Optimising Turnarounds to Achieve Asset Integrity

30 October 2012

OIL PETROCHEMICAL AND ENERGY RISKS ASSOCIATION (OPERA)

Conference 2012

Jacobs Consultancy

Steve Mabey

Leading technical and business consultancy:

Jacobs Consultancy – Petroleum, Chemical & Energy

Due Diligence & Valuation Merger, Acquisition & Divestiture Analysis Independent Technical & Market Consulting Asset Management, Reliability, Integrity,

Maintenance & Turnarounds Process Safety Management Environmental Planning, Permitting

& Management

Agenda

Business impact of a Turnaround

Factors influencing effective turnarounds for process plant

Delivering an effective Turnaround

BUSINESS IMPACT OF A

TURNAROUND

What is a Turnaround (TAR)?

A planned and scheduled event for conducting all necessary operational, maintenance, and

improvement tasks required to enable safe, reliable operation at the desired

performance for the next campaign.

Jacobs’ Asset Management Work Process

Deliver across complete Asset Life Cycle − “Strategic” through to “Retirement”

AM Work Process integrated into Engineering Work Process Modules defined for specific activities across phases Driven by ‘Total Lifecycle Cost’ optimization….

Conceptual Definition

(FEED)

Detailed

Design

Construction Start-Up Operation &

Maintenance

Asset Life

Extension

Asset

Retirement

Strategic and

Opportunity

Produce Most Product for the Longest Time at the Lowest Cost.

Turnarounds

Turnarounds have a major impact of downtime

On-Stream Availability = Measure of ‘Production’ (Profit Opportunity)

The turnaround is one of the major contributors to

downtime

But getting the turnaround right, will impact on long-

term reliability

Generic numbers which shall vary by Region, Industry and Company

Lost opportunity from Turnaround

Lost Opportunity for a 15 MMTA refinery >$120Million 1 day of Turnaround = $2-3Million Major incentive to provide resources and management effort

Losses for outages outside turnaround can be far greater

For a typical total oil refinery turnaround:

$US90million Lost Opportunity + $US30million Turnaround Costs

= $US120million Immediate Cost to Business

Different people – Different needs

Head Office Executive’s view: − Is it really necessary? − Will it affect the share price? − Can I use this money else where?

Plant Manager’s view: − I have so many other initiatives. − Will it distract our Operation? − Where will I find the resource? − How will I achieve my targets?

Turnaround Manager’s view: − Will the scope fit the budget? − Can I find a competent contractor? − This is stressful and traumatic!

Need alignment

Key drivers for turnaround success

Key metrics are Safety, shorten Duration & reduce Cost But Quality is fundamental to integrity

Defects introduced or retained, within asset, system or process Greatest impact on integrity, reliability, availability and profitability Issues seen many months / years after completion of the TAR

Quality

Safety Duration Cost

FACTORS INFLUENCING

EFFECTIVE TURNAROUNDS

Factors influencing Turnarounds

Turnaround Success

People

Plant Process

3 factors that influence success:

− People − Plant − Process

Delivering a successful Turnaround requires aligned strategies during Design / Operation / Maintenance

Some example issues influencing 3 factors

People − Technical capability deficit − Contractor resources

Plant − Aging plant management − Corrosion Under Insulation

Process − Integrated Business Strategy

Turnaround Success

People

Plant Process

Technical Capability Issues:

− Operating companies lost / lack technical competency

− High dependency on Contractor workforce

− Ineffective training programs to develop new talent

Result: − Insufficient management of technical /

aging plant issues

Potential Improvements: − Develop competence improvement for technical staff − Targeted use of industry specialist for critical issues

Turnaround Success

People

Plant Process

Contractor Resources

Issues: − Significant resources needed for TAR execution − Short duration events − Skilled contracting resource-pool shrinking − Lack of skills in the market place − “New build” work is more attractive

Result: − Integrity issues missed or introduced

Improvements: − Appropriate contracting strategies − Make events smaller

Turnaround Success

People

Plant Process

Aging Plant Management

Issues: − Many assets exceeded original design life − Metallurgical / corrosion / erosion issues

