The energy sector has been hit hard by the current global economic interruptions, with rapid drops in demand, changing mix of preferred products, plunging crude prices, difficulty staffing essential production sites and fragility of supply lines. This article focuses on short-term actions and long-term strategies as companies go into recovery.
In May 2020, refiners are faced with high volatility. Prices are extremely dynamic. Margins are very low. Demand for some products (such as diesel and naphtha) greatly exceeds demand for other products (gas, jet). Ethylene producers are looking at optionality between naphtha and natural gas. For the refinery operators, they are running business scenarios and alternative refinery plans on almost a daily basis. And risk and uncertainty into the future is high.
In the face of being forced to move most workforces into remote and work-from-home scenarios, energy companies are re-examining their digital capabilities, and increasing their focus on digitalisation as an essential long-term strategy.
In the short-term there are a number of immediate digital technology actions energy companies can take. The actions in many cases are based largely on technology already in place within companies, but which has not been deployed in the most effective way to support remote and collaborative work that is so necessary for the agility and responsiveness to succeed in the coming challenging months. This article covers ways in which easy to implement strategies can have immediate impact on businesses.
The business challenge
Multiple respected economic forecasters believe product demands will not fully recover for at least one to three years. Industry watchers predict permanent changes in the roles of on-the-ground vs remote working. Organisations are seriously considering how more work can be done remotely and with fewer crews in dangerous settings, in and around assets. Autonomous production is no longer thought of as in the distant future. Companies are turning to an acceleration in digitalisation. But what does that mean in the short and medium-term to a typical refinery organisation?
Some analysts feel the energy transition will be accelerated; others forecast the opposite. Energy and chemical businesses are likely to rethink supply chains which are today highly globally interdependent and just-in-time in nature. The sustainability focus including decarbonisation, circular economy, and broader access to electricity and clean water globally, will resume with some new urgency and focus when things normalise, and this will drive regional refining and chemical markets. It will also impact the speed at which refineries integrate their operations to incorporate chemicals and shift away from transportation fuels.
In the short-term, companies are looking at a range of questions, which have different importance depending on regional differences:
- Which are the right CAPEX cuts to make that keep the business agile and ready to take advantage of opportunity during the recovery?
- How can I maximise my team effectiveness today using digitalisation and enable continued remote working?
- What is my turndown limit, to keep plants running within safe limits and without damaging units and equipment?
- What is my optionality to shift as far as possible to diesel and minimise jet and gasoline?
- What do my margins look like under a dizzying range of crude and products pricing scenarios?
- In new operating scenarios, do I degrade my catalyst faster; in the face of supply chain disruptions, should I be ordering future catalyst sooner?
- How do I utilise my existing tools to optimise production in a drastically different operating regime?
- How can I shift my supply chain dependencies across geographies and what are the business and economic tradeoffs?
Digital as a tactical tool today
How will companies most effectively contend with future business uncertainties?
In a recent discussion, a Middle Eastern energy customer referred to digitalisation as “a tactical lever in this environment.” Many organisations have realised during the current disruption that they need to develop capabilities to automate operations as much as possible and enable remote experts to address production plans, needs, and interruptions, and are not as far along in digitally enabling their assets as they should be. So, amidst the business uncertainty, several companies have small teams looking at how to digitally enable themselves more rapidly.
Seven ways to use digital now
There are short-term moves energy companies can make and are currently making in terms of digitalisation to navigate the current period and prepare for future economic recovery. These include:
- First, rebalancing capital spending (CAPEX) and operational expenses (OPEX) in an informed manner to match the current business climate. You have put 20%, or maybe even 30% of your capital budget on hold. Now you need to assess, for the next 12 months, which projects you should defer, and which are more strategic for your recovery and growth. Economic modeling and risk tools can rationalise your CAPEX portfolio into a series of scenarios, ranking them by impact on revenue, by impact on sustainability, and by financial risk and externalities. You can examine optionality of locations, timing, and contracting and their impact on agility, workforce, cost and enterprise value. Using advanced economic cost and risk modeling you should be able to make economic and risk tradeoffs transparent for making more informed decisions within 30 days.
