Refinery optimization is a complex business. Plant managers
across the globe face constant pressure to achieve commercial
targets. Fundamentally, a key part of the operational planning
process relies on setting accurate goals, whereby planning and
scheduling, process modeling and day-to-day plant operations
are important tools to help set targets and achieve them.
Often, management encounters more questions than answers.
Why do the linear programming (LP) models not reflect reality?
How do we cope with continuously changing targets? Why are we
not performing to expectations? The optimal plan typically will
be a stretch target. It may not factor in certain
constraints like tankage, but it will account for plant
availability while not assuming any product quality
Refining is not a linear
process. In reality, there is always a broad range of
variables and fluctuations to manage. As a result, there will
almost certainly be a gap between planned and actual
performance. A small percentage variation in the production
process or delays in scheduling can be costly and equate to
plant inefficiency. For executive decision-makers, this could
have a significant impact on planning and forecasting for their
entire operation. On the positive side, this could mean that
actual selling prices are higher than those for expected or
opportunistic purchases. Conversely, the effect might be
negative, causing less throughput, lower yields and product
Planning is key to profitability
Primarily, there are two types of gaps: unanticipated events
that have a big impact, with a large gap across a short time
frame; and the ongoing margin leak during normal operation,
with small gaps over a longer period of time.
Overall, these gaps are likely to have negative impacts on
refinery profitability levels. The
typical gap between planned and actual financial performance is
about 5%, but it is not uncommon to see a gap of 10% of gross
margin. For a mid-size refinery, at todays margins, a 10%
gap represents a potential financial loss of up to $20 million
per year (MM/yr). It is hardly surprising that, for most
refiners, closing this gap is one of the largest (non-capital)
Therefore, from the perspective of the planners, it is
important to ensure that plans are as accurate as possible from
the outset of the process. To best achieve this accuracy,
planners must consistently question their models. They must ask
several key questions:
- Is the plan optimum, or should it be stretched?
- Is the plan fit for purpose, and is it resilient?
- Does the plan provide a true representation of the
capabilities of the refinery?
These considerations must also take into account the current
status the plant is operating under, along with the likely
changes over time. When first developed, planning models
usually reflect reality based upon the criteria known at the
point of design. However, changes to the refinery mean that the
model will require modifications over time, to prevent
inaccuracies from occurring.
Since it is necessary to update the planning model, planners
must decide how often to make necessary alterations. The best
practice will be to use engineering simulation models (process
and rigorous reactor models) to update the planning model.
Engineering models may require tuning to current operations,
but there is growing awareness that their usage is becoming
critical to delivering optimum planning models. In this
context, a blend of planning and engineering tools provides a
Dealing with risk
Any refinery plan must be able to effectively manage risk.
This is always a difficult challenge. Key input variables in
planning can have a large degree of uncertainty associated with
themfeedstock and product prices, for
In the course of the planning process, refineries typically
will need to make assumptions and even informed guesses about
the future values of these variables. Inaccuracies in these
guesses will result in significant gaps between planned and
The traditional approach to making these assumptions is to
perform a scenario analysis. Typically, such an analysis
requires the time-consuming definition of a large number of
cases. Incorporating risk analysis can help develop more
resilient plans that are likely to be achievable.
Key role of scheduling
Closely linked to planning, scheduling is typically more
about feasibility than economic optimization. Planning output
is typically delivered to the refinerys management and
scheduling teams. The schedulers then take the plans and
convert them into hour-by-hour actions. However, a sensible
approach to scheduling should not only look at the various
options for achieving the plan, but also provide the ability to
react quickly to deviations from that plan.
Just as with the planning process, refinery management
should continuously question the scheduling approach. Key
questions typically include:
- Are the plans and schedules aligned?
- What is the feedback to the planning process?
- How quickly can the schedulers cope with unplanned
events, and can they evaluate opportunistic sales and
purchases in the necessary time frame?
Here, petroleum-scheduling solutions that come with a
planning and scheduling model accuracy (PSMA) tool, which
facilitates and automates the process of model-accuracy
tracking, can play a key role.
Another key area that refinery management must focus on is
energy management. Refineries are extremely high consumers of
energy; approximately 40% of a refinerys outgoing costs
are energy-related. The cost of energy is the highest refining cost after crude oil
purchases (Fig. 1). The energy cost for an
average, 100,000-barrel-per-day (bpd) refinery can hit $100
1. Planners can easily review and manage
with a full view of the refinery.
