Take operational excellence to the next level

For years, high and rising oil and commodity prices spurred plant construction, expansion and modernization without much regard to cost. Then prices fell, bringing many projects to a screeching halt. The ensuing hiatus has given owner/operators and engineering/procurement/construction (EPC) companies several years to reconsider their options for how they go about their businesses.

Now, prices have started to rise and there is new interest in projects to boost capacity and improve productivity. But rather than simply return to the “boom time” methodologies of the past, companies have the opportunity to evaluate their methods in light of recent rapid advances in engineering methods, automation and the connectivity provided by commercial information technology and the Industrial Internet of Things (IIoT).

The Wednesday morning keynote panel discussion at ABB Customer World this week in Houston, titled “Next level operational excellence,” roamed over a wide range of topics related to improving project costs, uptime, productivity and efficiency.

Today’s projects can cost less

Today, most companies need higher capital efficiency—to make good use of expenditures and get better returns. This is true not only in oil and gas, but in the public sector due to public deficits. They’re concerned about funding and deploying their resources in a cost-effective way.

“We have to change the way we are looking at and executing projects—not just squeezing prices, but new ways of looking at things,” said Jose Bustamante, executive vice president, business development and strategy, Fluor Corp. “We must collaborate more, to discuss the standards, specifications and practices we have taken for granted. How can we change them to make them more cost-effective?”

Clients come to Fluor with their latest designs, and those might save 10-15%. “We want to start from scratch—some call it ‘zero-based’—and ask, what are their goals? What’s the minimum kit?” Bustamante said. Then together, Fluor and the client can add features such as HSE, safety systems and redundancy where they're actually needed, he said. “With this approach, we can save 30%—with better delivery.”

[sidebar id =1]

Capital projects need better control of schedule and risk. When commodity prices rose, there was a strong incentive to do projects the same way as ever, but research shows global project costs rose and schedules still ran late, with 64% of projects overrunning on cost and 73% on schedule.

“Now oil and commodity process have come down, and we need a reset,” said Peter Terwiesch, president, industrial automation division, ABB. “Shaving 5-10% won’t do it when prices are half, so there’s been less project activity. Now we are seeing some new, big projects where we’ve been able to apply our latest methods, with examples showing 25% and even more than 50% cost reductions.”

Some of that is due to reductions in bulk material and labor costs, Terwiesch said, “But a lot is not, and we’re seeking to make those savings structural in our methods.

“Project cost reductions are putting pressure on automation costs, so we are seeing more cloud engineering, digital marshalling, and automated data management for pulling together the tags. These can result in 30% savings in CapEx.”

To shorten the project timeline and improve build quality, Bustamante said, “We’ve moved more of the construction work into fabrication shops, where it can be done under controlled conditions, in parallel with other activities to shorten the project.”

For higher on-site personnel efficiency and safety, Fluor uses virtual reality and personnel tracking systems. “We’ve been using virtual reality for 15 years now,” Bustamante said. Fluor’s system for tracking badges can monitor 15,000-20,000 workers. “We can know where they are in case of evacuation. We know where the hazards are, and when people approach them,” he said. “We can track individuals, such as visitors and new employees who are at most risk of injury. We can make sure they stay where they belong.”

Smoother operations

Whether under construction or running for decades, plant owner/operators and engineers are eyeing the operational benefits of connectivity and the IIoT.

“Our Peru plant has 220 MW, 20 MW and 25 MW hydroelectric plants, and seven natural gas-fueled engine generators providing 42 MW. We have our own engineering department, so we are both supervisor and owner for engineering, construction and startup,” said Ricardo Rizo Patron, chairman, UNACEM Corp., a Peru-based global supplier of concrete and ready-mix with operations in Peru, Ecuador and the U.S.

UNACEM is centralizing production management for all its plants, with control loop optimization, expert systems and energy efficiency management done over the cloud, so it can manage its energy and peaking requirements.

“In OpEx, we see advances in safety, productivity and efficiency,” Terwiesch said. “People can stay out of harm’s way through remote operation, which can also enable continuous operation to optimize the use of plants and equipment.”

UNACEM is testing robots in trials for packaging cement in sacks, which is how it’s commonly delivered in Peru and Ecuador. “We’re testing drones for surveying our quarries and inventories, and we want to use autonomous vehicles in the quarries to prevent accidents,” Patron said.

The company sees potential applications in logistics (so it can know where its trucks are), in online transactions (so customers can order on the web), and in distribution, where artificial intelligence could guide its trucks more efficiently through the heavy traffic in Lima.

“For power generation, we are looking at more renewables—solar, biomass—and at optimizing distribution on both the supply and demand sides,” Patron added. “We want energy storage to store hydroelectric power from afternoon rains for use at other times.

“For engineering, we need ways to manage drawings for electrical, mechanical and civil engineering so they are coordinated and don’t fight with each other. This is very important for both greenfield and brownfield applications.”

Declining downtime

Research has shown that unplanned downtime costs $20 billion per year in the oil and gas industry, and 80% of that is avoidable. “We can help keep operators alert 24/7 with ergonomic control rooms, digitalize the plant floor for new levels of productivity and add sensors to motors, pumps and compressors to assess health, predict maintenance and extend service intervals. And we can avoid power interruptions,” Terwiesch said. “Together these are worth 30% in operational savings. We see a wealth of opportunities opening up.”

As a foundation of data analysis for condition monitoring, “We’ve been capturing information from maintenance, operations and asset management for 40-50 years,” said Bustamante. “Fluor has information on how to prevent failures, and we can design in the measurements from the beginning.

“On the capital side, we do close to 1,000 projects annually, and have a lot of information on how to design and build for cost and reliability. And we have a system to leverage this.”

UNACEM has installed wireless sensors for motor monitoring and predictive maintenance, Patron said. “Wireless systems and training are required to take advantage of new ways of doing things.”