January 2025

Special Focus: Sustainability and the Energy Transition

Synthetic graphite demand drives attractive techno-economics for coker upgrades

This article describes the economic opportunity that synthetic graphite demand growth presents for American and European refiners. It describes the conditions that best suit a plant to be considered for such a revamp. The article also discusses the modifications needed in capital equipment, process conditions and feedstock to execute this change, the typical capital expenditure required to materialize it, and the transformational gross profit enhancements that could result from these modifications, given the product slate upgrade.  

IP: 3.144.172.231

Driven by the demand projections for electric vehicles (EVs), electric arc furnace (EAF) steel and battery energy storage systems (BESSs) for utility-scale renewable power plants, the synthetic graphite market in the U.S. and Europe is expected to grow at a compound annual growth rate (CAGR) of 27% from 2025–2030. The interplay of geopolitics is expected to convert this demand growth into a supply-demand gap in the U.S. and Europe. Needle coke is the critical precursor for synthetic graphite. Therefore, American and European refiners that can successfully upgrade petcoking units to needle coke units stand to make appreciable gains in this scenario. 

This article describes the economic opportunity that synthetic graphite demand growth presents for American and European refiners. It describes the conditions that best suit a plant to be considered for such a revamp. The article also discusses the modifications needed in capital equipment, process conditions and feedstock to execute this change, the typical capital expenditure (CAPEX) required to materialize it, and the transformational gross profit enhancements that could result from these modifications, given the product slate upgrade.  

Additionally, the article shares the typical considerations to be studied in such revamps and why those considerations might favor petcokers with a current design capacity < 25,000 bpd. This revamp could result in an internal rate of return (IRR) of 30%–35% for refiners with the appropriate feedstock, plant complexity and configuration. Key commercial considerations of this revamp include access to proper feedstock, appropriate customer or consumer units for base feedstock, appropriate turndown design, and potential product carbon footprint improvements. In such a revamp with the proper techno-commercial planning, refiners potentially stand to gain through product slate improvements and carbon finance mechanisms. 

Supply demand. Electrification is a megatrend that continues unabated across industries such as the automotive sector, utility-scale storage and steel manufacturing.^1,2,3 Given the push toward lower carbon alternatives, steel companies have been switching their manufacturing from blast oxygen furnace (BOF) manufacturing toward EAF manufacturing, leading to a trend toward 4.5%/yr growth of EAF steel globally. Secondly, utility-scale renewables are expected to grow exponentially over the coming years, and this trend is expected to drive demand growth for BESSs by 19%/yr. Most importantly, the continued growth in EVs across geographies is expected to drive demand growth for EV batteries from 2025 to 2030 by 15% globally. Together, these three megatrends point toward a significant growth in global demand for batteries and electrodes. 

An essential component of these batteries is the graphite anode.³ Therefore, the growth in the battery market translates to a graphite demand growth of 6.5%/yr from 2025 to 2030. Electrode and battery makers blend natural and synthetic graphite in different proportions to achieve the right balance of performance and economics for these applications. Thus, graphite demand growth is expected to translate into growth for both natural and synthetic graphite.  

China has a high overcapacity in both graphite formats to fulfill this demand—not just domestically, but also around the world. However, the developed world is increasingly wary of China’s dominance in these value chains. Several geopolitical measures have been put in place—particularly by the U.S. and European governments—to build barriers against battery value chains involving Chinese participation. Discussions on geopolitical measures undertaken by different governments are published in literature.³  

The geopolitical barriers and demand growth projections are expected to create a supply-demand gap for synthetic graphite in the U.S. and Europe. Since synthetic graphite is made through the graphitization of needle coke, the demand growth is expected to drive growth for domestically produced needle coke in the U.S. and Europe. An efficient way to achieve flexible needle coke capacity is through upgrading and repurposing current petcoker refinery units to become needle coke units. The key advantages of such a revamp include:  

1. High returns vis-à-vis the CAPEX needed for this repurpose due to the substantial differential in needle coke vs. petroleum coke prices 
2. High demand growth and the current domestic undersupply of needle coke 
3. The potential to contribute to the energy transition and to position the refinery toward a strategic tailwind, thus securing an economic advantage for decades 
4. The potential to improve the carbon footprint of operations while upgrading legacy units that were built decades ago 
5. The flexibility to shift operations back to petcoking to mitigate risks linked to technological breakthroughs or geopolitical strategies. 

