Domain experts from operators, EPC contractors and technology providers discussed the digitalisation drive in the downstream industry and its impact on it, in a roundtable organised by Refining & Petrochemicals Middle East.
Automation and digitalisation done in the right way will further improve the uptime, productivity, energy efficiency and safety in the downstream industry. The direction of this technology development is not just connecting systems but running them in a collaborative way with an increasing degree of autonomy. There is already a massive impact of automation and digitalisation in the refineries and petrochemical facilities, and this trend is going to be more powerful in the future. In every conference, seminar, workshop and industry events in the region, digitalisation is a core discussion point.
The roundtable was attended by Joerg Theis, global vice president, oil, gas and chemicals, ABB; Pierre Leretz, president and lead division manager, process automation, Middle East & Africa, ABB; Engr. Zaidan Mohammed O Yousef, director general, strategic planning and investment development, Royal Commission for Jubail and Yanbu; Bindu Satheesh, engineering director, Wood; Fadi Shanaah, regional director, business development, Smart Cities & IoT, Middle East, Africa and Turkey, Orange Business Services; Vinod Raghothamarao, director consulting, Energy Wide Perspectives, IHS Markit; Rakesh Kumar Mehra, strategic advisor, GP Global Group; Cristian Hedesiu, marketing manager, Orpic; Hamad Abdulsahab Mahdi, senior sales analyst, aromatics marketing department, Petrochemical Industries Company; and Martin Menachery, editor, Refining & Petrochemicals Middle East.
Chaired by Menachery and co-chaired by Theis, the roundtable discussed the themes of ‘Current Automation/Digitalisation Landscape of the Downstream Industry’, ‘Innovations in Automation and Digitalisation’, and ‘Humans Collaborating with Systems through Digitalisation’ in three separate sessions.
Many companies in the region are on hype when it comes to the adoption of digital transformation. Some of the companies in the region are really advanced in digital transformation, and those companies have innovation departments. Menachery set the tone of the roundtable discussion with a question to Theis on how digital technologies are transforming the refining and petrochemicals manufacturing industry globally.
“The reason why the downstream industry is going for digitalisation is that the industry is facing a huge competition. The companies want to improve their profit margins. This is the only reason why the downstream industry is suddenly embarking on the digital transformation journey,” Theis observed.
“Interestingly, when we speak to customers, we see a common pattern in the way they think about digital – all of them are talking about improving operations and supply chain, and going in for new business models. Many companies are now having dedicated innovation centres. For me, this is the key element. All of a sudden, a very traditional industry is getting ready to be innovative,” commented Theis.
For the downstream industry, it is advantageous to go for big data and use it for bringing in value. It is a transformation process. Most of the downstream companies are looking at optimisation of plant productivity. By collecting data, and using better data algorithms, it is possible to find potential problems in a refinery or petrochemical plant. It is an innovation process.
“But, the data without a human element does not bring in any value. With data, we need experts. A plant is heavily depending on the operator. If there is a very good operator, the plant will always be running very smoothly,” Theis added.
Elaborating on the observation of Theis, Shanaah said: “The downstream industry is globally one of the most advanced in terms of digital applications and automation compared to other industries. Much before we started talking about digital transformation, many of the processes in the refining and petrochemicals manufacturing industry were highly automated. Now, with the new focus globally on IoT, a new era of innovations is coming in for the industry.”
“But, many people do misunderstand when we talk about big data today. The idea is not about collecting data. It is about what data you are collecting. How to utilise the data that is collected to bring in improvements is the most important question. And here the human factor is very important. Experts like data scientists know how to make algorithms which can give novel insights out of the collected data,” added Shanaah.
Bindu was of a totally different opinion about the digitalisation initiative in the downstream sector and said: “Globally, the digitalisation drive in the downstream industry is far behind compared to the automobile or piping industry.”
Mehra was quick to disagree with Bindu. He stated: “In the downstream industry, amazing digital transformation is taking place in the last few years. I am saying this from my experience with Indian refineries. This we can evaluate from the key performance indicators that we are receiving from those units.”
