WELCOME

TO

The Presentation on
Benchm arking
arking
at

PETROFED Workshop on Energy Management

& Efficiency Improvement in the Oil & Gas
Sector by CSS Narayana, Centre for High
Thursday, November
12, 2009

Technology
13th Nov09, New Delhi

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

Refining Capacity
Capacity of Indian Refineries, MMTPA
250
240.9
200
148.9
116.9
89.9

127.3 Total Capacity 127.3

PSU Refineries

94.3

94.3

99.4

105.4
82.0

33.0

Thursday, November
2003
2004
12, 2009

150

132.4

Pvt. Refineries
27.0

158.9

43.5
33.0

2005

33.0

2006

2007

100

50

0
3 2012

Indian Refining Capacity

Nameplate Capacities in
MMTPA 106 Tons/Yr
9.0
12.0
8.0

BHATINDA

13.7

0.65
2.35

3.0
DIGBOI

PANIPAT

6.0

MATHURA

NUMALIGARH

BONGAIGAON
SIKKIM

ESSAR 10.5 & 3.5

BARAUNI

GUWAHATI

1.0

Vadinar

RIL 33 & 29

BINA
JAMNAGAR

KOYALI
HALDIA

5.5

MUMBAI
PARADEEP

6.0

VISHAKHAPATNAM

12.0
ONGC
IOCL

MRPL 9.69

7.5

EXISTING

PROPOSED

REFINERY

GOA

9.5
MANGALORE

7.5
Thursday, November
12, 2009

KADALUR
KOCHI

1.0

North
South

CHENNAI

BPCL
HPCL

LEGEND

Nagarjuna 6.0
NARIMANAM

East
West

Current Processing
Capacity
20 MMTPA
35.19 MMTPA Total Capacity
=178 MMTPA
19 MMTPA
74.9 MMTPA

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
Thursday, November
5
bottom
of
the
barrel
for
maximize
profitability
12, 2009

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. 6
Thursday,
November
12, 2009

Energy consumption
Is manifested thru following attributes
To generate Power
Thru STG

Direct fuel in Heaters/Boilers/GTGs

Indirect fuel to raise Steam

Steam & Power for Equipment drive To meet Process req.

Cooling Water circulation

Refinery energy consumption is calculated based

on consumption of each of these attributes

Thursday, November
12, 2009

Average Industry Energy &Loss Consumption(Mbtu/bbl)

400
395
390

385

386

385

380

380
375
370
365

375

367
362

360
355

Thursday, November
12, 2009

08
-0
9

07
-0
8

06
-0
7

05
-0
6

04
-0
5

03
-0
4

350

Specific Energy Consumption Trend

Average Industry Specific Energy & Loss Consumption (Mbtu/Bbl/NRGF)
85

82

83

81

81
79

76

77

74

75

71

73
71

69

69
67

Thursday, November
12, 2009

9
-0
08

8
-0
07

7
-0
06

6
-0
05

-0
04

03

-0

65

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

10

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

11

Refinery Performance evaluation

Tools for improvement
Benchmarking the ongoing search for best practices that produces

superior performance when adopted and implemented

Effective tool to improve , productivity, quality, profitability and

other such dimensions of performance that determine
competitiveness

Is the first step on the improvement cycle

Identifies the opportunities for improvement

Helps to measure success achieved in bridging gaps identified

Maintains stimulus for continuous improvement
Thursday, November
12, 2009

12

Why Benchmark?
Collects data and verifies the
KPIs that you rely on
Establishes solid cornerstone
to build corporate strategy
Measures progress
your Vision

towards

Identifies opportunities
improvement
Thursday, November
12, 2009

Improvement
Cycle

for

13

Performance Forces
World-Class

Resisting Forces

Weak
Regulation
Conflicting
Labor
Crises
Crises and
Organizational
or Subsidization Priorities
Conflict
Lack of Interruption
Sensing
Fragmentation
Challenge
Invisible
NonOffice Politics
Non-Involvement
Upward
Errors
in Goal Setting
and Red Tape
Poor
Delegation
Inflexibility
Coaching
Inadequate
Biases
Capital
Neglect
Unrealistic Inadequate
Risk
Expectations Information
Aversion
Disorganization
Indecision
Inappropriate
Goals

Vision

Leadership
Initiative

Purpose

Recognition

Focus
Networking
Listening

Collaboration

Knowledge

Organization
Competition

Technology
and Tools
Innovation

Alignment
of Values

Benchmarking
Accountability

Strong Decision Making

and Risk Taking

Downward
Delegation

Training
and Mentoring

Valid
Information
Planning
and Goals

Driving Forces
Thursday, November
12, 2009

14

Capturing the Potential within

Three Legs of the Stool

Thursday, November
12, 2009

Organizational
Ownership

Performance Gaps

The Why

Practices Gaps

The What

The How

15

Customized Gap Analysis

Understanding Performance Gaps is key to Performance
Improvement
Performance gaps will be assessed using customized peer
groups
Peer groups members
Are approximately your size
Are in your market area
Have a similar configuration

Thursday, November
12, 2009

16

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 Thursday,
closing
the gap should be evaluated.
November
17
12, 2009

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

18

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.
2.
3.
4.
5.
6.
7.
8.

