SK Energy adds new unit at Ulsan refining complex
SK Innovation Co. Ltd. subsidiary SK Energy Co. Ltd. has completed construction of a new vacuum residue desulfurization (VRDS) unit for production of low-sulfur fuel oil (LSFO) at its 840,000-b/d Ulsan refining complex at Sinyeocheon-ro, Nam-gu, Ulsan, South Korea.
Construction of the 1 trillion-won VRDS unit, which began in January 2018, reached mechanical completion about 3 months ahead of schedule on Jan. 31, SK Energy said in a Feb. 3 release via the SK Group of companies’ official media blog.
Equipped with the capacity to produce 40,000-b/d of light and LSFO using a feedstock of depressurized residue oil from the refinery’s vacuum distillation unit, the VRDS plant is scheduled to begin commercial production in March following a trial-run period now under way, SK Energy said.
Once fully operational, SK Energy said it expects the new VRDS unit to increase its operating profits by 200-300 billion won annually.
SK Energy took final investment decision on the VRDS unit project in late 2017 as a preemptive measure to help the Ulsan refinery meet the International Maritime Organization’s (IMO) mandate—announced in October 2016—that, effective Jan. 1, 2020, all ships must use marine fuels with a sulfur content below 0.5% from a then-current sulfur content of 3.5%, according to a Nov. 1, 2017, release from the operator.
Alongside International Energy Agency (IEA) projections for rapid demand growth in the LSFO shipping market in 2020, SK Energy said it also expects the global market for marine LSFO to further expand amid strengthening air-pollutant emission standards by global ports—including South Korea’s Incheon port—for port ships docking at their facilities.
Upon announcing mechanical completion of the VRDS unit, Cho Kyung-mok—SK Energy’s chief executive officer and president—said he expects the LSFO market to further improve beginning in this year's second quarter when existing stockpiles are exhausted.
Last year, SK Energy let a contract to Chevron Lummus Global (CLG) to provide licensing for its proprietary VRDS technology for a grassroots plant designed for production of LSFO to help the Ulsan complex meet IMO 2020 clean-fuel requirements, CLG said in an Aug. 8, 2019, release.
CLG did not reveal further details of the August 2019 VRDS technology contract with SK Energy, though it did confirm the award came as part of an ongoing relationship the service provider has with the operator to process heavy residuum refinery streams. CLG also confirmed the award follows other similar projects at Ulsan for which it has licensed technology, including VRDS Unit 1 as well as residue desulfurization (RDS) Unit 1 and RDS Unit 2, one of which was revamped for added capacity and flexibility.
Given identification of an earlier project at Ulsan as VRDS Unit 1, it remains unclear whether SK Energy is planning to add an additional VRDS unit at the new plant.
Neither SK Group nor its SK Innovation and SK Energy affiliates responded to OGJ’s request for clarifications regarding the Ulsan VRDS project.
Robert Brelsford | Downstream Editor
Robert Brelsford joined Oil & Gas Journal in October 2013 as downstream technology editor after 8 years as a crude oil price and news reporter on spot crude transactions at the US Gulf Coast, West Coast, Canadian, and Latin American markets. He holds a BA (2000) in English from Rice University and an MS (2003) in education and social policy from Northwestern University.
