Improve Plant Operations with Enterprise Technology

 In

In early 2009, the author was asked a rhetorical question by a senior executive with a major international oil company: “How do you run a business when your product unit price rises from $60/bbl to $140/bbl in the space of 14 months, and then drops to $40/bbl in less than six months?” My reply was, “Well, that’s the oil business for you!” True enough, all of us have learned that being in this industry is a bit like taking a ride at the fairground, with a blindfold—and, as we have seen with recent oil price volatility, the ride continues.

I have often reflected on the frustration of that senior executive and recognized the difficulties he faced with making decisions in an environment full of uncertainty, beyond the price of oil. Other challenges are abundant, such as aging assets, workforce competency, production costs, safety and environmental risks, geopolitical swings, societal pressures, regulatory changes, etc.

These challenges must be managed to the satisfaction of shareholders, but how that is achieved is perhaps more important, given emerging market areas and the competition to gain access to these markets, whether through JVs or licensed operations. Those competing must bring more than just capital to the table. Their technical knowhow is a differentiator, but more so are the processes and techniques for managing safe, clean and cost efficient operations.

Being an “excellent operator” is an essential strategy these days. In a volatile market, those companies that can react quickest to market opportunities will be the most profitable and will rise to the top. Likewise, companies that can demonstrate the lowest operating costs, the fewest number of incidents and the most efficient operations will be the most successful. (Fig. 1).

 

Fig.1. – Companies that can demonstrate the lowest operating cost, the fewest number of incidents and the most efficient operations at their plants will be the most successful operators.  

Taking a ride at the fairground, with a blindfold

Operational excellence has long been a topic of conversation in the hydrocarbon processing industry (HPI), and it has never been more relevant. In complex, multifunctional organizations that operate complex assets, agility is easier discussed than achieved. Operational excellence programs have been striving to address this issue for many reasons. With fluctuating commodity prices and constrained budgets, operational excellence offers a real way forward to manage fixed costs and simultaneously reduce safety and environmental risks. Operational excellence is the means to survive as well as thrive.

“One version of the truth” has been a mantra for many years, and indeed has driven many successful programs. In spite of this, performance gaps remain, and process upsets and incidents continue. Now is the time to examine operational excellence through the lens of operational risk.

Operational excellence is the practice of getting the most out of assets safely, efficiently, effectively and in a sustainable manner. It is the practice of managing risk, improving the productivity of operations and keeping people and assets safe. Three building blocks toward achieving operational excellence may be considered, from operational risk management to capital effectiveness and asset productivity. By starting with a better understanding of operational risk and how people, assets, the environment, reputation, health and major hazard risks come together, more of the right things can get done at the right time and in the right way. This enables the safe and cost effective extraction of the maximum value from an asset. If the right things are not getting done, then assets are not being optimized.

In general, most companies have a good idea of what could go wrong in their plants, how bad it could be, and what could be done to minimize the risks. They have identified major hazards through failure analyses and specified multiple barrier systems to prevent an event from happening, to mitigate its consequences, and to avoid risk escalation. Formal or informal operations management systems, including functional operations excellence programs, help manage the process safety lifecycle, from how to handle management of change (MOC) to operating procedures, safe working practices, competency and training.

Managing the health of process safety barriers is crucial throughout the life of an asset to sustain its reliable performance. Over time, this becomes more challenging as equipment ages, as wall thicknesses shrink due to corrosion, and as general wear and tear take their toll on the reliability of safety critical equipment. It is up to the operations team to address these needs and to ascertain where to devote resources to achieve the best value. Competition is ongoing in an organization between different interest groups, with each group vying for its share of resources. Maintenance, reliability, process safety, asset integrity, projects and others compete for budget share and space in a typically crowded schedule. Each group will emphasize the consequences of deferring activity, be it cost escalation, production decline, opportunity loss, increasing safety risk, or regulation violation. Some of the activities will necessitate bringing equipment out of service, reducing plant throughput and, in the extreme, shutting down an entire unit.

Operations will be in the thick of this wrestling match, arguing for plant uptime to meet targets. This is where operational excellence can make a difference. The long term decisions on prioritization, short term decisions on planning and scheduling, and day to day management of activities are where truly excellent companies excel. The problem facing most organizations is how to best compare all of the options and choose which one is right for the business as a whole.