This article takes a deep dive into the attractive economics and carbon footprint reduction opportunities for refineries presented by the upgrading of petcoking units to needle coking units. The authors argue that, for the appropriate petcoking units, this represents a payback period of less than 2 yr–3 yr. This article also describes what “appropriate” means in the context of this revamp. 

Modifications in process conditions. The key process conditions for producing needle coke are the coking temperature, coking pressure, cycle time and recycle rate. The optimum values for each of these process conditions can be determined depending on the feedstock and the desired needle coke properties. Revamping from a petcoking unit to a needle coking unit will typically require higher pressure, increased cycle time and a higher recycle rate. 

In a revamp scenario, the size of the coke drums typically sets the basis for the unit feedstock rate. Given the available plot space and the coke handling infrastructure constraints, the revamped coke drum size would be roughly the same as in the original design. This, combined with the high coke yields and increased cycle time required for needle coking, leads to a lower feedstock rate than that of the original design.  

The co-authors’ company’s proprietary models and state-of-the-art pilot plant help identify the specific changes needed for appropriate product yields and provide the optimal input for designing the revamp equipment. As the market leader in designing petcoker and needle coking units globally, the co-authors’ company has the expertise to modify a revamp design for a smooth design transition. 

Modifications in configuration. Revamping a petcoking unit to a needle coking unit will require several modifications to the unit’s existing configuration. These modifications are implemented to handle the different feedstock, along with its resulting product yield slate and the required operating conditions for producing needle coke. 

Therefore, the revamp necessitates the following key changes to the hardware: 

1. New coke drums with a higher design pressure: The production of needle coke requires a higher coke drum operating pressure, necessitating the replacement of the existing coke drums with those of a higher design pressure. The adequacy of all associated lines, valves and equipment in the same pressure circuit must be checked.  
2. Feedstock filter skid: The quality of the feedstock is critical to produce needle coke. Aromatic feeds such as fluid catalytic cracking (FCC) slurry oil could contain substantial catalyst fines that must be removed. If high-efficiency fines removal does not already exist onsite, then a new fines filtration equipment package is necessary to condition the feedstock to the required specs. 
3. Coke cutting and coke handling equipment: Needle coke has different properties than petroleum coke, notably a higher density and hardness. To ensure proper handling of the needle coke product, all coke handling equipment and machinery need rerating and may require modifications or replacement. 
4. Heater modifications: The heater must be rerated for the change in operating conditions, and the existing heater tubes may need to be replaced for a higher design pressure. This also provides an opportunity for efficiency improvements and the modernization of the heater through means such as air preheater redesign, pinch analysis, low-nitrogen oxide (NOx) firing, hydrogen (H2) firing or even electrification heating. 
5. Recycle configuration: A higher recycle rate is required for the needle coke operation. This typically leads to modifications in the recycle loop (i.e., pumps, valves, pipelines) to accommodate the change in the recycle rate.  
6. Fractionation column modifications: Due to the higher pressure of the coke drum operation, a letdown valve may be placed on the coke drum overhead line, or the fractionation column may need to be replaced to enable higher design pressures. In addition, the lower gas and liquid flows throughout the column in the revamp design compared to the base-case design could imply the need to replace column trays with narrower downcomers, a larger valve opening, multiple valve sizes and an optimized tray geometry to improve vapor liquid contact. The fractionation column bottom section may also need to be modified to achieve the higher recycle rate required for the needle coke operation. 
7. Wet gas compressor rating: Processing the aromatic feedstock for needle coke results in a different product yield than a typical petroleum coke feedstock. The flowrate to the wet gas compressor may be less due to the low unit throughput, but the gas yield may be lighter. To ensure proper operation, a rating of the wet gas compressor is required. 
8. Gas plant column rating: Similar to the compressor rating, the columns of the coking unit gas plant must be rated for the needle coke revamp conditions. 

