1. Leverage lessons learned from Multi-Platform Strategies to successfully deliver NEW REFINERY ProjectS
Süleyman Özmen
VP Licensing, Shell Global Solutions International BV
Leverage lessons learned from Multi-Platform Strategies to successfully deliver your Mega Project
April 2012

2. Disclaimer
Shell Global Solutions is a network of independent technology companies in the Shell Group. In this document, the expressions “Shell” or “Shell Global Solutions” are sometimes used for convenience where reference is made to these companies in general, or where no useful purpose is served by identifying a particular company. The information contained in this material is intended to be general in nature and must not be relied on as specific advice in connection with any decisions you may make. Shell and Shell Global Solutions are not liable for any action you may take as a result of you relying on such material or for any loss or damage suffered by you as a result of you taking this action. Furthermore, these materials do not in any way constitute an offer to provide specific services. Some services may not be available in certain countries or political subdivisions thereof. Copyright ©2012 Shell Global Solutions International BV. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical including by photocopy, recording or information storage and retrieval system, without permission in writing from Shell Global Solutions International BV. The information contained in this presentation is provided for general information purposes only. No representations or warranties, express or implied, are made by Shell Global Solutions International B.V. or its affiliates concerning the applicability, suitability, accuracy or completeness of the information contained herein and neither Shell Global Solutions International B.V. nor its affiliates accept any responsibility whatsoever for the use of this information. Neither Shell Global Solutions International B.V. nor any of its affiliates shall be liable in any way for any liability, loss, cost or damage incurred as a result of the receipt or use of the information contained herein.
Leverage lessons learned from Multi-Platform Strategies to successfully deliver your Mega Project
April 2012

3. Agenda Balancing act in refining industry
Lessons learned from implementing improvements across the value chain – the A–Z concept
Update on the Shell Global Solutions Pentagon model
Steps in designing a successful project
Key takeaways
Leverage lessons learned from Multi-Platform Strategies to successfully deliver your Mega Project
April 2012 3

4. KEY CHALLENGES FACING Refining industry– balancing act: upgrade, shutdown or build
Many ageing assets located far from growing market
Crude owners desire to own the entire supply chain: crude to petrochemicals
Large and highly complex refineries integrated with Petrochemical site tends to be the new norm
Demand for clean transportations fuels is expected to continue growing
Regulations on emissions will continue to get more stringent
Regulations for cleaner fuels in all applications will increase (including marine fuels)
Leverage lessons learned from Multi-Platform Strategies to successfully deliver your Mega Project
April 2012 4

5. IMPROVEMENTS ACROSS THE VALUE CHAIN The A–Z concept – Every cent counts
Crude evaluation and procurement
Processing options
Environmental specifications
Distillate dewaxing to ‘arctic winter’ diesel
Crude selection/ crude assays
Configuration studies
Opportunity crudes
GTL Product blending synergy
Processing flexibility
Shell Global Solutions Sulphur Technology Platform
Hydrocarbon margin
Upgrading HCU bottoms to base lube oils
Impact of crude quality on refinery hardware
Maximise ULSD production by upgrading LCO, DAO, CGO and TCD
Marine fuels upgrading
High performance
Energy management
Upgrading existing hardware (VGO HT to MHC)
Integration with petrochemicals
The Pentagon model remains as valid as ever – it provides a roadmap for implementing these projects.
Organisational effectiveness
Process re-configuration
Feasibility studies
HSE
Refinery constraint modelling
Staged investment: Revamp vs. new units
Asset integrity and reliability
Operating conditions
Operational excellence
Hardware selection
Investment planning
Leverage lessons learned from Multi-Platform Strategies to successfully deliver your Mega Project
April 2012