The rising cost of energy, along with stricter environmental
emissions rules, means that there is a need for better planning
and management. In the future, there will be an increasing
focus within refineries on energy optimization rather than only
on hydrocarbon optimization. Today, the focus on energy
reporting is being superseded by a focus on energy management,
which requires management of both the demand and the supply
Refiners must question energy costs. In particular, they
should ask themselves the following:
- Can energy costs be reliably forecasted?
- Do energy usage and costs meet the plan?
- Can energy and emissions constrain the plan?
Some refineries have successfully implementedand are
continuing to integrateplanning, scheduling and
energy-management systems as part of an overall risk-management
strategy, effectively taking a more integrated approach to
their overall operational strategy (Fig. 2).
Refiners can look to achieve improvements in unit and
refinery-wide performance by concentrating on two areas in
particular: closed-loop control and open-loop management.
2. Visual tools enhance data analysis to
crude purchasing decisions.
Advanced process control (APC) techniques typically come
into play with closed-loop control. Recent advances in APC have
reduced the cost of implementation and made controller maintenance much easier. As a
result, APC can now be justified on most units.
Composite APC applications can be used to synchronize and
optimize the operation of multiple units. New work is focused
on feeding targets from scheduling directly to APC
applications, which can understand operating constraints and
can feed back to the scheduling system (and, from there, feed
back to planning).
Open-loop performance management is also vital to adding
value in the refinery. Most performance-management systems in
use are actually performance-reporting systems. For performance
management to be valuable, it needs to move beyond simple
reporting by delivering information in as near real time as
possible, and it also needs to provide what is known as
look-ahead capability. This enables refiners to
answer the question, How will this information impact my
monthly plan, define the magnitude of the issue and facilitate
rapid solution investigation?
Performance reporting is capable of pinpointing where a
refinery is making errors and, therefore, help eliminate their
reoccurrence in the future. The point is not to avoid making
the same mistake twice; it is managing performance to avoid
making the mistake the first time.
Ultimately, performance management is extremely powerful
because it draws on data from many of the other tools
previously outlined, from planning and scheduling to APC.
Refineries should carry out a systematic performance analysis
to quickly identify gaps and actions. To be effective, this
analysis requires multi-disciplinary input.
Closing the gap is key to success
Refining margins continue to be squeezed in todays
highly competitive marketplace. The difference between planned
financial performance and actual financial performance may be
up to 10% of a refinerys gross margin. Closing this gap
is one of the highest return opportunities for refinery
Refineries should regularly define gaps in financial
performancetypically on a monthly basis. To do so
effectively, however, requires a systematic analysis of why
actual performance falls below target. Each step of the
processfrom planning to scheduling through
operationsneeds to be analyzed for gaps, along with the
financial value of closing those gaps. Once the reasons for the
gaps are known, appropriate actions can be taken. In some
instances, these may be one-off actions (e.g., replacing
unreliable equipment or process systems that require long-term
Refinery management must remember that small, incremental
changes can make huge differences to the competitiveness of a
refinery. Software technology solutions provide a
realistic method of closing the gap between planned and actual
performance, and they are critical to achieving long-term
commercial success. HP
Petela is Aspen Technology Inc.s
director of business consulting for Europe and the Middle
East, and he is responsible for providing technical
support to AspenTechs oil and gas clients in the
areas of manufacturing and petroleum supply chain. Mr.
Petela joined AspenTech in 1997 and has over 30 years of
experience in the oil and gas, refining and petrochemical industries. Mr.
Petela is also a specialist in improving plant operations
through process engineering, planning and scheduling
technologies. He has extensive commercial experience and
in-depth knowledge of refining, olefins, chemicals
and polymers process units, and the highly integrated
energy and utility systems within complex manufacturing
sites. Mr. Petela began his career in the area of process
plant design, and he held a variety of roles over a
number of years before moving to a business consulting
role. He has implemented projects and performed
consulting services for many oil and chemical companies
around the world. Mr. Petela has a BSc degree from the
University of Nottingham, and he is a chartered engineer
in the UK and a fellow of the Institution of Chemical