The symptoms of “not getting it right” are obvious and include unplanned plant and equipment outages, extreme maintenance backlogs, deferments of safety critical inspection/testing and an increased number of integrity failures. Many companies set out on a new asset with the intention of implementing proactive maintenance, but very quickly they become swamped and fail to balance competing needs. All too easily, they slip into a “fix and repair” mode vs. a “maintain and prevent” approach.

As assets age, this becomes more critical—not just due to aging equipment, but also to changes in demand on the facility. Market dynamics can often extend the useful life of an asset and associated infrastructure well beyond its original design life. This puts tremendous pressure on the teams responsible for keeping the plant running, in good repair and compliant with internal standards and regulatory requirements. Some refineries and petrochemical plants have systems still in operation that were installed over 50 years ago. The many years of operating with slender commercial margins and the resulting squeeze on maintenance budgets have taken their toll. It is no wonder that plant owners seem to be fighting a losing battle in which complaints such as “We just can’t get enough of the ‘right’ things done safely and efficiently” are heard.

Why is it so difficult?

Surprisingly, one of the biggest challenges is the ability to promptly define the issues and compare options using common criteria. For example, a project team manager wants to install a new deluge system around major vessels in the fluid catalytic cracking (FCC) unit. This job will render the area inaccessible for four months. The asset integrity manager is arguing that deferring the planned pipework inspection program will increase the risk of plant failure.

The facility manager will likely opt for the project crew since a new deluge system will restore the necessary performance vs. the current system, which is constantly in need of repairs. Corrosion, the manager knows, is relatively slow acting, and the pipework does not look “that bad.” However, the manager feels guilty because this is the third time the inspection crew has been deferred.

This is not an uncommon scenario; these types of decisions are determined every day by budgets, logistics constraints and “gut instinct” rather than by rational decisions. What is needed is better data, in a more accessible manner, to allow decision makers to compare options. Dealing with future uncertainties typically boils down to the risk of welcome or unwelcome outcomes, for example: How quickly could corrosion in that pipe have accelerated, bringing us closer to a line failure? What are the real benefits of restoring the deluge system?

These choices can be made even more complicated by another project team, with a debottlenecking project in the same area that could restore the unit to full capacity. The challenge emerges of deciding between two optional activity costs to keep the plant going, compared to the costs of increasing the potential throughput and revenue stream from the plant.

Data is the root of the problem. Data is gathered to understand the health of equipment and systems and is typically held in closed “silos” inside organizations, inaccessible in a useful manner to the majority. Standalone data systems or spreadsheets are used to manage the masses of data, often jealously guarded by subject matter experts who alone can access and interpret this data.

Management processes are in place, generating performance indicators, but the data they provide is often difficult to utilize effectively. Lagging indicators capture the symptoms already mentioned: equipment failure, system outages, loss of containment incidents, etc. What some people refer to as “leading indicators” typically focus on the health of the management system. Like lagging indicators, they provide data that is useful for showing trends but not specific or timely enough to support operational decisions. What must be known is the potential impact of each of these conditions or non-compliances, and the cumulative impact of all of them in the context of day-to-day operations.

For example, one such key performance indicator (KPI) might be that 95% of safety critical inspections were carried out on schedule. This sounds impressive, but it begs questions about the 5% that were deferred. What is included in those inspections, and what might they impact? If 80% of piping and instrumentation diagrams (P&IDs) are up to date, what about the 20% that are not? If 85% of overdue MOC tickets will be closed out this month, what is the impact of the 15% that will not? Furthermore, what is the risk impact when these three items converge as work is carried out in one area of the plant during a specific time frame?

KPIs look very different, depending on who is observing. Those organizations with leaders who spend the time to visit facilities and are competent enough to recognize what they are seeing will likely outperform those companies with leaders who rely on KPIs. Not too long ago, the author was speaking with a regional maintenance director, who said, “What’s interesting is that all of the indicators that are pushed up to me look good. Our operational reality is completely different. Unplanned outages, rising costs, maintenance backlogs, declining capacity, near misses—how do we reconcile these two visions of the world?”

The conclusion is that many separate functions exist in our organizations, each with their own risk management systems, but it is difficult to compare the priorities each system generates.

Are we forced to wear the blindfold?

The way data is gathered, analyzed and disseminated needs to be improved. Too many systems reflect individual organizational structures. They are standalone systems, and do not communicate with each other very well. We need to find better ways to integrate systems across enterprises. Data and analysis must be easily shared at the frontline and through all levels, including the boardroom, as a true reflection of how the organization is performing.

