A model for refinery profitability

Creating a culture of optimisation through a harmonised business process

Darren York

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Article Summary

The process industries are historically gauged by three central pillars of measuring success: safety, reliability, and profitability, with a fourth, environmental, social and governance (ESG), becoming more predominant. If we consider the past four or five decades, we can observe the development and progression of organisational and work cultures that have fostered advances in safety and reliability performance. These advances are no less than incredible and attest to the achievement of a superior standard in these areas that would have been virtually unthinkable 40 years ago.

These shifts in safety and reliability did not happen by accident. Each started with a central mantra of developing and sustaining a culture of change. To foster these changes, tools were built along the way to better model, understand, and mitigate safety and reliability risks as well as measure progress and performance. As a function of these changes and tools, a new ‘language’ of safety and reliability culture was developed to communicate within organisations more clearly as well as across the industry. Work processes were adjusted to make safety and reliability core elements such that these areas became second nature and the standard of doing business. This metamorphosis was the result of a sound blending of technical, physical, and ‘people’ elements, which resulted in development of a culture that reflects attitudes, beliefs, perceptions, and values that employees share and exhibit in relation to safety and reliability.

Unprecedented pressures of the pandemic as well as quick expansion of focus and attention on ESG and the associated energy transition globally have dramatically highlighted how the third pillar, profitability, can no longer be assumed to be a given outcome. Pressures exerted by local and global products markets are now coupled with ESG and increased expectations of investors and financing availability, which compound the complex profitability scenario of the cash intensive business in the refining and petrochemical process industry. These new forces, as well as some still to be fully defined and realised, make development of an ‘optimisation culture’ like safety and reliability cultures an imperative.

Integrated model
Obtaining this optimisation culture demands a rethinking of optimisation using an integrated mental model that is focused on collaborative value outcomes which breakdown traditional silos of decision making and information visibility. As demonstrated and from valuable lessons learned from the evolution of safety culture within the industry, optimisation must develop as a comprehensive culture that considers tools, decision processes, and people elements to assimilate a collaborative organisational society of value creation and capture propelled by a common vision and desired goals. Jim Collins, in Built To Last, expresses this concept with what he calls the “Genius of the AND” versus the “Tyranny of the OR”. This concept explains how visionary companies embrace what seems to be two paradoxical goals and figure out how to have both rather than just one or the other. This concept is more than just balancing two goals which would arrive at an average of the two or, simply put, to compromise the desired goals for something less which is not the “AND” but the “OR”. While profitability is not the paramount goal for a refining or petrochemical company superseding safety, reliability or ESG, it must be one of the goals simultaneously achieved. Although challenging, safety and profitability, reliability, and profitability, ESG and profitability, and digitalisation and profitability are all just examples of the “Genius of AND” that must be practised to survive and thrive today.

Sustainable profitability
To achieve this simultaneous combination of outcome for profitability, a holistic approach is required. A Harmonised Business Process (HBP) approach cultivates the optimisation culture needed to create sustainable profitability. The HBP considers every aspect that contributes to the ultimate goal of profitability based on an organisation’s values and culture connecting its position, process, purpose, and performance (see Figure 1). 

To understand HBP, it is important to understand the core elements individually:
•    Position includes an organisation’s mission, vision, and goals.
•    Process includes the decision workflow(s), tools, and data.
•    Purpose includes the detailed tasks, decisions, and associated decision(s) value.
•    Performance includes an understanding of responsibility, measurement, and incentives.

This harmonised approach permits an understanding and development of all elements required to develop a well-equipped and efficient optimisation culture. To that end, HBP also systematically connects the dots of the optimisation boundary and activities with decision/work processes and technology as well as digitalisation elements of data visibility, integration, and overall performance evaluation. In order to thrive in more competitive markets and circumstances, these themes must be understood in the context of current capabilities and those required for success.

With all the focus today on technology solutions and digitalisation, it would appear that one or both of these are a silver bullet to produce optimised results. While there have been, and no doubt will continue to be, significant advancements in optimisation technology tools and data solutions, one cannot forget that tools are tools and can help with task efficiency as well as data transparency and presentation, but foundationally it is as Jeff Duntemann, in Assembly Language: Step By Step, puts it: “A good tool improves the way you work. A great tool improves the way you think.” Stated in a more direct way, if you are looking for improved optimisation solely in the form of technology or digitalisation, you will come up short of your goal. It is important to realise that both technology and digitalisation are enablers for improved results from a well informed and cooperative optimisation culture driven by people who think differently and are better equipped to make empowered decisions that lead to profitability. The silos of today’s roles and departments have to be transformed to allow this visibility and collaboration across organisational disciplines to foster a better outcome for the organisation, thereby leading to sustained profitability.

Computational access
With that foundation, consider how today’s tools are being utilised for optimisation as well as some expected advancements in capabilities, synergies, and application to promote a fully functional optimisation culture within an organisation. Traditionally in the refining and petrochemical industry, the most recognised tool is a linear programming (LP) model. While linear programming has been around for 80-plus years, the reason for its synonymous recognition with optimisation really comes from the personal computer revolution of the late 1980s and 1990s and the computational access that it provided. LP models have a great capability to optimise scenarios with thousands of variables but are limited in their level of process modelling fidelity compared to highly dynamic and non-linear industry process responses. With the PC revolution and individual computational capability also came the introduction of rigorous, kinetic process simulation tools which represent detailed modelling fidelity of those same dynamic and non-linear industry processes but offered little in the way of optimisation capabilities. Today, with programming and computational advancements, these two tools have taken on new and more advanced capabilities that leverage the tools’ strengths while improving their weaknesses.

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