FIRST ISSUE. Logistics master planning. Risk Based Process Safety. CDU preheat train performance improvement. PTT Energy Solutions. Issue 1, June 2012

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1 PTT Energy Solutions Issue 1, June 2012 Energy optimization study IRPC Logistics master planning New refinery configuration and feasibility study Risk Based Process Safety CDU preheat train performance improvement Training on distillation and Crude Distillation Unit FIRST ISSUE

2 Welcome In this first issue of Energy Express we want to tell you, in the PTT SPIRIT of sharing and learning from each other, about our services and how we are working with our customers. A number of the ongoing and finished activities and projects are highlighted in this issue. We hope you will enjoy exploring how we could support you enhancing your operations performance. On our website you can find an overview of the various services we provide and designed as Fit for Purpose to support Operational Excellence Implementation at the sites of our customers. Bhawana Suphavilai, President All articles and quotes in this document have been reproduced with the kind permission of our customers. Copyright is vested in PTT Energy Solutions Company Limited, Thailand. All Rights reserved. Neither the whole nor any part of this document may be reproduced, stored in any retrieved system or transmitted in any form or by any means (electronic, mechanicals, reprographic, recording or otherwise) without the prior written consent of the copyright owner. PTT Energy Solutions Company Limited (PTTES), a PTT Group Company, was established on June 10, 2011 by four shareholders : PTT, IRPC, PTTGC and TOP 40% 20% 20% 20% PTT Core Values PTTES deploys the PTT Core Values SPIRIT of Synergy, Performance Excellence, Innovation, Responsibility, Integrity with Trust and Respect. We believe these are the desired behaviors to drive us towards sustainable growth for PTTES and its Customers. Vision The vision is To be a Technical Center of Excellence in Asia Pacific by 2020 for Process Safety, Reliability, Efficiency and Optimization through Operational Excellence implementation. PTTES is targeted to be one of the major key players supporting the PTT Group to achieve the Top Quartile Performance and sustainable growth. Mission In order to reach the Vision, our key success factors are to Institutionalize a technical knowledge-based organization Development of technical professionals S P I R I T Synergy Performance Excellence Innovation Responsibility Integrity & Ethics Trust & Respect Partnership and Service Management PTTES is the technical consultant, focusing on the PTT Group of companies. A 5 year contract with Shell Global Solutions is in place for the provision of technical services to the PTT Group. PTTES acts as intermediate one-stop-shop for its customers providing services, where beneficial in co-operation with other consultancy companies and service providers.

3 Area of Business and Services PTT Energy Solutions is formed by its shareholders to support the Refinery and Petrochemical Industry to enhance their operational performance targets, by providing the Value Added technical services, in a professional and cost effective way. The PTTES Services are concentrated around 5 technical platforms : Safety, Health, and Environment Asset Integrity and Reliability Efficiency and Optimization Equipment Engineering Service Process Engineering Service PTTES offers training, seminars, benchmarking, and project management support such as HAZOP, IPF/SIL as well as technical consultancy. Our operations office is located at PTTGC6 Admin Office; 8, I-8 Road, Map Ta Phut Industrial Estate, Map Ta Phut, Muang, Rayong Energy Optimization Study IRPC PTTES provides services for energy optimization for refineries, lube oil, aromatics, olefin and power plants. In an ongoing study together with IRPC two different areas are covered : a unit monitoring study to optimize day-to-day operations of the various units and a feasibility study to develop earlier identified areas for improvement in more detail. The unit monitoring study focuses on main equipment with high energy consumption (i.e. furnaces, distillation columns) and on the day-to-day operation of the units. The unit constraints and equipment efficiencies are evaluated, together with key operating parameters. Proper operating windows are defined to identify gaps and to make energy improvement recommendations. An energy report of each process unit is also developed as part of this study; an example is shown in the figure. Next steps in the ongoing program with IRPC are to specify the gaps with best in class energy performance, and to identify operational day-to-day improvements to reduce the overall energy consumption. In the feasibility study, the areas for energy optimization as identified earlier in the Solomon benchmarking study, are developed in more detail. Examples are the retrofit of the Crude Pre Heating Train (CPHT) network, a CPHT heat exchanger cleaning program and a study to recover more heat from the OVHD gas of a Hydrotreater. A Proposal For Improvement (PFI) is made to provide a detailed description with the potential benefits, the estimated high level investment costs and resulting payback period. If the PFI is approved by the Client, a detailed study is required to implement the proposal. Also in the implementation phase of the PFI s of the Energy Optimization study, PTTES can be a valuable partner. For more information on Energy optimization studies, please contact Khun Parichat Tanthakit at Parichat.T@PTTES.com