6. IMPROVEMENTS ACROSS THE VALUE CHAIN The A–Z concept – Every cent counts!
Hydrocarbon margin
Processing flexibility
Process re-configuration
GTL Product blending synergy
Upgrading HCU bottoms to base lube oils
Marine fuels upgrading
Operating conditions
Refinery constraint modelling
Configuration studies
Crude selection/ crude assays
HSE
Organisational effectiveness
Feasibility studies
Staged investment: Revamp vs. new units
High performance
Impact of crude quality on refinery hardware
Energy management
Asset integrity and reliability
Shell Global Solutions Sulphur Technology Platform
Integration with petrochemicals
Upgrading existing hardware (VGO HT to MHC)
Maximise ULSD production by upgrading LCO, DAO, CGO and TCD
Opportunity crudes
Distillate dewaxing to ‘arctic winter’ diesel
Environmental specifications
Processing options
Crude evaluation and procurement
Investment planning
Hardware selection
Operational excellence
The Pentagon model remains as valid as ever – it provides a roadmap for implementing these projects.
Leverage lessons learned from Multi-Platform Strategies to successfully deliver your Mega Project

7. LESSONs LEARNED FROM THe PENTAGON MODEL
Operational Improvements
Amine Hygiene
Energy
Management
Hydrocarbon
Margin
Reliability/
asset integrity
Operator Training
Short-Term = Just Surviving
Short-Term Revamps
Liquid Treating
Hydrotreating
Catalysts & RI
New Column
Internals
Gas absorption
(SOx, CO2, NOx)
Dewaxing HDS
Short- to Medium-Term = Survive/Starting to Thrive
Phased
Investments
Claus Tail Gas
Treating
LT/LS SCOT
HVU/SDA/DTC
LCO Upgrading
HVU/HCU/SDA
Long-Term = Thrive
Health, safety and environmental issues are of great importance to Shell Global Solutions and thus central to all pentagon options
Leverage lessons learned from Multi-Platform Strategies to successfully deliver your Mega Project
April 2012

8. OPERATIONAL IMPROVEMENTS – SURVIVAL
Shell Global Solutions believes that margin improvements of $0.1–1 a barrel can be unlocked at any refinery simply by sweating its assets, that is, by making them work harder but without capital investment
Projects from the A–Z scheme can be attributed to the pentagons
Pentagon I
Energy management
HSE
People
Asset integrity and reliability
Crude selection
Processes
Tools
Short-term options – Survival:
Change crude diet (crude selection matrix)
Import of component to blend on spec (eg. Aromatic/sulphur constraints) and export higher sulphur product to ‘Africa’
Sweating of assets: review how you route sulphur containing products in your units. Could make a huge difference to change stream routings without need of changing hardware ( configuration study, no hardware)
Amend your blending recipe, blending optimisation
Monitor your operation /quality – regular analysis (not once a week!), proper product quality control essential and optimise your quality control
Organisational effectiveness
Leverage lessons learned from Multi-Platform Strategies to successfully deliver your Mega Project
April 2012

9. OPERATIONS Proof point: TüpraŞ
To make the company highly competitive in global markets Tüpraş management targeted top-quartile performance.
Through a three year business improvement programme, Shell Global Solutions and Tüpraş:
identified 220 opportunities for improvement
selected the 80 opportunities that would have the biggest economic impact.
As a result, Tüpraş’ operating cash flow increased by $244 million.
Work areas
Health, safety and environment
Hydrocarbon margin
Asset integrity and reliability
Operating cost
Organisational effectiveness
Leverage lessons learned from Multi-Platform Strategies to successfully deliver your Mega Project
April 2012

10. SHORT- TO MEDIUM-TERM: INVESTMENT PLANNING CONSTRAINED CAPEX – STARTING TO THRIVE
The cash that is generated by the projects implemented in the Pentagon I programme can be invested in Pentagon II initiatives
Typically, these require $5–50 million of capital and have a return on investment of one to three years, depending on the scope of the project
Implemented examples:
Ukrtatnafta dewaxing
Omsk refinery hybrid – hydrotreater and dewaxing
Capacity
Margin with new feed and product slates
Product quality (10-ppm diesel)
Pentagon II
Revamps
Hydrodracker
reconfiguration
Upgrading existing hardware (VGO H/T to MHC)
Distillate HT upgrading
Distillate dewaxing for arctic winter diesel
Leverage lessons learned from Multi-Platform Strategies to successfully deliver your Mega Project
April 2012

