Foster Wheeler Optimise The Downstream Response

Transcription

1 Foster Wheeler Optimise The Downstream Response Global Refining Summit, Barcelona 21 st 23 rd May 2012 Jack Hatch Proposal Director Mike Whitling Manager Asset Operations and Consultancy John Payne Chief Engineer Static Equipment

2 Safe Harbor This presentation may contain forward-looking statements that are based on management's assumptions, expectations and projections about the Company and the various industries within which the Company operates. These include statements regarding the Company's expectations about revenues (including as expressed by its backlog), its liquidity, the outcome of litigation and legal proceedings and recoveries from customers for claims and the costs of current and future asbestos claims and the amount and timing of related insurance recoveries. Such forward-looking statements by their nature involve a degree of risk and uncertainty. The Company cautions that a variety of factors, including but not limited to the factors described in the Company's most recent Annual Report on Form 10-K, which was filed with the U.S. Securities and Exchange Commission and the following, could cause the Company's business conditions and results to differ materially from what is contained in forward-looking statements: benefits, effects or results of the Company's redomestication or the relocation of our principal executive offices to Geneva, Switzerland; the search for a permanent Chief Executive Officer; further deterioration in the economic conditions in the United States and other major international economies, changes in investment by the oil and gas, oil refining, chemical/petrochemical and power generation industries, changes in the financial condition of its customers, changes in regulatory environments, changes in project design or schedules, contract cancellations, changes in estimates made by the Company of costs to complete projects, changes in trade, monetary and fiscal policies worldwide, compliance with laws and regulations relating to its global operations, currency fluctuations, war and/or terrorist attacks on facilities either owned by the Company or where equipment or services are or may be provided by the Company, interruptions to shipping lanes or other methods of transit, outcomes of pending and future litigation, including litigation regarding the Company's liability for damages and insurance coverage for asbestos exposure, protection and validity of its patents and other intellectual property rights, increasing competition by non-u.s. and U.S. companies, compliance with its debt covenants, recoverability of claims against its customers and others by the Company and claims by third parties against the Company, and changes in estimates used in its critical accounting policies. Other factors and assumptions not identified above were also involved in the formation of these forward-looking statements and the failure of such other assumptions to be realized, as well as other factors, may also cause actual results to differ materially from those projected. Most of these factors are difficult to predict accurately and are generally beyond the Company's control. You should consider the areas of risk described above in connection with any forward-looking statements that may be made by the Company. The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any additional disclosures the Company makes in proxy statements, quarterly reports on Form 10-Q, annual reports on Form 10-K and current reports on Form 8-K filed with the Securities and Exchange Commission.

3 Introduction Significant Challenges to European Refining Addressing three key issues: Energy and CO 2 management - Rising energy costs - CO 2 legislation Declining gasoline market - How can you improve the economics of an FCC configured refinery? - How do you minimise the impact on your revenue stream? Declining fuel oil market - Gas availability for power substitution of fuel oil - MARPOL regulations on bunker fuel

4 Introduction Opportunities to Address These Issues Combining best practice expertise, project delivery and technology Energy and CO 2 - The application of expertise - Holistic approach to asset optimisation Declining gasoline market - The application of project delivery excellence - Fully realising the benefits of latest technology Declining fuel oil market - The application of best technology - Latest developments in combining commercially proven technologies Project Delivery Technical Expertise Proven Best Practice Technology

5 Issue: Energy Costs and CO 2 Legislation Response: Holistic optimisation of assets

6 Optimising Assets Incremental Investment Huge Opportunities Starting with Energy Optimisation Most refiners face the dual challenges of: - reducing operating costs - planning for future CO 2 emissions legislation

7 Optimising Assets Incremental Investment European Emissions Trading Scheme From 2013 European Refiners will be subject to an Emissions Trading Scheme (ETS) However, refiners who are the top energy performers (as benchmarked against international KPIs) will be exempt So, most refiners will end up paying differing amounts for CO 2 credits A strong incentive to improve energy efficiency

8 Optimising Assets Incremental Investment Huge Opportunities Starting with Energy Optimisation Strategies employed to reduce energy consumption can include: - operations and maintenance (revisit the basics) - human issues - equipment and design evaluation Most assets have major opportunities to optimise energy consumption and save tens of millions of dollars every year ASK YOURSELF WHY WOULD YOU NOT DO THIS?

