Thursday, November

12, 2009
1
The Presentation on
Benchmarking Benchmarking Benchmarking Benchmarking
at
PETROFED Workshop on Energy Management
& Efficiency Improvement in the Oil & Gas
Sector by CSS Narayana, Centre for High
Technology
13th Nov09, New Delhi
WELCOME
WELCOME
TO
TO
Thursday, November
12, 2009
2
Presentation Overview
Introduction
Energy consumption, conservation & optimization
Performance Evaluation & Benchmarking how critical?
Performance Evaluation of PSU Refineries by CHT
Global Benchmarking Methodologies
Potential identified
Opportunities for performance improvement
Way forward
Thursday, November
12, 2009
3
Refining Capacity
132.4
148.9
240.9
127.3
116.9
127.3
105.4
99.4
158.9
89.9
94.3
94.3
82.0
33.0
33.0
43.5
33.0
27.0
0
50
100
150
200
250
2003 2004 2005 2006 2007 2012
Capacity of Indian Refineries, MMTPA
Total Capacity
PSU Refineries
Pvt. Refineries
Thursday, November
12, 2009
4
SIKKIM
GOA
MUMBAI
MANGALORE
KOCHI
CHENNAI
VISHAKHAPATNAM
HALDIA
MATHURA
KOYALI
BONGAIGAON
GUWAHATI
DIGBOI
NUMALIGARH
PANIPAT
NARIMANAM
BARAUNI
BHATINDA
JAMNAGAR
RIL 33 & 29
12.0
5.5
MRPL 9.69
7.5
9.5
1.0
7.5
12.0
8.0
6.0
3.0
0.65
1.0
2.35
6.0
13.7
BINA
PARADEEP
REFINERY
EXISTING
North
South
East
West
Current Processing
Capacity
PROPOSED LEGEND LEGEND
Vadinar
20 MMTPA
35.19 MMTPA
19 MMTPA
74.9 MMTPA
Nameplate Capacities in
MMTPA 10
6
Tons/Yr
Indian Refining Capacity
ESSAR 10.5 & 3.5
Total Capacity
=178 MMTPA
9.0
BPCL
IOCL
HPCL
KADALUR
Nagarjuna 6.0
ONGC
Thursday, November
12, 2009
5
Indian Refineries
19 refineries 17 PSUs & 2 Private
Present refining capacity of 178 MMTPA much higher than
product demand of 133.4 MMTPA
Focus shifted from maximization of middle distillates to
market driven economics more secondary units
Stringent Envn. Norms, fuel quality compliance & improved
performance key for survival
Evolving Refinery Configurations highly complex &
integrated with Petrochemicals / Power plants to up-grade
bottom of the barrel for maximize profitability
Thursday, November
12, 2009
6
Need for Energy Conservation
~45% of our energy needs met by oil & gas sector alone
Energy accounts for ~40% operating costs in HC Sector
Fuel consumption & HC Loss: 7-10% of crude processed
Energy conservation and environmental protection are two
sides of the same coin
Higher Energy Efficiency & better management play vital
role in leveraging profit margins
Hence, Optimizing internal energy consumption is the key
The endeavour should be towards optimizing
energy consumption and not minimization.
Thursday, November
12, 2009
7
Energy consumption
Is manifested thru following attributes
Direct fuel in Heaters/Boilers/GTGs
Indirect fuel to raise Steam
Steam & Power for Equipment drive
Cooling Water circulation
Refinery energy consumption is calculated based
on consumption of each of these attributes
To generate Power
Thru STG
To meet Process req.
Thursday, November
12, 2009
8
375
380
386
367
362
385
350
355
360
365
370
375
380
385
390
395
400
0
3
-
0
4
0
4
-
0
5
0
5
-
0
6
0
6
-
0
7
0
7
-
0
8
0
8
-
0
9
Average Industry Energy & Loss Consumption (Mbtu/bbl)
Thursday, November
12, 2009
9
Specific Energy Consumption Trend
76
82
81
74
71
69
65
67
69
71
73
75
77
79
81
83
85
0
3
-
0
4
0
4
-
0
5
0
5
-
0
6
0
6
-
0
7
0
7
-
0
8
0
8
-
0
9
Average Industry Specific Energy & Loss Consumption (Mbtu/Bbl/NRGF)
Thursday, November
12, 2009
10
Performance Evaluation
Why needed ?
