Headwaters Incorporated Announces Results of First Commercial Scale Test of Its Proprietary (HC)3(TM) Heavy Oil Hydrocracking Technology
Monday January 23, 9:00 pm ET
SOUTH JORDAN, Utah--(BUSINESS WIRE)--Jan. 23, 2006--Headwaters Incorporated (NYSE: HW - News) today announced the successful demonstration of the (HC)3(TM) Heavy Oil Hydrocracking Technology at a large commercial refinery in Europe. Headwaters' subsidiary, Headwaters Heavy Oil, LLC, in cooperation with the host refinery and Advanced Refining Technologies LLC (ART), the hydroprocessing catalysts joint venture of W. R. Grace & Co. and Chevron Products USA, a leading supplier of hydroprocessing catalysts, have successfully demonstrated the technical and economic advantages of integrating the (HC)3 catalyst in a commercial hydrocracker converting additional bottom-of-the-barrel material to gasoline, diesel and other value-added products.
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Headwaters Heavy Oil, LLC believes that the (HC)3 Heavy Oil Hydrocracking Technology represents a breakthrough in heavy oil upgrading. Processes for bottom of the barrel upgrading have been in commercial use for almost a century, from high-temperature thermal cracking to catalytic hydrocracking that uses solid catalysts and hydrogen pressure to upgrade residual oils. Peter Quinn, president of Headwaters Heavy Oil, LLC, explained, "Prior to the introduction of the liquid-phase (HC)3 catalyst, conventional catalytic hydrocracking was the state-of-the-art in heavy oil upgrading. We expect that this new technology, which was successfully demonstrated last month in Europe, may enable refiners to produce a higher distillate yield, and a better quality product, than was previously possible with older technologies."
The (HC)3 Technology uses a unique liquid catalyst, chemically generated within the process plant, to convert residual oil feedstocks into gasoline, diesel and other higher-value fuel products. The liquid catalyst precursor is injected into the feedstock through a proprietary skid-mounted mixing system. Headwaters Heavy Oil, LLC's exclusive, worldwide license for the patented (HC)3 catalyst and related proprietary technology and ART's ongoing business relationship with the European refinery were key factors in making this commercial trial a success. The parties have not currently entered into long-term commercial relationships.
This commercial demonstration of the (HC)3 Technology was carried out over a 30-day period at a European refinery where an ebullated-bed hydrocracker has been in use for several years. During the 30-day trial completed last December, residual oil was upgraded at conversion levels higher than normally achievable at that site. In the past, a high level of residual oil conversion was difficult to maintain because of fouling in the reactor and downstream equipment. However, during the (HC)3 trial, the plant operated at conversion levels as high as 20% above the previous limit, with no observed negative effects. In addition to higher conversion, the refinery observed a significantly lower rate of fouling in the upgrading unit's main heat exchangers.
"We believe that the (HC)3 Hydrocracking Technology represents a major improvement in heavy oil upgrading," Quinn continued. "We estimate that existing ebullated bed catalytic hydrocracking units today process close to 500,000 barrels per day of residual feedstocks, and given the current price differentials between light, sweet crudes and residual oils, we anticipate that most of these units would see a significant benefit by adding the (HC)3 liquid catalyst to their current operations."
According to Robert H. Bullard, managing director of ART, "We were pleased to provide the equipment and support for this first commercial trial. Since ART supplies the catalyst currently in use at the heavy oil upgrader plant, we were on-site to assist them with the integration of (HC)3 Heavy Oil Hydrocracking Catalyst, using a proprietary catalyst addition and conditioning system."
Beyond its application as an additive to enhance residual oil conversion and improve the operation of ebullated bed hydrocrackers, Headwaters Heavy Oil, LLC intends that the (HC)3 Technology be used as the principal hydrocracking process for upgrading resid in "brownfield" and grass roots refineries which process heavy crudes such as Canada's tar sand bitumen. Last year, Headwaters announced the start of engineering for such a plant, to be built by North West Upgrading LLC of Calgary, designed to upgrade Athabasca Tar Sand Bitumen and Cold Lake heavy oil into high-quality synthetic crude, comparable in quality to high-value, light, sweet crude oil. Headwaters Heavy Oil, LLC is presently evaluating stand-alone applications of the (HC)3 Technology in Asia and North America.
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