4 Risk Based Process Safety Risk-based Process Safety (RBPS) is the Next Generation of Process Safety Management (PSM) published by the Center of Chemical Process Safety (CCPS) in 2007, with an aim to prevent unwanted releases of hazardous chemicals and energy. RBPS provides a proactive guideline and systematic implementation of activities which recognize and tailor all hazards, risks and resources associated differently by each facility. The structure of RBPS comprises of 20 elements that built upon original PSM s 14 elements within the following 4 pillars ; 1. Commit to process safety 2. Understand hazards and risk 3. Manage risk 4. Learn from experience The outcome of an RBPS study can be reflected in a spider diagram, where the position in the 20 elements is shown. PTTES can offer a complete RBPS program or any specific element as required by Customers The RBPS program includes training, auditing and activity implementation by competent personnel of each focus area. The outcome of audit embraces health check, Risk Based Process Safety - RBPS Process Safety Culture Management Review & Compliance With Standards Auditing Process Safety Compentency Measurement & Metrics Workforce Involvement 40 Incident Investigation Stakeholder Outreach 10 Emergency Management 0 Process Knowledge Conduct of Operations Operational Readiness Management of Change benchmark, opportunities for improvement, prioritization of activities, and measurement For more information on RBPS please contact Khun Kunalai at Kunalai.u@pttes.com Hazard Identification & Risk Operating Procedures Safe Work Practices Training & Performance Asset Integrity & Reliability Contractor Management RBPS Elements 1. Process Safety Culture 2. Compliance with Standards 3. Process Safety Competency 4. Workforce Involvement 5. Stakeholder Outreach 6. Process Knowledge Management 7. Hazard Identification and Risk Analysis 8. Operating Procedures 9. Safe Work Practices 10. Asset Integrity and Reliability 11. Contractor Management 12. Training and Performance Assurance 13. Management of Change 14. Operational Readiness 15. Conduct of Operations 16. Emergency Management 17. Incident Investigation 18. Measurement and Metrics 19. Auditing 20. Management Review and Continuous Improvment

5 CDU Preheat Train performance improvement study The Crude Distillation Unit (CDU) is one of the highest energy consumers in a refinery. The easiest way to reduce the energy consumption in the CDU is to increase the Heater Inlet Temperature (HIT) of the crude oil. To achieve the maximum HIT, the heat exchanger network of the crude preheat train is the primary parameter. One of TSA clients of PTTES, studied possible improvements of the crude preheat train (CPHT) configuration in their CDU. The Pinch model methodology was used for the heat exchanger network design and optimization. The study recommended a significant modification of the Crude Pre Heat Train. The proposed network will use the existing heat exchangers plus 9 new heat exchangers, by adding and replacing. As a result of this modification, HIT is increased from around 231 C to 262 C for typical crude, which consequently reduces the furnace duty by approximately 20 MW and at the same time reduce CO2 emission as well. The majority of the additional recovered heat comes from heat exchange between crude and overhead vapor from the crude column. PTTES has worked as the owner representative and supported the engineering company for the Basic Design Package (BDP) study. To ensure that the design is practical, the margin of design in both thermal rating and hydraulic study needs to be reviewed. In addition, the ability of construction, operation, and maintenance on the proposed modification shall be assessed. For more information on this study please contact Khun Boonyarat Narongwongwattana at Boonyarat.N@PTTES.com Working with us PTTES is the organization providing career development for the technical professionals. We are looking for enthusiastic, self-motivated and energetic candidates for several positions. Interested person can find more detailed in our website: or please contact: Technical Talent Manager PTT Energy Solutions Company Limited 8, I-8 Road, Map Ta Phut Industrial Estate, Map Ta Phut, Muang District, Rayong Tel: +66(0) , +66(0) info@pttes.com;

6 Logistics Master Planning PTT Tank has recently started operations at the Map Tha Put waterfront. The facility handles products on behalf of the surrounding industries. The site has ample free space available for further business development. PTTES has been invited to support PTT Tank in formulating a long term development plan for the site, maximizing the return on investment. Although the economics are important criteria in selection of the business, it is not the most important criterion. It comes only on the fifth place after Safety, Environmental, Product Integrity and Efficiency considerations! The 5 CRITEREA any project MUST meet 1 Safety License to operate 2 Environment License to operate 3 Product Integrity Business Reputation 4 Efficiency Asset utilisation 5 Economics Viability Safety and Environmental determine the facility s license to operate without meeting these requirements, the facility should not be in operation. Maintaining Product Integrity affects the business reputation of PTT Tank and the clients PTT Tank services Operational efficiency ultimately affects the operating margin for the facilities Once all the forgoing 4 criteria have been met, will come the fifth element in focus : economic viability The objective of the logistics master plan is to align the long term profitability by optimizing assets of its refinery or complex. The current Capability Review (Performance Assessment) is the starting point for the master plan, where issues such as tank turnover rate, storage capacity, days storage, berth occupancies, blending efficiency, Quality Give Away and Loss performance are assessed Following the Capability Review, the Terms Of Reference (TOR) can be formulated, providing the outline for the Master Plan Development. The TOR covers issues like Product handling scenarios (volumes), product quality and expected changes thereof, facility constraints, long term product values and economic screening criteria. The 4 elements of the logistics master plan are : 1. Feed Import & Handling System : This element addresses the crude/feedstock tank farm configuration and also the import facilities, i.e. ship,road, rail, pipeline. 2. Transferring and Blending System : This element reviews the internal tank configuration and product blending facilities. 3. Product Delivery System : assessment in detail of all modes of delivery, ship, road, rail, pipeline, drumming and dry cargo. 4. PQ, Loss Control and Safety & Environmental : Specific consideration is given to these elements as they affect a sustainable operation of the logistics facilities. A scope of work will be developed for all elements, which can then be used for an order of magnitude cost estimate and subsequent benefits analysis. The scope of work will be tested against all 5 criteria mentioned earlier. When it passes these criteria, a selection phase for the options considered may take place, before finally settling on an agreed long term master plan. The next phase can be the development of the BOD/BDP and detailed engineering. During these phases the proposed changes will continue to be validated for their economic viability, as the cost/benefits assessments become more accurate. After the implementation and normal operations of the facilities, the cycle will be repeated and the master plan can be updated after 3 to 5 years depending on the business dynamics. For more information on Logistics master planning studies, please contact Khun Wout Timmermans at Wouter.T@PTTES.com