It is an on-going process to assess the present operation
of a refinery against best in the world w.r.t. to KPIs such as
Capacity utilization
Energy & HC Loss Management
Yield & processing
Human Resources & other Asset Management
Maintenance Performance, Reliability & Availability
Financial Performance
Environmental Performance
and identify the scope and further improve the operational
performance.
Thursday, November
12, 2009
11
Performance Evaluation
How Critical ?
Globalization
Corporate mergers & formation of JVs
Oil & Gas Sector is a truly global & highly competitive industry
Value added product at acceptable cost
Market driven cost profits under pressure spiraling input costs
Ever increasing energy costs & Security
Dismantling of APM
Fluctuating Operating Margins - need to reduce operating costs
Challenges ahead in processing Heavy & Sour Crudes
Stringent Fuel Quality & Environment Norms
Performance evaluation helps to take corrective measures
to bridge the identified gaps to improve bottom-line &
finally be at par with global standards
Thursday, November
12, 2009
12
Refinery Performance evaluation
Tools for improvement
Benchmarking the ongoing search for best practices that produces the ongoing search for best practices that produces the ongoing search for best practices that produces the ongoing search for best practices that produces
superior performance when adopted and implemented superior performance when adopted and implemented superior performance when adopted and implemented superior performance when adopted and implemented
Effective tool to improve Effective tool to improve Effective tool to improve Effective tool to improve , productivity, quality, profitability and , productivity, quality, profitability and , productivity, quality, profitability and , productivity, quality, profitability and
other such dimensions of performance that determine other such dimensions of performance that determine other such dimensions of performance that determine other such dimensions of performance that determine
competitiveness competitiveness competitiveness competitiveness
Is the first step on the improvement cycle Is the first step on the improvement cycle Is the first step on the improvement cycle Is the first step on the improvement cycle
Identifies the opportunities for improvement Identifies the opportunities for improvement Identifies the opportunities for improvement Identifies the opportunities for improvement
Helps to measure success achieved in bridging gaps identified Helps to measure success achieved in bridging gaps identified Helps to measure success achieved in bridging gaps identified Helps to measure success achieved in bridging gaps identified
Maintains stimulus for continuous improvement Maintains stimulus for continuous improvement Maintains stimulus for continuous improvement Maintains stimulus for continuous improvement
Thursday, November
12, 2009
13
Why Benchmark?
Collects data and verifies the
KPIs that you rely on
Establishes solid cornerstone
to build corporate strategy
Measures progress towards
your Vision
Identifies opportunities for
improvement
Improvement
Cycle
Thursday, November
12, 2009
14
Performance Forces
Driving Forces Driving Forces
Biases Biases
Lack of Lack of
Challenge Challenge
Crises Crises and and
Interruption Interruption
Vision Vision
Knowledge Knowledge
Purpose Purpose
Organization Organization
Initiative Initiative
Recognition Recognition
Benchmarking Benchmarking
Focus Focus
Inappropriate Inappropriate
Goals Goals
Non Non- -Involvement Involvement
in Goal Setting in Goal Setting
Resisting Forces Resisting Forces
Unrealistic Unrealistic
Expectations Expectations
Risk Risk
Aversion Aversion
Neglect Neglect
Indecision Indecision
Upward Upward
Delegation Delegation
Leadership Leadership
Technology Technology
and Tools and Tools
Listening Listening
Training Training
and Mentoring and Mentoring
Planning Planning
and Goals and Goals
Networking Networking
Valid Valid
Information Information
Disorganization Disorganization
Fragmentation Fragmentation
Inflexibility Inflexibility
Poor Poor
Coaching Coaching
Inadequate Inadequate
Information Information
Labor Labor
Conflict Conflict
Regulation Regulation
or Subsidization or Subsidization
Office Politics Office Politics
and Red Tape and Red Tape
Invisible Invisible
Errors Errors
Inadequate Inadequate
Capital Capital
Weak Weak
Organizational Organizational
Sensing Sensing
Conflicting Conflicting
Priorities Priorities
Competition Competition
Collaboration Collaboration
Innovation Innovation
Strong Decision Making Strong Decision Making
and Risk Taking and Risk Taking
Accountability Accountability
Downward Downward
Delegation Delegation
Alignment Alignment
of Values of Values
World World- -Class Class
Thursday, November
12, 2009
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Capturing the Potential within
Three Legs of the Stool
The Why
The What
The How
Thursday, November
12, 2009
16
Peer groups members
Are approximately your size
Are in your market area
Have a similar configuration
Customized Gap Analysis
Understanding Performance Gaps is key to Performance
Improvement
Performance gaps will be assessed using customized peer
groups
Thursday, November
12, 2009
17
Performance Evaluation & Benchmarking
Important!
