© 2012 KBC Advanced Technologies plc. All Rights Reserved.

Bill Schlesing, Principal Consultant

Taking It To The Next Level: Capturing “Missed” Opportunities

12 December 2012

Agenda > What Roadblocks keep us from “Taking it to the Next

Level?” > Why Push? What is the Incentive? > Selected Case Studies > Breaking through the Barriers > Conclusions

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What Roadblocks keep us from “Taking it to the Next Level?”

> Time is the number one challenge most of us face – the lack of – It’s not that we cannot address the issue ourselves, rather we have many other

competing calls for our time > Resources

– We don’t have the people OR we don’t have the right people available when needed > Tools

– We don’t have the right tools or in some cases, the best tools > Core Capabilities

– We don’t do it all the time and are not fully comfortable with it > Expertise

– We don’t do it at all and/or don’t realize we need it > All of the above

– It’s complicated, it’s a lot of work, it’s hard to value, etc. > Excuses or “Reasons Not to Do It” – We Often have These!

– We’re doing well, we don’t need to do it – We’ve looked at that before (but how long ago and how deeply?)

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Why Push? What is the Incentive? > Competition

– Maintaining the status quo (standing still), in reality is falling behind > Regulatory

– Often we push it off to avoid resource or capital commitments today; in some cases hoping it will either change or go away. Sometimes this works and sometimes we hold off too long and end up with a sub-optimal answer that costs much more.

– Done right, we may be able to capture process improvement synergies > New perspectives and paradigm shifts

– Sometimes a fresh look brings in an approach we had not considered and/or breaks a logjam we had not been able to get past

> Resource Loading – Addressing critical priorities, without sacrificing key opportunities – Maintaining momentum and avoidance of restart inefficiencies

> Validation – Sometimes an “honest broker” is required to allow an initiative or project to progress

> How much might it be worth in tangible terms? It depends – 10 – 30 cents/bbl in a refinery (4 – 11 Million USD/annum for 100K BPD) – 8 – 16 USD/ton of ethylene or aromatics (USD 1.07 – 2.13 per barrel)

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Case Studies – Desalter Cold Eyes Review

> Situation – Several large refineries in Americas

experiencing desalter operational problems resulting from:

• Changing crude quality • Increasing operational demands to prevent

downstream corrosion – Specific client experiencing poorer than

anticipated performance > Identification and Evaluation

– Single Stage Performance in 92-93% range – benchmarked at average to low side of performance curve depending upon crude quality and desalter design

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Operating GAP

Technology GAP

CurrentDesalter

inlet

outlet

mudwash

CER, Cold Eyes Review

KBC Benchmark

– Performance trended with API of crudes processed, with higher API crudes performing better. This skewed the average and masked true performance.

– Removing the higher API crudes showed two gaps which could be addressed via operational improvements (low CAPEX) or conversion to two stage operation - technology (high CAPEX)

> Recommendations – Path forward list was generated for zero, low and high CAPEX options – List included 11 major areas with 33 sub-areas which were subsequently prioritized for

implementation resulting in significantly improved operations

Case Studies – Hydrocracker Cold Eyes Review

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Low Purity MUGH2 Design MW

High Purity MUG H2

Speed

> Situation – A major USGC Refiner was having operability and reliability problems with

a hydrocracker compressor. Plant personnel had identified many possible scenarios regarding performance but the root cause of compressor outages was not obvious.

> Identification and Evaluation – A refinery team was established with KBC as a member. – Utilizing the Cold Eyes Review (CER) approach, potential causes were

identified, narrowed and an action plan developed. – With older units, increases in hydrogen purity while desirable, can lead to

compressor performance problems associated with recycle gas molecular weight (MW) decreasing below design. The result is reduced capacity to avoid surge.

– Two common solutions are: • Change the rotor – high CAPEX and operationally challenging requiring a

turnaround • Add tempering gas to increase MW, avoid surge, and maintain capacity

> Recommendations – The hydrocracker (including the compressor) was modeled in Petro-Sim™

to understand impact of the make-up hydrogen on performance. Based on the model output, the optimum tempering gas composition was determined for best system performance.

– The compressor is now operating well and is meeting reliability targets.

Case Studies – Asphalt Cold Eyes Review > Situation

– Asphalt production is as much art as science. KBC has developed tools and methodology to predict asphalt viscosity/penetration and the Performance Grade (PG) specifications.

