Opinion: Key challenges in reliable and safe downstream asset operations

The current trends in production, transportation and processing of hydrocarbons open a whole new range of opportunities for growth and development of global businesses, comment Ekaterina Kalinenko and Konstantin Stezhko of Euro Petroleum Consultants.

Ekaterina Kalinenko is project director at Euro Petroleum Consultants.
Ekaterina Kalinenko is project director at Euro Petroleum Consultants.
Konstantin Stezhko is advisor at Euro Petroleum Consultants.
Konstantin Stezhko is advisor at Euro Petroleum Consultants.

When analysing the major trends that are shaping the global oil and gas industry, we can see that a number of these are happening in parallel: (i) the energy balance moving towards natural gas and associated surge of LNG-related projects (of different scales); stricter government and global environment standards and requirements – also evolving fuel specifications; (iii) the profitability of crude processing assets ‘slowing’ after the boost of 2016-2017, and, as a consequence, petrochemical industry progresses.

Without doubt, the start-up of new projects is always good news for the industry – the geographical spread of these projects highlight the diversity of hydrocarbon sources, and of new emerging markets. Today, the production of LNG from the north of the Arctic Circle to Equatorial Asia is possible and in some cases economically viable.

We are also seeing a change from the oil and gas companies in their project requirements – due to modern economic parameters and also increased competition in markets, there is a notable move towards increased automation – contractors and suppliers are asked to provide automated process and safety systems in their packages. This can mean reducedmanpower requirements.

In process design documentation and operating procedures, the common practice is to have a minimum guaranteed asset lifetime of 20 years. However, if we look at LNG and certain petrochemical technologies, these have been developed over the last 10 years – also some of the most innovative and competitive are often implemented for the first time on a production level.

Decreasing downstream margins

Construction and commissioning of LNG terminals for the developing markets such as Africa and Baltic region is also associated with human resources deficit due to length of training required and the important development of the infrastructure. Against this backdrop, there has been a ‘pause’ put on a number of ‘traditional’ refining projects.

Many experts have explained that this slowdown in activity is due to decreasing downstream margins. If we focus on international oil companies, this factor is not a reason for them to stop production.

For instance, one large oil and gas company in the CIS region has put on hold the construction of over 20 process units. These units have a current completion status ranging from 20% to 70%. This means that these are unlikely to be finished – at least in the nearest future. On the flipside, there are still many process units with a life period of more than 35 years still in operation in many parts of the world.

One important aspect when looking to implement these types of highly automated projects is the way in which HAZOP studies are performed. Successfully implemented projects of this kind require low impact of human factor and a relatively low number of personnel on site. Nevertheless, if we look into the course of actions to be taken in the event of an emergency, it is clear that the only option for these workers would be to leave the danger zone.

In the case of a full shutdown of the power supply, the automatic performance control (APC) system could be severely impacted and have a knock on effect for equipment, machinery, catalytic systems, and people. This is a key concern with regards to highly automated plants – in terms of maintenance and operation.

The energy balance is moving towards natural gas and associated surge of LNG-related projects of different scales. (Image for illustration only)

Establishing a stable working system

Another focus area when investing in projects and in particular the construction phase is contractor management and ensuring safety within the site. For example, an approach to look up to is the one that Bahrain Petroleum Company (Bapco) has implemented and was recently presented at the Gulf Safety Forum in Bahrain.

Bapco has used a 6-phase model for establishing a stable-working system. Phase 1 of this model is contractor pre-qualification (based on experience, health and safety policy, safety statistics, legal information, financial situation, etc.); then comes contract definition and award (risk assessment to be done); Phase 3 is pre-commencement (another risk control, including permit to work, skills verification, and equipment); then comes contract implementation (auditing, regular performance reviews, monitoring and inspection); Phase 5 is handover and acceptance (receiving all relevant documents and confirming that no new hazards were created); and, finally, closeout and review (evaluating contractor’s health and safety performance to determine its inclusion into approved contractors’ list).

With this procedure and model, Bapco managed to successfully undertake several projects and update the corporate contractors’ database to simplify further the tender process for its future projects.

When we turn our attention to LNG transportation projects, from the outset, the most advanced solutions in the market were implemented in such projects – in terms of operation in a low temperature environment and also with regards to process automation. As a result, these projects demonstrate an unprecedented level of hydrocarbons transported and/or stored per worker. These solutions – included during design stage – allow for safe and reliable operation of the asset against environmental hostility (weather effect, equipment unit failure, natural disasters, etc.).

These also take into account the important structural changes in the industry that have happened in the last five years – certain political and economic risks that influence the market, for example, trade and finance sanctions, conflicting interests of different producers and consumers, market segmentation, etc.

These often results in one party having some benefit from a particular decision, and gain competitive advantage (although the effect usually is short-lasting), while the other parties seek opportunities in other market sectors and areas – one of which is internal intensive development.

Roadmap for improving process safety

Based on the HSE-related events that Euro Petroleum Consultants have recently held in the Middle East and CIS regions, and the practical experience our experts have through working on different cases over the years, we can try to summarise the strategy that can be applied on both corporate and process facility levels (with certain amendments), using a Russian international oil company roadmap for improving process safety level:

Step 1 – changes in organisational structure (separate process safety department, training employees onsite, and introduction of special documentation for the purpose of establishing proper process control). A good example is IASK (Improve Awareness, Skills and Knowledge) learning programme, developed and implemented at Saudi Aramco, with which the company achieved significant results.

Step 2 – documentation control and support, use of experience (actualising documentation, analysis of current regulations and changes, review of the best company practices with similar scope and function and – learning from cases from other industries – i.e., IT, aviation, manufacturing, retail, etc., correcting the existing management system).

Step 3 – efficiency improvement (checklist deviation control, ranging and development of an integrated database; sharing the ideas and information with other companies to help troubleshooting and inspire future development; maximum use of available IT resources for storing and analysing data; and increased top management involvement in the process of improvement).

Step 4 – ensuring high level of process safety – should be followed again by Step 3 on an ongoing basis (risk prioritisation, elimination of high-profile risks, development of target programmes, finance control and sustaining sufficient level of HSE funding, and control of safety measures during maintenance and turnaround).

In the past, a lack of focus with regards to HSE issues could have been understandable – it was not always considered top-priority for companies. Companies were more likely to direct their resources to new construction, or market activities, thus leaving other elements of the system underfinanced.

The market structure changes imply that special analysis and evaluation of projects are required from an HSE standpoint. To ensure zero level of accidents, it is important to implement proven and advanced technology solutions, in addition to continuous review of lessons learnt. Risk register does not limit itself to traditional points, it could – and definitely should – be extended and based on accumulated expertise and experience.

Ekaterina Kalinenko is project director and Konstantin Stezhko is advisor 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, including the Gulf Safety Forum 2019 and OPEX MENA 2019 – Operational Excellence in Oil, Gas & Petrochemicals  – which will take place in Bahrain during 25-28 March. EPC has offices in Dubai, London, Moscow, Sofia and Kuala Lumpur. For more information, please visit www.europetro.com.

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