August 2019

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Executive Viewpoint: Now and into the future: Challenges and solutions for the global processing industries

Hydrocarbon Processing sat down with senior-level executives of Merichem Company, Cyndie Fredrick (CF) and Kathy Young (KY), Senior Vice Presidents and General Managers of Merichem’s two business units, to discuss the state of the downstream industry, where it is heading in the future and how their company is helping operators meet their sustainability goals.

Fredrick, C., Young, K., Merichem Co.

Hydrocarbon Processing sat down with senior-level executives of Merichem Company, Cyndie Fredrick (CF) and Kathy Young (KY), Senior Vice Presidents and General Managers of Merichem’s two business units, to discuss the state of the downstream industry, where it is heading in the future and how their company is helping operators meet their sustainability goals.

HP: Can you both talk a little bit about your present roles at Merichem?

CF: My role with Merichem is Senior Vice President and General Manager. I work directly for Kendra Lee, Chief Executive Officer and Chairman of the board. My responsibilities include leadership of Merichem Process Technology’s sales, marketing, product execution, research and development efforts and financial performance. Our company is responsible for the sale, licensing, engineering and fabrication of proprietary sulfur removal and sweetening technologies, as well as the production and sales of proprietary catalyst.

My role is to increase the focus on the operations side of the business. My previous experience allows me to leverage the technology knowledge I already have, pair it with the operational experiences I gained outside of Merichem, and blend that into a slightly different focus, while continuing emphasis on clients, innovation and growth. I also bring additional midstream experience and mindset into a technology division, which ensures an enhanced mindset of “speed to market” and “fit for purpose,” allowing even more growth in the midstream area than we have had previously. My belief is that the operational focus, along with the amazing talent already present, will ensure continuing growth for many years to come.

KY: I am Senior Vice President and General Manager of Merichem. I also work directly for Kendra Lee. The Merichem Caustics Services business provides spent caustic removal services to refineries and petrochemical manufacturers and, subsequently, sells the spent caustic to companies that would otherwise purchase more expensive fresh caustic. To support operations, I have the pleasure of leading a team of logistics, customer service, sales and finance professionals. Our team consists of chemists, engineers, supply chain experts and research scientists who ensure a match between the spent caustic we receive and the end user’s specifications.

HP: What are some of the greatest challenges within the industry, and the greatest challenges specifically to your role in the processing industry?

CF: Some of the greatest challenges in the last several years include the requirements of clients for increasingly lower pricing, with increasingly higher levels of detail being required. Couple these with intense pressure to have shorter schedules and the results are some of the less successful projects the industry has seen recently on the US Gulf Coast and internationally. Many companies are working successfully to drive down prices, whether by using offshore resources or by using more standard designs or specifications when applicable. This can be successful when companies and clients can partner and agree on the expected outcomes. If companies and clients can agree on a reasonable set of specifications and deliverables, schedule reliability is greatly enhanced.

Contractual terms are also becoming increasingly onerous to companies providing goods and services. We are seeing clients pushing harder on consequential damages, liquidated damages and challenging payment schedules. This often results in risk profiles that do not allow service companies to be successful. In many cases, this also results in higher pricing for clients as companies are forced to protect themselves from these clauses. Many companies do not have the ability to handle this additional risk profile and are often forced to turn down projects or take unacceptable risks to accept jobs.

Balancing those challenges has been difficult. The goal of our company is to provide a quality product in the time needed by our clients. We work in nearly every country in the world and must handle and understand multiple client and engineering companies’ specifications, preferences and contracts. We provide technical service support to our clients and need to ensure the safety of our employees in challenging locations. However, these challenges and requirements keep things interesting.

KY: Our company relies on third parties for truck, rail, barge, terminal storage and vessel transportation; therefore, we must ensure that our logistics partners meet our strict standards. Our primary concern is safety, so we employ a rigorous in-house safety program to qualify and monitor each and every vendor. Two examples include our company’s fluid sealing management programa—which ensures railcars have the proper valve manway gaskets installed in the proper sequence to the proper torque—and a regular review program to validate our truck vendors’ safety and fitness electronic records (SAFER) scores. We work hard to continuously strengthen these partnerships.

