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1 >APPLICATION NOTE SASOL Sees Immediate Results after Implementing Real-Time Energy Usage Monitoring Solution from IPS DPMs provide management with the information to make more-informed business decisions >BENEFITS $400,000 (USD) per year in savings from two of five targeted plants. 6% savings on energy feedstocks and 4% savings on electricity costs for making steam in Steam Stations 1 and 2 for the first month and progressively improved throughout the second and third months. Improved business systems and operator performance. Vastly improved reporting due to real-time nature of the solution. Operators can see the impact of their actions almost immediately so they can make more informed decisions. > CHALLENGE > ABOUT IPS Invensys Process Systems (IPS) is a global technology, consulting, and advanced solutions firm dedicated to delivering greater impact and unprecedented results in process automation, controls, business operations, and enterprise performance. Unified offerings deliver market-leading quality, reliability, and comprehensive business remedies to notable industrial organizations within hydrocarbons, chemicals, oil and gas, power and utilities, pulp and paper, food and beverage, minerals and mining, specialty chemicals and pharmaceuticals. IPS solutions are comprised of integrated legacy brand offerings, including field devices, safety, and control systems from Foxboro and Triconex; advanced simulation and optimization applications from SimSci-Esscor; operations management from Avantis; and the world s first truly open enterprise control system, InFusion. These cohesive capabilities seamlessly inter-operate from top to bottom, drive enterprise-wide safety and efficiency, and extract useful knowledge from operations to make better investments. IPS clients benefit from domain and vertical knowledge, and with modular IPS solutions, enjoy the freedom to select any combination of products and professional services you need - whether to solve a problem on a single piece of equipment or optimize all assets across multiple sites. For SASOL (originally called the South African Coal, Oil & Gas Corporation or the Suid Afrikaanse Steenkool, Olie en Gas Korporasie), a leading South African company involved in mining, energy, chemicals and synthetic fuels, energy management has a significant, direct bottom-line impact. SASOL refines crude oil into liquid fuels and lubricants. SASOL s Infrachem Utilities and Syngas division produces electricity, demineralized water, and steam for its own internal use and sells excess capacity to other users. SASOL needed a way to monitor energy usages in real time, so its technicians could optimize it in the plant and know exactly how much power would be required to meet its internal needs and how much would be available for resale to the local grid. The company was also facing cost pressures due to reduced demand in its commoditybased business and was interested in opportunities to minimize costs by introducing new technologies. > SOLUTION Invensys Process Systems (IPS) deployed a business performance service team to work with the customer s plant personnel with the goal of delivering a real-time performance measurement system that was aligned with the manufacturing strategy and accounting system. This system provides consistent and accurate real-time measurements of plant performance that drive maximum economic business value from plant assets. Steam Plants 1 and 2 were chosen as pilot sites for the project because they faced enormous cost pressures while they represent a manageable and self-contained area for starting the process. Early results indicate that the plant is exceeding its projected bottom line, showing $400,000 (US) dollars per year in savings from the two pilot plants. > COLLABORATION The IPS Business Performance Services consulting team worked with personnel from the SASOL One Site in SASOLburg, South Africa, to develop real-time dynamic performance measurements (DPM) at Steam Plants 1 and 2. DPMs were developed to determine the underlying real-time performance measures of each production unit in the two plants. Real-time financial metrics were also created to calculate costs and profits for each process unit and area.

