From Disruption to Optimization: The Role of Simulation in Modern Refining

The global energy landscape is increasingly complex. In addition to slowing demand for refined products and tightening regulatory mandates, aging infrastructure, rapid growth in competitive sectors such as LNG and nuclear, and ongoing geopolitical tensions add further uncertainty. Despite higher refining margins following recent Middle East conflict disruptions, global refinery crude throughput is projected to decline by 4.5 mb/d to 78.7 mb/d in Q2 2026 and by 1.6 mb/d to 82.3 mb/d for the full year. Middle East operators have also faced infrastructure damage, export restrictions, and reduced feedstock availability.  

Refining Industry Outlook

 

United States

U.S. refining capacity is expected to remain largely flat for the foreseeable future, with many industry executives believing that no new refineries will be built. Several factors—including increasing EV adoption and improved vehicle efficiency—are contributing to structurally lower demand for refined products. In 2025, a wave of refinery closures (including the LyondellBasell facility in Houston, Phillips 66 in Wilmington, and facilities in Los Angeles and Northern California operated by Valero) reduced U.S. refining capacity by approximately 550 kb/d.  

A key structural challenge for U.S. refiners is crude mismatch. Although the U.S. is the world’s largest crude oil producer, its domestic light shale crude is not ideally suited for many existing refineries, which were historically configured to process imported heavy, sour crudes.

Larger, vertically or horizontally integrated refiners maintain a competitive advantage over smaller independent operators. They benefit from preferential access to compatible crude, greater capital availability for upgrading assets, and more complex processing capabilities that enable them to adapt to shifting market demands.

Regulatory compliance also places disproportionate pressure on smaller refiners. The Renewable Fuel Standard (RFS), which requires blending renewable content into gasoline, often forces smaller operators to purchase blending credits at market prices, while larger refiners can produce their own renewable components. The EPA’s 2026 rule further increases biofuel volume mandates, intensifying this burden.  
 

Europe

Under various net-zero scenarios, Europe could lose up to 80% of its traditional refining capacity by 2050. Declining demand for refined products, increased adoption of electric and hybrid vehicles, persistently high crude prices, and intensifying competition from newer, more efficient refineries in Asia and the Middle East are reshaping the region’s refining outlook. In addition, regulatory pressures—such as the EU Emissions Trading System (ETS) and the potential expansion of the Carbon Border Adjustment Mechanism (CBAM) to the refining sector—are likely to further erode competitiveness.

Ongoing refinery closures are expected to increase Europe’s reliance on imported refined products. In 2025, capacity closures totaled just under 500 kb/d, with additional shutdowns anticipated. Analysts estimate that required capacity rationalization before the end of the decade could range from 500 to 700 kb/d. Refineries most at risk are those heavily dependent on export markets.

As domestic production declines, import dependency is expected to rise across key product segments. IATA projects that Europe’s jet fuel imports could exceed the current level of approximately 30%, further underscoring the region’s growing reliance on external supply.  

Asia-Pacific

Refiners across Asia-Pacific have faced growing challenges in securing medium and heavy sour crude from the Middle East following recent geopolitical disruptions. As a result, many operators have shifted toward lighter, sweeter crude imports from the United States. This shift has created operational constraints, as secondary processing units—traditionally configured to handle heavier residues—are increasingly underutilized due to a lack of suitable feedstock.

Prior to recent supply disruptions, China significantly expanded its refining capacity, reaching approximately 18.5 mb/d in 2023, with five additional refineries expected online by 2028. These newer facilities are highly flexible, often equipped with advanced hydrocracking units that allow operators to shift production between naphtha for petrochemicals and diesel for transportation fuels.

Similarly, India has expanded its refining capacity to approximately 5.1 mb/d, with 11 crude distillation and upgrading projects planned through 2028. Many of these investments focus on increasing both primary distillation capacity and downstream hydrotreating and hydrocracking capabilities to improve product flexibility and meet evolving demand.
 

The Middle East

The Middle East’s total crude distillation capacity was estimated at approximately 10.8 mb/d in 2023, with 11 additional refineries expected to come online by 2028. Saudi Arabia leads the region, accounting for roughly 40% of crude production and 30% of refining capacity.  

The region remains a critical supplier of crude to global markets. According to the International Energy Agency, China is the largest destination for Middle Eastern crude imports (4.6 mb/d), followed by India (2.1 mb/d), with smaller volumes flowing to Europe (0.6 mb/d), the Americas (0.5 mb/d), and Africa (0.2 mb/d). Other Asian markets account for the majority of exports, receiving approximately 6.2 mb/d.

Despite these structural strengths, recent geopolitical disruptions have exposed key vulnerabilities. Supply interruptions—including the temporary closure of the Strait of Hormuz—removed an estimated 3.3 mb/d of refined products and 7.5 mb/d of crude from global markets, underscoring the region’s outsized impact on global energy stability.
 

New biofuel, SAF, and e-fuel opportunities for refiners

As the refining sector evolves to meet shifting energy demand and decarbonization goals, processing alternative fuels is becoming increasingly essential. Refiners are expanding their use of bio-based and renewable feedstocks—including agricultural residues, forestry waste, algae, animal fats, and used cooking oil—to produce sustainable aviation fuel (SAF) and other biofuels. At the same time, e-fuels—produced from captured carbon and green hydrogen—are gaining momentum as enabling technologies continue to mature.