7 New refinery configuration and feasibility study For a group of International Investors PTTES did a configuration and feasibility study for a new refinery in Vietnam. The LP modeling and capital cost estimation has been done in close cooperation with KBC. PTTES supported the client with the development of the key premises for the study, which covers crude oil supply, products supply & demand analysis, crude oil & product pricing, utility costs, products supply specifications, key financial parameters and the refinery throughput to be applied in the study. The KBC Linear Programming (LP) tool was used to simulate and effectively optimize crude oil selection, unit operating capacities & key parameters and production of refined products, with the maximized Gross Refinery Margin as result. PTTES worked closely together with KBC on the LP modeling and to set up the various refinery configurations, using the input parameters as agreed in the key premises Km3/d or Kt/d Summary of overall Refinery products LPG Propylene Naphtha Export Gasoline Aromatics 12 refinery configurations have been studied starting with Hydroskimming and adding various process units like Product Treating Units, Platformer, CatCracker, Hydrocracker and Delayed Coker, to increase the complexity of the refinery configuration, in order to increase the value of the products made. Jet Diesel Fuel oil Fuel oil Sulfur Bitumen Pet coke PTTES provided the input data for capital cost estimation both for Inside Battery limit and Outside Battery limit i.e. on process unit capacities, tankage, offsite & oil movement facilities, miscellaneous costs, owner cost including land development costs, catalyst & royalties costs and contingencies. KBC produced the capital cost estimates of each refinery configuration based on this input and their capital costs database, with an accuracy for this stage of the study in the order of ± 50%. The economic evaluation of the 12 refinery configurations was done by PTTES. The net refining margin is calculated using the operating costs, which is different in each refinery configuration, depending on its complexity. The key economic parameters (NPV and IRR) are presented. Various sensitivity studies have been carried out, including on project risks (e.g. increase of Capital expenditure, increase of construction time), on plant performance (e.g. operating cost, operation availability), and on product pricing & demand, to evaluate the robustness of the more attractive refinery configurations. The most attractive refinery configuration has been selected by considering the key economic parameters (IRR and NPV), the economic impact of the sensitivity studies together with other key screening criteria e.g. flexibility for future expansion and future competitiveness. The proposed refinery configuration shows an attractive economic justification, however at a higher capital cost than expected by the Investors. The project is consequently on hold. More information on Refinery and Petchem configuration and feasibility studies can be given by Khun Jariya Oonmeechai at Jariya.O@PTTES.com

8 Training on Basic Distillation and Crude Distillation Unit Distillation is one of the most important processes in refinery and petrochemical operations. It is necessary to understand the basics of this process for the effective operation of distillation units and also essential for trouble shooting and problem solving. PTTES expected that the training on basic distillation would be a valuable service for our clients, especially for process technicians and operators. The basic distillation course covers the following subjects: the key parameters of distillation, the distillation types including their Pros and Cons, the internal compartments in the column including how to select the proper type trouble shooting During the course the participants will thoroughly comprehend how important each part and the parameters in distillation are. In addition, they will have an idea on what the trouble indicators are and also how to deal with these problems. The Crude Distillation Unit (CDU) was selected as example to work on during the course, as it is the main energy consumer in a refinery. If the clients understand the operation of the CDU unit, they will have an understanding how to operate a distillation unit to achieve both on-specification products and lower energy consumption. The Distillation training was successfully conducted in the last week of April 2012, with 31 participants. Parts of a Distillation Column It was a good opportunity for both PTTES and our clients to share with each other in good SPIRIT their experience, especially with regards to trouble shooting in the distillation process and how to solve these problems. The course was much appreciated by the 31 participants : the average Customer Satisfaction Index was 4.1 (out of max 5). More information on this and other courses can be found on our website : info@pttes.com Technical Training Courses and Seminars PTTES acts as intermediate one-stop-shop for its customers, providing Technical Training and seminars, where beneficial in co-operation with other service providers. We provide the best solution for your training requirements PTT Energy Solutions Company Limited Bangkok Office 7th Floor, Building 2, Head Office 555 Vibhavadi Rangsit Road, Chatuchak, Bangkok Rayong Office 8, I-8 Road, Map Ta Phut Industrial Estate, Map Ta Phut, Muang District, Rayong Tel. +66(0) Fax. +66(0) Website :