27 August 2012© Copyright 2012 Barber & Barber Associates, Inc.# 1 Empirical Capital Allocation...

transcript

Empirical Capital Allocation

Technical Presentation

Reliability-Based Plant Performance & Capital Allocation Decision Tool

Contents

1. What is Opgrade?a) Why is Opgrade Unique?

2. What does Opgrade do?a) Typical Execution Planb) Typical Result Values & Charts

3. Why Opgrade?a) Case Studiesb) Moving Forward

What is Opgrade?• Opgrade is an innovative service that employs a unique tool• It answers the question:

“ What is the impact on revenue if we allocate capital differently, when taking reliability into account? ”

• How? Opgrade uses a proprietary, reliability-based, statistical flow solver that transforms the following inputs

into On-Stream Factors (OSFs) for all of your units and streams, thus predicting your future revenues

• Unit & Equipment Reliability• Supply Availability• Planned Maintenance

• Actual Process Flows• Actual Mass Balance• Actual Operational Rules

• Tank Working Volumes• Intelligent Flow Routing

Defining OpgradeThroughout this presentation, Opgrade is used in the following contexts:

OP•GRADE (ŏp'grād') noun» A service to maximize return on capital employed (ROCE)

and increase plant revenues by identifying operational bottlenecks and capitalizing on maintenance synergies:“Opgrade can help us maximize ROCE”

» A stochastic, reliability-based capital allocation decision tool developed by Barber & Barber Associates: “Opgrade is a unique tool”

verb, transitive» To raise to a higher grade or standard through reliability

and performance evaluation and optimization: “We plan to Opgrade all of our plants”

An Innovative Service• Our engineers use actual plant information to analyze

your systems and maximize the return on capital employed (ROCE) for identified capital allocation scenarios

• Opgrade services help our clients:» Know where installing additional capital will

actually alleviate reliability bottlenecks (and maximize ROCE)

» Size new tanks to meet demand (and maximize ROCE)

» Reallocate existing tanks to different services without reducing revenue (thus maximizing ROCE)

A Unique Tool• The Opgrade software tool belongs to a

class of tools called “Risk Assessment Tools”• By combining the benefits of several different

Risk Assessment Tools, Opgrade avoids the limitations inherent to those stand-alone tools

• Therefore, our Opgrade software tool allows us to predict your future revenues like no one else

• Complex tank and operational rules from Discrete Event Simulators• Mechanical availability and maintenance schedules from RAM Simulators• Dynamic mass balances from Dynamic Process Simulators

Opgrade Combines:

Combines features from

all three

Risk Assessment Tools

Discrete Event Simulations (DES)Evaluate how logistics and schedules affect production

RAM Studies (Reliability, Availability, Maintainability)

Evaluate bottlenecks in systems based on reliability

Dynamic Process SimulationsEvaluate pressure, temperature and flow profiles in systems

Computational Fluid DynamicsEvaluate pressure, temperature and flow profiles within equipment

Finer Resolution

Broader Scope

Other Tools

» Pros

A. Are good at handling complex operational rules and tank logic

B. Are designed to predict overall production

C. Can handle product loops (e.g. output that is also used as input)

» Cons

D. Are not designed for evaluating plant configurations based on reliability data

E. Are not designed to calculate mass balances

• Discrete Event Simulation (DES) Studies

Other Tools

» Pros

B. Are designed to predict overall production

D. Are designed for evaluating plant configurations based on reliability data

» Cons

A. Are not good at handling complex operational rules and tank logic

C. Cannot handle product loops (e.g. output that is also used as input)

E. Are not designed to calculate mass balances

• Reliability, Availability, Maintainability (RAM) Studies

Other Tools

» Pros

C. Can handle product loops (e.g. output that is also used as input)

E. Are designed to calculate dynamic mass balances

» Cons

A. Are not designed to handle complex operational rules and tank logic

B. Are not designed to predict overall production

D. Are not designed for evaluating plant configurations based on reliability data

• Dynamic Process Simulation (DynSim) Studies

Opgrade is Innovative• Opgrade

A. Is good at handling complex operational rules and tank logic

B. Is designed to predict overall productionC. Can handle product loops

(e.g. output that is also used as input)D. Is designed for evaluating plant configurations

based on reliability data

E. Is designed to calculate dynamic mass balances“ Opgrade combines the best features of three

different tools without their inherent limitations”

What Does Opgrade Do?

