K. Y. WAN and T. H. TSUI, Trindent Consulting, Toronto, Canada
The oil and gas industry is a complex network of manufacturing processes that involves mining, transportation, refining, distribution and retail. The industry necessitates a comprehensive understanding of refining techniques including distillation, cracking, hydrotreating and deep-conversion processes, among others. Each of these techniques requires specialized knowledge and expertise to operate efficiently, and an understanding of the chemical and physical properties of crude oil and its derivatives is essential for effective implementation. Additionally, the choice of technique and its application depend on the specific characteristics of the crude oil feedstock and the desired output, making a nuanced and adaptable approach critical. Refiners must embrace cost-effective operations that enable swift adjustments in production volumes and product offerings.
Part 1 of this article discussed the value of strengthening relationships with crude suppliers, efficient logistics and inventory management, and collaboration with upstream and downstream partners. Part 2 will outline additional opportunities across quality giveaway reduction, hydrocarbon loss measurement, refinery mass balance and energy management in downstream functions without the need for capital expenditure (CAPEX) or software infrastructure upgrades. These opportunities yield a strong cashflow performance within several months and can improve gross margins shortly after.
AREAS OF OPPORTUNITY
Execution of the plan: Fine-tuning operations for maximum efficiency. Refineries that invest in product quality management areas (e.g., model accuracy, sampling processes, execution control) have the potential to save as much as dollars per barrel.
The authors’ company completed a series of gasoline quality giveaway reduction projects between January 2020 and December 2024. After engaging in the authors’ company’s quality giveaway program, most refineries can reduce their quality giveaway by ~50% or more, a performance improvement inclusive of and benefiting top-quartile players. Typically, quality giveaway control within testing method repeatability is achievable with the implementation of a comprehensive gasoline blending program. Accordingly, refineries can focus on three areas to reduce the quality giveaway of their products: scheduling, execution and measurement practices.
First, scheduling involves improving the predictive accuracy of models within planning and scheduling tools. This enhancement ensures the availability of components with the right quality to manage final product quality. Optimizing the ethanol model for gasoline blending is a readily available method to generate substantial savings. In recent years, the authors’ company has often identified outdated or absent ethanol uplift model practices in gasoline blending—this represents a common area where refineries can quickly generate substantial savings by reducing quality giveaway. FIG. 3 highlights an example of where the authors’ company’s post-ethanol modela can predict the actual property within method reproducibility most of the time, allowing for tighter blend control.
Second, execution practices have progressed from console operators making real-time recipe adjustments to minimize quality giveaway and prevent re-blends. Automation technologies, particularly advanced process control (APC) systems, are now widely adopted in modern refineries. However, customizing numerous parameters within these APC systems according to the refinery, product and seasonal variations is crucial. A well-thought-out APC configuration enables refined control over product quality through highly automated execution. Over the past few years, the authors’ company’s collaboration with process control groups has been instrumental in gasoline giveaway control. For instance, this collaboration has comprised multiple areas including the introduction of a real-time product quality estimator, even in the absence of online analyzers.
Finally, measurement practices now involve increasing refinery reliance on online analyzers for real-time production control of refined fuels. However, in many observed cases, poorly maintained analyzers have proven more misleading than beneficial to refinery value. Therefore, establishing a comprehensive online analyzer program is vital to ensure their accuracy, control and value addition during fuel production. The authors’ company has assisted numerous clients in enhancing hundreds of online analyzers, encompassing online knock engines, Reid vapor pressure (RVP), Raman, near-infrared (NIR), sulfur, flash points and more. Improvements have been achieved via the implementation of maintenance and calibration programs, as well as modeling best practices.
Hydrocarbon loss control program. Custody transfer control is the linchpin of hydrocarbon management, ensuring that accurate measurements are made during the transfer of ownership from one party to another. In refining, where vast quantities of hydrocarbons are exchanged daily, precision in custody transfer is not just a best practice, it is a financial necessity.
At the heart of custody transfer control lies the accuracy of custody meters. These instruments determine the quantity of hydrocarbons being transferred and form the basis for financial transactions. Refineries that focus on calibrating and maintaining custody meters with precision can minimize measurement errors, translating directly into financial gains.
FIG. 4 illustrates a meter factor control chart (MFCC) showing a gradual increase in the meter factor (MF) over time, indicating potential meter wear and tear. Depending on the material being transported and a company's position as the receiver or deliverer, such a meter can lead to financial risks of overpayment or under-delivery. Across the last 20 projects where the authors’ company aided clients in developing comprehensive hydrocarbon loss control programs, many clients lacked MFCCs for their meters. Implementing an MFCC typically takes 1 mos–2 mos for a refinery; however, the accurate measurement of incoming and outgoing material volumes often results in a financial payback within months or even weeks, covering the project's cost.