Crude Tput,
Distillate Yield
Product Pattern
Energy Consumption
Fuel & Loss
HC Loss
Refinery overall Capacity Utilization (primary & secondary)
Plant Mechanical Availability (considers s/d details)
Thursday, November
12, 2009

19

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

20

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

21

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
1989
1996
1998
2000

Refineries participated
CPCL,IOCL (J), (M), (H)
IOCL(J),(M),(H),BPCL,HPCL(M),(V),KRL,CPCL
BPCL
CPCL

Thursday, November
12, 2009

22

SA Benchmarking Studies
Major Key Performance Areas & Parameters are:
Parameters of measure
Performance Areas
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

Thursday, November
12, 2009

Net Margin

23

Net Margin Index

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

24

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

25

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

26

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

27

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
28
12, 2009

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

29

Indian PSU Refineries are classified as

NSP Count - 2004
Small or Medium Complex Type
100.0
90.0

70.0
60.0
50.0
40.0
30.0
20.0

HSK

TCR

LCP

Small Complex Plant

Thursday, November
12, 2009

45
46
47
48
49
50
51
52
53
54
55
56
57
58

40
41
42
43

35
36
37

30
31

25
26

18
19
20
21
22

0.0

15
16

10.0
1
2
3
4
5
6
7
8
9
10
11

Normal Shift Position (NSP)

80.0

VLCP

Medium Complex Plant

30

Intake relative to Complexity high for many sites

225,000

Processing Intake kbbl/yr

200,000
175,000
150,000

Barrels of Intake

125,000

Small Complex Plant

Medium Complex Plant

100,000
75,000
50,000
25,000
0

HSK

TCR

Small Complex Plant

HSK November
TCR
Thursday,
12, 2009

Medium Complex Plant

LCP

31

VLCP

The CEL system built as per this diagram

Consumption

Energy
Generation

Process

Process Units

Storage & Handling

Cooling Water
System

Sundries

Flare

Mass
close

Balance

to

CEL
Refinery
Loss

Energy
allowances
for Process units
Energy
close

balance

to

Ocean
Thursday, November
12, 2009

32

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

33

Energy & Loss Performance - CEL

improvement in Energy and Loss was noted
220

SBR = Shell Benchmarking Reference

200

160

140

120

HSK

TCR

Thursday, November
12, 2009

SCP

MCP

44
45
46
47
48
49
50
51
52
53
54
55
56
57
58

39
40
41

37

34

27
28
29
30
31
32

24
25

18
19

16

80

12
13

100

1
2
3
4
5
6
7
8
9
10

CEL Index

180

LCP

VLCP

34
CEL Index

SBR

2003

Refinery Energy and Loss Performance vs.

Regional Peers
2003

2004

3
2

15

14

13
9

12

Thursday, November
12, 2009

11

10

35

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

36

Refinery Products Analysis

Regional Target Distillate Yield
100%
90%

70%

Regional Target Mogas + Kero

60%
50%
40%
30%
20%
10%

Gas

LPG

Gasolines + Naphtha

Thursday, November
12, 2009

Jet + Kero

Gasoils

Residue + Fuel Oil

Base Oil + Bitumen +Wax Coke

Other

Reg Ref

15

14

13

12

11

10

0%

%wt on Products

80%

Fuel + Loss

37

Refinery Product Breakdown 2004/5

100%

40.0

90%
38.0
80%
70%
36.0
60%
50%

34.0

40%
32.0
30%
20%
30.0
10%
0%

28.0
1

Gas & LPG Gasolines & Solvents Kerosene

Thursday, November
12, 2009

Gasoils

10

11

12

13

14

15

Regional
Peer
Group

Fuel Oil & Residue Lubes, Wax & Bitumen Coke, Sulphur & Misc Fuel & Loss Feedstock API

38

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

39

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

40

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

41

Energy Benchmarking - results

Energy Consumption of Indian Refineries Vs APC & Global Peers
10
9
8
7
6
5
4
3

3
2

2
1

Tercile 1

Tercile 3

03-04 APC

Tercile 1

Tercile 3

04-05 APC

APC: Indian 15 & total 39

Thursday, November
12, 2009

Tercile 1

Tercile 3

03-04 GBL

Tercile 1

Tercile 3

04-05 GBL

Global: Indian 15 & total 62

42

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

43

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 ecosystem

This will also help reduce GHG emissions and thus
protect our eco-system
Thursday, November
12, 2009

44

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

45

Maintenance Benchmarking results

Position of 15 PSU refineries in various Terciles for 2003-04 & 2004-05
APC - Asia Pacific Region & GBL - Global refineries
10
9
8

6
5

0
T er cile
1

T er cile
2

T er cile
3

Thursday, November
03-04
APC
12, 2009

T er ci le
1

T er cile
2

T er ci le
3

04-05 APC

T er ci le
1

T er cile
2

T er ci le
3

03-04 GBL

T er cile
1

T er cile
2

T er cil e
3

04-05 GBL 46

75

Thursday, November
12, 2009
48
49
50

42

37
38

30
31
32
33
34
35

8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

1
2
3
4
5
6

47

56
57
58

53

% Maintained Availability

Refinery Reliability key for sustainability

100

95

90

85

80

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
Thursday, November
48
12, 2009
above.

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
49
12, 2009

World is changing More Rapidly than we can

Comprehend or fully Analyze!
Let us explore & catch up fast.

Thursday, November
12, 2009

50