Whitepaper: Valero Energy Stewardship Program: Meeting the Challenges of Optimizing Energy in Refinery Operations

Background:

Typically, 50% of a refinery’s operating expense is directly related to energy costs, excluding capital and depreciation. This presents a significant opportunity to capture savings and control operating dollars. With the downturn in the economy, narrowing margins on crude distillates, and hurdle rates for capital projects becoming more competitive, identifying, capturing, and sustaining low cost energy reduction opportunities have become increasingly important. Historically, energy has been viewed as a relatively inexpensive resource to be used with little consideration. However, in July of 2007, Valero management recognized the need to substantially reduce energy consumption and costs in refinery operations. With the implementation of the Energy Stewardship Program (ESP), the Valero Energy Corporation committed to the reduction of energy costs by $100 million per year. The primary charge of the initiative was to effectively manage and assure attainment of the energy savings goal identified. Foremost, it was important to reduce the quantity of energy consumed in the refineries without impacting throughput and quality. To date, the ESP has been employed in fourteen Valero refineries with captured savings totaling $120 million per year.

Energy Stewardship Strategy and Tactics:

Valero Energy Corporation engaged Modular Process Control (MPC) to aid in the employment of an energy management program in its refineries. MPC is an energy management consulting firm that assists manufacturing companies to reduce energy use without capital. MPC accomplishes this through the development and implementation of Energy Management Systems (EMS). MPC’s primary role was to facilitate the execution and sustainment of energy improvement ideas. This was achieved by focusing on three distinct project attributes that included evaluation, implementation, and retention phases. The following describes these attributes in detail.

Evaluation Phase:

Site Assessment: The evaluation phase involves a high degree of participation among the refinery staff, the corporate energy team, and MPC in order to affect a site energy gap review focused on identifying improvement opportunities. The review of energy and production data is a primary focus. An evaluation with special attention to production, workflow, significant energy users, and current energy performance measurements is conducted. Daily historical energy performance data is gathered to identify trends and establish correlations. Moreover, proven levels of performance are noted and daily variances are identified. All key factors influencing energy consumption should be fully understood.

Analysis Activities: Further investigation performed by the refinery staff and MPC should include: an Energy Ratio Analysis that highlights energy consumption against key process inputs; an Energy Variance Analysis comparing average versus demonstrated benchmark levels of performance; a System Analysis that determines the information gaps in energy tracking and reporting; an Awareness Survey highlighting the level of focus on energy by refinery personnel; a Metering Analysis that focuses on improving measurement points for daily energy management; a Quantified Opportunity List highlighting specific energy opportunities created through communications with plant personnel and daily operational analysis; and an Organized Energy Team that identifies, qualifies, quantifies, and implements Energy Action Items that result in lower energy intensity use at the refinery.

Implementation Phase:

Energy Team Formation: During the implementation phase, an energy team is formed and charged with generating energy improvement ideas using energy ratios as well as solicitations from refinery staff members. Each energy improvement opportunity identified is summarized as an Energy Action Item (EAI) in an assignment log. EAIs are prioritized and quantified. Accountability is determined to ensure the timely implementation of improvement opportunities. The energy team conducts weekly meetings in which the accountable person(s) discusses the progression of assigned EAI.

Energy System Development/Installation: To ensure ongoing management and control of energy resources in the refinery, an EMS is needed. Detailed indicators influencing relationships among energy consumption, production levels, product mixes, weather factors, and other associated energy drivers are reviewed for significance. Energy ratios, a relationship between energy consumption and production volumes, are developed for each key process area in the refinery. The energy ratios form the basis for daily review of each process area. As a result, poor energy operating performance and negative trends impacting energy consumption are easily identified. Further, the energy team is trained to utilize the EMS to identify variances directly impacting energy performance.

Another tool used for performance tracking is the Key Volume Indicator (KVI) models, which are developed to track current performance for all major utilities against historical energy performance. The KVI model is based on historical performance to predict theoretical energy use as though an energy savings initiative had not been pursued. Thus, the KVI model provides a basis for the quantification of the net economic impact derived from the efforts to reduce energy consumption and manage energy resources effectively.

Retention Phase:

Retention Team: The purpose of the retention phase is to ensure the long term sustainability of the EMS and, consequently, the ESP. MPC provides a retention manager to work closely with the site energy coordinator and refinery staff during project completion. Daily energy ratios are reviewed and recommendations are made to improve daily energy performance. In addition, daily and weekly communications between the energy coordinator and the retention manager take place. Emphasis is placed on the identification and implementation of new energy improvement opportunities. Plant visits and system project installation audits are conducted on a scheduled basis to support the sustainability of the ESP. Energy savings are verified, which ultimately aid in future energy budgeting with use of KVI models. This assures the energy savings achieved are accurately reflected in the subsequent yearly energy budget. Finally, continuous feedback is given to the refinery regarding areas where savings are deteriorating and energy improvement opportunities exist.

