Z. MILOSEVIC, KBC Process Technology Ltd., Walton on the Thames, Surrey, UK
A
s the margins remain low, the importance of reducing the oper- ating costs, improving margins and maximizing the use of the existing assets remains a high priority for refiners globally. Energy efficiency is in focus, both as a cost issue and as environmental con- cern. This importance has also been rec- ognized by new standardization in the area of Energy Management (ISO 50001, to be implemented by end 2010) and Energy Management Systems (BS EN 16001, implemented in 2009).However, while many refinery engi- neers and operators have ideas about how to improve the energy efficiency of a site, these ideas very often fail to mature or be implemented. What is most undesirable to any refiner in the present market environ- ment is that the good ideas and desirable projects are not put into practice.
Refineries can and do focus very effec- tively on operational excellence, mainte- nance or safety, but they rarely create an energy-focused organization. This occurs due to various reasons, including lack of organization, equipment (instrumenta- tion), or tools and skills that are required for project identification and effective implementation. Conversely, some refiners show remarkable vigor and ability to imple- ment such projects. What is their secret? Which organizational factors affect the implementability of good ideas, and which can be quickly adjusted and amended to achieve good implementability?
Project challenges. The obstacles to effective project implementability usually fall into three categories:
• Technical—Lack of instrumentation, measurements, accurate data or control- lability.
• Skills-related—a shortage of skills and tools.
• Behavioral and organizational. It has been often noticed that even in the absence of the first two roadblocks, and with only the third challenge (behavioral or organizational) present, project imple- mentation is slow. The lack of required organizational and behavioral features can- cels the effects of skills and technical effort. If so, a complete revamp of a refiner’s prac- tices is often required, encapsulated into what is called the creation of an “energy focused organization.” This article will dis- cuss behavioral and organizational factor, what is needed to create an energy-focused organization, and how the transition can be effectively made.
ENERGY-FOCUSED ORGANIZATION
Refiners have been talking about “profit-oriented organization” and “operational-excellence-focused refining.” However, energy effectiveness has become a factor of such a vital importance that a new term, “energy focused,” has been added. An organization may have all of the tools and knowledge necessary to be a world-class energy performer, but without a clear energy strategy, along with motivated and informed personnel and an organization that supports energy initiatives, the end result will be less than desired. An energy-focused organization is crucial for ensuring the implemen- tation of the identified improvement opportunities and for sustaining good operational efficiency.
The term “energy-focused organization” defines the organizational structure and procedures that support good energy man- agement. That structure and those proce- dures are usually contained in six areas:
• Energy policy. It includes existence,
clarity, completeness and adherence to the organization structure.
• Organizational structure. It is the
position and role of the site energy coordi- nator and the energy team, their responsi- bilities, authority, and senior management support.
• Motivation. Must be present at all
levels.
• Information systems. This includes
adequacy of measurements, targets, reporting • Marketing of energy efficiency.
How is energy efficiency promoted both internally and externally for the company?
• Investment. Such projects require
building the case for investment and creat- ing budget availability.
Energy policy. This is the refiner’s public statement of commitment. It is the vision, and, as such, it forms the foundation of a successful energy management program. It is formally written, clearly and succinctly, and contains measurable objectives in improving the energy performance, including any other goals such as environmental protection. The policy is tailored for the particular organiza- tion. It is approved and issued by its chief executive, and involves the key members of the senior management team.
A well-written policy is understandable to both employees and the public. It is real- istic. It includes the skills and abilities of all management and employees. The policy is communicated to all staff, so that everyone is encouraged to get involved. The policy will ideally state the chain of command, define the responsibilities and provide authority for implementing the energy program.
Organizational structure. The effec- tiveness of the organizational structure
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I
FEBRUARY 2012 HydrocarbonProcessing.comrevolves around the office of the site energy coordinator, and the coordinator’s compe- tencies and authority. The energy coordina- tor is the key player, who leads the energy management program, and communicates and reports to the senior management. The energy coordinator is responsible for:
• Developing and promoting of the corporate energy policy and energy-effi- ciency plan
• Motivating the staff to improve the energy efficiency
• Assuring accountability and commit- ment from the organization
• Ensuring that the necessary means are in place to achieve the goals in terms of systems, resources and training
• Identifying and evaluating areas for improvement.
The members of the energy team should include representatives from operations, utilities, maintenance, planning, facilities and environment. They help the leader to integrate the program and to measure and track the energy-performance data.
Motivation. It is typical for engineers and operators to be conservative, to try to remain within their comfort zones, and to adhere to the established practices. Motiva- tion “induces people to act voluntarily in a certain way and then to persist in the face of difficulty.”
Motivation needs to be extended to all players—senior managers, heads of depart- ments and operators. Different motiva-
tional factors apply to different organiza- tional levels:
• Senior managers are motivated by incentives to reduce costs and improve profitability.
• Heads of departments are the budget holders and are responsible for the energy cost. Their motivation can be in the use of under-spending and setting budgets for the succeeding year.
• Operators need to be trained and their performance monitored by the use of key indicators and energy metrics.
Internal competition (tracking sheets, scorecards, etc.), recognition (highlight and reward accomplishments), financial bonuses and prizes, and environmen- tal responsibility are all valid drivers for improved motivation, especially if they work in conjunction with well-introduced performance standards.
Information systems. An energy management information system measures, targets and reports the energy consump- tion. Effective measurement extends to consumption of all utilities (electricity, fuel, steam and water,) documenting consump- tion and creating the historical database. Setting realistic, achievable and, yet, aggres- sive targets is one of the main features of an effective energy-efficiency program. The targets take the form of key-performance indicators (KPIs) and energy influencing variables (EIVs), which have to be defined for each of the selected users. They are set
with much care by a team of specialists at each organizational level.