“Just by augmenting certain features of the safety procedures through digital technologies, there is tremendous performance improvement in those units. Today, some of those refineries can boast of 15 million man-hours without lost-time injury,” added Mehra.
Earlier many of the Indian refineries used to have many major safety incidents. As the operations of refineries have become more and more complex, the automation and digitalisation drive in some of the refineries have enhanced the key performance indicators of those refineries.
Raghothamarao made a mixed response to Bindu’s observation and said: “I do agree that automobile industry is far ahead in digitalisation drive. The downstream industry is not an early mover on the digitalisation drive happening around the world in different verticals; it is a late starter.”
“But, from my experience with some of the major national oil companies in the region, I can say that they are taking very fast initiatives on digitalisation now. And from the kind of endeavours these companies are putting in, they might come to the forefront on digitalisation in a very short time. For example, we work very closely with Saudi Aramco and they have gone far ahead on Industry 4.0,” added Raghothamarao.
“They are also trying to get in to the areas of artificial intelligence and machine learning. They are collecting big data, understanding the patterns, insights and inferences, and taking these by the sensors to the systems, which have the capability to do self-correction. They are using drones to inspect pipelines in remote areas. At this point of time, it is in the nascent stage – it is being used in a couple of fields as prototypes,” revealed Raghothamarao.
Hedesiu joined the discussion with his vast experience in polymer marketing in the region and observed: “From our polymer production point of view, digitalisation has really helped us to control the quality of our products. I believe in competition and I would like to know what SABIC is doing about their polymer products. Digitalisation helps us to compare our products with those or our competitors.”
“Another important result of digitalisation is that I can have access to all our plant data wherever I am. All our current key projects are running on the latest automation and digitalisation technologies. Even our entire supply chain will be digitalised and automated soon,” stated Hedesiu.
Speaking with his aromatics marketing background in Kuwait, Mahdi said: “We are using latest digital technologies in all our operations. Our business functions are automated from finance to marketing, operations to production, chartering to shipping. And, we use digitalisation to forecast the supply and demand scenario for each of our plants.”
Engr. Yousef joined the discussion with an overview digitalisation in huge organisations and remarked: “In big companies, large volume of data usually go into the data warehouses. The business intelligence unit uses state-of-the-art software to come up with the right data and data inference for the management to take business decisions. These business intelligence software help in extracting useful information from the big data.”
“If you go to a refinery, you will find lot of sensors everywhere. Every second, lot of data is coming out from these sensors. Data analysis will create a huge portfolio of business in the future. Earlier we used to talk in terms of megabytes and then gigabytes, and now we are talking in terms of terabytes,” added Engr. Yousef.
A job creator
Theis brought in the latest trends of digitalisation in the industry and commented: “Digital is still on a hype in the region. But, when we go to the details, there is only little bit of change happening. Big companies start very ambitious on digital transformation like building innovation centres, etc. After some months, they realise that it is a slow transformation – it is a change management process.”
“People are so afraid about it when we discuss about robots. They think that if companies start using robots, everyone will lose their jobs. People are not realising that companies using robots are much more profitable that companies not using them. When a company is profitable, it can grow. When it grows, it can retain people. For me, this is one of the key drivers why digitalisation is a must in the downstream industry, especially in this region,” remarked Theis.
Engr. Yousef agreed with Theis and stated: “Digitalisation does not necessarily cut jobs. It might remove certain job categories but will definitely create new job categories in large numbers.”
Bindu was also of the same opinion and commented: “We are always thinking that automation and digitalisation are going to replace the human element. We have to change our mind-set. We have to start thinking that digitalisation will help us rather than replacing us on the job front.”
“Among the employees of downstream industry moving ahead with digital transformation, there is a constant panic of being replaced,” opined Raghothamarao.
Replying to Raghothamarao’s concern about the fob front, Bindu said: “Data Analysis can create another booming sector. You cannot do anything with data until it is analysed and implemented in the operations. We do not need to be afraid about job cuts because of digitalisation since more opportunities are created than lost.”
Shanaah agreed with Bindu and commented: “There is tremendous amount of data that is being produced from the operational sites, which is not being used. And, building big data is not a solution in itself. Highly experienced humans are needed to build in algorithms to bring in insights from this data.”
