PTQ Q2 2023 Issue

Refinery of the future: bankable, flexible, and sustainable Efficient use of molecular precision across an integrated refining and petrochemical operation uncovers the best roadmap for refiners to meet their changing objectives

Keith Couch Honeywell UOP

A s firms work to realise their vision of how they want to engage the market across the energy transition, implementing those plans requires an investment strategy that is simultaneously bankable, flexible, and sus - tainable. In a business where investment opportunities are aligned with three-to-five-year maintenance turnaround schedules, opportunities span from smaller, highly tactical investments to longer-term strategies. While smaller investments can be funded out of cash flow, bolder projects often require access to external financing. These projects face increased challenges to secure the cash needed to bridge the energy transition. Simply responding to changes in the marketplace risks being too late and an inability to invest fast enough to maintain a going concern. The fundamental challenge is to invest in profitable invest - ments aligned with society’s increasing focus on environ - mental, social and governance (ESG) goals. Rising to these challenges is how Honeywell UOP helps its customers realise their refinery of the future. Healing a fractured business model Please, get rid of transfer pricing. Whether a firm operates a basic oil refinery or the most highly integrated refinery and petrochemicals complex, entitlements are pervasive in the form of transfer pricing between internal lines of business. These can be west-side vs east-side, conversion units vs others, and refinery vs aromatics vs olefins, to name a few. As the industry looks to drive efficiencies via connected and

digital, we learn more about the inefficiencies associated with such entitlements. Connected and digital themselves do not fix inefficient business models. As China has been the world leader in integrated R&P complexes, it drives step-change higher efficiency in the ‘Chairman’s Model’, in which each internal business is driven towards the same goal: the best overall profitability of the firm, not just their domain. Any digital or connected approach will simply mirror the inefficiencies of a fractured business model. Several major firms are realising this fundamental inefficiency and have started their journey to improvement – leadership structures are being modified, incentives are being realigned, and ben - efits are being realised. The first step in creating a future-for - ward refinery is to ensure the organisational structure reflects an integrated business model approach. When we consider decarbonisation and driving efficiencies, it is imperative to consider the whole operation. Efficient integration with molecular precision As we look at ways to increase a plant’s efficiency, we start at the macro level, but very quickly dig deeper into what is hap - pening at the most micro level. It is no longer good enough to talk about boiling ranges of feedstocks or even individual carbon numbers. Strategies for molecule management have matured to one of true molecular precision. Latest technology advancements manage operating efficiency at the level of individual isomers as we drive to minimise the work intensity for each component. As engineers and chemists, we can take almost any mol - ecule and convert it into almost any other molecule. But certain molecules want to be certain things. For example, by exerting energy (work) and capital, we can convert propane all the way to BTX. But what should we convert it into? The answer is: the thing that creates the highest value with the least amount of work and capital. To do that, we need to integrate efficiently across the entire enterprise. Less efficient operations are systematically losing their right to participate in future markets. How to measure efficiency? At Honeywell UOP, we focus on six fundamental efficiency metrics (see Figure 1 ). The five on the outside ring (carbon, hydrogen, utilities, emissions, and water – treated as a scarce resource) are in tension with each other and with capital at

Carbon Putting the right molecules in the right place

C

Utilities Doing more with less

Hydrogen Optimi si ng the sources and uses

H

Capital

$

Driving for the most bankable project

Water Treated as a scarce resource

Emissions Providing for a better tomorrow

CO₂

H₂O

Figure 1 Focus on six fundamental efficiency metrics

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PTQ Q2 2023

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