What's It All About, Alky?, Part 3 - For Refiners, Are There Viable Alternatives to HF Alkylation?

Refineries with hydrofluoric acid alkylation units account for about 40% of total U.S. refining capacity. Many in the refining sector are concerned that an Environmental Protection Agency (EPA) proposal to compel refineries to conduct exacting studies of newer, alternative alkylation technologies could be leveraged to discourage and effectively ban HF alkylation, and as a result, potentially lead to more refinery closures. The U.S. already has lost more than 1.3 MMb/d of refining capacity since 2019 — losses that exacerbated the run-up in motor fuel prices through the first half of last year — and the specter of another round of refinery closures on the horizon looms large. In today’s RBN blog, we consider the challenges that refineries with HF “alky” units might face if they were required to replace them.

This is the third episode in our blog series about alkylation. As we said in Part 1, alkylate is a blendstock that represents about 15% of the total gasoline pool and is prized for its positive attributes: high octane, low volatility and low sulfur content. There are two primary and distinct catalysts that refiners use to produce alkylate: hydrofluoric acid, or HF, and sulfuric acid, or H2SO4.  Both approaches are quite popular, with HF and sulfuric acid technologies each representing about half of domestic alkylation capacity — and with those shares varying significantly on a regional basis. While refiners have been safely operating both types of alky units for many decades, HF alkylation has drawn additional scrutiny from regulators, including the EPA, which has proposed that refiners using the HF-based process be required to undertake extensive evaluations of potentially safer alternative technologies. While the rule wouldn’t require refineries to replace and shut down HF alky units, there is concern among industry that such mandated evaluations could be a precursor to a total ban on HF alkylation. Under such a scenario, many are concerned that the high cost of a forced shift away from HF alkylation to another alkylation catalyst could well lead to more refinery shutdowns.

In Part 2, we discussed a few reasons why replacing an HF alky unit with another type of alkylation unit is no easy task. First, when refinery owners decided many years ago which type of alkylation process to employ (typically either HF or sulfuric acid), they considered many factors, including the configuration of their specific refinery — its layout, available land, etc. — and the availability of the catalysts themselves. Given that a sulfuric acid alky unit requires many times more acid (and acid-storage space) than its HF counterpart, it is not physically possible to simply swap out the latter for the former. Second, besides sulfuric acid, there aren’t many market-ready alternatives to HF — commercial-scale use of ionic-liquid alternatives is limited and only one refinery (in China) has a solid-acid catalyst alkylation unit. Third — and this is a big one — is cost. One recent analysis estimated that the total installed cost (TIC) of replacing an existing HF alky unit with a new sulfuric-acid alky unit would range from $200 million to $850 million, with the actual TIC depending on the size of the unit. The same study found that at more than half the 40-plus refineries with HF alky units the cost of replacing the unit would equal or exceed 70% of the entire refinery’s value — and that some refineries would likely decide to shut down rather than incur such costs.