Rakesh concluded the discussion on the job front by pointing out the importance of training in digital transformation. He said: “In the digitalisation drive in the downstream industry, imparting knowledge and skills is a very weak area. I have observed that, whenever we are trying to upgrade a plant by bringing in new technology, there is always a weakness in imparting the knowledge to the persons concerned.”
“For example, there was a major fire in one installation in India. When an enquiry was conducted on the incident, it came out that when old equipment were replaced with state-of-the-art instruments, the training part was missing. Such a failure could lead to disaster instead of smooth functioning of the plant because of the new installation. Upgradation of the operator skills regularly is very important,” added Rakesh.
Answering to Menachery’s question about the key innovations in automation and digitalisation relevant to the downstream industry in the recent past, Leretz said: “One of the key digital innovations from ABB that I would like to mention is ‘Select I/O’ which provides efficiency improvement for automation projects, as well as faster start-ups, while decreasing complexity, project delays and cost overruns.”
“IIoT is one of the main subjects for the downstream nowadays. Most of our customers in the region are extremely willing to work with us in adopting digitalisation. They want us to prepare their people to know what it means to be digital,” added Leretz.
Sharing his knowledge on the innovations digitalisation can bring in the downstream sector, Shanaah observed: “The latest digital solutions can actually serve in many areas in the operations of downstream industries, starting from logistics to tracking of the assets.”
“Predictive analysis is a big topic now in the downstream industry. It is the method of predicting the failure of an equipment before it happens. For this, historical data not just from one site but from multiple sites are analysed. For this, governments have to bring in regulations by which data can be shared between different refineries. It is easier in the GCC because most of the refineries are in government control,” added Shanaah.
Digitalisation in project management
Bindu detailed about the development of the project management sector in the industry in the recent years to answer Menachery’s question about how humans collaborating with systems will get the best possible job done autonomously in the downstream facilities. She said: “When I started my career in 1990, we were not having AutoCAD. At that time, we were making everything on the board by hand. For completing a refinery project design of 500 metric tonnes capacity, we were using around 5,000-10,000 man-hours.”
“Now, we can design the same prototype within 1,500-2,000 man-hours using advanced digital technologies. For example, take the case of all the pipe specifications. In a refinery, there could be around 50-60 pipe specifications. If this is done once, then we can replicate it every time. And, we are multitasking; we are simultaneously working on five or six projects because of digitalisation. The FEED time has come down significantly to approximately half of what it was without digitalisation solutions,” added Bindu.
Raghothamarao responded by asking her whether projects get ahead of time through this. Bindu answered: “Yes, we are finishing projects much earlier now. In 1990s, whatever we were finishing in one year, we can finish within six months now. The first project will definitely take more time.”
Leretz shared his knowledge on projects and said: “Planning phase in a project is not looked at that importantly, but actually it is super important. We are trying to reach this message to our customers continuously. We call this ‘Collaborative Operations’, whereby wherever we have a customer who has many sites utilising our equipment, we try to convince them to have a room for us somewhere, collecting the information from the sites and analysing it for them.”
“How do you get all this information which is not on the site? How do you make sure that this data is protected? How do you ensure the customer that there is no remote access to their sites without proper authorisation? These are important questions. Once you solve these questions with your customer, then you can do a very good project management work,” added Leretz.
“For the digitalisation of an existing plant, we can use the laser scanning technology, put intelligence into the drawings and models, and then use that data for the engineering of the next projects. And, then put all the production and operational data on a 3D intelligent model so that it becomes standardised,” observed Bindu.
Raghothamarao responded to Bindu and added: “I think you are referring to FEED modularisation. I have seen many companies learning about what went wrong in a plant by understanding FEED modularisation. Most of the leading FEED EPC companies in the region are doing that for the refinery projects.”
Bindu was sceptical about the way the region is taking forward the project management in the downstream sector, and said: “In 1995, when we started the Reliance refinery in India, we did all the design work on 3D. Still, we have to do such things in this region. Another important issue is the investment in the prototype. The first project will definitely take lot of time and money for a prototype to be made.”
