Apr-1998

Managing operating strategy affecting process reliability

A review of the method for combining opportunities for profit improvement, together with processing and maintenance requirements, with engineering practices, technologies and expertise

E Bradford Clark, Martin W Ball and Peter H Haar, KBC Process Technology

Article Summary

Increased competition in the refining industry has created a business environment over which the refiner has little control. The desire to invest to maintain a competitive position is quelled by the current low rate of returns. The primary strength needed today is the ability to react quickly, as the lowest-cost producer will obtain the best margin. Accordingly, many refiners have begun programmes in reliability and maintenance cost reduction to improve their overall competitive position.

With possible benefits from a successful programme exceeding US$0.60 per barrel in maintenance cost reduction, and with process availability well in excess of 97 per cent, this is clearly a major opportunity to sustain increased profitability.

The decision to cut maintenance costs and improve reliability calls on refiners to do more work with fewer resources. Complicating the decision is the fact that the optimum level of maintenance support required to maintain the assets is not the same for every plant or every competitor. In fact, many refiners have achieved significant cost reductions in maintenance only to find that reliability and availability have deteriorated, far outweighing the benefit of the original reductions.

A well-structured program in a cost-driven market will take systematic steps to lower production cost to maintain the competitive position within an acceptable level of business risk. A program poorly implemented makes capricious reductions, only to mirror the competition. What your competitor believes good for his business may not be good for yours. After all, would you follow him in his cost reduction if you knew he was wrong?

The only method to truly quantify the required maintenance resources for a refinery is to look at the requirements of the equipment and match the operating strategy with the required maintenance to support this business goal. The critical task for management becomes setting the acceptable business risk. All changes in the operating strategy have an associated business risk that needs to be quantified, understood and, if acceptable, translated to the equipment level. The translation is required because the unit and its equipment is where the limited resources are allocated and hence where the money is spent.

There are many ways in which changes in operating strategy can affect process reliability. Crude oil selection to maximise profit in crude oil distillation will have a reliability effect on downstream units. For example, processing high acidity crudes to make profits in distillation can shorten the run length on the lubes plants if the lube furnace corrosion increases and remaining tube life is the limiting factor on the run length.

The effect of increasing the downtime and maintenance costs of a highly profitable lube unit could reduce the increased profitability from the distillation units. Similar decisions need to be made on the quality of naphtha sent to olefins units as the quality of naphtha can severely affect fouling of naphtha cracking furnaces and cause severe polymer fouling of downstream units. This has a direct effect on both the unit runlength and the effective throughput (hence availability) of the profitable olefins producing units.

These examples show how changes in operating strategy can have a real effect on the maintenance requirements of a whole refinery. The challenge is to make the right business decisions to maintain the optimum balance between production desires and maintenance interventions to maintain the associated profit and reliability margins. Leaders in the field maximise the use of their internal wisdom and knowledge (“intellectual capital”), capture all the knowledge and experience from their chemical, mechanical, control and electrical engineering groups, and combine these with the experience and knowledge of the operating and maintenance organisations to develop and use “asset policies”. They always revisit asset policies following significant changes in operating strategy, otherwise the operating envelope of the refinery has to change.

This ensures that the optimum maintenance and operations mitigation measures and interventions are in place. Large multinational organisations have an advantage here if they capture their corporate knowledge, and some are very effective at networking the knowledge they have. Smaller organisations use industry benchmarking and outside knowledge to develop the optimum strategies without the overheads of maintaining large support organisations. The leaders in the field, irrespective of size, find a way to maximise the return on intellectual capital and develop asset policies to underpin their asset management.

Once in place, asset policies ensure a consistent economics- and engineering-based application of operating and maintenance standards to all equipment, so meeting the predefined business strategy and objectives. The asset policy forms the basis for work selection whether it has to be executed as breakdown, planned routine or turnaround maintenance (or at all, ever).

Collectively, asset policies form the foundation for work selection for the entire refinery and define the maintenance resources needed to support a refinery in any specified configuration or time frame.

An asset policy is, therefore, the enabling tool to translate the business requirements for the process, maintenance and technical groups into an equipment operating and maintenance plan which will optimise the balance of production requirements, flexibility, maintenance cost and alternative options.

For those who are paying up to US$0.50 per barrel more than the competition, these moves can be as compelling as they are overwhelming. For those who are pace-setters, it provides an opportunity to optimise maintenance programs that reflect the current needs of the business in the most effective manner. The good news is that any refinery can install an overall operating and maintenance work practice which will enable consistent performance at the inherent optimum operating level, all at the lowest levels of cost.