Result: − Potential hidden failures − Unplanned capital replacements

Improvements: − Understand equipment life − Focus inspection plans on failure mechanisms − Deploy risk based methodologies

Turnaround Success

People

Plant Process

Corrosion Under Insulation (CUI)

Issues: − Major cause of loss of containment − Insufficient scope, planning, time to mitigate

Result: − Missed opportunity to address plant issues during

Turnaround

Improvements: − CUI Management is possible using

structured “risk based” strategies − Conduct pre-shutdown assessments − Adequate planning and funding

Turnaround Success

People

Plant Process

Issues: − Desire for extended cycles − Misaligned business process − Bow wave of asset replacement − Deferred decisions − Increased risk profile

Result: − Short term decision process and inadequate

planning resulting in untimely action Improvements:

− Risk based methodologies to extend cycle times

− Alignment of Business Process − Optimised Investment Decision Support (ODIN)

Business Strategy Turnaround

Success

People

Plant Process

DELIVERING AN

EFFECTIVE TURNAROUND

Effective Turnarounds

Apply a structured Turnaround Management Process Opportunity to improve performance Mitigates for resource and skill shortages Quality & Reliability built into work process Detailed planning is critical to address known

and unknown problems

End Start -36 -12 -24

Months 0 +1.5 +3

Schedule Execute Post Review Planning Strategy

-6

Turnaround Success

People

Plant Process Scope Freeze

Turnaround Timeline: Planning is key

Spend

Influence The time to influence turnaround “efficiency” and “effectiveness” is during the Strategy &

Planning

Turnaround Success

People

Plant Process

End Start -36 -12 -24

Months 0 +1.5 +3

Schedule Execute Post Review Planning Strategy

-6

Our support - Turnarounds Readiness Assessment

Best practice activity to deliver successful events in the industry

Objective: − Assess turnaround preparation − Provides assurance − Identify risks − Mitigation − Enable sharing and transfer of best

practices across the company

Benefits: − Management assurance − Early identification of problems − Unbiased view

0

5

10

15

20

25Strategy Development

Organization & Management

Objectives & Metrics

Data / Document Management

Scope Management

Planning & Scheduling

Operational Planning

Materials & LogisticsQuality, Security & HSE

Contract Strategy

Cost Planning

Resource Planning

Execution Tracking

Emerging work

Handover

Post Event

Turnaround Effectiveness

XXXXXX, Russian Federation Best Practice

Assess improvement areas using a collaborative approach

Jacobs Consultancy’s recent Turnarounds engagements Year Location Activity

2012 Russia Refinery TAR Readiness Assessment and Implementation support

2011 Russia Refinery TAR Critical Path Review

2011 Caribbean Refinery & Power Plant TAR Assessment

2011 KSA Petrochemicals TAR Critical Path Review

2011 KSA Petrochemicals TAR Readiness Assessment

2006 UK Single Unit Readiness Assessment

2011 Russia Refinery TAR Readiness Assessment and Implementation support

2010 Russia Refinery TAR Scope Optimisation

2010 Russia Refinery TAR Readiness Assessment & Critical Path Assessment

2010 Russia Refinery TAR Readiness Assessment and Implementation support

2009 USA Petrochemicals TAR Readiness Assessment

2009 Ukraine Refinery TAR Readiness Assessment and Improvement “Road Map”

2007/08/09/10 Czech Republic Refinery TAR Readiness Assessment, Improvement “Road Map”, Implementation support

Summary

Turnarounds are a major business opportunity − Opportunity to address aging plant issues

Clarity of TAR strategy is critical for success − During event and next campaign

A structured TAR Management Process ensures planning and preparation is achieved

TAR Readiness Assessment identifies issues early

Jacobs Consultancy 226 Tower Bridge Road London, SE1 2UP Tel: +44.7780.835876 Email: Steve.Mabey@jacobs.com Web: jacobsconsultancy.com

Steve Mabey Director of Asset Management