11. PHASED INVESTMENTS – THRIVE
Pentagon III focuses on the longer term for which several larger, more-capital-intensive projects may be worth closer inspection
In today’s competitive refining margin environment, investment is a key enabler for a thriving business
Implemented hydrocracker examples:
Grupo Lotos
CNOOC
Marathon
Pentagon III
Integration with
petrochemicals
Maximise ULSD
Max gasoline or max diesel
Clean fuels
Margins while processing difficult crudes
Hydrocracking for
difficult feedstock
Marine fuels upgrading
Upgrading H/C bottoms to base lube oils
Leverage lessons learned from Multi-Platform Strategies to successfully deliver your Mega Project
April 2012

12. PROCESSING: Hydrocracking
Hydrocracking is seeing significant growth worldwide because refiners are using the technology to respond to the momentum in global dieselisation.
Many refiners are leveraging the flexibility that hydrocracking offers. For instance, they can:
swing between the gasoline mode and the distillate mode to take advantage of seasonal product demand shifts
process a wide range of feedstocks (including DAO, HCGO, extracts).
Projects implemented: Grupa Lotos, CNOOC, Marathon and Valero
Leverage lessons learned from Multi-Platform Strategies to successfully deliver your Mega Project
April 2012

13. ENVIRONMENTAL LEGISLATION: The Shell Sulphur Technology Platform
7/13/2010
ENVIRONMENTAL LEGISLATION: The Shell Sulphur Technology Platform
Leverage lessons learned from Multi-Platform Strategies to successfully deliver your Mega Project
April 2012

14. Successful projects begin with robust front-end design and end with a detailed execution plan
5% costs
95% costs
Scouting
Front-end development
Realisation
Implementation 5 4 3 2 1 A B C D
Doing the right project
Doing the project right
Make bullets clearer – have key words
1) Shell’s experience and learnings from large capital projects
2) Don’t delay starting initial scoping phase of projects. Because spending incremental amounts of money for good definition of scope pays multiple times back in implementation phase
3) Timing – be ready in time for the big investment
4) Acting now to secure best deal on resources in terms of people and materials at good prices
Scouting, Basis of Design
Project Specification
Detailed Engineering, Procurement, Constructions
Commissioning and Start-up
Origins of problems during CSU and (early) production
45 %
10 %
40 %
5 %
Leverage lessons learned from Multi-Platform Strategies to successfully deliver your Mega Project
April 2012

15. The PROJECT VALUE CHAIN The A–Z concept – Every step counts
Lesson learned
Processing flexibility
Punch List (according to design, check functionality)
Optimum Capex/Opex with desired NPV
Design basis input from owner, PMC, EPC
Experienced EPC
Ensure Tightness/cleanliness
Follow Procedures/Safety Rules
Equipment standardization
Vision, goals, strategy and KPI’s
HSE
Hiring and training of operators/Teams
Reliability
Maintenance strategy
High performance:
- On schedule
- On budget
- Flawless start-up
- High on stream
efficiency
- Meet return criteria
- Well led competent
teams
Contracting Philosophy
Selection of local contractor
Asset integrity and reliability
Early procurement
Organization effectiveness/
Continuous training
Alignment of teams (project/Operations)
Input by key functions/ Define Roles
Hazop
Heat integration/ Value engineering / Standardization
Detailed engineering
Project specifications
Scouting and initial design
Normal operations/ Operational excellence
Commissioning and
Flawless S/U
Constructions
Configuration
Disciplined/Experienced project manager
Integrity Leadership: design, technical and operational
Leverage lessons learned from Multi-Platform Strategies to successfully deliver your Mega Project
April 2012

16. KEY TAKEAWAYS: LEARN FROM THE PAST
The project value chain The A–Z concept – every step counts
Focus on defining the right projects rather than fixing later
The A–Z concept shows that improvements to the basis of your project can be identified right across the value chain. Every step counts!
Learnings from the Pentagon model can provide a roadmap for implementing the right projects.
Synergy created by all best practices need to be well managed
The Shell Global Solutions Pentagon Model
Short-Term = Just Surviving
The Pentagon model provides a roadmap for implementing the previously-mentioned projects in a coherent, planned order
Operational Improvements
Short- to Medium-Term = Survive/Starting to Thrive
Short-Term Revamps
Long-Term = Thrive
Phased
Investments
Health, safety and environmental issues are of great importance to Shell Global Solutions and thus central to all pentagon options
Leverage lessons learned from Multi-Platform Strategies to successfully deliver your Mega Project
April 2012