Age or type of technology employed not taken into account
Why? refineries undergo continuous maintenance &
upgrading
So, age/technology of unit bear no resemblance to original
Obvious that old unit/technology may be less efficient w.r.t.
energy consumption or product yield/quality is an
inescapable fact, the performance gap is real & economics
of closing the gap should be evaluated.
Thursday, November
12, 2009
18
Energy Benchmarking & Targeting
CHT conducted Energy Benchmarking & Targeting of PSU
Refineries in 96 97 in association with EIL
20% Gap between actual energy consumption &
Benchmark identified for most of the Units. Corrective
measures taken to reduce the gap.
CHT along with EIL conducts regular Audits to reduce gap
between actual vis--vis Target Performance
CHT repeated Energy Benchmarking through EIL in 2003
Thursday, November
12, 2009
19
Performance Evaluation by CHT
CHT regularly carries out Internal Benchmarking of PSU
refineries w.r.t. major areas of operation impacting
profitability - as part of Performance Evaluation
The major parameters of performance benchmarked
include
1. Crude Tput,
2. Distillate Yield
3. Product Pattern
4. Energy Consumption
5. Fuel & Loss
6. HC Loss
7. Refinery overall Capacity Utilization (primary & secondary)
8. Plant Mechanical Availability (considers s/d details)
Thursday, November
12, 2009
20
Performance Evaluation by CHT
CHT introduced new Energy Factors for Process units in
2002-03, to reflect the technological advances over the
years
Energy Factor indicates intensity of Energy Consumption
of a process units vis--vis CDU
Similarly, new method for benchmarking Overall Refinery
Capacity Utilization taking utilization of into consideration
both primary & secondary units has started in 2004-05
This reflects actual scenario compared to earlier practice
of comparing only the capacity utilization of CDU only
Thursday, November
12, 2009
21
Benchmarking at Global Level
No data base on performance of global refineries readily
available in public domain
Objective is to develop valid industry performance criteria
to facilitate evaluation of refineries vis--vis others in that
region
International agencies such as SA, BP, KBC, SGSI, etc
carry out performance evaluation studies
Thursday, November
12, 2009
22
SA Benchmarking Studies
As advised by the Expert Committee constituted (to
identify gaps in technology in Indian refineries) by
MOP&NG in 1995, various refineries participated in
benchmarking studies
Refineries participated in International studies carried out
bi-annually by M/s Solomon Associates
Year Refineries participated
1989 CPCL,IOCL (J), (M), (H)
1996 IOCL(J),(M),(H),BPCL,HPCL(M),(V),KRL,CPCL
1998 BPCL
2000 CPCL
Thursday, November
12, 2009
23
SA Benchmarking Studies
Major Key Performance Areas & Parameters are:
Performance Areas Parameters of measure
Capacity Utilization Equivalent Distillation
Capacity (EDC)
Capacity Utilization
Processing Efficiency Index
Energy Energy Intensity Index (EII)
Manpower Personal Index
Maintenance Cost Maintenance Index
Turnaround Index
Operating Expenses Cash Operating Index
Net Margin Net Margin Index
Thursday, November
12, 2009
24
SA Benchmarking Studies
EDC Equivalent Distillation Capacity
EDC concept helps for comparing performance
between refineries of different size & configuration
(Normalization)
EDC = (Configuration Factor * design unit
capacity)
Capacity Utilization is a function of EDC
Thursday, November
12, 2009
25
SA Benchmarking Studies
Energy Efficiency
The energy efficiency of a refinery is measured in terms of
Energy Intensity Index (EII), which is given by
EII = [(Actual energy consumption / Standard energy
consumption)] x 100
Standard energy consumption signifies target energy
consumption reasonably achievable if the refining
operation is optimal