For units with sufficient plot area availability, it could also be beneficial to include a calciner within the unit to remove volatile organic matter from the green coke product to produce needle coke in-house. As showcased in the subsequent economics section, adding a calciner upgrades the green coke product and pays back for the coker unit modification even faster due to the higher market prices for the calcined product.  

Feedstock modification and availability. A critical consideration for this revamp is to shift the operation from cracking long-chain aliphatic or olefinic hydrocarbons like vacuum resid to highly aromatic feedstock such as FCC cycle oil. Such a feedstock should be available for alternative routing from within the refinery or should be available via a long-term purchase contract from outside the refinery. The refiner must determine an economic and assured supply chain to secure feedstock availability throughout the life of the repurposed coker unit.  

The throughput of coke is expected to remain similar between the base case and the revamp situation. This is achieved through a high turndown of the feedstock throughput while increasing the cracking severity, the coke drum cycle time and the recycle. Therefore, the revamp feedstock throughput is much less than the base-case feedstock throughput. 

The client must also have a ready in-house customer or an external buyer for the extra vacuum resid now available as a vacuum distillation unit product, since it can no longer be used in the coking unit. The appropriate identification of the right customers, along with the careful design of the vacuum resid supply chain, could lead to highly beneficial economics for such revamps. 

The co-author’s company’s expertise in supply chain and feedstock archetype evaluations helps clients determine the appropriate feedstock sources and vacuum resid markets to effectively net off feedstock costs, which can lead to crediting the vacuum resid cost as an economic benefit to the refiner. 

CAPEX and operating expenditure (OPEX) considerations. Typical petroleum coker gross margins range from $20/t–$25/t of feed throughput, provided feedstock is allocated at a fair value. The revamp to needle coke is expected to increase fixed costs and to marginally increase feedstock and utility costs. However, the increase in product revenue is expected to more than offset these expenses, resulting in a typical product slate revenue enhancement of approximately $200/t. This is expected to enhance the gross margin to $130/t–$150/t (FIG. 1). 

FIG. 1. Margin improvement through revamped product slate improvement. 

The impact is expected to be even more positive with the installation of a calciner (FIG. 2), which is expected to result in a product slate revenue enhancement of approximately $250/t. Therefore, the resulting gross margin is estimated to be in the range of $200/t–$220/t. 

FIG. 2. Margin improvement through revamp product slate improvement and calciner installation. 

IRR for the revamp. At the time of this publication, the typical revamp CAPEX is estimated to be about $250/tpy–$300/tpy of revamped unit throughput for an upgrade from a petcoker to a needle coker configuration. With the calciner, the CAPEX of the revamp is estimated to increase to approximately $400/tpy–$450/tpy of the revamped unit throughput. These costs are more than offset due to the improved product slate in each case, particularly the market product prices for green coke or calcined coke. While the authors have taken the much-subdued prices of 2024 in the estimation,^4,5 these prices could trend higher as the graphite market improves. Even with the conservative estimates of the low needle coke price environment of 2024, the IRR of the revamp is estimated to be about 30%–35% without the calciner configuration and about 35%–40% with the calciner configuration.  

These margin estimations get a further positive boost when one considers that the original vacuum residue feedstock can be offloaded in the market as a byproduct, thus obtaining additional value for the refiner. If the vacuum residue can fetch even a 50% discount to its market value, this can result in an IRR of 70% to > 100% of the CAPEX needed in the exercise, with payback periods < 1 yr (FIG. 3). 

FIG. 3. Pre-tax IRR and simple payback for different scenarios of the coker repurpose. 