The energy performance reports should be tailored for different levels within the organization and written in an easy-to-read format. They would typically summarize the targets, compare the targets and actual operation, and show lost opportunities due to sub-optimal operation in monetary units. It is often found that, by just install- ing the information system, the energy per- formance does improve.
Marketing. An energy-focused organiza- tion promotes its energy management both internally, throughout the organization, and to the outside world. The “marketing” of its energy program is the responsibility of the energy team. To be effective market- ers of internal policy, the team members must gain the confidence and commitment from key personnel. They will encourage debate and suggestions on the ways to improve energy efficiency and to promote the energy-reduction program outside the organization. They will be responsible for personnel training.
As always, to be effective in market- ing, the energy team members will need to do their homework and find who will be involved in the program and what the needs of the people involved are. They will also endeavor to learn the other energy managers actions and to become very familiar with the type of energy-saving measures that are available, along with the benefits and the costs from such programs.
Investment. Within the fixed budgets, the energy-efficiency projects will compete against other projects in a refinery. Some refiners differentiate positively in favor of energy projects, on the grounds that the energy project, once installed “sits there and makes money,” as opposed to yield-related projects, where the profitability depends on ever-changing relative product pricing.
In either case, the energy team needs to build a strong case for investment. This consists of the assurance of a) the correct selection of projects, b) the accurate cal- culation of the benefits and c) the accurate estimate of the project costs.
Many engineers and operators will know how to save energy and can propose mean- ingful projects. The trick, however, is in the organization’s ability to agree on and priori- tize those ideas. From dozens or hundreds of ideas to propose, only those ideas that are undoubtedly the best and the most worthy of implementation will be used to create a
TABLE 1. Energy policy needs according to ISO 50001
• Defines and documents the scope and boundaries of the energy management system • Is appropriate to the nature and scale of, and impact on, the organization’s energy use • Includes a commitment to continual improvement in energy performance
• Includes a commitment to ensure the availability of information and of all necessary resources to achieve objectives and targets
• Includes a commitment to comply with all applicable legal and other requirements • Provides the framework for setting and reviewing energy objectives and targets • supports the purchase of energy efficient products and services
• Is documented, communicated and understood within the organization • Is regularly reviewed and updated
Job performance profiling Energy strategy Work process mapping Awareness program design Rollout Organizational alignment
Organization alignment to ensure improved energy-efficiency programs. FIG. 1
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road map of projects that are targeted for energy performance for the site.
HOW TO CREATE AN ENERGY- FOCUSED ORGANIZATION
An energy-focused organization will have most of the mentioned six areas of concern well addressed, including:
• The energy policy and the related action plan will exist. It will be regularly reviewed, and will have the commitment from top management.
• The energy management will be fully integrated into the management structure.
• There will be formal and informal channels of communication at all levels to motivate staff in energy conservation.
• A comprehensive information and management system will exist with proper monitoring, target setting and reporting.
• The value of energy efficiency will be continually promoted within the organiza- tion and outside of it.
• Positive discrimination in favor of energy projects will be secured.
These organizational features are not produced overnight. It may take a long time for pacesetters in energy efficiency to create and sharpen their energy focus. While it is difficult to generalize, it is likely that the process of creating an energy focused orga- nization will start with proper organiza- tional alignment, which means aligning the refinery management team with the energy strategy and the overall business goals, as shown in Fig. 1. The activities shown are defined as:
Develop an energy strategy. This involves setting strategic goals, developing a vision statement and identifying how the organization will support the main inter- nal clients for energy (energy efficiency “owners.”)
• Work process mapping. Writing
the working processes and practices asso- ciated with economically optimizing the energy performance of the plant should be reviewed and defined. It should cover:
• Energy reporting structure. It
defines how energy performance is reported and monitored throughout the organiza- tion.
• Operational practices. These prac-
tices define key performance indicators and energy influencing variables, packed into an Energy Management System.
• Improvement identification prac- tices. These practices define the appropri-
ate procedures and resources for identify- ing and evaluating opportunities, and for
defining how energy projects are included in investment budgets.
• Performance support tools. These
tools identify training needs and develop- ing human performance management pro- cesses and support elements.
• Training programs.
Job profiles. Such profiles define the roles and responsibilities of the key mem- bers for the energy team, including an outline of the required competencies and measurement criteria. This may require introduction of new positions. But energy focus should also be included in the roles and responsibilities of existing operations and technical staff.
Awareness program design. This program includes developing leaflets, cam- paigns, information and training needs.
THE WAY FORWARD
Assuming that energy effectiveness will remain a strong industry driver for years to come, creating an “energy-focused organi- zation” will become an unavoidable task and an essential part of good refinery man- agement. The process will start with bench-
marking the organizational structure and energy management practices, and iden- tifying performance gaps. Many refiner- ies will find that, while sufficient expertise and technical knowledge exist, the lack of adequate organization, motivation and implementation ability or implementation culture prevent them from actually improv- ing their energy performance.
The order and methods of addressing and reducing these gaps will differ from site to site, but most refiners will find that training will be required at all levels, fol- lowed by re-organization, with sufficient authority given to the site energy coordi- nator, and implementation of an energy management system. HP
Dr. Zoran Milosevic is a senior staff consultant with KBC Process Technology Ltd., and an internationally renowned authority on energy optimi- zation and profit improvement of oil refineries and petrochemical plants. He is best known through his work on profit improvement and energy con- servation. He has over 40 published papers and articles on energy efficiency, refinery/petrochemicals profitability improvement, and energy economics. Dr. Milosevic has given numerous training courses on energy economics, refinery energy efficiency and pinch technology.
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