirm these growth rates.While it is true China represents about 50% of the global primary aluminum demand and supply, the growth in demand due to efforts to reduce weight in OTR vehicles (especially in developed countries) mandated in many cases by aggressive government regulations (such as the CAFE standards imposed on fleet MPG in the USA), increased aerospace production, packaging and construction will continue to push demand higher with or without Chinese growth. Indian aluminum demand growth bears watching as well. Whether the demand occurs in China or the ROW, the metric of requiring 1/2 kilo of green petcoke to produce a kilo of primary aluminum remains unchanged. IMHO, the only way we will see a tempering in demand growth is when and if the price of aluminum increases to the point that other materials, whether it be composites, plastics, high strength steel, titanium, etc., become more economical to use than aluminum. Until then the growth in aluminum demand is on a collision course with the available supply of anode grade green petcoke. At some point in the few years the deficit in the supply of this critical raw material will become painfully obvious to the global aluminum industry.
Can you provide more information on this fake semi-finished aluminum?
Many thanks