IRPC ’15: Managers need long-term focus to find downstream sustainability

By Ben DuBose
Online Editor

ABU DHABI -- Top industry management must consider profits over the long-term to make the business case for more sustainability, with a particular focus on results in the four-to-five-year range rather than on the initial year or two.

Jimmy Kumana, CEO with Houston-based Kumana & Associates, delivered this message Tuesday in the petrochemicals track at the sixth-annual International Refining and Petrochemical Conference (IRPC).

"To capture 80% of the savings potential, you must accept payback four or five years down the line," he said. "For a one-to-two year payback, savings are likely to be subpar."

Kumana pointed to the Solomon Energy Intensity Index (EII) as a globally-accepted benchmarking system. He noted that of the group's most recent study of 341 refineries around the world, six stood out as far superior to their cohorts. Of those six, three are in North America, two in Western Europe and one in Asia.

Among those six refineries, the average margin was higher by $2.04/bbl, and of that, $1.77/bbl was due to higher energy efficiency.

"Too often, the focus of management is on production and not on energy efficiency," said Kumana. "It is not a matter of incompetence, but the perverse incentives embedded in our modern business culture."

However, there is a bright side, he explained. Most leading and profitable companies have adopted at least some version of ISO-50001 best practices, and typical realized savings are in the 5-to-15% range. Saudi Aramco, in particular, is the standout with savings of approximately 40%.

Other key companies considered to be ISO-50001 compliant include Chevron, ExxonMobil, Valero, Total, Repsol, Kuwait Petroleum, Indian Oil, Reliance Industries, Albemarle, Dow Chemical, Eastman Chemical, Huntsman, LyondellBasell, BASF, Bayer, Eni and GS Caltex.

"Hopefully, other companies will start following their lead," Kumana said.

Among that group, catalysts producer Albemarle may have the most ambitous program, having achieved what Kumana said were "remarkable efficiency improvements in a very short time" by doing something no other major public company has done.

"About two or three years ago, on the initiative of a senior vice president, they formally incorporated energy efficiency into the compensation formula for all employees -- from the CEO to the janitor," Kumana said.

"Since then, there has been no need to persuade anyone to take energy efficiency seriously -- they do it because it is in their personal financial interest to do so."

Other strategies critical to achieving sustainability include linking design/construction contract bonuses to the operating efficiency of the process in three-to-five years after startup, rather than to schedule or budget metrics. Additionally, companies should have a mandate to use process integration to optimize the energy of new plant designs and revamps, as a corporate standard.

Upgrading equipment is also of great importance, with examples including a revamped compressor control system to minimize "hot gas recirculation", helical shell-side baffles to improve HX temperature profile and heat transfer capacity, advanced distillation column designs such as low DP internals and a dividing wall, variable frequency drives for selected motors, an O2 analyzer in the boiler/furnace flue gas to control the air-to-fuel ratio, and multi-blade dampers on fired heater stacks.

"Most energy-efficient technologies are well-known and easily available through consultants, NGOs, conferences and membership in research consortia," Kumana said. "But they must be supported by good management."

IRPC 2015 continues through Wednesday at the Jumeirah at Etihad Towers in Abu Dhabi.

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