Thursday, November
12, 2009
26
BP Energy Benchmarking Studies
BP carries out Energy Management Studies based on
utility parameters Steam, Power, Fuel & CW
Computes Energy Performance Index (EPI)
Actual Energy Consumption
EPI = ____________________________ X 100
Guideline Energy Consumption
A tool to judge relative unit performance w.r.t. Benchmark
Thursday, November
12, 2009
27
KBC Energy Benchmarking Studies
Approach considers overall refinery as a system and
studies integration between Process & Energy Systems
Developed Best Technology (BT) Energy Consumption
Norms Benchmarks for evaluating refinery performance
ENCON Programme considers Energy Costing & Plant
Yield Performance and results in economically justifiable
consumption level set by actual economic environment
Thursday, November
12, 2009
28
Shell Benchmarking of PSU Refineries
Modules
Energy and Hydrocarbon Loss Management
Human Resource Management
Maintenance performance, Reliability and Availability
Optimisation
Environmental Performance
Financial Performance
Boundaries of The Review
Standard Refinery (fuel + Lube Units) Operations,
Maintenance, Management and Projects
Includes Head Office Support functions
Excludes Terminals, Supply and Distribution, Packaging
Plants, Community Facilities (township, hospital, etc)
Thursday, November
12, 2009
29
Shell Benchmarking of PSU Refineries
Peer Groups comparison
Peer Groups Refineries are divided into Peer Groups on the
basis of Region and/or on the basis of the Refinery Complexity.
An additional Indian Peer group has been included in this study.
Three regional Peer Groups considered Asia Pasific (EAS),
Europe (EUR) and North & South America (NSA)
The refinery complexity Peer Groups in order of increased
complexity are
Hydro-skimming (HSK)
Thermal Cracking (TCR)
Small Complex (SCP)
Medium Complex (MCP)
Large Complex (LCP)
Very Large Complex (VLCP)
Thursday, November
12, 2009
30
NSP Count - 2004
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
1 2 3 4 5 6 7 8 9
1
0
1
1
1
5
1
6
1
8
1
9
2
0
2
1
2
2
2
5
2
6
3
0
3
1
3
5
3
6
3
7
4
0
4
1
4
2
4
3
4
5
4
6
4
7
4
8
4
9
5
0
5
1
5
2
5
3
5
4
5
5
5
6
5
7
5
8
HSK TCR
Small Complex Plant Medium Complex Plant
LCP VLCP
Indian PSU Refineries are classified as
Small or Medium Complex Type
N
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S
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P
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(
N
S
P
)
Thursday, November
12, 2009
31
Intake relative to Complexity high for many sites
Barrels of Intake
0
25,000
50,000
75,000
100,000
125,000
150,000
175,000
200,000
225,000
P
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s
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a
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k
b
b
l
/
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.
Small Complex Plant Medium Complex Plant
HSK TCR LCP VLCP
HSK TCR
Small Complex Plant Medium Complex Plant
Thursday, November
12, 2009
32
The CEL system built as per this diagram
Process Units
Cooling Water
System
Flare
CEL
Energy
Loss
Generation
Consumption
Ocean
Refinery
Storage & Handling
Sundries
Process
Energy allowances
for Process units
Mass Balance to
close
Energy balance to
close
Thursday, November
12, 2009
33
Performance Evaluation & Benchmarking
Energy & Hydrocarbon Loss Management
Site CEL Index
Overall site Energy & Loss performance Indicator
CEL Index = Actual Energy Consumed + HC loss
_________________________________ X 100
Allowance for (Energy + HC loss)
Thursday, November
12, 2009
34
Energy & Loss Performance - CEL
80
100
120
140
160
180
200
220
1 2 3 4 5 6 7 8 9
1
0
1
2
1
3
1
6
1
8
1
9
2
4
2
5
2
7
2
8
2
9
3
0
3
1
3
2
3
4
3
7
3
9
4
0
4
1
4
4
4
5
4
6
4
7
4
8
4
9
5
0
5
1
5
2
5
3
5
4
5
5
5
6
5
7
5
8
HSK TCR SCP MCP LCP VLCP
C
E
L

I
n
d
e
x
.