- Next, expand and accelerate scenario planning your production strategies. Production planning and scheduling tools are being creatively used to react to and solve challenges related to supply chain, demand and pricing disruption, by remote teams. Production planning can be rapidly moved to the cloud for remote and work-from-home; and to access high performance computing to run the large numbers of scenarios to establish the optimum choices as business conditions change dynamically. Several of the largest global refinery planning teams are running scenarios 12 hours a day, constantly adjusting the underlying model assumptions. Teams are using this approach to build future scenarios to plan for variable market and regional recoveries. Digital twin models of refining units can be used to inform the planning model of operating scenarios that have never been planned for before; to make sure the planning models are adjusted to be directionally correct; to identify safe operating turndown limits; to identify impacts of deferred maintenance on asset safety and integrity.
- With the need to minimise workers in plant settings, remote worker access is crucial to enhance collaboration and sustain effectiveness. Visualisation and workflow digital tools are providing remote workers the ability to react to and collaboratively manage asset production. An Italian energy company is continuing urgent engineering work remotely with a front-end engineering collaboration tool that works as effectively from home as in the office. Asset health can be monitored remotely with prescriptive maintenance analytics to provide weeks of warning of equipment trouble. Adaptive process control can be managed and monitored remotely.
- Adapting production to new operating conditions: when I drastically turn down units, or change column cuts, or operate under different process conditions, how do I optimise my operations for safety, yield and energy? Adaptive process control can be upgraded and deployed remotely. Self-tuning adaptive control can be adjusted quickly and remotely to these new operating strategies and continue optimising the key process units.
- With assets operated with the fewest possible on-site staff, routine inspection and maintenance has been deferred. Maintenance and asset health analytics and monitoring tools, such as troubleshooting operations via online column models and monitoring heat exchanger performance and fouling with online models, are evaluating how long equipment is able to run safely with deferred maintenance. Several global operators are using these online models to determine cost and risk of deferring maintenance. Predictive analytics are forecasting equipment failures and process upsets, providing one to eight weeks advance notice of failures, enabling asset owners to efficiently deploy small strike teams to avoid damage and downtime. This machine-learning based prescriptive maintenance has already saved one global refiner millions from avoiding conditions leading to equipment failure and improving plant uptime.
- With assets running at lower rates, modeling tools are crucial to ensure that these operating scenarios can proceed without damaging the asset. Plant digital twin models can be run remotely to advise operators of the correct process changes for safely and reliably running units at low turndown rates. They can be run online to monitor the status of equipment and units with respect to process safety, process integrity, emissions, energy use, fouling and degradation, and yields.
- With global energy companies continuing their focus on sustainability goals, even during this global economic volatility, digitalisation can be a crucial weapon to keep corporate focus on sustainability, while operating leaders are fully occupied with maintaining operating safety and continuity. As an example, Bharat Petroleum (BPCL) very recently deployed an integrated digital twin to optimise sulfur recovery – encompassing software, such as AspenTech’s adaptive process control and connected simulation models to improve contaminant removal, as well as a key performance indicator (KPI) dashboard. In six months, the implementation resulted in 90% reduction in sulfur emissions and economic (and circular economy) value from recovered sulfur. In a related project, BPCL implemented a digital emissions monitoring and prediction system, that allows the company in its Kochi Refinery to effectively address an increasingly rigorous and dynamic regulatory environment.
A progressive recovery
Agility and flexibility will be a key in the energy industry, as unpredictable oil and gas prices and patterns of demand will be in front of us. Digitalisation is not only a tactical tool, but more importantly a strategic lever for making a refinery more agile, and the business owners more flexible. Specific areas of digitalisation create very significant value quickly and enable companies to be extremely effective whether using on-site or remote workers. Beyond the short-term, as AspenTech ties planning and scheduling closely to optimisation and advanced control, advanced planning technology implementation is not only paying dividends today but will ensure safe operations and margin capture in the future. The plant digital twins that can be implemented easily on highest economic value units, such as crude units, conversion units, and preheat trains, provide optimisation and advice, without placing workers in dangerous places in the asset.
From its position as a partner to the energy industry, AspenTech has been working with companies globally to support workers who have the critical need to access its software for remote access to perform their daily mission-critical work. Many companies are evaluating how much of this remote work they will make permanent. AspenTech Customer and training websites, customer support telephone and chat systems are all fully available to rapidly respond to support companies and their teams who are currently operating in work from home mode. In addition, beyond the current unique economic environment, the company will be helping its global customers to digitalise in the highest impact areas, as energy companies put increasing emphasis on these projects. These high value areas will include, margin capture, safe operations, agility in face of uncertainty, and sustainability.
Written by By Ron Beck, Aspen Technology.
Read the article online at: https://www.hydrocarbonengineering.com/special-reports/08052020/building-agility-resilience-and-recovery-in-refining/