Another challenge we face is unexpected upsets in our network, especially because we commit to our customers to pick up 100% of their product 100% of the time. Even when weather and unanticipated disasters occur, our company remains dependable. In fact, we did not miss a single customer pickup the entire time our industry was recovering from Hurricane Harvey.

HP: In your role, what are the primary challenges when speaking with operators around the world?

CF: Operators around the world are trying to improve their own operations, often with fewer engineering staff to support themselves. They are relying more on engineering companies and licensors for complete packages, as they do not have the time or staff to check and verify to the same level they did in the past. That reliance shifts additional responsibility to the supplier, which can be effective, assuming the supplier and client have a strong relationship and understand each other’s needs.

Operators are also feeling the impact of lower crude prices and their net effect throughout the industry. Lower pricing impacts both capital and expense budgets at a time of additional environmental concerns and changes due to crude slate differences, which are driving the need for new projects.

In addition, concerns exist about talent in the industry. The oil and gas engineering industry has become less “glamorous,” and fewer graduating engineers are going into this industry. Also, a smaller number of people are going into trades. Combined with many experienced personnel retiring, knowledge gaps will continue to expand. This will lead the industry to deal with learning curves, as well as struggle to complete current and upcoming projects at the same level of skill seen in the past.

HP: Regarding your company’s technologies, where do you see the processing industry going in the future?

CF: The processing industry is witnessing stricter requirements around total sulfur worldwide. This is driving some companies to install hydrotreaters at a significant expense. Our company licenses technologies that can be used in lieu of hydrotreating in some cases, saving significant amounts of money for our clients. However, the increasingly challenging specifications are heavily impacting operators worldwide, both from a CAPEX and OPEX perspective.

The industry is also seeing a push for “greener” energy and reduced emissions. This is driving the “less green” industry overseas, where there are fewer constraints. As industry shifts to the overseas markets, our company will be able to support those companies and industries with our technologies.

We have always valued innovation and will continue to do so going forward. Our company is developing new products for sulfur removal that will allow us to sell both the chemical and/or the equipment and chemical as a pair. We are also tailoring our products to provide standardized solutions for the midstream market, allowing speed to market for caustic treating for hydrogen sulfide (H2S) and mercaptan removal. We see a significant future in the need for this type of innovation, especially as new shale gas sites are developed that contain sulfur compounds that will need to be treated.

HP: What is the future for spent caustic handling?

KY: With new refinery capacity coming online in the next few years, we expect to see increases in available spent caustic from higher production. Furthermore, with our focus on new and innovative ways to provide spent caustic to end users, we expect our end user base to expand. In addition, we see opportunity to beneficially reuse higher volumes of spent caustic, some of which goes to waste facilities. We strive for a future where more qualified spent caustic is beneficially reused.

HP: How do your technologies help customers meet their sustainability goals?

CF: The technology business offers a multitude of sulfur treating and removal technologies, as well as caustic treating technologies. Sulfur removal and treating ensures that clients can provide cleaner hydrocarbons to the general public. Our proprietary H2S removal technologyb removes H2S from streams and turns it into elemental sulfur that can be used in fertilizers and for other sustainable uses. Our caustic treating technology ensures that clients can turn spent caustic into a water-based liquid that can be easily sent to their wastewater treating systems safely and efficiently, again ensuring the sustainability of the plant’s environmental systems.

KY: All of our major customers have adopted the United Nations’ 17 Sustainability Development Goals and report on them periodically. Our operations help these companies primarily with Goal 12, “to ensure responsible consumption and production patterns” by reducing the amount of waste they must report or by using recycled materials for consumption. HP

NOTES

a Merichem’s Right TightTM program

b Merichem’s LO-CATTM H2S removal technology

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