Houston Refinery Project Overview:

The Valero Houston Refinery, ~150,000 barrel per day, was selected as the pilot site for the rollout of the ESP due to the established infrastructure and the continued successful focus on energy management during the prior 12 years. A kick-off meeting was held to introduce the ESP concept and share with the refinery the expectations of both Valero Headquarters and MPC participants.

Project Team Structure:

The core refinery team was identified and consisted of an energy manager/champion, energy engineer/coordinator, and an operations field energy coordinator. The refinery support was aligned from the leadership team through to operations, with primary support groups consisting of unit engineers, complex managers and superintendents, and the maintenance department. MPC was given the primary responsibility of implementing the EMS associated with the ESP. Their charge was to provide a systems outline and to guide the implementation of a sustainable refinery energy management program.

Energy Gap Analysis:

During the launch of the ESP, an energy performance analysis was performed. Unit process flow sheets and historical data were reviewed with field verification to identify potential energy cost reduction opportunities. This was lead by Valero through a systematic format that included pre-identified focus areas and prepared questions. A review of the fuel gas, steam, and electrical balances were performed across the refinery, complexes, and units. The refinery fuel gas balance closure was reduced from a running average of 24% to less than 5%, the steam balance was reduced from a running average of 10% to less than 2%, and due to the lack of infrastructure and cross regional substation responsibility, an electrical balance was deemed more cumbersome than the initial scope this project allowed. All suspect instrumentations were investigated and corrected. This allowed more accurate measurement and benchmarking which aided in the achievement of energy performance objectives.

Measurement Tools:

Along with Solomon’s Energy Intensity Index (EII), several new measurement tools were employed for tracking purposes. An energy ratio file was created to measure the overall refinery and individual unit energy ratios (MBTU/barrel of feed), an energy log was created to capture and record the progression of EAIs, and a savings model calculator (Key Volume Indicator model) was created to track the gross financial benefit of the ESP. Numerous graphics were created in an energy dashboard system for online performance review. Steam balance, fuel gas balance, heater performance, and contract compliance performance displays were generated in the refinery’s local historian for further evaluation.

Energy and Process Performance Improvement:

A unit by unit review with respect to energy and process performance was conducted with corporate subject matter experts, unit process engineers, unit superintendents, and complex managers. An initial evaluation produced 46 potential energy opportunities. Subsequently a prioritized rolling list of ten items was used to focus and streamline implementation efforts. All identified energy ideas were recorded and tracked in an energy log. Each EAI was reviewed weekly for progress and benefits achieved. To date the Houston Refinery has identified and completed 32 energy action items. Through best practice sharing among inter and intra organizational groups within the Valero Energy Corporation, opportunities continue to be identified and pursued.

Sustainability of Results:

A major component of sustainability is the continuous review of implemented EAIs. A champion is selected to be responsible for the progression of each EAI. This champion is then charged with the initial analysis of the project benefits, the feasibility of implementation, and quantifying captured savings after implementation. All EAI’s are further reviewed by refinery management, engineers, and the responsible person(s) during a weekly energy management meeting. A comprehensive understanding of the relevant issues in the form of a presentation is expected at each of these meetings. Each month, an energy Business Unit Review meeting is held with all refineries and the corporate energy business team to review companywide energy metrics and performances, specific refinery issues, and upcoming expectations.

Results Achieved:

In the course of the previous two years, the Houston Refinery’s Solomon EII decreased from 95 in 2007 to 84 in 2009. The energy ratio was reduced from approximately 460 MBTU/Bbl to approximately 320 MBTU/Bbl. This was accomplished through a combination of energy reduction initiatives as well as increased refinery reliability. The overall refinery energy use was reduced by approximately 9,600 MMBTUD while the throughput increased approximately 27,000 BPD. The energy cost savings was approximately 9.6% when compared to the 2007 baseline. Utility contract performance compliance is also reviewed monthly by the energy engineer/coordinator. The energy project has expanded to include all utilities: water, nitrogen, oxygen, and hydrogen. Within one year, the Houston Refinery has improved from a fourth quartile performer to a consistent first quartile performer with respect to energy.

Background:

Valero Energy Corporation is the leading independent oil refiner in the United States. The company owns and operates 14 refineries with a combined capacity of 2.5 million barrels per day. Approximately 60 percent of this capacity is located in the Gulf Coast region with refineries in Texas, Louisiana, and Aruba. The remaining refineries are located in the West Coast, Mid-Continent, and Northeast regions. Valero also markets refined products on a wholesale basis through a bulk and rack marketing network as well as more than 4,700 retail sites branded as Valero, Diamond Shamrock, Ultramar, Beacon, and Total.

Modular Process Control LLC is a leading energy management consulting firm that assists energy intensive manufacturing companies to significantly reduce energy consumption, costs, and greenhouse gas emissions. It employs a non-capital approach to energy management and optimization by addressing issues related to process control, equipment efficiency, maintenance effectiveness, and operator compliance to standard operating procedures.

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