Raghothamarao agreed with Bindu and said: “I have seen this specifically in the FEED EPC companies; they do not want to use the latest modelling, or 3D printing, or drones for construction. Specifically, in the construction of refineries, most of them do not want to go for the latest trends.”
“One of the trends I would like to point out is that compared to other regions, there is a big drive for production optimisation in the downstream industry in the Middle East. But from our experience, using digitalisation for production optimisation is not probably not high on its agenda. We have seen that in many of the companies outside the region, using digitalisation is probably in the top of the list,” commented Raghothamarao.
“We are living in a world where in many large organisations, people are scared to share data among different departments within the company,” remarked Raghothamarao.
“HSE is an area where digitalisation is very poor in the region,” observed Raghothamarao.
Bindu was quick to correct Raghothamarao and said: “Currently, the refineries and petrochemical units in the region are taking HSE seriously. I think in the last five years, there is a huge change in the attitude towards using digitalisation in HSE. There were very few critical incidents in downstream plants in the region in the last few years.”
Taking the discussion to the hot topic of IT-OT integration, Bindu said: “The product manufacturing units in Europe and the US are using the IT-OT convergence to the maximum level. When information technology and operational technology implement the result of R&D on a production floor, then only we can say that these two converged properly. This is happening in many other sectors but not in the downstream industry.”
“In a cloud environment, we do not have to be sitting at the site to do the engineering work. In Wood, we have a central software system. If we want something, we just raise it to IT department and they will put it on the server. If I am not an expert in simulation, I can ask for help from one of our team members in London or Amsterdam who has the domain knowledge on it. Engineering process in all the big EPC companies is IT-OT converged. Even when I go on vacation, I can work from home. That is the way it is converged now,” added Bindu.
“All the operators in the downstream facilities are trained for specific operations. But they might not be trained on how to use the IT systems. All the operators should be upgraded with IT capabilities. That will solve the problems in IT-OT synchronisation in operating plants. This requires some major investments and time. Many people are continuously talking about the integration between OT and IT. But, I am not seeing real improvement in the region in IT-OT integration,” observed Bindu.
“What we are aiming is each phase in a project to be IT-OT integrated. A downstream project is divided into many phases – conceptual stage, pre-FEED, FEED, detailed engineering and design, EPC, and commissioning. Now, these different stages are not integrated in project management. Once these get integrated, then we can say that there is IT-OT convergence in project management. There is a huge gap in this in the Middle East, compared to the US and Europe,” commented Bindu.
The data revolution
It is projected that in the global petrochemical industry, annually $20bn is lost because of downtime. If something wrong is going on a plant, the project managers can immediately retrieve the data using digitalisation tools for the vendor who has supplied the particular instrument in fault and advise the operators what parameter is to be changed and that integration can be done with a manual intervention. Data is transferred digitally but a human element with knowledge about the system can intervene with it immediately.
“What is happening is the data generated during the design and construction phase is stored somewhere and no one is using it. If we use this data in the operations, with someone who is an experienced data scientist knowing critical algorithms, it can make dramatic improvements in productivity,” observed Shanaah.
Theis joined the discussion on the usefulness of data and said: “Data is very important. We can generate tonnes of data. But what about the dump data? We need to understand that every data does not bring in value. We have to be selective. Cloud is a very nice hype word. But every calculation in the cloud costs the user money. As soon as the user start loading data into the cloud, he/she starts paying. I will use only the data which really brings me value. So, the question is which data is useful?”
Menachery asked Theis how this selection of data is done. Is it through a human element, or system, or artificial intelligence? Theis answered: “It is primarily through machine learning. Some algorithms work through the data and find out some correlations between data and brings out insights. Again, there is the need for experienced human element here.”
Theis elaborated: “A customer was discussing with me about having sensors on pumps and we realised that what we need is a noise sensor. When an experienced operator hears the noise of a pump, he/she knows its condition – he/she can clearly understand if there is a problem with the pump.”
“The old operators are going into retirement and the younger ones do not know anything of this sort. How do we use the expertise of the experienced old operators to create the right sensors and the mathematical models for the predictive analysis of a pump failure? Tonnes of data are to be analysed to do this,” revealed Theis.