9 Optimising Assets Incremental Investment An Holistic Methodology for Energy Management A complete Energy Management picture Data Collection Understand Current Situation Set Objectives Develop Options Evaluate & Develop Roadmap Implement DEFINE DEVELOP DELIVER Minimise energy consumption within capital cost limits

10 Optimising Assets Incremental Investment High Impact Low Cost: Operations/Maintenance and Human Issues Operations & Maintenance Issues Revisiting the basics Operations many options Furnace control Flare management Air cooler operation Maintenance checks/procedures Steam leaks Flange tightness/gasket usage Steam traps Insulation repair Furnace condition (wall leaks) Burner & damper maintenance Analyser maintenance Human Issues Communication and consistency Training Consistent best practice Education Energy management principles Information Top down objectives Real time performance Clarity on key energy KPIs

11 The man machine interface Operational impact Challenge for shorter-term performance enhancement is to selectively assess operations practices and restructure operator workforce Place accountability for specific performance areas directly with selected operators on 24-hour/day basis Fringe benefits of operator buy-in include: Improved housekeeping Competency enhancement Improved management skills Above all pride

12 Optimising Assets Incremental Investment Energy in Equipment & Design Staged Opportunities Refinery design / Investment in CHP Optimise pre-heat trains Improving heater efficiency Improved operations & maintenance: steam leaks minimised, insulation well maintained, furnace mgt

13 Optimising Assets Incremental Investment Energy in Equipment & Design Typical Studies Energy and the link to CO 2 Fired heater air preheat Air cooling versus water cooling Typical studies Advanced process control systems Steam and power system optimisation High pressure/ low pressure interfaces CDU / VDU pinch analysis Inter-unit integration (hot rundowns) Low grade heat recovery study

14 Case Study Preem AB I-Energy Improvement Study Preem s objective is to be one of Europe s most efficient refinery systems Site Energy Improvement Study - Foster Wheeler and AspenTech combined their operational, design and simulation knowledge to study the advantages that cultural change, facility revamp or design of new equipment would provide. The projects combined realised savings: - Refinery energy reduction of 10 % - Total benefit US$ 35m year on year - Payback periods all <18 months FW has now progressed Preem s projects beyond the study phase: - CDU heat exchanger reconfiguration - Offgas redirections to HPU - Packinox replaces shell and tube on CCR - HDT preheat feed to furnaces

15 Issue: Declining Gasoline Market Response: FCC Turnaround with Upgrade

16 Turnaround Intermediate Levels of Investment Project Delivery Excellence: Opportunities to Upgrade for free Intermediate investment typically $10 100m Getting it right what is achievable - how do you minimise the impact on revenue? - what are the potential benefits? - how can you make the upgrade pay for itself? Example of upgrading an FCC during a turnaround

17 Turnaround Intermediate Levels of Investment Project Delivery Excellence: Why FCC Turnarounds? Lost revenue is $1M to $2M per day when not operating Typical turnaround time: 35 days or less 5 to 6 year continuous run time Cyclone and internals life: 15 to 25 years Expansion bellows life: 10 to 15 years Shell refractory life: 5 to 25 years Coke build-up in reactor

18 Turnaround Intermediate Levels of Investment Project Delivery Excellence: Key Steps in the Study Phase Client Needs Process / Technology Improvements Maintenance Requirement Options Feasible Licensor Pre-selection Cost Estimate Engineering & Construction Planning TAR Duration Risk / What-if Analysis Conclusion & Execution Strategy

19 Turnaround Intermediate Levels of Investment Project Delivery Excellence: Opportunities for cost savings Scope Generation Detailed Engineering Phase Procurement Phase Potential Saving Construction Phase Cost of Making Change Net Potential Savings

20 Turnaround - Intermediate Levels of Investment Project Delivery Excellence: Case Study 1 Full FCC Reactor Replacement Maximise offsite work to improve: - Safety - Quality - Cost 860 tonne reactor Modular approach Each section fully constructed (cyclones, refractory) Foster Wheeler s Philosophy: Fit First Time Picture courtesy of Esso

21 Turnaround - Intermediate Levels of Investment Project Delivery Excellence: Complex Installation/Construction Logistics Skidding in over live plant Various detailed studies Final options: - Build on site - Part modularise (with internals) - Full modularisation Bold decisions - eg major temporary steelwork Picture courtesy of Esso

22 Turnaround - Intermediate Levels of Investment Project Delivery Excellence: Every Construction Step Planned in Detail Reactor Top the first step - Move head into position on trailer - Lift from base Reactor Build - Lift head slowly by Strand Jacks - Move mid section into position - Semi-automatic weld - Only two major site welds - Check and make-good refractory - Build adjacent to existing reactor Picture courtesy of Esso

