whitepaper_invensys_competitiveadvantagefromrefinerybusinessperformanceoptimization_03-10

8/8/2019 WhitePaper_Invensys_CompetitiveAdvantageFromRefineryBusinessPerformanceOptimization_03-10

1/10

WhitePaper

Achieving Competitive Advantage from

Renery-Wide Business Performance OptimizationAuthor: Ian Willetts, Director, Invensys Operations Management

Whats Inside:

1.Introduction

2.ChallengingTimes

3.MaximizingBusinessPerformance

3.1ImprovedMassBalanceAccuracy

3.2ModelBasedPerformanceMonitoring

3.3OptimalRegulatoryandAdvancedProcessContro

3.4Real-TimeUnitandRenery-wideOptimization

3.5EnergyOptimization

3.6OptimalReneryPlanning

3.7EnterpriseManufacturingIntelligenceforRenery

PerformanceTracking

4.Conclusion


2/10

Page 1

1. IntroductionThe economic slowdown, rising energy costs and growing environmental pressures have created a Perfect Storm for theglobal rening industry. In a June 2007 interview with Chemical Week, Michael Dolan, Senior Vice President at ExxonMobilCorporation discussed how a focus on operational excellence, disciplined investment, and technology leadership helped thecompany drive prots. Even though the economic environment is very different today versus 2007, the underlying premise ofthe Michael Dolan interview is the same. Companies have to look for business process improvement strategies to navigate thesechallenging times and maximize margin (or even minimize losses) and to emerge as leaders when the economy nally recovers.This paper discusses the Renery-wide Performance Optimization Solution from Invensys Operations Management, a uniqueintegrated technology that helps companies to integrate the business functions and workows within their organization foroverall business process improvement.

2. Challenging Times

Renery margins are a reection of the balance between supply and demand and today demand is down signicantly with theeconomic slowdown. Rening margins in the United States have dropped precipitously since early 2007 as shown in Figure 1.

Figure 1: Representative US Refning Margins (Source: OilMarketReport.org)

Rening margins in the Asia Pacic region are not negative as they are in the United States and Europe and have actually improvedrecently driven by a strengthening economy in the region. The low and negative margins are driving a shift in rening capacityaround the world. The U.S. Energy Department reported that Reneries ran at 78.4 percent of capacity in the week ending Jan.15, 2010. This is the lowest level since 1989, excluding instances when hurricanes halted Gulf Coast operations. This decrease inutilization can be clearly seen on the next page in Figure 2 which shows the 4-Week Average U.S. Percent Utilization of Renery

Operable Capacity over the last 20 years.

Achieving Competitive Advantage fromRenery-Wide Business Performance Optimization
http://oilmarketreport.org/http://oilmarketreport.org/


3/10

Page 2

Figure 2: Historical Refnery Utilization (Source: US Energy Inormation Administration)

This low utilization combined with new more cost effective rening capacity coming on-line in the Middle East and Asia Pacic regionis leading to many companies shuttering reneries in the United States and Europe.

The overall picture is also not helped by rising energy costs which now represents approximately 45% of operating expenses versusjust 25% ten years ago. There is a strong correlation between the price of oil and the percentage of operating expenses that energycosts represents. Figure 3 below is a plot that shows the interdependence between the price of a barrel of oil and the energy cost as

percentage of operating expenses, assuming differing costs for the price of natural gas.

Figure 3: Energy Cost as a Percentage o Operating Expenses

versus the price o a Barrel o Oil (or dierent Natural Gas Prices in $/MMBtu)

The third contributing factor creating the Perfect Storm comes with worldwide growing environmental concerns that have resulted ithe enactment of strict regulatory frameworks and emission norms. Layering this on top of the slow economy and rising energy costscreates a situation where the rening industry must look for every opportunity to maximize its business performance in order to survivethese challenging times and emerge as stronger companies.



4/10

Page 3

3. Maximizing Business PerformanceInvensys Operations Management created in 2009 from the integration of four different groups within Invensys Invensys ProcessSystems, Wonderware, Eurotherm and IMServis uniquely positioned to help rening companies optimize the business impact oftheir operations performance and therefore overall protability.