Better ways to deal with management processes (most of which are effectively risk management systems) are also needed. When non-conformances are identified, the impact on operations must be identified, allowing better prioritization choices to be made. Rather than being focused on how well each management process is working, the combined effect of deviations on the safe and effective operation of the facility must be understood. The way in which these deviations impact the fundamental process safety barriers that protect people, assets, the facility and its surroundings against major accidents must be identified.

To deliver on the promise of operational excellence, operators must integrate operations management and risk management at an enterprise level. These concepts are not new, but the tools capable of properly managing them are only starting to emerge.

Managing the ride

Enterprise operations excellence management software platforms offer improvements over traditional ways of assessing operational risk. These decision support tools help manage the complete planning-to-execution business process. By utilizing these solutions, companies can visualize risk at all levels of their organizations and significantly improve operational performance. By better integrating planning, maintenance and operations, companies can access visibility into the complete operation, driving increased efficiency and effectiveness overall.

Operations excellence management platforms enable plant operators to standardize initiatives, policies, processes and procedures across their organizations, driving a culture of excellence. They enable operators to:

  • Employ routine and efficient management of operational risk throughout the organization
  • Understand the contributing factors to safety risk and their impact on process safety barriers in one place, in real time
  • Produce new leading indicators of operational risk that reflect the operational reality of the plant
  • Close the gaps between maintenance, planning and the operational reality of the plant to achieve better plan attainment, wrench time and operational decisions
  • See all risk across the entire organization.

These enterprise systems have emerged from a realization of the gaps between planning, maintenance and operations processes and look to provide a way to integrate them into a holistic, end-to-end solution.

Existing practices result in isolated silos of data and information reflecting the different organizational silos that produce data. Interoperability is vital to achieving a holistic understanding of plant health. Operations excellence management platforms are designed to interface with ERP, EAMCMMS maintenance management systems, inspection databases, and planning and scheduling systems to help identify plant conditions and the real-time status of barrier impairments, to manage work safely and efficiently and to improve future plan attainment.

A built-in risk assessment engine provides the necessary workflow to assess the impact of deviations associated with risk-control systems, major events and impaired process safety barriers—all in the context of daily operations. By aggregating deviations and non-conformances with functional data-management systems, operators can access early-warning signals of the potential for a major incident by a specific area of the plant, across a unit, and throughout an entire facility, over a specific duration.

Furthermore, connecting the performance of process safety management systems to their impact on operations enables operators to make proactive interventions to prevent major accidents. Dashboards (Fig. 2) simplify operational risk management through a consistent means of visualizing risk, so that everyone across the plant can make better decisions.

They help operators understand plant status in terms of risks, trends and peak exposures. Icons on graphical screens show area(s) of the plant affected by impairments and deviations, in addition to their cumulative impact on process safety barriers and activities that could contribute to an actual event.

 

Fig.2. – Dashboards simplify operational risk management through consistent means of visualizing risk to plant operations.

Prioritizing work based on risk is more achievable with an enterprise operations excellence management solution. At present, many operational teams recognize the value of being able to prioritize, fix or maintain activities by the level of risk reduction they achieve. The ability to determine and compare with alternatives has always been elusive, but, with this new category of software technology, such comparisons are easier to understand. They drive increased efficiency and effectiveness through improved plan accuracy, plan attainment, plan safety and overall wrench time, thereby maximizing the value of assets (Fig. 3).

 

Fig.3. – Enterprise operations excellence management software technology drives increased efficiency and effectiveness, thereby maximizing value of assets.

Additionally, the frontline workforce is better informed about the risk consequences of their planned activities, and, as a result, they can make better decisions. The organization as a whole has greater insight into day-to-day operational risk exposure, as well as the efficiencies gained in work execution. This is true across the enterprise, making it easier to compare performance among assets and among regions.

Back to the ride at the fairground While these new technology solutions may not be able to smooth out the entire ride, they allow the blindfold to slip a little by providing predictive views of what is coming around the bend. In doing so, they enable better decision making.

Companies that want to pursue operational excellence must make significant changes to the way they work. Organizational barriers need to be knocked down, and data needs to be shared more widely and leveraged to its full potential for performance to improve. Enterprise-wide operations excellence management technology is the only way to achieve this to its fullest while driving a culture of excellence.

As with physical plant processes, business processes need to be systematized so that they generate the data needed to make better decisions. Risk management based on generic data beyond its sell-by date should be a thing of the past—and, with technology, it can be. Returning to the senior executive I met with back in 2009, if he were to ask me the same question today, I think I would have a better answer for him!

Click here to find out more about the author.

 

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