Wednesday, 3 May 2017

Continuous Improvement - Key to Success

Süleyman Özmen from Shell Global Solutions shares with us his expert insight on why continuous improvement is the key for success.

Süleyman Özmen is a Vice President, Refining and Chemical Licensing in Shell Global Solutions, following roles with IFP, BP Amoco and UOP. He is known for his “Three Pentagon Model”, which provides refiners with a road map for their investment plans. He also packs in over 40 years of sector experience along with numerous qualifications, patents and technical papers. During his career, he has worked through the major challenges faced by the industry such as the unleaded gasoline mandate, the introduction of oxygenates (such as MTBE, ETBE and ethanol) to gasoline, and the trend for ultra-low levels of Sulphur in diesel (ULSD).

Euro Petroleum Consultants (EPC Ltd.): In your presentation at the IDTC 2017 - International Downstream Technology & Strategy Conference, you are going to talk about continuous improvement. How often do you see it implemented in refineries across the globe and have you seen a peak in the last few years?
S. Özmen: Continuous improvement is a characteristic shared by many of the refiners that are doing well today. The high performers are continuously planning new projects, executing them and optimising their operation. But, crucially, they do not stand still. 
As I explain in my presentation, they have a steady pipeline of new projects, so they repeatedly go through that plan–execute–operate cycle to improve their business further. Although this approach may not be new, numerous factors mean that it has become,

in recent years, more challenging than ever before. Chief among these factors is the shortage of financing; you are asking investors to spend multiple billions of dollars, so you must be able to demonstrate that you can provide a good return and reassurance that you will meet key objectives such as timeline, budget and net present value. Moreover, the geopolitical and macroenomic environments are extremely fast moving, yet your project probably will not be delivered for at least four years. How will you ensure that your chosen plan and configuration are the right ones?

EPC Ltd.: How would continuous improvement add value to your investment?

S. Özmen: Key to mitigating these challenges is the expertise of the project management consultants, licensors and front-end-engineering design (FEED) and engineering, procurement and construction (EPC) contractors that you select. Having the right people on board and working collaboratively can be invaluable in helping to identify and deliver a value-adding project: you benefit from their experience and the lessons they have learned from previous projects.
Furthermore, to ensure that a project is sustainable and robust against future trends, I always recommend that the investors test their project against a few different future economic, regulatory and market scenarios.

EPC: According to your experience how much a refinery should rely on operational excellence practices?
S. Özmen: Operational excellence should be your priority whenever you have brought a project on-stream. With the planning and execution phases behind you, you have valuable new assets that were designed to deliver high and sustainable margins. But market conditions may have changed since the planning phase and technology and catalyst capabilities are on an upward trend, so there may be new opportunities.

Consequently, you could consider upgrading your new assets to adapt to the new reality and further increase your margin. For instance, you might consider capacity debottlenecking or installing new, latest-generation catalysts. Alternatively, you could add new processing options, exploit opportunities for refinery–petrochemical integration or investigate opportunities to improve reliability or energy efficiency. Most refineries usually have a wide variety of potential opportunities for improvement and in my presentation I show the Shell Global Solutions A–Z Concept, which highlights many of the most common ones.

EPC: How would you convince refineries to invest in optimisation during the current economic situation?
S. Özmen: The refining business is extremely competitive. As we know, most refineries are ranked by Solomon benchmarking, which divides the world’s refineries into four quartiles. Everyone is striving to be a first-quartile performer; if you apply my “Three Pentagon Model”, there is nothing stopping you from becoming one of the best.

The first step (Pentagon 1) is to focus on operational excellence type improvements such as reliability and energy management projects that do not require much capital expenditure. Experience shows that this can increase margins by $0.1 to 1. This can help to fund revamp projects (Pentagon 2), which typically provide big gains for a relatively modest investment. In turn, the cash generated from those initiatives can be used for larger, capital-intensive projects (Pentagon 3) that add conversion and increase refining complexity.

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.
*Shell Global Solutions is a network of independent technology companies in the Shell Group. Its engineering services in the United States of America are provided by Shell Global Solutions (US) Inc. For projects in the United States of America that entail engineering services, Shell Global Solutions (US) Inc. will retain appropriately licensed engineers as necessary. Please note that certain engineering projects are not offered and are not available to the public in any/some of the States and Territories of the United States of America.

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