22 The Planning Process.ppt
- 1. Tools & Methodology for Profit Improvement Session 2:2 The Planning Process
- 2. Tools & Methodology for Profit Improvement Planning Process 2 Petroleum Supply Chain Supply Chain Management Focus: Demand forecasting Shipment scheduling Terminal Inventory Benefits: Lower Spot Freight costs from wider loading window, more choice ~$1/ton. Higher Spot sales prices from better forecasting ~$1/ton Refinery Planning Focus: Asset utilization Product mix Inventory scheduling Benefits: Profit Improvement of 10-20 c/bbl Critical Link
- 3. Tools & Methodology for Profit Improvement Planning Process 3 Petroleum Supply Chain Supply Chain Management within refinery Trade-offs between inventory (working capital) and supply chain costs Blendstock inventory vs. optimum product blending Product inventory vs. economies of shipment size Product inventory vs. customer demands Intermediate feedstock inventory vs. plant reliability Accurate refinery planning essential to evaluate supply chain costs
- 4. Tools & Methodology for Profit Improvement Planning Process 4 Planning Process Methods & Procedures Communications Performance Metrics Feedback Continuous Improvements Model Maintenance Planning Tools • Refinery LP Models • Structure • Yield/Quality Data • Constraints • Operations scheduling • Blend Scheduling Plans & Decisions Accurate Tools Best Process Better Plans Better Decisions More Profit Planning System Elements
- 5. Tools & Methodology for Profit Improvement Planning Process 5 Planning and Scheduling Horizons Horizon Time Span Purpose Long Range 2-5+ years Capital Strategy Term Supply Contracts Annual 12 months Budgets Monthly 2-3+ months Monthly feed purchases Product sales outlook Operating strategies Inventory strategy Weekly/Biweekly 4-6 weeks Unit strategies Production volumes Daily 10-14 days Operating instructions Stream and inventory management Unit targets Product Blends Immediate Optimize unit operations LP Scheduler APC/Simulation
- 6. Tools & Methodology for Profit Improvement Planning Process 6 Obstacles to Good Planning Limitations Resources and manpower Knowledge and experience View limited to KNPC only Lack of simulation models for accurate yield predictions Result Out-of-date planning models Inaccurate predictions of product production Operations ignore planning directions/strategies Experience factors and spreadsheets used for local strategies and optimization Planning operates in “glorious isolation”
- 7. Tools & Methodology for Profit Improvement Planning Process 7 Common Planning Problems Crude quality impact not adequately modeled Limited cut point optimization Perfect fractionation Limited process unit yields representation Limited feed quality and severity adjustments Models over-constrained; Constraints not challenged Inconsistencies between integrated and local LP models Ineffective analysis of Actual vs. Plan Ineffective LP model maintenance
- 8. Tools & Methodology for Profit Improvement Planning Process 8 Typical 10-15c/bbl benefit Or $30 million/year for KNPC Benefits of Improved Planning Increased value of products produced Improved utilization of facilities Optimized operating instructions to process units and to blending Better timing of product liftings Plan closer to optimum; Feasible schedules closer to the plan Better response to market opportunities and changes in liftings Better tactics to deal with planned plant shutdowns Reduced inventories and internal oil movements
- 9. Tools & Methodology for Profit Improvement Planning Process 9 Best Practices Planning Processes And Planning Tools
- 10. Tools & Methodology for Profit Improvement Planning Process 10 Best Practice Planning Process Features Supply Plans for Asset Optimization. Multi-refinery LP (M-PIMS) model of refineries with common crude supply and product markets. Optimum allocation of products to refineries based on refinery capabilities. Optimize use of intermediates and blend components between refineries. Long-term crude supply forecast.
- 11. Tools & Methodology for Profit Improvement Planning Process 11 Best Practice Planning Process Features Operating Plans by Individual Refinery Overall feed supply & product demands from supply plan. Fine-tune product slate by refinery. Optimize operations with current operating constraints. Interim plan updates.
- 12. Tools & Methodology for Profit Improvement Planning Process 12 Best Practice Planning Process Features Accurate LP Models. Multi-refinery model = combined individual refinery models with intermediate stock transfers. Individual Refinery responsible for configuration, data, and constraints.
