Information technology

Petroleum Economist © The Petroleum Economist Ltd, 2004

Software, hard cashRECENT YEARS have seen advances in

information technology (IT) deliversubstantial boosts to the bottom line formany companies. But there are furtheropportunities for profitability gains, bothfrom improving existing systems andfrom greater integration between thecontrol systems that drive facilities suchas refineries and the back-office sys-tems that keep a beady eye on the com-pany finances, writes Cris Heaton.

This was the message at AspenTech’sbiennial AspenWorld jamboree in October, inFlorida. The process-software developerunveiled a new flagship product, aspenONE,which aims to provide a better way of inte-grating disparate applications, and promotedan agreement with Shell Global Solutions(SGS) to market AspenTech software solu-tions to the refining industry.

The aspenONE suite fits in an emerging ITcategory called enterprise operations man-agement (EOM). EOM software is designed tobridge the communication gap between thedistributed control systems (DCS) that controlthe second-by-second running of industrialplants and office-based enterprise resourceplanning (ERP) software, such as SAP.

Waves of investment Following waves of IT investment in the1980s and 1990s, modern facilities andoffices have benefited from introducing well-designed DCS and ERP systems. DCS allowsplant-wide process control and monitoring,leading to greater plant efficiency, and ERPsystems enable companies to unify data fromdepartments, such as accounting, financeand human resources, allowing a betterinsight into the financial state of a business.

But DCS and ERP systems were notdesigned to share data with each other. Thismeans that assessing the financial effect ofan operational decision on the whole busi-ness is often difficult and lengthy, involvingmany discrete systems with data sometimesbeing transferred between them manually.

The intention of an EOM solution is to pro-vide an infrastructure to link these disparateapplications, data and models together in away that is as seamless as possible forusers and lets them collaborate to analyseand optimise operations across the com-pany. Functions of an EOM solution include:● Collecting data from multiple sources intoan interface that is geared towards eachuser’s needs – so a user arranging the distri-bution of a refinery’s products will be pre-sented with a different interface and set ofinformation to a user in the company’s trad-ing division, despite the underlying systemshaving access to the same data;● Enabling models from across the opera-tions lifecycle – from engineering and

design, to plant operations and supply chainmanagement – to be run side-by-side andthe results seamlessly integrated;● Monitoring operational performance inreal-time against performance indicators andallowing the underlying data to be analysedfor the root causes of any identified under-performance; and● Allowing users to identify events andtrends in their business processes in realtime and act on those that will have thegreatest effect on the business, either toresolve emerging problems or capitalise onan opportunity.

The aspenONE package is in its firstrelease version and, as AspenTech’s presi-dent and chief executive officer, DavidMcQuillin, freely admitted, does not yetrealise the dream of complete integration ofevery product a customer might use. Butenthusiasm among conference delegateswas fairly high and existing AspenTech cus-tomers say the idea is interesting.

“I am intrigued by the notion of capturingthe information right at the point of runningthe operation in the plant and making itavailable to people making decisions aboutrunning the operations, in a more real-timebasis,” says Tony Considine, executive vice-president of downstream at TNK-BP. Thecompany uses AspenTech’s Pims (an eco-nomic planning system) and DPO (distribu-tion planning optimisation) systems in itsrefineries in Russia and Ukraine. But he saysTNK-BP has not made any decisions aboutwhether any new aspenONE tools could beimplemented in its plants, where the com-pany is engaged in a base-lining exercise tounderstand its inherited technology and ITapplications, or whether a real-time systemwould provide significant benefits in thehighly illiquid Russian oil-products market.

Quantify the gains With the EOM concept still in its early stages,it is difficult to put a figure on the financialbenefits it might be able to deliver. It is easierto quantify the gains companies can makethrough improving existing systems with thetype of solutions the AspenTech/SGS allianceis intended to provide.

The deal will see SGS become a resellerand implementer for the planning, schedul-ing and blending module of the aspenONEfor Petroleum solution. SGS will offerAspenTech’s Pims, Orion (a refinery-schedul-ing application) and MBO (a multi-blend opti-misation tool) software to clients as part ofits supply chain and business-improvementsolutions. This will include a roll-out in theShell group, as part of the major’s drive toimprove its supply chain performance.

Wayne Hutchinson, vice-president of busi-ness development at SGS, says the aim is to

improve clients’ margins in two key areas inthe refining chain: the planning, schedulingand blending of products; and the supply ofproducts to customers.

Improvements from better technology andbusiness practices within the refinery areeasiest to quantify. “There are very tangible,measurable, demonstrable benefits,”Hutchinson says, citing an example of workcarried out by SGS for Galp Energia, whichoperates Portugal’s two refineries, the 5.2mtonnes a year (t/y) plant at Porto, and the10m t/y Sines facility.

The work included significant modificationsto the refinery linear-programming model,which is used to assess which products willbe produced from given blends of crudes, orwhich crude inputs will be needed to produce

a particular product. Specific initiatives, suchas linking aromatics output at the Porto refin-ery more closely to market demand and,therefore, optimising naphtha shipmentsbetween Porto and Sines, were also imple-mented, along with training in refinery eco-nomics and the importance of planning.

The exact financial benefits from thisrestructuring are confidential, but amount to“several million dollars a year”. In general,says Hutchinson, “a common figure for get-ting planning right in a refinery is around a$0.10 a barrel margin improvement”.

It is much harder to nail down the benefitsthat can be squeezed out in the supply anddistribution chain, although “everyone knowsthey are there”, says Hutchinson. But heclaims improving supply and distributiontechnology and business practices in a busi-ness such as a large national oil companycould yield savings of $10m-20m a year.

The co-operation agreement is initiallyconfined to these three software systems,but may be broadened. Some ofAspenTech’s and SGS’ other products com-pete with each other and the companies areassessing whether any of these could beimproved by pooling resources.

Collaborations in other sectors for whichAspenTech produces solutions, such asupstream oil and gas, chemicals and steel,are possible. SGS has interests in a numberof non-oil industries and wants to increasethe amount of work it does in these fields aspart of its drive to gain more clients outsideits parent group – non-Shell deals accountfor around 30% of its business.

Improvements from bettertechnology and business practices

in the refinery are “tangible,measurable and demonstrable”