Assessing the Current State

The next morning, Peter had a meeting scheduled at the South Texas refinery's administration building with Tom Jordan, the plant manager. While driving to the office, Peter considered what he'd already learned about his company.

Proclndustries is a downstream oil company that makes gasoline, diesel fuel, and other distillates and coke for the U.S. and international markets. For many years, Proclndustries had been content to be a successful midsized independent refinery. During that time, the company had seen a dramatic rise in competition from overseas players as well as significant variability of the crude oil supply. This variability negatively impacted the refinery's processing units, ultimately affecting run-time length and processing costs. In the past few years, they built several petrochemical plants to extend their value chain.

During interviews for his new job, Peter received a briefing on these trends and learned five pressing issues.

1. Changing raw materials, such as crude oil. The incoming available crude supplies show increasing contaminants, such as salts and solids. This trend has ramifications for production. Peter learned, for example, that Proclndustries has seen a significant deterioration in its ability to adequately process crude oil laden with contaminants. In response, Proclndustries altered its production equipment at the South Texas refinery. Although some of the problems were partially mitigated, they remained time-consuming issues for engineers, operators, and the company's chemical vendor to manage.

Because processing has become more complicated, it requires better communications between the planning, operations, and process engineering teams. It also requires additional and more frequent quality tests and improved equipment sensors.

  • 2. Throughput limitations and rising energy requirements. The accumulation of unwanted materials, called fouling, is caused by an increase of contaminants and other changes in the properties of oil and can lead to throughput limitations. In addition, fouling can contribute to rising energy demand in the refinery process because of the significant reduction in the heat transfer rates required for production.
  • 3. Fluctuating energy costs. Besides the challenge presented by the variability in raw materials, fluctuating energy costs have strained the electrical grid feeding the company's four oil refineries. Recently, the company received requests to participate in smart grid initiatives to avoid problems with electric power distribution.
  • 4. Environmental regulations. More stringent environmental regulations are putting significant pressure on Proclndustries to ensure a virtual 100% compliance level on water reuse and water discharge requirements. For example, the refinery must have total control of benzene and other contaminants in water discharge, something mainly driven by the quality of raw materials being processed.
  • 5. Safety regulations. Proclndustries is also required to update its process safety management systems to comply with the new U.S. Occupational Safety and Health Administration (OSHA) rules and related regulations in other countries.
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