Traditional approaches to the effective management of industrial complexes have been described under the label of operationsmanagement, but in todays real-time business environment, operations management provides only a part of the solution. Thechallenge is to couple the management of the operation with the drivers of the business. This requires a new strategy that crosses theoperational and business boundaries and provides a more holistic approach to managing and controlling the operation for businesssuccess. This new strategy is called Operations Business Management and the four basic components of an operations businessmanagement strategy are displayed below.

Figure 4: Real-Time Operations Business Management

The Renery-wide Performance Optimization Solution integrates different technologies from the Invensys Portfolio to deliver differentaspects of real-time business operations management to the rening industry. The Solution provides the following capabilities allwithin a streamlined integrated framework using industry leading technology:

1. Improved Mass Balance Accuracy Across the Renery (Measure)2. Model Based Performance Monitoring to improve Personnel/Operations Effectiveness (Empower)3. Optimal Regulatory and Advanced Process Control (Control)4. Unit and Renery-wide optimization for agility and responsiveness to changing market conditions (Optimize)5. Evaluate and Adjust Energy Production & Utilization (Empower and Optimize)6. Enable Optimal Renery Planning & Scheduling (Measure and Empower)7. Provide Ready and Timely Access of Performance Data to all Stakeholders (Measure and Empower)

These seven capabilities can all be deployed as separate point solutions and many rening companies have deployed some aspect of

these capabilities within their assets today. For example Advanced Process Control is a standard and widely accepted best practice forening companies. The important difference in this Solution from Invensys Operations Management is that it can be deployed on topof existing solutions, such as Advanced Process Control, but within an integrating framework. This integrated framework better informand aligns enterprise and local operating organizations with actionable objectives and shared performance measures which in turnenables optimal operational and business performance.

With the necessary application and implementation services, the Renery-wide Performance Optimization Solution enables rening companiesto conservatively add from $0.25/Bbl to $0.40/Bbl to the bottom line margin at each Renery. For a medium complexity, 100,000 barrels perday renery, this can be worth as much as $15 million per year, with the value rising proportionately with throughput and renery complexity.

The following seven sections describe how each of these seven components of the solution individually add value and return oninvestment should they be deployed in a stage wise manner. These sections also explain how these capabilities dovetail into others tobring greater value within the overall solution, for maximum business value.



5/10

Page 4


3.1 Data Reconciliation and Improved Mass Balance AccuracyOne feature often overlooked in business process improvement initiatives is the need and the ability to take raw data from theplant and process it to identify faulty instruments. Another feature often overlooked is to correct, through a reconciliation process,inaccurate data before using that data to make operational decisions that could impact the protability of the renery. In a Paperpresented at the Invensys Operations Management North American Client Conference in 2007, Mike Cronkwright of Shell CanadaProducts Ltd in Calgary described how Shell used this component of the overall solution to analyze over 300 ow meters across theShell Sarnia Renery. Using the Mass Balance Module within the Renery-wide Solution set, Shell was able to:

Achieve tighter unit mass balances for yield, energy and prot monitoring

Identify meters in Gross Error very quickly reducing the number of meters at fault from 25% to under 5%

Achieve a satisfactory heat and material balance across the renery as a starting point for the optimization process

Provided more accurate mass ows to the Accounting team to assist with monthly mass balance closure and to the Site BusinessPlanning Group to help with the LP monitoring tool

These are signicant benets from a single component of the solution and the reconciled data feeds up to other applications forfurther added value as at Shell. It is critical that any derived business or process information used and distributed within a businessperformance initiative is as accurate as possible.

3.2 Model Based Perormance Monitoring

In order to operate a renery at its peak performance Rening companies need to be able to determine where the renery isoperating today and what would be the nancial impact of making any changes. Such decision support requires the operationsstaff to have good process understanding and process insight that cannot be deduced from owrate, temperature and pressuremeasurements alone.

