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Copyright of Shell Global Solutions International B.V. LEVERAGE LESSONS LEARNED FROM MULTI-PLATFORM STRATEGIES TO SUCCESSFULLY DELIVER NEW REFINERY PROJECTS.

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Presentation on theme: "Copyright of Shell Global Solutions International B.V. LEVERAGE LESSONS LEARNED FROM MULTI-PLATFORM STRATEGIES TO SUCCESSFULLY DELIVER NEW REFINERY PROJECTS."— Presentation transcript:

1 Copyright of Shell Global Solutions International B.V. LEVERAGE LESSONS LEARNED FROM MULTI-PLATFORM STRATEGIES TO SUCCESSFULLY DELIVER NEW REFINERY PROJECTS Süleyman Özmen VP Licensing, Shell Global Solutions International BV 1 April 2012Leverage lessons learned from Multi-Platform Strategies to successfully deliver your Mega Project

2 Copyright of Shell Global Solutions International B.V. 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. 2 April 2012Leverage lessons learned from Multi-Platform Strategies to successfully deliver your Mega Project

3 Copyright of Shell Global Solutions International B.V. 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 3 April 2012Leverage lessons learned from Multi-Platform Strategies to successfully deliver your Mega Project

4 Copyright of Shell Global Solutions International B.V. 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) 4 April 2012Leverage lessons learned from Multi-Platform Strategies to successfully deliver your Mega Project

5 Copyright of Shell Global Solutions International B.V. IMPROVEMENTS ACROSS THE VALUE CHAIN THE A–Z CONCEPT – EVERY CENT COUNTS 5 April 2012Leverage lessons learned from Multi-Platform Strategies to successfully deliver your Mega Project 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 planningHardware selectionOperational excellence The Pentagon model remains as valid as ever – it provides a roadmap for implementing these projects.

6 Copyright of Shell Global Solutions International B.V. IMPROVEMENTS ACROSS THE VALUE CHAIN THE A–Z CONCEPT – EVERY CENT COUNTS! 6 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 planningHardware selectionOperational 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 Copyright of Shell Global Solutions International B.V. LESSONS LEARNED FROM THE PENTAGON MODEL 7 Operational Improvements Amine Hygiene Energy Management Hydrocarbon Margin Reliability/ asset integrity Operator Training Short-Term = Just Surviving Phased Investment s 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 Short-Term Revamps Liquid Treating Hydrotreating Catalysts & RI New Column Internals Gas absorption (SO x, CO 2, NO x ) Dewaxing HDS Short- to Medium-Term = Survive/Starting to Thrive Leverage lessons learned from Multi-Platform Strategies to successfully deliver your Mega Project April 2012

8 Copyright of Shell Global Solutions International B.V. 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 8 April 2012 Energy management Organisational effectiveness People ToolsProcesses Crude selection Asset integrity and reliability HSE Pentagon I Leverage lessons learned from Multi-Platform Strategies to successfully deliver your Mega Project

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

10 Copyright of Shell Global Solutions International B.V. 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 10 April 2012 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

11 Copyright of Shell Global Solutions International B.V. 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 11 April 2012 Max gasoline or max diesel Margins while processing difficult crudes Clean fuels Maximise ULSD Hydrocracking for difficult feedstock Upgrading H/C bottoms to base lube oils Marine fuels upgrading Integration with petrochemicals Pentagon III Leverage lessons learned from Multi-Platform Strategies to successfully deliver your Mega Project

12 Copyright of Shell Global Solutions International B.V. 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). 12 April 2012Leverage lessons learned from Multi-Platform Strategies to successfully deliver your Mega Project

13 Copyright of Shell Global Solutions International B.V. ENVIRONMENTAL LEGISLATION: THE SHELL SULPHUR TECHNOLOGY PLATFORM 13 April 2012Leverage lessons learned from Multi-Platform Strategies to successfully deliver your Mega Project

14 Copyright of Shell Global Solutions International B.V. SUCCESSFUL PROJECTS BEGIN WITH ROBUST FRONT-END DESIGN AND END WITH A DETAILED EXECUTION PLAN 14 5% costs95% costs ScoutingFront-end developmentRealisationImplementation A B C D Doing the right projectDoing the project right Scouting, Basis of Design Project Specification Detailed Engineering, Procurement, Constructions Commissioning and Start-up Leverage lessons learned from Multi-Platform Strategies to successfully deliver your Mega Project 45 %10 %40 %5 % Origins of problems during CSU and (early) production April 2012

15 Copyright of Shell Global Solutions International B.V. THE PROJECT VALUE CHAIN THE A–Z CONCEPT – EVERY STEP COUNTS 15 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/cleanlines s 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 engineeringProject 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 Copyright of Shell Global Solutions International B.V. KEY TAKEAWAYS: LEARN FROM THE PAST 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 16 April 2012 The project value chain The A–Z concept – every step counts The Shell Global Solutions Pentagon Model Short-Term Revamps Short- to Medium-Term = Survive/Starting to Thrive Operational Improvement s Short-Term = Just Surviving Phased Investment s Long-Term = Thrive Health, safety and environmental issues are of great importance to Shell Global Solutions and thus central to all pentagon options The Pentagon model provides a roadmap for implementing the previously-mentioned projects in a coherent, planned order Leverage lessons learned from Multi-Platform Strategies to successfully deliver your Mega Project

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