CEL Index SBR 2003
improvement in Energy and Loss was noted
SBR = Shell Benchmarking Reference
Thursday, November
12, 2009
35
Refinery Energy and Loss Performance vs.
Regional Peers
3
4
5
6
7
8
9
10
11
12
13
14
15
1
2
2003 2004
Thursday, November
12, 2009
36
Strengths and Weaknesses
Strength
Many process units are near world average efficiency
Three sites (IOC M, IOC J & NRL) rank highly on a
regional basis for Energy. Others have included upgrades
since 2003/4
Good Generation efficiency for sites with Gas Turbines
Energy conservation disciplines well advanced
Opportunities
Older units offer scope to improve but will require
investment. Geography of site could limit these opportunities
Lower capacity utilisation has an effect on energy efficiency.
Site wide energy optimisation gaps caused by sequential
site development
Ocean losses needs attention
Thursday, November
12, 2009
37
Refinery Products Analysis
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1
2
3
4
56
78
9
1
0
1
1
1
2
1
31
4
1
5
R
e
g
R
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f
%
w
t

o
n

P
r
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d
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c
t
s
Gas LPG Gasolines + Naphtha Jet + Kero Gasoils Residue + Fuel Oil Base Oil + Bitumen +Wax Coke Other Fuel + Loss
Regional Target Mogas + Kero
Regional Target Distillate Yield
Thursday, November
12, 2009
38
Refinery Product Breakdown 2004/5
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Regional
Peer
Group
28.0
30.0
32.0
34.0
36.0
38.0
40.0
Gas & LPG Gasolines & Solvents Kerosene Gasoils Fuel Oil & Residue Lubes, Wax & Bitumen Coke, Sulphur & Misc Fuel & Loss Feedstock API
Thursday, November
12, 2009
39
Margin Performance comparison
On an Import parity basis Gross Margins improved by
210% between 2003/4 and 2004/5
By comparison Regional Marker Gross Margins improved
by between 230 and 290%
Key constraints on Gross Margin potential
Indian Market is skewed towards Gasoil and away from Jet and
Gasoline
Refineries are constrained to their regional market within India
No outlets for premium quality products
Lack of conversion capacity means that Distillates are derived from
Crude which yield low value Fuel Oil and other components
Little or no outlets for Chemical Feedstock or export of fuels
Thursday, November
12, 2009
40
Margin Potential & Opportunities
Further increase conversion capacity & reduce FO
Strategically replace Naphtha as fuel with NG and develop
aromatics and premium gasoline
Upgrade HCUs for increased LPG Yields
Continue to develop supply chain infrastructure, port
capacity, crude and product pipelines
Quality improvements not just in response to
Environmental drives but also product differentiation
Develop refinery-petrochemicals interfaces
Export potential for low cost refineries (< $1/bbl) with good
supply logistics. (note product quality risk)
Thursday, November
12, 2009
41
Margin Issues to tackle
Relative lack of Residue Upgrading reduces margin
Significant margin loss due to prevailing product market
structure
Currently little or no product premium available
Crude diet relatively fixed compared to actions taken by
peers
Some process units, e.g. HCU, may not be performing at
optimum
Thursday, November
12, 2009
42
Energy Benchmarking - results
2
10
3 3
8
4
1
9
5
2
7
6
Tercile 1 Tercile 3 Tercile 1 Tercile 3 Tercile 1 Tercile 3 Tercile 1 Tercile 3
Energy Consumption of Indian Refineries Vs APC & Global Peers
APC: Indian 15 & total 39 Global: Indian 15 & total 62
03-04 APC 04-05 APC 03-04 GBL 04-05 GBL
Thursday, November
12, 2009
43
Potential areas of improvement
Steam & Power Imbalance
Poor Insulation
Optimising Hydrogen consumption