Notably, contaminants such as sediment and water can affect the accuracy of custody measurements for crude oils. Implementing rigorous testing procedures to identify and address these contaminants ensures the precise measurement of crude volume, preventing overpayment for sediment and water content. This proactive approach not only yields financial benefits by avoiding overpayment for impurities, but also enhances mass balance calculations, ultimately improving the refinery's long-term LP performance. One common observation made by the authors’ company when collaborating with clients on hydrocarbon loss control is the misapplication of measurement apparatus for sediment and water testing. If the centrifuge method is chosen and the incorrect class of measurement glassware is used, the measurement uncertainty can be as high as 0.15%, equating to approximately $0.10/bbl in current scenarios.
Moreover, the precision of tank and railcar gauging significantly impacts volume calculations during custody transfer. Refineries that prioritize accurate gauging methodologies can reduce disparities in volume measurements. An often-overlooked aspect during tank/railcar gauging is the influence of temperature. It is commonly observed that frontline employees lack a clear understanding of the temperature-volume relationship—this can result in temperature measurement during tank/railcar gauging being treated as a routine task. For example, at one Canadian refinery, operators were observed using an infrared scanner to record distillate temperature measurements. This equipment, which is not compliant with American Petroleum Institute (API) standards, measures only the liquid's surface temperature, which was found to be approximately 2°C higher than the liquid's average temperature recorded in a subsequent study.
Refineries investing in a comprehensive loss control program that includes custody meter accuracy, sediment and water testing, as well as tank and/or railcar gauging accuracy, may yield tens of cents per barrel in potential gains. These gains not only lead to financial returns but also establish a robust groundwork for precise volume balancing in their LP model backcasting. Properly tuned, an accurate LP can further enhance financial value for the refinery.
Mass balances across refinery fencelines and units. An accurate mass balance serves as the foundation for refinery optimization. Errors in fenceline and unit mass balances can cause inefficiencies, subpar operational choices and subsequent financial setbacks. Refineries focused on accurate mass balances and aiming for top-tier performance—both at the fenceline and within units—are better positioned to outperform their peers.
Establishing a state-of-the-art mass balance program begins with defining clear boundaries, whether at the refinery level or within processing units. This involves identifying the inputs and outputs across these boundaries. Subsequently and specific to unit mass balances, a sequence of test runs is conducted, intentionally altering the system to observe the response. By comparing observed outcomes with expected results, refineries can spot and rectify discrepancies, ensuring that mass balances accurately reflect actual operational conditions.
The evolution of robust unit mass balances is an ongoing refinement process. Continuous improvements involve leveraging insights from test runs to enhance the accuracy of kinetic models within the LP framework. This iterative approach ensures the model adjusts to evolving operational dynamics, facilitating sustained value creation through continuous optimization via a reliable LP.
In recent years, the authors’ company has conducted numerous mass balance improvement initiatives with its clients. The company has observed that a strong fenceline mass balance performance typically lays a solid foundation for an effective unit mass balance program. Industry best practices aim for a fenceline mass balance within 0.15%, mainly addressing mechanical uncertainties in measurement instruments like gauging taps or meters. Interestingly, the mass balance performance shows a reasonable correlation with the loss control program maturity score with an R2 of 0.86, a benchmark developed by the authors’ company. Out of a total score of 5, a 1 change in the loss control maturity score typically correlates with approximately 0.19% unidentified mass loss in the refining system.
The authors’ company’s loss control program maturity assessment is one of the benchmarking studies typically conducted during a diagnostic assessment. Through this assessment, a refinery can efficiently gauge its performance rating among Rigid, Flexible or Enterprise categories in each focus area (e.g., meter measurement, gauging, system tools). Then, by averaging the performance scores across all areas, the refinery can derive its overall maturity score. Rigid contributes a score of 0, Flexible equals 2.5 and Enterprise represents 5 in this assessment.
The financial impact of precise mass balances is substantial. Refineries that maintain a fenceline mass balance < 0.15% and unit mass balances < 2%, alongside robust continuous improvement initiatives, can potentially yield tens of cents per barrel. Consistently realizing these gains significantly enhances the refinery's bottom line, indicating improved operational efficiency and decision-making.
Energy management. Energy accounts for a substantial portion of refining operational costs. A comprehensive energy management program can decrease natural gas and water consumption, reduce emissions and carbon footprint, and enhance the refinery's overall bottom line. In addition to reducing energy expenditure, many refineries were able to debottleneck their process constraints through efficiency improvement and, therefore, increase the charge rate of their units, for instance.
The primary energy consumer in refining is process heating. Several indicators can be monitored in real-time to gauge energy efficiency, and various controls are available to influence these indicators. As depicted in FIG. 5, indicators such as fire duty, stream quality, change in charge temperature, excess oxygen (O2)% and stack temperature offer insights into heating process efficiency. Controls like fuel composition, fuel flowrate, excess air and air pre-heater can affect these factors.