2 Management and operator dashboards, that utilize DPMs and real-time financial data, were created to provide management with critical information in real time to enable better, more informed business decisions. As a first step, the IPS Business Performance Services consulting team conducted a plant operation and strategy audit. During the visit, the team interviewed SASOL management and plant team members from all aspects of plant operations, starting with the plant managers and continuing with the operators. IPS structured methodology was used to determine the correct measures of performance and decompose the key plant performance measures into lower-level functional entities that are small enough that they can be managed effectively. The component solutions were then recombined into an overall structure. This method, called Vollman decomposition (based on the work of business professor, Thomas Vollman), enables the identification of performance measures for each of an organization s functions, processes and activities that are derived from corporate strategic performance requirements. Every function and employee can be measured according to individual contribution to the business plan. For performance measures to be effective in process manufacturing operations, they must be generated in the same timeframe as the manufacturing process. If the measures are not available until after the manufacturing process has been created, it is difficult to line them up for a positive impact on performance. The measurement process helped to reconcile differences in the way that engineering and accounting staffs were measuring raw materials consumption. For example, the engineering production side was basing coal consumption on mechanical devices that measure coal based on the number of revolutions made by a wheel flow meter. The accounting side, on the other hand, based its measurements on weighing devices at the mine and silo measurements. These two measurement criteria resulted in significantly different between results. Therefore, reconciliation was required to arrive at a working solution. The process also helped to identify a water source whose cost had previously been incorrectly allocated. Producing Steam for Internal and External Consumption SASOL draws process water from a nearby river, treats it in one plant, mixes it with condensate recovered from the other plants and uses it to produce steam in two steam stations and an automatic thermal reformer (ATR) area, for consumption by both internal and external customers. Prior to 2004, demand for steam was high among external customers, especially those involved in coal reformation. At that time, maximizing output was key to the profitability strategy. However, as coal began to lose favor to imported natural gas, steam demand fell off and the strategy shifted from maximizing output to minimizing cost. The price of steam for both internal and external customers is based on an algorithm that approximates a fair market price at current conditions. The steam stations are also contractually obligated to run with 160 tons per hour of spare steam, which is approximately equal to the steam output from one boiler. If the plants cannot meet the demand for steam, they must first reduce supply to the electrical generation customers, who can buy electricity off the grid, but excessive power usage from the grid can be costly. Automation and IT Systems SASOL has made a significant investment in its automation and IT infrastructure. Each of the two steam stations has a dedicated Distributed Control System (DCS) for control, historization and graphical interface. At the start of the project, neither DCS was heavily loaded. The unused computing capacity in each DCS provided an opportunity to host applications beyond basic process control; in this case, as the model implementation and execution host for real-time performance measurements and business intelligence feedback. The historian server collects critical data for each DCS as well as for other production layer systems. Most connections between the DCS and IT layer are through bi-directional communications. Process data moves from the DCS to the historian server and manipulated data moves back from the historian server to the DCS to be displayed.

3 The Intrachem division utilizes SAP R/3 as the main backbone for measuring business performance. SAP Sales and Distribution, Materials Management, and Production Planning modules are used to coordinate sales and distribution, maintenance management and production planning. These SAP components then provide inputs to the production costing system and monthly management reporting systems. Production volumes are taken from SAP and used to derive variable costs from the SAP Plant Maintenance module. Allocated costs contained in the SAP Controlling module are also used in the overall costing pictures for each product. Monthly reporting of financial data provides an overall picture of the steam generation business and the entire Infrachem Syngas steam and utilities businesses. These reports are generated using Hyperion Financial Management reporting capabilities, utilizing key financial data from various spreadsheet sources. Managerial, operations and maintenance reports utilize input from the ODS system, SAP and other manually entered sources to provide custom reports to meet current requirements. Production supervisors use reports on a daily basis to review the previous day s production performance. Development of DPMs DPMs were modeled in the DCS and developed for each individual boiler, steam station, and for steam generation in general. Three station-level DPMs were developed: steam cost, steam quality and production rate. Each boiler is expected to produce the lowest-cost steam at the proper pressure and temperature specifications and maintain reliable production while managing production rates. For each boiler, the variable steam generating cost, including labor, consists of four major components: coal, electricity, fuel oil and water. Maintenance and Human Resources Metrics Management at the steam stations are rolling out a maintenance initiative designed to improve the availability of key assets by avoiding emergency shutdowns. They were able to accomplish this by improving planning, increasing the predictive-reactive maintenance ratio, setting proper priorities for maintenance activities and reducing cost. Real-time performance measurements in the maintenance area focus on: Reactive-predictive maintenance ratio Availability of each boiler Emergency maintenance reaction time, which is the time from when the breakdown occurred to when the repair is completed and the equipment is back in operation Maintenance schedule deviations, which are important for improving the maintenance planning process Implementing DPMs DPM algorithms, real-time financial models and unit levels were implemented in the two DCSs. Subsequently, cost factors on the plant floor can now be tracked on a real-time basis through the existing plant-level assets. The execution of these algorithms typically takes place in the microprocessors in the DCS. These algorithms are executed at a frequency that is near to the cycle time of the process. The historical collection is performed at a similar frequency. Unit-level metrics are then aggregated at the station and plant levels using the historian. Totalization can be performed at various periods, including shift, day and month. Real-time Financial Information Flows through to SAP Real-time financial data plus allocated costs tracked by the ValuMax activity-based costing system provide an immediate picture of product costs across the portfolio.

