A number of significant forces are reshaping the global refining industry. However, what characteristics define the world’s best refineries? HSB Solomon As- sociates LLC’s recent “Fuels Refinery Per- formance Analysis (Fuels Study)” investi- gated 2012 refining data from participating global refineries. Solomon Associates has been collecting detailed data from refiner- ies worldwide for over 30 years. Using the company’s proprietary methodologies, this information is calculated as bench- marks for individual refinery performance.
World’s best refineries. To be included on the “world’s best refineries” list, a re- finery must show excellent performance across a broad range of metrics and per- form them consistently. To be in this elite group, the refinery must achieve strong performance over a minimum of three consecutive studies (six years) in metrics such as return on investment, energy inten-
sity, maintenance efficiency and net cash margins (NCMs). For the purposes of the 2012 review, the “world’s best refineries” are categorized into mid- and large-sized- capacity groups. TABLE 1 summarizes the
average configuration, age and basic feed properties of these refineries by group.
Global commodity business. With a
few isolated exceptions, the fuels refining industry is a global commodities business. The low-cost supplier ultimately prevails. Approximately 67% of the global refin- ery fuel production is directed to making transportation fuels—gasoline, distillate fuels and jet fuel.
When averaging the cost of transpor- tation fuels (CTF) for a group of refiner- ies that have either closed or announced closure since 2010, the results showed that these refineries were among the high- est-cost producers in the world (FIG. 1).
The average of the two world’s best groups’ CTF is plotted in FIG. 1; the results
are roughly at the break between the first and second quartiles.
The front end of this curve (the low- cost suppliers) primarily comprises North American refineries that have been able
to take advantage of the distressed crude supply in the mid-continent. Low-cost raw materials for these refineries have created unique opportunities that even exceed those for the world’s best refiners. This pricing anomaly is expected to be re- solved, and the cost curve should flatten back to previous cycle conditions.
Achieving and sustaining world’s
best performance. A common thread
with all of the best performers is that their refineries are consistently available. High availability translates to reliable op- eration that can take advantage of market opportunities.
A very strong correlation exists between high availability and low total maintenance costs. If process equipment is reliable, then less time and money are spent to maintain it. However, availability is not a switch that a refiner can turn on and off. It is a culture and a way of doing business that must per- meate the entire organization.
A detailed look into the hundreds of refineries indicates that facilities with high availability provide time and opportunity for their staffs to be proactive: time to study, to plan, and to make positive changes that
TABLE 1. World’s best refi neries in 2012
Mid-sized average capacities, thousand bpd Large-sized average capacities, thousand bpd Crude 186 Crude 447 Vacuum 63 Vacuum 169 Coker 11 Coker 48 Hydrocracker 28 Hydrocracker 34 Reformer 35 Reformer 67 FCC 40 FCC 114 Diesel HT 68 Diesel HT 128 Sulfur, ltpd 154 Sulfur, ltpd 626 Complexity 11 Complexity 14
Average age, yr 27 Average age, yr 21
Crude sulfur 1.2 Crude sulfur 1.7
50MAY 2014 | HydrocarbonProcessing.com
Viewpoint
continuously advance the performance of the facilities. Refineries with low availabil- ity typically have staffs that are in “firefight- ing” mode. They move from one crisis to the next and have no time to do proactive work that moves the facility forward.
A review of long-term trend data clearly indicates that the only sustainable means of achieving low maintenance cost is to first drive availability to higher levels. Maintenance and operating procedures, equipment modifications and monitoring systems must first be put in place. After a facility is able to achieve sustained reliable operation, then maintenance cost reduc- tions will follow.
Another key factor in achieving high availability is an organization’s ability to minimize the amount of annualized turnaround downtime. By definition, an- nualized downtime is the total number of days a unit is out of service (duration) divided by the number of years between turnarounds (interval). Directionally, an- nualized turnaround duration is reduced by increasing the interval between turn- arounds, assuming a fixed duration. How- ever, the aggregate from the 2012 Fuels Study data suggest that there is a point of diminishing returns as the interval ex- tends far beyond industry averages. The best performers typically have short-du- ration turnarounds at slightly higher than industry-average intervals.
The world’s best refineries minimize both the duration and the cost during a turnaround by rigorously challenging all of the work done and how that work is ex- ecuted. By challenging paradigms and us- ing state-of-the-art techniques for inspec- tion and repair, they are able to achieve performance that significantly outpaces the rest of the world.
Other key cost—Energy. The largest
single component of operating cost is energy. The world’s best refineries not only have excellent energy performance, but they also continue to find ways to improve. These refineries incorporate energy improvement into revamps and replacement projects.
The world’s best refineries do not ig- nore mass loss. At US$100/bbl of raw material, fractions of percent material losses will have a significant impact on refinery NCM. Having monitoring sys- tems in place, and the discipline to use them, is an essential part of doing busi- ness for these leading refineries.
Myths and misconceptions. A huge
misconception is that the world’s best re- fineries are new and very complex sites. Results from the study proved that many of the top-performing refineries are not the most complex. New does not guar- antee lead performance; most of the top- performing refineries are in the middle of the pack with respect to age.
The last misconception is the belief that the best performers are in the first quartile in every major category. This is not the case, as shown in FIG. 2. It is es-
sential for an organization to have suffi- cient resources to operate and maintain its refinery, along with the resources nec- essary to seek out and implement con- tinuous improvement. From the 2012 study, the world’s best performers are not in the first quartile when it comes to non-maintenance personnel.
To-do list. How can you get your refinery on the world’s best refineries list? Here are some recommended action items:
Improve operational and mainte-
nance performance. Both are key to long-term success. Refineries must ac- tively implement ways to improve reli- ability while driving down annualized turnaround duration. Both actions will result in lower maintenance costs while providing the opportunity to fully utilize the capital investments to take advantage of market opportunities.
Improve energy efficiency. One of the cornerstones of a world-class opera- tion is energy efficiency. Refineries must be more creative and aggressive in find- ing new ways to lower energy usage and costs, especially in an environment in which the justifications are not particu- larly enticing.
Keys to long-term success. Although
new construction may improve a facil- ity’s total performance, operational and maintenance excellence are factors to attain and sustain long-term success. Operational availability is a key marker for a facility’s drive to become one of the world’s best refineries.
Like any commodities business, the high-cost suppliers of transportation fuels are likely to become extinct. The best will continue to get better. Those organizations with the plans and vision to improve do so, leaving those who are static to decline in performance relative to their peers. New low-cost suppliers are coming online as well, particularly in the Middle East and Asia-Pacific. They will put additional pressure on the high- cost producers in the now fully global refining markets.
ACKNOWLEDGMENT
This is an updated version of a presentation at the 2014 AFPM Annual Meeting, March 23–25, 2014 in Orlando, Florida.
Source: HSB Solomon Associates
Cost, $/bbl
2012 Dated Brent price
2010—US$79/bbl 2012—US$111/bbl 2010 Quartile LG MD 2 3 1 4 75 85 95 105 115 125 135 145
FIG. 1. Transportation fuel production costs by survey respondents in 2010 and 2012.
Source: HSB Solomon Associates
Competitiveness
Return on investment Net cash margin
Efficiency indicators Operational availability Process utilization Energy Maintenance Non-maintenance personnel 3 Large-sized 1 2 2 1 1 1 Mid-sized 1 2 1 2 2 1 2
FIG. 2. Ranking of key index quartiles for world’s best refineries, mid- and large-sized refineries.
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