In the United States, biofuel production is supported by strong policy incentives, including tax credits of up to $1.75 per gallon for eligible SAF. Ethanol-to-jet (ETJ) pathways are reaching commercial maturity, positioning the U.S. Midwest—with its abundant renewable power and access to concentrated CO₂ streams from ethanol plants—as a key hub for e-fuel production.

In Europe, biorefineries and e-fuel facilities are projected to produce up to 33 million tonnes of oil equivalent (mtboe) by 2030, with further growth expected as technologies scale. S&P Global forecasts approximately 20% growth in European e-fuel production between 2030 and 2050.

While challenges remain—including feedstock availability, supply variability, and the need to scale emerging technologies—the refining industry is steadily advancing toward greater integration of renewable fuels. In this transition, digital simulation tools such as CHEMCAD play a critical role in validating process designs, optimizing performance, and supporting the efficient deployment of new biofuel applications.

Process and flow simulation in refining applications

Despite a changing refining landscape, one pervasive theme in the industry is digital transformation and leveraging digital simulation tools to optimize production, lower energy use, monitor emissions, and ensure safety and reliability of new projects and existing operations. 

Process and flow simulation technologies are increasingly central to refinery design, optimization, and operational troubleshooting, enabling engineers to bridge thermodynamics, hydraulics, and real-world plant performance within a unified digital environment. 

A primary use case for a process simulation tool like Datacor CHEMCAD lies in distillation unit optimization, where rigorous process simulation can significantly reduce energy intensity. For example, engineers in Ukraine modeled the separation process of mixed crude to optimize jet fuel and diesel production. Leveraging CHEMCAD, they were able to stabilize temperatures throughout the column and helped support lower operating costs, improved energy efficiency, and modernization of legacy distillation assets without major capital investment. 

Beyond design, simulation plays a critical role in diagnosing and resolving performance degradation in live refinery operations. When a crude unit main column experienced unexplained yield shifts, a calibrated CHEMCAD model enabled engineers to isolate the root cause—low tray efficiency caused by mechanical damage—by systematically reconciling simulated and actual plant behavior. This approach eliminated prolonged trial-and-error adjustments and guided targeted inspection, ultimately restoring product yields and downstream unit performance. Simulation can be used as a high-precision diagnostic tool to identify hidden mechanical issues, recover lost margin, and stabilize refinery operations. 

Flow simulation and hydraulic models also play a critical role in transient analysis and surge mitigation across refinery and pipeline systems. By integrating steady-state hydraulic modeling with transient simulation, engineers can analyze pump trips, valve closures, cavitation, and pressure surges. As an example, during Kuwait National Petroleum Company's (KNPC) Clean Fuels Project (CFP) expansion, Fluor leveraged Datacor’s Fathom and Impulse to model the steady state and transient behavior of the new cooling water loop serving the new expansion. They were able to eliminate potential cavitation and vapor formation and mitigate any potential surge scenario.

Another critical use case for flow simulation is pipeline and transfer system surge risk mitigation, particularly for inter-facility connections where ownership and operational responsibilities are shared. In the URS case, transient modeling was used to evaluate competing protection strategies for one of Colonial’s oil pipeline segments connecting a pumping station to downstream storage. Simulation of worst-case scenarios—including power failure and rapid valve actions—revealed that a proposed control-valve-based protection scheme could expose upstream assets to unacceptable pressures. By iterating through multiple modeled scenarios, engineers identified a simpler and more robust solution: a properly sized relief valve that alone could protect both systems. This demonstrates how simulation enables data-driven decision-making, validation of alternative designs, and risk reduction across stakeholders. 

As refiners pursue both operational excellence and sustainability goals, process simulation is increasingly being used to evaluate alternative feedstocks and circular economy opportunities alongside traditional refining applications. In one CHEMCAD study, engineers assessed the feasibility of upgrading waste plastic pyrolytic oil through refinery-style rectification processes, comparing conventional crude distillation configurations with simplified fractionation schemes tailored to the unique characteristics of pyrolysis-derived feedstocks. The simulations demonstrated that while direct processing of pure pyrolytic oil in conventional atmospheric crude units is challenging due to differences in boiling range and composition, customized rectification systems can successfully produce naphtha-, kerosene-, and diesel-range fractions comparable to refinery products. The analysis also showed that low-ratio co-processing of pyrolytic oil with crude oil can be achieved with minimal impact on overall product yields and quality, while simplified column designs can reduce equipment complexity without sacrificing separation performance. This use case highlights how simulation enables refiners to evaluate emerging feedstocks, reduce development risk, optimize process configurations, and accelerate the commercialization of sustainable refining and advanced recycling initiatives before significant capital investments are made. 

Final note

Across these applications, simulation platforms enable scenario-driven decision-making throughout different refinery applications—from conceptual design and optimization to troubleshooting and continuous improvement. Engineers can evaluate multiple operating cases, optimize equipment performance, and quantify trade-offs in a virtual environment, reducing engineering time and capital investments. The result is a more predictive, digitally enabled operating model in which safety, reliability, and profitability are continuously optimized through high-fidelity simulation.


Disclaimer: Datacor’s suite of engineering and enterprise solutions—including CHEMCAD and its hydraulic modeling tools (Fathom, Impulse, Arrow, and xStream)—helps manufacturers design, optimize, and operate high-performance, reliable facilities. Contact Datacor to learn more or schedule a personalized demonstration.

Trey Walters is Principal, R&D, Engineering Software at Datacor. He sits on several standards committees of the Hydraulic Institute and is chairman of its Waterhammer Committee. He is also an ASME Fellow.