Shanaah responded immediately: “This is why I am saying that there is a huge demand for data scientists. If you are going for this type of predictive analysis, you need someone to tell you how to use the data – a person who has the experience of making use of the data. People are misunderstanding that collecting huge amount of data is useful. Most of the data collected is normally rubbish. How to get the useful data from the big data is the trick of the trade. Experienced human element, with machine learning, can enable this.”
Cristian was concerned about the huge volume of data that is coming in regularly and said: “It is also very important how we present the data. All of us are very busy everyday on the job front. There is so much data around us. It is very important to analyse the data and present it in a very simplified way so that the end user does not have to spend lot of time to understand the data.”
Mehra shared his experience with Indian refineries and said: “In India, we are sharing data among companies regularly unless it is something very company-specific. For example, if a company wants to invest in India in a refinery project, it needs to know every aspect of the sector’s opportunities in the country. All oil and gas companies in India are sharing data.”
Shanaah responded to Mehra and said: “This type of data is not necessarily the one pertaining to the operations. Sharing of operational data is not existing in the oil and gas industry. When it comes to sharing the data between the oil and gas companies, if the government is owning the companies, like in the UAE, it can regulate to share the data among the organisations.”
“As far as private companies are concerned, which are into serious competition among themselves, I think there is no possibility for sharing data, unless the government regulate this industry on this aspect. The government can identify what are the mandatory data to be shared by the companies,” added Mehra.
Menachery asked Engr. Yousef whether there is sharing of data in Saudi Arabia among the government-owned downstream companies. He replied: “There is mandatory data which is to be shared like the financials. But when it comes to operations and competitive edge of individual companies, they do not share those types of data at all. When it comes to the core operations of a company, it cannot share its data to any other business entity, for example, patents.”
Leretz took the discussion to knowledge transfer through data sharing and commented: “Sadara project is a joint venture between Saudi Aramco and Dow. Saudi Aramco team has gained extensive knowledge out of the joint venture. Recently, there was an announcement about an oil-to-chemicals (OTC) project between Saudi Aramco and SABIC. Is the knowledge gained from Sadara project going to be utilised in this OTC project?”
Engr. Yousef was quick to respond and said: “This OTC project is the first of its kind in the Kingdom. Saudi Aramco team with the Sadara project has definitely gained good knowledge from the project. I am sure that they will utilise that knowledge in their participation in the OTC project. There will be knowledge transfer in joint ventures and that is the beauty of it. But most importantly, SABIC has made tremendous efforts in developing the latest technologies for the OTC project.”
The new digital technologies will enable remote operations in plants and projects. It is still at the infant stage. Many pilot projects are already there in this direction. Digital transformation will become a reality in the downstream industry in the near future.
The biggest enabler for the digital drive in the downstream industry would be the customer demand. Everyone sees the huge need to go through this route for operational excellence. There is no survival in the future without using the novel concept of digital transformation. Technology is no longer the constraint. The need is to bring in clarity into the digital structure.
How to interpret data? How to bring value of data into real life? Digital transformation is not about collecting lot of data and creating big data. It is about bringing out something meaningful out of the collected data into the business. Whatever digital is doing is all about customer satisfaction. It is about health, safety and environment – keeping people and assets secure. And, of course, finally it is about money.
Menachery invited Theis to make the closing remarks for the roundtable. Theis said: “We are at the beginning stage of the digital transformation in the downstream industry in the region. It is also clear that the digitalisation drive depends a lot on external elements like governance and cost element rather than the availability of technology because we have the state-of the-art technologies in place. What is evolving is the strategy to find out the best way of doing things through digitalisation in the downstream industry.”
“We know where to go through digital transformation. What customers want from digitalisation is like what traffic lights give – red, yellow and green. They want digitalisation to give clear directions for operational excellence. The need of the hour is to create the path to this transformation through the integration of operational technologies with the information technology solutions. I am convinced that, if we go the full scale on digital transformation, we can achieve profitability gains of around 20% in the downstream industry,” concluded Theis.