Decarbonization and potential carbon offsets. The needle coke unit contributes to decarbonization by promoting industry electrification. However, the process itself can be described as emissions-intensive and fossil fuel-consuming. This can be remedied, however, through the following technological modifications: 

1. Improving coker heater efficiency: Introducing an air preheater in a natural draft heater can potentially increase heater efficiency from 70% to > 90%. 
2. Improving heat exchange: Improving heat transfer using pinch-like techniques could improve the overall preheat requirement of the feedstock by 5%–10%. 
3. Carbon capture of flue gases from the coker heater: Depending upon the scrubbing efficiency, this could decrease carbon dioxide (CO2) emissions from the unit by 50%–80%. 
4. Partial to full H2 firing of the coker heater: Depending on the extent to which natural gas or fuel oil is replaced by H2, this could lead to a > 90% reduction in the unit’s carbon footprint. 
5. Coker heater electrification: The heater can be partially electrified, leading to a reduction of CO2 emissions.⁶ 
6. Calciner flue gas waste heat boiler: If the coking unit is integrated with a calciner unit, the flue gases leaving the calciner can contribute to high emissions. This can be mitigated by providing a waste heat boiler downstream of the calciner, helping to generate high-pressure steam. 
7. Calciner flue gas carbon capture: Similar to the carbon capture step for a coking heater, this could lead to a significant reduction in the calciner’s carbon footprint.  

Several such measures have been implemented in past revamps and are mentioned in various publications.⁷ Each of the above steps has CAPEX and OPEX implications. These economics can be partially or fully offset through reductions in unit energy consumption and the generation of carbon offsets and carbon credits. 

Refineries most suited for the repurposing of petcoke units to needle coke units. Refineries planning such repurposing must investigate the following factors: 

1. Easy proximity and ensured availability of alternate aromatic feedstocks 
2. Easy access to customers of current feedstock—i.e., vacuum resid, with the potential to uptake all the vacuum resid used in the current coking capacity 
3. The availability of infrastructure that characterizes a quality plant, e.g., sour water handling units, sulfur handling units, demineralized water, boiler feed water, coke cutting water, utilities and industrial gases. 

In the authors’ experience, the combinations of the above considerations are best served through a refiner running a < 25,000-bpd petcoke unit with proximity to surplus aromatic feedstock and a ready market for its vacuum residue. Similar considerations could also be true for small topping refineries that have the appropriate infrastructure and that are aiming to add a new needle coking unit. 

Takeaways. The economics for upgrading petcoke units to needle coke units can be very compelling, with short payback periods and high returns. The units operated under the right conditions can have a 30%–100%+ increase in IRR, even in an environment with conservative synthetic graphite prices. A good coker design and a well-vetted commercial model can also incorporate the risks associated with this repurposing by maintaining unit yield and throughput flexibility so it can operate in both needle coke and petcoke modes. A more commercially savvy design will also incorporate sustainability aspects, earn greater goodwill and achieve better margins through improved carbon credits. 

The co-authors’ company has deep experience performing feedstock testing and feasibility studies to revamp petcoke units to needle coke units. In addition, the company has commercial experience in the licensing and design of a grassroots needle coke unit that has been integrated with a calcining unit and has been operational since 2021. The company’s state-of-the-art needle coking technology is supported by pilot plants located in its research and development facility in Pasadena, Texas (U.S.), which also has the capability for feedstock pretreatment and laboratory analysis.  

LITERATURE CITED 

1 ExxonMobil, “ExxonMobil Global Outlook: Our View to 2050,”  August 2024, online: https://corporate.exxonmobil.com/sustainability-and-reports/global-outlook  

2 International Energy Agency, “World Energy Outlook 2023,” October 2023, online: https://www.iea.org/reports/world-energy-outlook-2023   

3 Manral, V., M. Antoniou, K. Magdoza and V. Suri, “The attractive market opportunity for synthetic graphite,” Hydrocarbon Processing, August 2024.  

4 U.S. Energy Information Administration, “Petroleum & Other Liquids—Spot Prices,” online: https://www.eia.gov/dnav/pet/pet_pri_spt_s1_d.htm  

5 Mysteel, “Petcoke and needle coke spot prices,” online: https://www.mysteel.net/commodities/petcoke/  

6 Koduru, S., B. Kou and L. Lancia, “Pushing boundaries of residue conversion,” April 2024, online: https://event.on24.com/wcc/r/4562709/0ED02C98D193AB4A50E4EB013B774594?partnerref=Web     

7 Magdoza, K. and V. Manral, “Delayed coking revamp for capacity increase,” Petroleum Technology Quarterly, March 2021. 

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