In recent projects, the authors’ company’s observations of client processes reveal significant operating variances in how these controls are utilized to enhance heating efficiency. Refineries achieving top-quartile energy efficiency typically employ standardized practices to control these factors, while lower performers lack this consistency. For example, in a recent study, the company identified that the fire duty could fluctuate up to 8% for a large furnace associated with the crude unit at a similar production plan (charge rate, cut point, etc.). For units with different operating modes, such as chemical units where product specifications change between high- and low-purity requirements, appropriately adjusting unit parameters can help extract maximum profit margins. A recent client that engaged with the authors’ company observed a 28% reduction in fire duty across a series of chemical separation units by taking advantage of these operating modes.
The second largest opportunity for efficiency improvement typically lies in steam management. Often, there is a lack of transparency within refineries regarding current steam production and consumption. Efficient management and real-time adjustments to steam generation, distribution and utilization are pivotal for an effective energy management program, leading to enhanced overall efficiency. Updated shift handover logbooks structured to capture vent/letdown valve activity, steam dashboards to gain visibility on system imbalances across boilers, waste heat boilers and turbine status, and comprehensive field walk programs are all effective ways to improve communication.
Beyond real-time optimization, long-term equipment maintenance significantly contributes to energy conservation. Regular maintenance and optimization of equipment like pumps, compressors and motors play a key role in energy efficiency. By ensuring that steam lines, valves and heat exchangers function efficiently, the risk of leaks and pressure drops leading to energy waste is reduced. Cleaning the system removes buildup and contaminants that hinder heat transfer and steam quality, directly impacting operational efficiency. Moreover, maintaining and optimizing heat exchangers are critical to minimize energy losses in heat transfer processes. Steam is an excellent medium for cleaning systems and can be used whenever systems are being returned to service to clean and de-scale systems prior to re-use. This approach is particularly important where steam turbines in the process scheme could be damaged from particles emerging from the system.
Finally, a robust system for evaluating overall energy efficiency is crucial. This involves continuous monitoring, data analysis and identifying areas for improvement. The financial impact of a comprehensive energy management program is substantial. Refineries that prioritize energy efficiency in process heating, steam generation, equipment management, heat exchanger maintenance and overall evaluations can realize considerable cost savings or more aggressive process constraints. While specific savings may vary, successful programs often yield measurable improvements of tens of cents to dollars per barrel.
People: A high-performing team with clear roles and responsibilities. While preceding sections focus heavily on the technical aspects for how oil and gas operators can yield significant financial benefits without substantial capital investment, an often-underestimated factor is the human element in these processes. A high-performing team with clearly delegated authority and responsibilities is integral to a robust continuous improvement process. A few high-level concepts are detailed below.
Throughout the authors’ company’s engagements with its clients, it has frequently encountered undefined roles and responsibilities for cross-functional areas like planning or blending, resulting in internal friction and rework. While opportunities can be overlooked without clear ownership, well-established accountability tends to drive individuals to claim ownership of their processes and enhance the performance of their designated areas. The best projects—where results are sustained and the program is continuously improved—involve support across all levels of management. Appropriate expectations should be set by refinery leadership, while a dedicated program owner should continue to drive process improvement initiatives, maintain optimization toolkits, track KPIs and lead regular project-evaluation meetings to implement new improvement opportunities.
An area where inefficiencies commonly arise is in the effectiveness of management meetings. The purpose of these meetings should be well-defined in advance, and action items must be documented and regularly followed to support holding key stakeholders engaged and accountable for sustainable change. The company has observed meetings that cover the “what/where/when” but neglect to address the “how/why” questions, hindering continuous learning, skill development and improvement. By building an effective meeting owner and participant relationship, behaviors are managed appropriately and the agenda can be directed for cooperative problem solving.
Takeaway: Paving the path to sustainable profitability. In a rapidly evolving industry landscape, the implementation of the above-mentioned refining strategies can significantly enhance a refiner’s profitability and position it for sustained growth. By leveraging these opportunities, refineries can navigate market challenges, adapt to changing conditions and secure their position as industry leaders in the ever-evolving world of crude oil refining. HP
NOTES
Trindent’s post-ethanol T50 model
Kai Y. Wan is an Associate Principal at Trindent Consulting. Dr. Wan has collaborated closely with multiple business partners in the energy sector across North America and the Asia-Pacific, including some of the world’s largest refineries, and has delivered more than $150 MM in financial improvements.
Brian T. H. Tsui is a Senior Consultant at Trindent Consulting. Dr. Tsui is a highly experienced management consultant with years of working directly with clients in the North American petrochemical industry and has delivered more than $50 MM in financial improvements.