Jacobs Engineering Secures EPC and Management Services Contract for Refinery Expansion in Mangalore

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Researched by Industrial Info Resources (Sugar Land, Texas)--Mangalore Refinery and Petrochemicals Limited (BSE:500109) (MRPL) (Mangalore, Karnataka) recently awarded an engineering, procurement, construction (EPC) and management services contract to the Jacobs Engineering Group Incorporated (NYSE:JEC) (Pasadena, California) for the third phase of the expansion of its refinery complex in Mangalore.

MRPL is expanding the capacity of its refining facility from 207,000 barrels per day (BBL/d) to 320,000 BBL/d. The contract includes the development of a liquefied petroleum gas (LPG) treatment unit, an aviation turbine fuel (ATF) merox unit, a crude distillation unit (CDU) and a vacuum distillation unit (VDU).

A CDU breaks down crude oil into separate streams based on differences in boiling points. The individual streams are then either blended into fuel products or used as feed for downstream activities. Kerosene, ATF, naphtha, LPG and gas are some of the products obtained in this process. The residue in the CDU is distilled again in the VDU to produce vacuum gas oil and vacuum diesel. The ATF merox unit converts sulfur compounds present as impurities in the ATF into disulfide oils in a catalyst-based oxidation process.

The augmentation project was originally scheduled for completion by 2011. However, because of delays in appointment of process licensors, land acquisition issues, and increase in commodity prices, the mechanical commissioning of the project is now expected to be completed by October 2011 and the plant will be fully operational by the first quarter of 2012.

MRPL has effectively utilized the time of the delay to re-engineer the process design of the facility to enhance its capability to handle high acidic crude. High acidic crude is a grade of crude oil containing large amounts of naphthenic and other acids. It is also referred to as high-TAN crude on the basis of the total acid number (TAN), a commonly used unit of measurement for acidity. Additional processing units to enhance the quality of diesel and residue have also been included in the new design.

The delay has also led to an increase in project cost from $1.56 billion to $2.44 billion. The project will be financed in a debt-to-equity ratio of 2:1, with internal accruals providing for equity financing. About 88% of the plant equipment and machinery will be procured from domestic suppliers, and 12% will be imported.

MRPL, a wholly owned subsidiary of Oil and Natural Gas Corporation Limited (BSE:500312) (Dehradun, Uttarakhand), was conferred with the Mini Ratna-I status, which empowers state-owned companies to take independent decisions regarding joint venture investments, mergers and acquisitions, and capital-expenditure allocation. MRPL is the only refinery in the country that is equipped with two hydrocarbon crackers to produce high-cetane diesel fuel. It is also the only facility in India that produces high-quality unleaded high-octane petrol by using the continuous catalytic regeneration technology.

Jacobs Engineering has more than 60 years of global experience in the area of engineering, operations and construction. The company, which works with commercial, government and industrial clients, has expertise in handling large-scale projects in the infrastructure, aerospace, refining, automotive, technology, chemical and energy sectors. The $11 billion company employs about 55,000 people in 160 offices in 20 countries across Asia, Europe, North America, Australia and the United Kingdom.

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