Refining Decision Making with AspenTech Petroleum Supply Chain Solutions

Summary
The rapid decline in oil prices in the latter stages of 2014 was the biggest macroeconomic talking point of last year since it was largely unheralded and took even seasoned observers by surprise.

While there's no shortage of experts weighing in on how far the drop could extend in 2015 and the timing of any recovery, perhaps a more useful takeaway from the episode is to appreciate the heightened uncertainty and complexity of today's world and the consequences for an essential commodity such as oil.

The global oil industry has always been highly sensitive to geopolitical events but is now also experiencing the disruptive effect of technological innovation, specifically in the form of hydraulic fracturing and horizontal drilling, which extensively impact the supply side in terms of both production volumes and the feedstock options for refiners.

It was against this backdrop that ARC Advisory Group in Singapore recently met with executives from AspenTech to discuss the process manufacturing software company's initiatives for planning and scheduling oil refinery operations, with a particular focus on how refiners can raise levels of profitable performance in an environment characterized by unpredictable crude oil prices, thin refining margins, dynamic customer demand, and skills shortages.

Refinery Challenges

With construction costs running into the billions of dollars and complex equipment operating 24 hours a day, refineries represent significant capital and operational investments for oil companies.

The production processes necessary to convert crude oil feedstock to refined products such as gasoline and diesel are now routinely automated through technology such as distributed control systems (DCS), instrumentation, and control valves. However, there are still numerous business and operational decisions that largely determine refinery profitability. These decisions can be categorized into either planning or scheduling activities.

The planning activities in a refinery, which typically involve a time horizon of weeks or months, aim to maximize refinery profitability by making optimal decisions around which crude oil feedstocks to purchase and what refined products to manufacture and in what quantities.

The scheduling activities provide information on how the plan can be effectively and feasibly executed based on the assets available to the refinery owner. Scheduling extends beyond the refinery gate to include not just the production processes but also scheduling of the unloading of feedstock (from pipelines and tankers), and the scheduling of finished product for blending, storage, and outgoing transfer.

In many cases, scheduling is performed using Microsoft Excel spreadsheets, which introduces several shortcomings related to the sheer complexity of operations in a modern refinery and the dynamic nature of the petroleum supply chain and its pricing. This largely manual process means refiners must attract and retain increasingly hard-to-find expertise and experience. It is not uncommon in many refineries to find one senior planner supervising a very young team. Furthermore, particularly for scheduling, where different teams are often responsible for different parts of the refinery, the manual way of doing things encourages "silo thinking," making it more difficult to run the refinery in an optimally profitable manner.

Software Solutions

AspenTech's aspenONE Petroleum Supply Chain suite offers a number of software products for refineries looking to enhance planning and scheduling performance and overcome these issues.

In terms of solutions for oil refineries, AspenTech has the longest experience in the planning area. The company first released its Aspen PIMS product in 1984, just three years after the company's founding out of the fruits of a research project at the Massachusetts Institute of Technology (MIT).

Feedstock (i.e., crude oil) selection is a key function of Aspen PIMS. As a significant procurement expense, the feedstock decision impacts the profitability of production in the planned period as well as costs such as inventory holding. Along with price, variables that need to be considered in a planning model include availability, quality, and required volume.

The non-conventional oils that have come onto the market in recent years, in particular, from the American shale fields and Canadian oil sands, have increased the feedstock options for refineries. Planning software such as Aspen PIMS can help refiners evaluate the suitability and impact of newly available feedstocks.

To facilitate feedstock selection, Aspen PIMS includes the Aspen Assay Management tool. Prepared by the producer, an assay details the key properties of a crude oil such as originating source, density, viscosity, sulfur content, etc. The tool allows planners to download assays from different sources and store these for later interrogation based on the feedstock properties required.

Other useful functions of Aspen Assay Management include spot crude evaluation and molecular characterization. With spot crude evaluation, planners can rapidly ascertain the breakeven cost of a new type of crude and compare with a known reference case. Molecular characterization (a patent-pending innovation), provides planners with an enhanced level of detail on feedstocks to help improve crude purchase decision quality.

For the scheduling activities necessary in a refinery, AspenTech provides the Aspen Petroleum Scheduler product. This is an evolution of the ORION Scheduling System from Houston Consulting Group, which was acquired by AspenTech back in 2001. This simulation tool enables users to build a model of the refinery and view the different units on successive flowsheet screens. Integration with Aspen PIMS allows assay data, production plans, and blending correlations to be shared. The schedules for the various refinery units are displayed on a series of graphical event screens. To promote collaboration, several users can work simultaneously on the schedule.

AspenTech's 2013 acquisitions of Pipeline Scheduling System (PSS) and Dock Scheduling System (DSS) software from Refining Advantage of Houston, Texas brought significant enhancements to the Aspen Petroleum Scheduler. According to the company, with the respective capabilities integrated into the software, users can now optimize refinery incoming/outgoing pipeline schedules and automate vessel-to-berth scheduling at the dock, a notoriously difficult task using manual scheduling.

