No doubt you’ll be pleased to see the back of 2020! But why … is it because it pushed you well outside your comfort zone? Whatever you feel about the year 2020, it’s undeniable that it’s been a steep learning curve in self awareness, as well as digital transformation – both personally and corporately. COVID has accelerated everyone’s digital journey by years: everyone now has an army of (virtual) co-workers around the world and walking around the ‘office’ involves dialing someone on Teams. The workplace water cooler is now a pretty lonely and deserted place … most have been turned off!
For us in KBC this has been no different. But we see adversity as a prompt to learn and adapt. We published our Digitalization Manifesto in 2018; it remains a keystone reference piece that remains as relevant today as it was back then. Digital proof of concept (PoC) projects followed in 2019 and 2020 was set for value delivery at scale. But we certainly weren’t expecting quite the rate of change in 2020 that has been experienced. But by doing the small things right we’ve been able to leverage agile mindsets and strong customer collaboration to capture opportunity in the chaos.
We have endeavored to keep our customer base informed over the year about thought leadership, application ideas and case studies. In November we delivered the Y Now digital transformation symposium featuring 43 industry experts sharing what’s worked for them in the past and what they envisage for the future. But you’ve also been busy and there’s a good chance you’ve missed a good chunk of these rich insights. So, here’s a short summary of a few which you ought to get acquainted with. We see that industry's survival hinges on three things:
The pandemic has created challenges around preservation of cash-in-hand, limiting discretionary spending, and re-emphasizing in-house programs. However, improving short-term profitability is always needed. KBC identified short-term profit gaps in a client’s two oil refineries. A particularly large gap (USD 51 million/year) was associated with a high-volume naphtha stream. Some of the reduction in the gap was achievable through operational adjustments but capturing the full benefit would require installation of butane blending facilities and overcoming naphtha storage RVP limitations. KBC’s change management and innovative digital solutions around temperature and RVP management allowed refinery staff to raise the RVP closer to mechanical limits and storage tank RVP limits sustaining a benefit of USD 17 million/yr. Plans to acquire the remaining USD 34 million/yr. savings through facility upgrades, are ongoing with minor to moderate capex and exceptionally short paybacks.
End-to-end hydrocarbon supply chain optimization is an extremely complex optimization problem to solve, currently relying on a disparate tool set that focuses on discrete dimensions and specific optimization goals that leads to siloed models, data and decisions. We have completed client proof of concepts where all our major supply chain and production optimization technology blocks were utilized (Petro-SIM® kinetic unit models, Petro LP, Visual MESA® Supply Chain Scheduling and Visual MESA Production Accounting) and then expanded into informing the APC (PACE) application. This has automated and visualized unit monitoring and performance variance analysis as well as crude oil scheduling optimization. By integrating all elements, it provided modelling consistency, aided optimized execution and de-limited the visibility of the businesses over its entire value chain with both actual and predictive performance abilities. The outcomes that we have delivered included increased productivity of planners and engineers by automating routine processes. This has enabled silo busting and more efficient resource allocation and utilization. The whole industry is still on the journey to complete autonomous operations, but we are proud to be co-innovating with clients that believe in our abilities in providing them with first mover advantage.
COVID has changed the market economics of a greenfield refinery. Travel restrictions have exacerbated the situation further with only around 10% staff being active. This has caused lots of head scratching around how to alter these projects and embrace alternative, ‘future-proofed’ business models (remote operations), Technical Optimization (operations profit reviews), and Asset and Production Readiness (integrated planning and asset handover preparation).
Of immediate interest has been remote operations as existing staff have not been willing to transfer to isolated locations. Yokogawa’s automation, controls systems, process control and other advanced solutions enabled a clear value hypothesis around the use of digitalization, digital twins, and operations readiness to both lower staffing levels as well as structurally decrease costs.
We are developing the Remote Operations Center with a fully integrated digitalization solution aiming to reduce overall staffing needs by almost 50%, including a much reduced permanent in-field team.
Embracing alternative business models means doing things differently. We delivered an enhanced unit monitoring Co-Pilot Program® enabled by the digital twin to monitor health of a process unit and to validate accuracy of tools used for business decisions. Delivering a single version of the truth alongside visualization of results enabled collaboration within the organization, new opportunities and greater data analysis. Opportunities worth $5 million per year from one process unit and huge benefits identified from closing the significant gap between the actual performance of the unit and that predicted by LP.
We have to prepare for the new world. The alternative is putting your head in the sand and taking it out sometime later only to realize that you’ve become irrelevant and can’t survive. A recently appointed Energy Manager of a large complex commented that profit performance of their asset had deteriorated as a result of limited utilization of digital energy management software. COVID working arrangements had made it even harder to justify internal efforts to restart use of the technology. But over just 2.5 days of remote workshop, justification was proved emphatically. The workshop focused on the technology value to the wider stakeholder group, how to use the latest digital connectivity to interface into their work process, as well as analyzing Roles and Responsibilities (RASCI Matrix). The outcome was a defined implementation Roadmap with agreed success factors. The most frustrating thing that came out of the workshop was the scale of the missed opportunity cost whilst everyone was dragging their heels.