The primary goal of performance monitoring based on rigorous engineering models is to extract useful and consistent informationfrom raw process data to support high quality operational decision-making. The solution also combines real-time nancial and

economic data together with the derived performance measurements to create quantiable, actionable information. Benets arerealized via continuous performance improvement by informed and thereby empowered frontline personnel who understand thenancial performance of current operations and the impact of driving operations to a higher and more protable state. This isapplicable where the information helps operations to drive the plant toward more optimal operation and equally applies where thelack of timely and accurate information about the degradation of process equipment may result in an unplanned process upset or,worse yet, a shutdown.

Invensys customers are applying this part of the solution for applications that include:

Crude Preheat Train Monitoring & Fouling Calculations

Compressor and Gas Turbine Monitoring

Distillation Tray Efciency Calculations

The models implemented in each phase of a project are readily upgradable into open loop and closed loop process optimizationsupporting the stepwise deployment of the overall Renery-wide Performance Optimization Solution.

3.3 Optimal Regulatory and Advanced Process Control (APC)

Multivariable model predictive or Advanced Process control strategies are a standard and best practice for Petroleum Reners for:

Enabling the plant to operate closer to product specications and process or equipment limits

Improving process stability

Reducing product quality variability

Improving energy/utility efciency, such as dispatching boilers, unit stabilization etc.

Achieving economically optimal changeovers between operating modes with minimal process upsets


6/10

Page 5


Many rening companies that would consider deploying the Renery-wide Performance Optimization Solution may already have inplace Advanced Process Controllers within their Renery. However in todays current economic situation, as explained previously,reners are running at or below historically low operating rates. Control loops that were tuned for operating at higher operating ratesmay be poorly tuned for controlling processes at these lower ow rates, providing the opportunity to improve performance. Also thenature of poorly tuned regulatory control has operators reacting to problems caused by the poor tuning rather than having the time todrive process improvement and run the renery as protably as possible.

This component of the solution primarily leverages Invensys Operations Management consulting staff who are industry leaders in theimplementation of regulatory and advanced control technology. Prior to tuning, re-commissioning an existing or even installing a newAdvanced Process Control solution, the Invensys staff can use its advanced diagnostic methods and proprietary tools to documentcontrol system performance and to recommend remedial actions that will make a positive difference.

Our process control performance analysis tools and diagnostic service provide a comprehensive analysis that includes informationon process constraints, eld actuator problems, loop interaction and model identication for improved tuning. Improved regulatoryand advanced process control tuned to operate at todays lower throughput are a critical pre-requisite to utilizing the optimizationcomponent of the solution described next.

3.4 Real-Time Unit and Refnery-wide Optimization

By maintaining tighter control (less variability) through Advanced Process Control, operations are able to operate closer to productspecications and process or equipment limits in order to improve energy efciency, product yields, throughput etc. without violatingprocess constraints. Although the APC can hold the plant at its control targets, it does not have sufcient economics and unit modelrigor to calculate optimum operating targets in response to changing market conditions.

Real-time Optimization uses a rigorous rst principles process model to continually calculate improved set points for the advancedcontroller that will drive the unit to a higher protability subject to plant constraints, given the current economic conditions. Theoptimizer can be congured to drive for any user-denable objective function such as, for example:

Maximum Prot from optimal product slate and yield, or Maximum Production rate at Minimum Energy Consumption

This stepwise improvement from basic control onto Real-Time Optimization is shown in Figure 5.

Figure 5: Regulatory Control to APC and onto Real-Time Process Optimization or Maximum Benefts


7/10

Page 6


The rigorous rst principles model can be of a single unit such as the Crude and Vacuum Distillation Unit or Fluid Catalytic CrackerUnit (FCCU) or it can be a collection of units such as the aromatics section of a renery. The model will take real-time processand economic data and perform an economic optimization to identify the improved set points for the APC that will drive higherprotability. The optimizer will also report the current operating point versus the process constraints such as column ooding, availablcooling or furnace bridge wall temperature. The model sensitivities are used to quantify the nancial benets that could be realizedif it is possible to widen the constraints. While some constraints are tied to equipment limitations and may not be able to be pushed,some soft process constraints maybe able to be relaxed to drive increased protability.