For refinery schedulers, aside from the core Aspen Petroleum Scheduler product, Aspen Refinery Multi-Blend Optimizer provides off-line blend scheduling and optimization capabilities for the refinery's output products – gasoline, distillates, fuel oil, etc. to help maximize margins and minimize off-spec blends and costly quality giveaway.

Innovation for Today's Market

In evolving its product portfolio for refinery planning and scheduling, AspenTech is conscious of a number of trends. One of these is the proliferation of web-based devices to satisfy the need for mobile rather than just fixed desktop access to information. To help address this trend, in February 2014 the company introduced aspenONE PIMS Platinum as part of the aspenONE Version 8.5 release.

With this solution, users can access both the refinery plan and schedule from any web-enabled device, eliminating the need to install client software. As well as advantages in mobility and wider information access, with planning and scheduling information available in a single flowsheet environment, users can immediately see the impact of changes to the plan on the refinery schedule. In particular, any discrepancies between plan and schedule are highlighted for action to help avoid non-optimum execution.

To address users' performance requirements, the company offers Aspen PIMS-Advanced Optimization (PIMS-AO), a layered application that takes advantage of the latest multicore processors to provide refinery planners with the results of multiple scenario runs at least eight times faster than using Aspen PIMS alone. PIMS-AO also includes sophisticated solver capabilities to avoid the sub-optimization problem and allow users to rapidly get to a global optimum. The latest aspenONE release (Version 8.7) allows Aspen PIMS-AO to be run from the aspenONE PIMS Platinum web-based flowsheet environment.

An Indian oil refiner with a trading arm in Singapore uses PIMS-AO to positively impact profitability. At the beginning of each workday, the refiner gets the market price from the trader in Singapore, where, because of the time difference, it is almost midday. Whereas it used to take four hours to get the analysis results based on today's price, these are now available in around 20 minutes using PIMS-AO. The refinery can thus execute the derived optimum plan the same day in India and "capture the profit" based on this price rather than having to wait until the next day when the price and hence refinery operating parameters may have changed.

Opportunities in Asia

Although AspenTech does not break down financial performance by region, it is clear from ARC's discussions with executives in the Singapore regional headquarters that Asia Pacific represents a prime growth opportunity for the company. Economic expansion, increasing industrialization, and wider vehicle ownership all stimulate the need for refined oil products in many parts of Asia. Countries such as Indonesia and Vietnam, which are experiencing burgeoning demand in the face of inadequate domestic refining capacity, have already announced billions of dollars' spend on new refinery construction over the next decade.

In Southeast Asia, a recent bright spot for AspenTech in Asia Pacific, one national oil company has seen tangible benefits – of the order of several millions of dollars a year – from adopting AspenTech's Petroleum Supply Chain solutions at one of its major refineries.

Specifically, adopting Aspen Petroleum Scheduler and Multi-Blend Optimizer allowed it to automate refinery scheduling and overcome the information speed-and-quality deficiencies associated with more than ten schedulers juggling multiple Excel spreadsheets and attempting to communicate the data between them.

Conclusions

While the recent turbulence in the oil markets has made the typical motorist pay greater attention to the price paid at the pumps relative to the day's Brent or West Texas Intermediate price (a relatively simple equation to solve), the refiners have to be constantly aware of and process a multitude of variables to operate profitably.

Faced with dynamic supply prices, greater feedstock options, and fluctuating market demand, refinery planning and scheduling is challenging at best, and even more so when it depends on individuals in different departments filling up Excel spreadsheets and sending these back and forth. AspenTech designed its software solutions for refinery planning and scheduling to help focus refiners' resources and energies on maximizing profitability, rather than on crunching and communicating data. The integrated nature of the aspenONE offering delivers one single "version of the truth," avoiding discrepancies between planning and scheduling and between schedules generated in different areas of the refinery.

For a company with roots in the research community and that continues to invest significantly in R&D, it is not surprising to see continuing innovations and enhancements of AspenTech's product portfolio. Improving solver quality, reducing the time to solution, facilitating information sharing, and making products easier to use are all attributes that will be appreciated by refinery end users.

In Asia, AspenTech can capitalize on the opportunities from new refinery builds in the emerging economies. Going forward, AspenTech should expect Asia to become an increasingly prominent demand center for its Petroleum Supply Chain suite of products

Given these positive factors for future business growth in Asia, whether through industry exhibitions, dedicated seminars, regional trade publication articles, etc., it is recommended that AspenTech continues to clearly communicate the value of its solutions for improving the operations and enhancing the profitability performance of refining companies in the region.

aspenONE and Aspen PIMS are trademarks of AspenTech. All other trademarks mentioned are the property of the respective owners.

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Keywords: AspenTech, Oil & Gas, Refining, Downstream, Asia, Supply Chain, Planning, Scheduling, Optimization.