– Two refineries were exploring ways to improve their asphalt blending and engaged KBC to identify opportunities utilizing the CER approach

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> Identification and Evaluation – Refinery operations were reviewed from

crude selection to blow still operation to final blend recipes.

– A Petro-Sim™ model of the facility was developed to aid in crude selection and develop operational responses to crude quality shifts. Crude tower performance, blow still operation, and polymer blending were also evaluated using the model.

> Recommendations – Base operations and novel alternatives were

evaluated and a list of 40 ideas were generated for the path forward

– Improved refinery asphalt operations were the end result

Case Studies – Middle Eastern NEC PIP > Client Situation

– A Middle Eastern National Energy Company (NEC) asked for a Profit Improvement Program to include the generation, implementation and sustainment of opportunities to improve the bottom line performance of a refinery at no or minor capital cost.

> Procedures Performed – Tools - Created a refinery-wide simulation model in Petro-SIM™ to evaluate economic viability of

opportunities – Unit monitoring tools, including Profit Tracker, were set up to track KPIs and progress of all

opportunities – Training was provided to engineers in the use of the tracker and simulation models – Profit awareness culture and improved communication between departments was fostered in the

refinery staff by leveraging KBC’s expertise in the form of tools, methodologies and best practices – Operating practices/targets - Kerosene production was maximized by increasing stripping steam

in the side stripper and reducing top temperature in the crude tower > Outcomes

– Total annual benefit of the opportunities implemented was over US $80MM/year (or 42 c/bbl) – Increased kerosene production by 7MBD at the expense of lower valued naphtha exports,

resulting in net benefit of US $7MM/year – Targets from refinery-wide Petro-SIM™ model were incorporated into the plant’s MVC system to

help implement and sustain the kerosene opportunity – By running both normal and spare pumps, a record-high level of kerosene was produced

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Operational Planning - General > Range of Benefits from Planning & Supply Chain Upgrade:

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– Reduction in feedstock costs – Increased product value

realization – Lower inventories – Maximized asset utilization – Improved trading performance – Lower shipping/distribution

costs – Improved market

responsiveness – Value capture potential

• Refining 10-30 ¢/bbl (75¢ - $2.25/ton)

• Petchem 8-16USD/ton ($1.07 - $2.13/bbl)

Breaking through the Barriers > Time

– Get past the excuse that “we don’t need anyone because we know how to do it” and honestly ask – “so when are we going to get it done if we don’t re-prioritize or get outside help?”

> Resources – Treat initiatives in the same way you approach routine maintenance and project manpower. Identify the base load

needs and staff/resource accordingly. Incremental workload should be outsourced to avoid low resource utilization. – If the resources are needed now but require a major disruption in the organization (e.g. maintenance schedule

breakers) is moving your own people around the best answer? > Tools

– Determine whether you can justify adding the tools yourself - and further, are you committed to maintaining the knowledge base to use the tools and the manpower to keep them updated?

> Expertise – Determine if you:

• A) currently have the necessary expertise or if not • B) have the critical mass in terms of needs to justify developing and maintaining the expertise?

> Core Capabilities – Determine what are your core capabilities and focus on those areas to be the best. All other areas, consider

utilizing the skills and tools of others where they can provide as good or better end results at lower cost > Getting Past the “Excuses”

– Be honest and ask yourself, just because we are doing well, do we believe we can’t do better? – Don’t forget that what is true today may not be true tomorrow – how many expected shale gas and shale oil to have

the impact they are having today and not 10 years from now?

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Conclusions > One size does not fit all, do what makes sense for your

particular challenge > Just because that’s the way you’ve always done it, is not the

only justification for continuing down the same road > Fresh Perspectives:

– Bring new ideas and approaches which may add additional value – Sometimes break the logjam on a difficult problem – Can be the missing link in a collaborative effort – Can provide validation

> When we get caught up in the details for any of a variety of reasons, a third party may be the fresh objective approach we need

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Closing > Contact: Bill Schlesing, Principal Consultant,

WSchlesing@kbcat.com > Questions? > Future webinar topics:

– Market conditions – Asset optimization – Investment support – Sustainable workforce development

> We welcome suggestions for future topics – please email kbc-marketing@kbcat.com > Thank you for joining us!

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