The individual unit optimizers allow process operations to be managed within the dened criteria but do not look beyond the processenvelope at how upstream and downstream units could affect or be affected by the separate optimizers. The Renery-wide solutionalso supports the capability to build a renery-wide model. This model will not be built to a fully rigorous level but will support theappropriate level of rigor to support timely analysis and understanding of the renery-wide behavior and the process and economicinterdependency of the individual units. The renery-wide model will not be run in a closed-loop real-time mode but will be used

open-loop to understand the renery-wide behavior as well as the renery-wide process constraints that allows constraints to bepushed safely and for prots to be maximized.

Although the following table is taken from an analyst report that is over 10 years old, the data is still very relevant today. Both APC anreal-time optimization are established practices followed by the industry leaders. The benets from the control and optimization ofthe individual units have been widely reported in the literature. Table 1 clearly shows that substantial benets can be achieved by theAPC and Optimization components of the solution. The table does not include the additional benets that can be realized from thedevelopment of the renery-wide model to compliment the individual optimizers.

Refning Unit Beneft c/bblTypical Unit

Size, 1000 Bbl/dTypical Bene-

fts, $million/yr

Crude/Vacuum 5-10 135 2.5-5.0

FCCU 20-40 38 2.8-5.6

Reformer 5-25 25 0.5-2.3

Hydrocracker 10-30 26 1.0-2.9

Alkylation 5-35 10 0.2-1.3

DelayedCoker 10-40 31 1.1-4.5

LightEnds 10-20 40 1.5-2.9

Isomerization 5-15 30 0.5-1.6

LubesVacuum 10-40 10 0.4-1.5

Aromatics 15-20 15 1.8-1.1

Table 1: Combined Benefts rom Applying APC and Optimization to Refning Units

(Source Harts Fuel Technology and Management, Nov/Dec 1996)

In addition to driving the plant to its most protable combination of constraints that optimizes product slate, balances energy usageand nds the best yields, the rigorous tuned model can also be used to extract the relationship between inputs and outputs (LPvectors) across each processing unit within the renery. This data can be used for updating the planning models used to guide reneryoperations, as explained the sixth component of the overall solution below.

3.5 Energy Optimization

As the price of barrel of oil rises, Figure 3 on Page 2 clearly shows that energy costs become more and more of a factor in thenancials of renery operations, representing an ever increasing percentage of operating costs. This combined with increasinglystringent environmental regulations is leading companies to look for opportunities to improve energy efciency. The cost of powerand utilities is often the largest controllable operating expense after the purchase of raw materials at most large operating sites.


8/10

Page 7


The Renery-wide Performance Optimization Solution provides the ability to act in real-time and to automatically optimize energysupply with changing economics and plant needs within environmental constraints. It is especially attractive for plants that havevarying energy prices or the changing possibilities to buy, produce or sell power.

This component of the Renery-wide Optimization Solution can result in a signicant reduction in energy cost of between 3 and 5%.Additional side benets include the ability to:

Monitor and helps reduce emissions of CO2, SO

X& NO

X

Automatically take advantage of off-peak power pricing

Optimize fuel type, boiler & turbine load distributions

Achieve better fuel gas management and fewer alarms

Figure 6 below shows a screenshot from a utilities optimization owsheet developed within the integrated solution framework.

Figure 6 A Utility Optimization owsheet with the Steam Headers, and Power Generation, Export and Importation Systems

3.6 Optimal Refnery Planning

Today Reneries use empirical LP planning models to decide which crude oils to process, and how to operate the renerys process units

to meet the expected end-product demands for maximum expected protability. Planning is performed by the Planning Departmentwhich operates somewhat independently of the day-to-day operations staff in the renery. Business performance optimization can onlybe achieved by integrating work ows among different business functions within the company and the Renery-wide Performance Opti-mization Solution brings together the information from the rigorous process Optimization applications (Item 4 above) to support optimalRenery Planning by the Planning department. The Planning Department needs to drive optimal performance by enabling its personnelto optimize production plans and schedules with the best possible LP Planning Models that reect the most current state of the renery.

