Special report

Odongo Odoyo

By Odongo Odoyo

There is a saying that one will always believe that his or her mother is the best cook until one tested the meal cooked outside their own back yard. The point l am driving home is that this country has potential petroleum products but lacked enough effective tools for maximum production.

 There is a need to take the production exercise seriously which should be undertaken by both local and international key players in the sector. While the government is embarking on serious non-oil sector development, particularly in agriculture, the oil sector still remains the base of the major revenue source for the government to carry out and implement national public programs. It is therefore the duty and responsibility of the local investors and key players to borrow a leaf from the successful global institution to enable the sector to be well managed to produce more for the country’s sustainability and development programs. Apart from public sector players, there are private individual institutions that have come out, among them TRINITY ENERGY LIMITED, an indigenously owned firm to showcase their potential and ability in the oil production sector. They need to have an enable space and support to make this sector become self-sustaining for the benefit of the whole country and beyond and ensure their Paloch Refinery project succeeded in becoming a reality against all economic odds that is globally being experienced.  It is with such in mind that they have to work tirelessly far and beyond to make good their investments for the benefit of the country and the citizens at large. The Americans have gone far in this field but they also had their shortfalls just like other global players. Take their example to reach where they are today with all the resources and the workman available to them. According to Honeywell Infographic “Despite the country’s strong appetite for petroleum, more than half of American Refineries closed since 1981. As less efficient refineries ceased operation, larger and more efficient ones have taken up the slack. Today, the United States is refining about 5 percent more crude oil – about 18 million barrels per day– than it did 30 years ago.

While many existing refiners continued to invest in capacity expansions, the U.S. went 17 years without building a new plant. But the development of shale oil production has supported the construction of six new facilities to fractionate new supplies of domestic light, sweet crude oil that are supplied to refineries.

In the intervening 30 years or so, the process for opening a new refinery became more complicated, with requirements to produce cleaner-burning fuels, the need to quickly change products, and planning to adapt to a gradual plateau in demand for transportation fuels forecasted in the next 20 years. In addition, oil refiners need to address the loss of skilled labor to retirement in an increasingly complex environment.

Even with decreasing demand for hydrocarbon fuels such as gasoline and diesel, energy companies continue to build larger and more efficient complexes driven by economies of scale. These plants are being built in parts of the world where fuel demand continues to grow due to population and GDP growth. Most are being built for integration with petrochemicals production in mind so they can achieve high returns in the near-term, and greater flexibility to meet the demand for petrochemicals in the long term.

Refineries that produce mostly petrochemicals are likely to be among the most consistently profitable in the long run. In fact, refineries that produce only petrochemicals are clearly on the horizon.  “You can sell fuels for $550 a ton, or convert them further to petrochemicals and get around $1,400 a ton,” said Keith Couch, Senior Director, Sales Support & Integrated Project Solutions at Honeywell UOP, presenting the choice for energy companies.

Driven by the endless quest to capture more value from every drop of oil, many refiners aim to become sustainable, connected, and integrated with petrochemicals. But the path they take to get there is unique to each refinery and defined by staged capital investments over a period of time.

At each stage, the “Refinery of the Future” is measured by how efficiently it uses six critical resources to capture growth. According to Couch, these Six Efficiencies measure how effectively a refinery uses carbon and hydrogen – the components of hydrocarbons – as well as utilities and scarce water, plus its level of emissions. These five efficiencies help to determine the sixth, effective use of capital. All six variables are balanced in accordance with the refinery’s overall business strategies.

Carbon efficiency may be described simply as putting the right molecules in the right place, and touching those molecules as few times as possible. Hydrogen, indispensable because it changes the character of hydrocarbon molecules, also must be managed efficiently — not just as a byproduct, but as an ingredient.

Utility efficiency represents how well energy is used to operate the refinery. The efficiency of water, which is used to regulate temperatures in the refinery, is particularly critical because it is almost always scarce.

“We cannot treat water as a utility anymore,” said Couch. “We treat water as a scarce resource to reduce the environmental impact from refiners and petrochemical plants, and as society balances civil, industrial and agricultural needs.”

Refiners also must achieve lower emissions due to stricter regulation and environmental liability. Finally, capital invested in the plant must generate attractive returns to maintain high profitability and secure capital for future investment.

To maintain sustainable profitability, the Refinery of the Future must respond quickly to changing market conditions, switching from one product slate to another as profit margins change. For instance, naphtha — the raw material for making gasoline — may instead be redirected to produce petrochemical feedstock that fetches a higher price, and back again, when they fall.

Perhaps most critically, the Refinery of the Future is digitally connected to a degree never before possible. Millions of data points can be collected from a refinery, but this data has until now only served as a record of how the facility has performed.

New cloud-based connected plant technologies introduced in just the last three years can compare plant performance data with a digital twin based on proprietary models and deep domain knowledge — essentially comparing the refinery’s actual performance to the way it should operate. Gaps in performance are analyzed to provide recommendations that can determine the root causes of underperformance.

Corrective actions can improve process optimization and operational reliability, minimize energy consumption and emissions, reduce waste products and make better use of water. It also can bridge gaps in experience caused by personnel attrition while greatly improving the capabilities of plant operators.

Honeywell Forge often uncovers underperformance that was previously undetectable and, in some cases, can even predict problems before they happen, potentially saving refineries millions of dollars a day in lost production. Employees can even access this data remotely, providing visibility well outside the refinery control room.

“The goal of connectivity is to provide as much intelligence to plant workers as possible,” Couch said. “That means plant operators can rely on new insights from cloud-based services that analyze and process data against proven models for higher plant utilization and, ultimately, competitive advantage.”

Unfortunately, Couch said that even the most advanced plants today are not ready for the future because the information is not typically presented in a form that enables the most economic operation every minute of every day.

A typical refinery has three shifts of operating teams, and each has its own opinion of what works best. One shift will create a set of operating conditions for a processing unit in a refinery, and the next shift will take over and immediately start changing things. Who is right, and which approach was economically best?

“Today, I would say most refiners don’t know because they don’t have a way to determine in real-time what are the best settings to achieve economic optimization from that equipment,” Couch said. “A Honeywell Forge service removes these biases and establishes a single benchmark for efficiency so the shifts don’t needlessly turn dials all day.”

As refiners explore new ways to achieve efficiency, the markets they serve are changing. Global demand for petrochemicals is surging and is projected to continue to grow at roughly 4% annually, driven by demand for plastic resins, films, and fibers. While petrochemicals typically reward producers with higher margins, they also require additional process units and more complex configurations, relative to fuels production.

Traditional refiners producing fuels today can move into more profitable petrochemicals production in a series of strategic investments, staged in well-planned intervals to better manage cash flow and help those refiners develop markets and build a more thorough understanding of the industry.

“Whether petrochemicals integration is right for a particular firm or not, they need to have a plan,” Couch said. “Many of these refiners will remain purely in refining because it’s what they know, and they do it well.”

But, he notes, there is increasing pressure from institutional investors and boards of directors to develop business plans in the event regional demand for their products begins to fall. For example, refiners that have traditionally supplied export markets soon will find those markets being served by new domestic refiners located in those export markets. These refiners will be stranded, able only to produce a product they cannot sell, and no longer able to attract the funding they need to move into petrochemicals.

“Integration with petrochemicals may not be right for every refiner, but you need to have a plan to address what is becoming a clear market shift,” Couch said. “It doesn’t matter if demand for fuels declines due to more efficient engines, electric or hybrid vehicles, ride-sharing, some new technology, or all of the above, all that matters is when this will happen and whether a refiner is ready for it.”

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