- 13. Tools & Methodology for Profit Improvement Planning Process 13 Best Practice Planning Process Features Clear, frequent communications between all groups involved Agreement (“buy-in”) by all groups essential Profit performance monitoring Monitor and analyze deviations to plan, and to “Best Achievable” Quantify profit impact Feedback systems and continuous improvement LP model updates Price/demand forecasting
- 14. Tools & Methodology for Profit Improvement Planning Process 14 Best Practice Planning Process Features VIRTUOUS CIRCLE EXECUTE PLAN MEASURE PERFORMANCE REVIEW
- 15. Tools & Methodology for Profit Improvement Planning Process 15 Operations Planning Cycles PLAN SCHEDULE OPERATE Variance Analysis Model Update Feedback & Adjustment
- 16. Tools & Methodology for Profit Improvement Planning Process 16 Complexity Detail Accuracy Ease of Use Input Data Management Interpretation of results Solution speed Maintenance Linear models of non-linear refinery operations Key: Accurately capture major economic drivers Planning Tools
- 17. Tools & Methodology for Profit Improvement Planning Process 17 Best Practice LP Model Features Scope encompasses assets with common feed and product markets (i.e. multi-refinery) Constraints reflect true capability and flexibility of the system (represents the TECHNICAL ENVELOPE) Swing cuts for cut point optimization Crude assays and main fractionators (FCC, Coker) Fractionated swing cut qualities calculated by simulation Stream pooling with quality recursion Prevents over optimization of stream dispositions for short term planning Maintain stream disposition flexibility in refinery
- 18. Tools & Methodology for Profit Improvement Planning Process 18 Best Practice LP Model Features Process unit models Feed pooling Yields and product qualities adjusted for feed quality and operating severity Base yield and delta vectors Product blending by quality specification Utility balances Base loads and variable consumption
- 19. Tools & Methodology for Profit Improvement Planning Process 19 LP Models Scheduler Refinery Operations Planning Supply Plan Operating Plan Daily Instructions Process Simulation Models LP Data Maintenance Application Calibration Factors Performance Monitoring Data Reconciliation Operating Targets Integration of Planning Process and Tools
- 20. Tools & Methodology for Profit Improvement Planning Process 20 Supply Planning Supply interfaces requires communication / collaboration Planning turnarounds and other major events with refinery operations and maintenance Blending and scheduling Shipping Incremental product valuations Inventory management Impact of constraints Products Unit capacity and severity
- 21. Tools & Methodology for Profit Improvement Planning Process 21 Product Blending Inventory management Blendstock and finished product Shipment schedule coordination Product quality giveaway Tracking and reporting Economic and operational impacts
- 22. Tools & Methodology for Profit Improvement Planning Process 22 Operations Planning Typically 1 month time horizon. Monthly operating plan. Optimum asset utilization, and product production. Spot sales opportunities for products, intermediates and blend components. Valuations and impact on plan. Unit shutdown planning. Planned and unplanned maintenance and Turnarounds. Inventory management. Outages, overfills. Interface with scheduling, operations, maintenance.
- 23. Tools & Methodology for Profit Improvement Planning Process 23 Refinery Scheduling Scheduling does not optimise, but sequences operations Methodology for translating plan into operating orders Interfaces with planning / operations / process engineers / maintenance Updating operating instructions Frequency Methodology / techniques Communication techniques Written / electronic Daily meetings
- 24. Tools & Methodology for Profit Improvement Planning Process 24 Performance Measurement What was the actual operation? Record flows in volume, convert to weight. Record lab tests for critical qualities. Cumulative Month to date Mass Balances on critical process using sensible method for accounting for missing data. Volume and weight average of product dispatched * critical quality giveaway. ANYTHING UNMEASURED CANNOT BE CONTROLLED
- 25. Tools & Methodology for Profit Improvement Planning Process 25 Performance Review Aims Ensure that refinery always operates at optimum as defined by LP model plan. NOT to allocate BLAME. Constructive, NOT Destructive, criticism. NOT to figure out how much profit was lost because no human can forecast future. Update plan with better data, more realistic constraints, technical envelope. Ensure operations are always at current optimum.
- 26. Tools & Methodology for Profit Improvement Planning Process 26 Back-casting A method of measuring the planned vs. actual profit deviation, and identifying the causes. Profit deviation need not be a loss. Can be extra profit because plan was too pessimistic. Backcasting uses the LP model (using cases) to calculate profit. Compare Backcast solutions to help understand the cause of profit differences.
- 27. Tools & Methodology for Profit Improvement Planning Process 27 Using Back-casting Cases in Performance Review Are deviations “one-off” or part of a trend? Are measurements of actual performance believable and accurate? Decide what actions required to avoid negative (or positive) deviations in future.
- 28. Tools & Methodology for Profit Improvement Planning Process 28 Actions From Performance Review Do more research into cause by process engineers, including simulation model runs, plant test runs, lab testing. Change the LP model data. Add, tighten, or free up, constraints in the LP model. Change Process operations and product blending to make more profit at no cost. Persuade management to accept costs for items like extra demurrage and maintenance using Backcasting results. Make case to Corporate Planning for extra investments using Backcasting results.
- 29. Tools & Methodology for Profit Improvement Planning Process 29 Profitability Gaps Prices Crude Plan Actual Products Plan Actual Rates Crude Plan Opt Actual Products Plan Opt Opt Actual Opt Refinery capacity Plan Actual Best Lost Opportunity Margin $/bbl Plan Actual Best Achievable Market Planning Refinery