Report: Global Refinery Octane Requirements to Decline

2 September 2008

A new Global Refining Octane Outlook report by Hart Energy Consulting concludes that while the global gasoline market octane will gradually increase by half a point through 2020, requirements for global refinery octane will decline between 2007 and 2020, affected by outside component contributions—e.g., merchant ether and ethanol—and the impact of fuel quality requirements.

Global octane markets have been volatile as driven by refining capacity constraints, gasoline sulfur reductions (and related refinery processing octane loss), removal of MTBE from markets, upgrade of ultra low octane markets and final stages of lead removal. Markets have experienced periods of high octane premiums with US premiums peaking at 5 to 7 cents per octane-gallon.

Gasoline comprises a complex mixture of hydrocarbon molecules, and many mixtures burn unevenly, resulting in engine knocking. Some mixtures burn more evenly, however, and in 1927, the industry created a scale to attempt to define anti-knock properties. Iso-octane (2,2,4-trimethylpentane) when burned pure in the engine delivered the best anti-knock properties, and was assigned the index number 100.

The fuel n-heptane delivered the worst knocking. Mixed together, they delivered different amounts of knocking based on their ratio—the higher the percentage of iso-octane, the lower the knocking. A gasoline with a 90 octane rating has the same knocking properties as a 90:10 blend of iso-octane:n-heptane.

Refineries have looked to octane enhancement processes such as alkylation and isomerization to convert more petroleum to higher octane molecules to raise the octane content of their fuels. They also looked to additives. Tetraethyllead was an early one—leaded gasoline, with its environmental and health downsides. MTBE was another.

The Hart report projects that the global gasoline market octane—which was 87.6 in 2007—will gradually increase by about half a point through 2020. All regions of the world except North America will experience an increase in market octane with the highest increase in the Former Soviet states (CIS) where lower octane standards will be harmonized with the EU. North American octane will remain relatively stable, according to the report.

Europe is the highest octane market and will see further octane increases as their 91 octane grade is phased out. The CIS region is currently the lowest octane aggregate region, but will increase octane to approach European levels.

Non-refinery octane components—primarily ethanol—will affect the global octane market to a greater extent than in the past. Ethanol blending with gasoline will increase by well over a million barrels per day between 2007 and 2020, significantly reducing demand on refinery-generated octane.

Merchant ether and ethanol contribution to the gasoline pool will increase by more than 2 octane numbers by 2020, according to the report.

Gasoline quality improvements will place additional octane requirements on refinery octane by removal of octane sources (lead phase out) or reducing refinery component octane (sulfur and benzene reductions). Globally the quality improvements will be far less significant than the added ether/ethanol octane, but their impacts will have more pronounced regional effects, according to the report.

Taking into account market octane requirements, outside component contribution and fuel quality impacts, global refinery octane requirements will decline between 2007 and 2020. Trends in refinery octane requirements will vary considerably between global regions, with some increasing and others in decline. The North American market will see the largest decline while the CIS region will experience the greatest increase in refinery octane requirement, the report concludes.

Resources

• Handbook of petroleum processing, David Jones, Peter R. Pujadó Springer, 2006