4 The same real-time financial data can also be eventually integrated into SAP s Financial and Controlling modules as the fidelity and applicability of these data is better understood. The figure below provides a general overview of the real-time business intelligence/finance system for Steam Stations 1 and 2. DPMs and real-time finance (RTA) models were developed and processed in the existing automation system. Developing a Baseline After the metrics were installed, they were historicized to provide a performance profile of each unit, station, etc. under various operating conditions. These baselines enable economic comparison of boilers under various conditions. Improvement initiatives and projects and operational improvements through improved procedures and training can be financially tracked and validated. Baselining also enables development of data for financial and accounting validation. One of the key opportunities for improved results lies in training the operators to think and act strategically. Dashboards provide operators clear and simple feedback as to individual impact on SASOL s business performance. Integrating this way of thinking is helping to improve SASOL s business and build the knowledge and skill base of its operators. Providing Real-time Business Intelligence/Financial System operators with a tool that provides feedback as to which boiler produces the least expensive incremental steam enhances performance of each steam station. For example, operators can make spare and spinning steam decisions based on economic information. Spinning is the available spare steam capacity when the feed rate on an idle mill is increased. Spare steam is the amount of potential steam available by starting the third mill of a boiler running on just two mills. Operators increase steam output on an instantaneous or immediate basis according to demand changes. Future Improvements Planned The various stakeholders provide such widely varied needs that the current infrastructure needs to be expanded to meet their changing and sometimes irregular nature. Standards, such as the ISA-95 plant-to-enterprise standard, formalizes the concepts and interfaces for integrating business systems with production systems. The DPMs and RTF/BI dashboards can be scaled to cover additional aspects of the business. In addition, custom business applications can be developed more easily within a standards-based environment. The most notable players in this arena are SAP s xapp for Manufacturing Integration and Intelligence (xmiii) and Invensys ArchestrA plant-level SOA (services oriented architecture). These systems will, in the future, enable SASOL to map and model its plant information to intelligent plant and business models that not only integrate well with SAP but can meet the varying demands from different levels in the organization. Divisional management currently has approved expansion to the other plants in the location. The DPMs, realtime financials and dashboards have only been in place a short time, but they have already had a significant impact. Feedback from managers, engineers and operators is that substantial improvements have been achieved. Operators can see the impact of their actions almost immediately, so they are making more informed decisions. For example, a substantial reduction has already been seen in the air flow variability in the burners. Reducing airflow variability reduces coal consumption since too much airflow remove heat from the boiler out the stack and too little airflow results in incomplete combustion. The dashboards also enable engineers to quickly determine the impact of a new control strategy or equipment change.

5 This project provided numerous benefits for SASOL. As the division looks to continue to improve its operation and drive business value for the company, it plans to bring in new product and process technologies that can help them achieve their goals. SASOL Infrachem management views development of its people as one of the company s most critical tasks. The importance of skills and knowledge development is underscored by government regulations and key personnel nearing retirement. The DPM methodology, by the nature of the process, brings together different functional areas such as accounting, engineering, management, operations and maintenance to discuss the overall business seeing it in a holistic view. This type of interaction creates understanding across business functions, enables proper strategic performance measures to be developed across functions and helps create new and valuable business processes aimed at improving the bottom line. The benefits of this project are clearly positive for SASOL. First month results indicate a 6% savings on energy feedstocks and 4% savings on electricity costs for making steam in Steam Stations 1 and 2. This percentage progressively improved throughout the second and third months. These savings are due to$400,000 (US) dollars per year in savings from two of five targeted plants. This equates to approximately $230k savings in the first month. The annualized direct benefit of this project is expected to be about 2% reduction in variable costs associated with energy feedstocks and electricity costs. Some of the next steps include bringing the new business information together with process data to identify other areas of improvement through advanced multivariate statistical analysis, continuous improvement programs such as Six Sigma, and other business value-adding activities. > OFFICE LOCATIONS Invensys Process Systems 5601 Granite Parkway III Suite 1000 Plano, Texas USA O F E getmore@ips.invensys.com Invensys Systems, Inc. All rights reserved. Foxboro, Invensys, SimSci-Esscor, Triconex, Validation Technologies and Wonderware are trademarks of Invensys plc., its subsidiaries and affiliated companies. All other product names are the trademarks of their respective holders.