Once an Optimizer is installed and working, it will continually track the performance and changes in the renery over time, adaptingas it goes. As the optimization model retunes itself in response to changing process conditions it maintains the most accuraterelationships across the process units. This accurate model can then automatically export updated relationships between the feedsand products (the LP vectors) for each processing unit throughout the renery. These LP vectors are formatted ready for input into therenery planning model and when updated give the best possible representation of the plant for next months planning process. Thisin turn will ensure that next months planning model identies the most protable way to operate the renery.


9/10

Page 8

In addition, Plan versus Actual calculations enabled by the Renery-wide solution will also allow the customer to track and quantifythe improved performance the updated LP models are helping to deliver.

3.7 Enterprise Manuacturing Intelligence or Refnery Perormance Tracking

Process and business optimization as described above is performed on a daily basis by the industry leading rening companiesand Invensys Operations Management works very closely with both Royal Dutch Shell and ExxonMobil Corporation on many of thecomponents of the overall solution. Both Shell and ExxonMobil track quantify and report the benets of deploying these technologiesAt the 2009 North American Client Conference, Michael Chisholm of Shell reported that the Deer Park DU-2 Crude Unit Optimizer isstill in use over 10 years after its initial deployment. The presentation clearly stated that tracking the optimizer KPIs is one major factoin ensuring the longevity of the optimizer. By tracking and reporting the dramatic benets of process optimization, the managementof these leading companies see the value and continue to invest in maintaining and further deploying these solutions across theirassets. Shell has reported that it realizes $1000 in benets from optimization for every $25 it spends on maintenance and support of itoptimizers. This is quite a compelling return on investment.

This last piece of the overall Renery-wide Performance Optimization Solution is focused on enabling and automating a businessimpact feedback loop from the Solution to the stakeholders in the Solution. The Enterprise Manufacturing Intelligence feedbackloop component of the solution acquires critical process and optimal performance data from the Optimizer and aggregates it withdata acquired from other data sources within the Renery including the LIMS, ERP system and the existing renery process historian toprovide deeper insight into and tracking of the renery performance. This enables a unique and extremely valuable set of data to becalculated, tracked and made readily available to all stakeholders. Included in this information is:

Aggregated nancial impact of the optimizers

Operational constraints and nancial opportunities from constraint pushing

Planning model performance

Key Performance Indices such as Energy Intensity and Product Yields

Respective Renery Performance (e.g. Utilization, Emissions, Protability) across the eet

The all important Achilles Heel of optimization solutions being turned off has been addressed by automating the businessperformance feedback loop in order to ensure that the Solutions benets will be sustained years beyond the initial installation.



10/10

Page 9


Figure 7 below provides a diagrammatical representation of the information ow that enables the all important business performancefeedback loop.

Figure 7: Inormation ow to the Enterprise Manuacturing Environment

With clear measurable and visible benets totaling million of dollars per year, rening companies are able to readily make thedecisions needed to continue to invest in these value-added technologies that ensure the Renery-wide Performance OptimizationSolution delivers long term and sustainable benets.

4. ConclusionThe Renery-wide Performance Optimization Solution from Invensys Operations Management is a unique integrated technology thathelps Rening companies to maximize the returns on average capital employed (ROACE) of their huge asset base, while operatingthese assets safely and in compliance with increasingly stringent environmental regulations.

2010 Invensys Systems, Inc. All rights reserved. Avantis, Eurotherm, Foxboro, InFusion, Invensys, SimSci-Esscor, Triconex, Validation Technologies and Wonderware aretrademarks of Invensys plc., its subsidiaries and afliated companies. All other product names are the trademarks of their respective holders. rel. 03/1

whitepaper_invensys_competitiveadvantagefromrefinerybusinessperformanceoptimization_03-10

Documents