High Steam Losses
High handling loss due to TTL dispatch
Piece-meal augmentation of Refining Capacity
Inadequate dissemination of ENCON measures being implemented
Lack of information on KPIs of Pace- setters in public domain
Energy Management Systems not fully evolved at some places
Lack of quality vendors (Poor workmanship)
Thursday, November
12, 2009
44
Energy Mgmt & Improvement
Efficient Management, best practices operation &
preventive maintenance measures requiring little or low
investment could save ~10% energy
Develop Action Plan based on successfully implemented
ENCON Schemes elsewhere
Implementation of these measures would help Indian Oil &
Gas Industries improve their Energy Efficiency &
Conservation levels
Savings in energy conservation would in future be
required from both cost cutting as well as conserving eco-
system
This will also help reduce GHG emissions and thus
protect our eco-system
Thursday, November
12, 2009
45
Limitations/barriers to improve Energy Efficiency
Lack of awareness at the operator level for acute need for
Conservation opportunity value lost due to inefficiency
No continuous display in DCS of key operating
parameters & their impact on margin (Thermal Efficiency of
Heaters/Boilers, etc)
Slow decision making ENCON Projects have to compete
for approval with other projects like Margin Improvement &
Environmental Issues
Absence of a dedicated & separate ENCON Cell at many
places
Existing award scheme for suggesting energy
improvement techniques need to be made attractive
Thursday, November
12, 2009
46
Maintenance Benchmarking results
1
6
8
1
8
6
1
5
9
5
9
1
0
10
Ter ci l e
1
Ter ci l e
2
Terci l e
3
Terci l e
1
Ter ci l e
2
Terci l e
3
Terci l e
1
Ter ci l e
2
Terci l e
3
Ter ci l e
1
Ter ci l e
2
Terci l e
3
Position of 15 PSU refineries in various Terciles for 2003-04 & 2004-05
APC - Asia Pacific Region & GBL - Global refineries
03-04 APC 04-05 APC 03-04 GBL 04-05 GBL
Thursday, November
12, 2009
47
Refinery Reliability key for sustainability
75
80
85
90
95
100
1 2 3 4 5 6 8 9
1
0
1
1
1
2
1
3
1
4
1
5
1
6
1
7
1
8
1
9
2
0
2
1
2
2
2
3
2
4
2
5
2
6
2
7
2
8
3
0
3
1
3
2
3
3
3
4
3
5
3
7
3
8
4
2
4
8
4
9
5
0
5
3
5
6
5
7
5
8
%

M
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t
a
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d

A
v
a
i
l
a
b
i
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i
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y
.
Thursday, November
12, 2009
48
Potential identified from Benchmarking
Energy and Loss Management area Energy is
the single largest controllable cost.
Maintained Availability Unavailability is one of
the largest controllable loss of Income for the
sites.
Unplanned Downtime Unreliable plant also
leads to loss of Income and adds costs.
Supply Chain Optimization External market
impact on plant utilization. Supply chain
optimization is of lower priority than the items
above.
Thursday, November
12, 2009
49
Way Forward
Efficient energy use cornerstone for sustenance
Implementation of ENCON Measures
Overall site heat integration
Optimize utilities generation GT based CPPs
Key is sustainable Availability & Reliability improvement
to go for best operating practices, constantly assess the
impact of unit non-availability
Synergy with Petrochemicals & Power Plants
Upgrade Bottom of the Barrel wisely for profit margin
Increase conversion capacity
Reducing Carbon foot print I.e. Greenhouse Gas Emissions
Zeal to operate close to Benchmarks helps create
competition in excellence
Benchmark & target the systems regularly
Thursday, November
12, 2009
50
World is changing More Rapidly than we can
Comprehend or fully Analyze!
Let us explore & catch up fast.