Opinion: Digitalisation – Improved profitability enabler in downstream industry

For grassroots and complex refineries and petrochemical plants, which are being built with state-of-the-art technologies and materials, digitalisation will be the best solution, especially if the facility is designed to produce high-value petrochemical products, comment Ekaterina Kalinenko and Stefan Chapman.

Ekaterina Kalinenko is project director at Euro Petroleum Consultants.
Ekaterina Kalinenko is project director at Euro Petroleum Consultants.
Stefan Chapman is vice president at Euro Petroleum Consultants.
Stefan Chapman is vice president at Euro Petroleum Consultants.

Globally, industrial companies are currently involved in transforming the oil and gas business into a digital-based and excellence-driven process system. This is a very ambitious goal – one that is a challenging path, considering that the downstream business has traditionally been more conservative in matters of automation and more sensitive to investment-return ratio than other related spheres.

Some companies have already announced moving into a new paradigm – digital development and, in parallel, asset capitalisation growth via innovations (results of R&D investments in the Middle East, Asia and USA) and upgraded values that include environmental consciousness, lean principles in production and a focus on intensive development. In general, this concept could be described as ‘taking care of all resources (including natural resources like feedstock, human power, existing assets, etc.) and using renewable sources efficiently’.

Field-proven benefits

One prime example is the implementation of advanced process control (APC) and optimisation in refineries and other types of plants – the benefits are field-proven and generate high rates of return on investment. The benefits are wide ranging, including: increased throughput, improved yields, reduced energy usage, decreased operating costs, improved quality consistency, increased operating flexibility, and improved process stability.

Without doubt, advanced IT solutions bring extra value and advantages to operating processes and help with the development of up-to-date instruments – i.e., predictive analysis, big data management, and integrated cloud storage – that address current industry needs.

Companies claim to save millions with small changes in normal operations, and see enormous potential in using all kinds of digital tools not only in reservoir modelling, or online refinery parameters control, but also in bunkering, gasoline station distribution, production management centres, and even accounting.

According to IBM, there will be significant new data and analytics job openings in 2019 and 2020 – more than 2.5mn. This will substantially change the human resources landscape, technology market, and strategic view of companies. Although middle-sized companies and industry majors struggle with finding qualified and experienced staff for new strategic projects – mainly technical specialists and high-level project managers – we can see that IT business is thriving in terms of engaging bright minds, generating new ideas and innovative solutions.

Opposing opinions

However, as much as industry digitalisation looks promising and essential, there are a number of important issues to consider, which slow down the digitalisation trend in the downstream sector. According to the experience of our clients, there are two common and opposing opinions on increasing industry automation: (i) Implementation of digital plant concept means minimising the impact of human factors on operations, maintenance and other critical activities – reducing risk of accidents, saving on labour costs and increasing levels of plant safety, ensuring correct data from units is collected, stored and analysed on an ongoing basis, and so on. (ii) When the number of workers on site is minimised, i.e., in a ‘digital plant’ concept, the cost of installing and maintaining numerous automation elements increases several-fold, operations will depend on the reliability and accuracy of incoming data, and someone will have to monitor it anyway. Another issue is the troubleshooting time – if any of the data collectors reject, will unit shutdown be required?

Companies claim to save millions with small changes in normal operations, and see enormous potential in using all kinds of digital tools.

There are many more valid arguments for each side, and this dilemma is not easy to resolve. For grassroots and complex plants that are being built with the latest technologies and materials, this might be the best solution, especially if the plant is designed to produce high-value petrochemical products. For ageing assets like many operating refineries in the world, that depend heavily on crude price, tax policies and investment, rapid digitalisation could result in more burdens than benefits.

The way ahead

Digital transformation should be done in steps, with thorough analysis of direct costs, and, most importantly, all possible incurred costs, including loss of product, comparison of cost-result, and a clear view of final status to be reached.

Investigating opportunities in this area for downstream assets is a top-priority topic for the Middle Eastern companies – this can also be said of Russia and the CIS region that look to the best industry practices and ways to utilise existing local potential for change.

All these important questions, considerations and options will be discussed during the 5th Operational Excellence in Oil, Gas & Petrochemicals Conference & Exhibition – Op-Ex Russia & CIS 2018 – to be held in Sochi, Russia, during 14-16 November. For this event, we are partnering with Russian industry majors – Rosneft and Gazprom Neft – which are very active in the area of operational excellence.

(Stefan Chapman is vice president and Ekaterina Kalinenko is project director at Euro Petroleum Consultants (EPC), which is a leading independent consulting company in the oil, gas and petrochemical sectors, as well as a producer of specialised annual international conferences and training seminars, focusing on market trends, technological advances and business strategies for the petroleum industry. EPC has offices in Dubai, London, Moscow, Sofia and Kuala Lumpur. For more information, please visit www.europetro.com)

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