23 Turnaround - Intermediate Levels of Investment Project Delivery Excellence: A World Class Achievement 64 Days Old Reactor Removal - Asbestos insulation Reactor Installation 64 days between oil-out and oil-in: Achieved primarily through - early study and design work - early procurement - maximised pre-shutdown work - maximised offsite work Picture courtesy of Esso

24 Turnaround - Intermediate Levels of Investment Project Delivery Excellence: Case Study 2 Typical FCC Head Replacement Regenerator Head Replacement - 17m diameter - with cyclones tonnes Foster Wheeler s Philosophy: Fit First Time Picture courtesy of Esso

25 Turnaround - Intermediate Levels of Investment Project Delivery Excellence: Risk-free & Fit First Time Philosophy Key Issues - precision survey including laser scanning - proprietary specialist modelling techniques - fitted within millimetres - with pre s/d work, head installation was not critical path - 30 day critical path was related to other parts of the turnaround Picture courtesy of Esso

26 Turnaround - Intermediate Levels of Investment Project Delivery Excellence: Precision Applied to the Crane Build Detailed planning of crane build over live plant 30 day Turnaround Norm > 60 days? Picture courtesy of Esso

27 Issue: Declining Fuel Oil Market Response: Major Residue Upgrading

28 Major Upgrading A Quality Investment Residue Upgrading: Higher Margin Refining with High Conversion Significant political pressure to address environmental issues Declining markets for high sulfur fuel oil impact of gas and MARPOL Light / heavy crude spread Increased demand for distillates and clean fuels New crudes sources and extra heavy crude upgraders Residue upgrading & conversion Catalytic Residue FCC Residue hydrocracking Non-catalytic Delayed coking Flexicoking Visbreaking Solvent deasphalting Gasification

29 Major Upgrading A Quality Investment Residue Upgrading: Technology Options for the Bottom-of-the-Barrel Visbreaking Solvent Deasphalting Residue FCC Delayed Coking Flexi coking Residue Hydrocracking Gasification / CFB Low TIC Low TIC Moderate TIC Moderate TIC High TIC High to Very high TIC Very high TIC Low conversion Fuel oil residue Expensive product treatment Pitch residue Carbon residue limited Use with ATB or light residues Easy to integrate into refinery Readily available coke Market Complex operation Low BTU gas challenge Very small volumes of purge coke Complex operation Large hydrogen demand Fuel oil residue Needs electricity market and / or Produces syngas / hydrogen

30 Major Upgrading A Quality Investment Residue Upgrading: Yield Comparison (Arab Heavy VR) 100% 90% Gases Naphtha Gas Oil Fuel Gas LPG Naphtha Fuel Gas LPG Naphtha LCGO 80% 70% DAO LCGO Yield (wt basis) 60% 50% 40% HCGO HCGO & DAO 30% 20% 10% Fuel Oil Pitch Coke Coke 0% Visbreaker SDA SYDEC SDA & SYDEC

31 Major Upgrading A Quality Investment Residue upgrading: PetroPower TM the Full Conversion Refinery Solution Heavy Oils Light Oils Hydrocracker/ FCC Hydrogen Steam Reformer Nat Gas Solvent Deasphalting Heavy Oil Asphalt Delayed Coker CFB Electric Power PETROPOWER

32 Major Upgrading A Quality Investment Residue Upgrading: Configuration and Technology Selection are Critical Choice of upgrading option depends on particular circumstances - fuel oil market / asphalt market / downstream processing / power availability Coking provides high conversion with well proven technology Coking can be integrated with other processes - with SDA higher distillate yields, lower coke make - other exciting new developments reducing coke by 35% PetroPower TM integrated coking and CFB to achieve Zero Residue Refining The Most Critical Issue: Getting it right in the study phase

33 In Summary. Key Takeaways Many Refineries See Challenges They Should Also See Opportunities! Energy Optimisation huge unrealised opportunities - Meet the environmental challenge head on - Release cash year-on-year for further investment Turnarounds and Upgrades best in class performance - Project delivery excellence reduces risk, cost and schedule - Claim back potential lost revenue to pay for significant upgrades Residue Upgrading short payback with proven technology - The economics are indisputable - Meet the environmental challenges as a top quartile refinery - Sit at the top of the refinery margin list

34 Thank you for listening