• With Opgrade you can:» Predict future revenues using complex system

models based on actual process flow» Compare the sensitivity of predicted revenue to

various configurations to optimize return on capital employed

» Calculate production impacts from random failure and scheduled maintenance events

» Predict the average long-term production for the facility after many simulated years of operation

Typical Execution Plan

• Study kick-off & definition of objectives» Review drawings with plant engineers» Develop model Block Flow Diagrams (BFDs)

• Study Basis» Draft Study Basis document and review assumptions

• Modeling» Prepare and debug the model input file» Load model and debug control logic statements» Run model over many repetitions

Typical Execution Plan

• Generate & validate results» Ensure that the model truly represents reality

• Identify, create and run sensitivity cases» Calculate incremental OSF and ROCE for each case» This effort provides the greatest value in the study

• Final Report & Deliverables» Generate plots and result summary datasheets» Review results with team and draft report» Present findings

Model Complex Systems

• Your actual process flows

• Multiple commodities

• Intelligent conditional flow splitting

• Unlimited feedback / recycle loops

• Control flow with actual rules from operations

Typical Results

• For all modeled unit operations:» On-Stream Factor (OSF)» Mechanical Availability» Mechanical Reliability» Scheduled Maintenance Impacts

• Charts» Time Series of Average Unit OSF » Histogram of Tank Levels» Time Series of Average Tank Levels

Typical Abbreviated Results

OSF Mechanical Availability

Mechanical Reliability

Scheduled Maint.

Product to Pipeline 86.5%

Area A 84.6% 95.6% 99.2% 3.6%

Unit A1 82.5% 95.6% 99.1% 3.6%

Unit A2 82.5% 95.3% 98.9% 3.6%

Unit A3 82.5% 95.2% 98.8% 3.6%

Unit A4 82.5% 87.4% 92.2% 4.8%

Area B 80.0% 87.1% 93.2% 6.1%

Unit B1 82.3% 96.2% 99.8% 3.6%

Area C 82.3% 91.8% 95.3% 3.6%

Unit OperationsTypical Result Charts

Unit Reliability

• HCU modeled with three failure modes

• Failure data derived from industry sources

• “Reliability” as used here is availability with only unplanned outages included

Unit Availability

• 39-day turnaround every 3-years

• Overall availability is 94.8%

• “Availability” as used here includes both planned and unplanned outages

Unit On-Stream Factor

• Other units also drive operations (i.e. HCU cannot operate without available feed source and effluent destination)

• HCU is online for significantly less time than it is available (82.3% vs. 94.8%)

Unit Operation Charts

• Results charts for unit (or equipment) operations:» Show any evident operational trends» Show the effects of planned maintenance» Describe the expected operating regions for the

unit» Illustrate how the On-Stream Factors (OSFs) for

units are often much less than the mechanical availabilities

» Are beneficial in validating that the model is setup correctly

Tank OperationsTypical Result Charts

Tank Level Histogram

• Know how your tank levels are affected by unit availability

• This tank is at least 10% oversized

• In a sensitivity study, reducing this tank’s size by 20% had no impact on production

Tank Sensitivity Study

• This chart shows the OSF sensitivity to tank size for the same tank

• An increase or decrease in size of 20% has no effect on OSF

• Reducing size by more than 20% begins to reduce the OSF

Tank Operations

• This chart shows the time series of the same tank

• Only periodic maintenance operations drive the tank down

• If demands on the tank during maintenance can be reduced, the tank can be even smaller

Tank Operation Charts

• Results charts for tank operations:» Show any evident operational trends» Show the effects of planned maintenance» Describe the expected operating regions for the

tank» Illustrate how often the tanks may go empty (or

full)» Can prove that bigger tanks do not necessarily

equate tomore revenue

Proving the Business CaseWhy Opgrade?

Case Study: Plant Infrastructure

• Opgrade Study Establishes Business Case for $700 million Infrastructure Investment» By utilizing Opgrade, our client can proceed with

confidence knowing that their $700 million capital improvement project will results in sufficient additional revenue. The study also identified $30 million in possible annual revenue improvements and at least $40 million in possible capital expenditure reductions.

» Savings generated from this study alone are in excess of 100:1 return on investment in study fees.

Case Study: Steam Production

• Availability Study Improves Revenue and Optimizes Equipment Configuration» By employing our RAM study methodology, our

client can sell more product because they can produce more steam. In this case, greater steam generating flexibility with fewer maintenance requirements clearly provides higher steam availability over time, yielding an annualized revenue improvement of up to $6.1 million.

» Savings generated from this study are in excess of 100:1 return on investment in study fees.

Moving Forward

• Invest your CapEx wisely• Know tomorrow’s output today

» Calculate how much revenue (OSF) is produced in multiple scenarios

» Know the value of your CapEx by comparing the total revenue (OSF) calculated for each scenario

• Reallocate tanks and other capital» Put your capital to its best use

Opgrade Your Plant Today!

• Contact us anytime for a free evaluation of your situation and learn if Opgrade can generate 100:1 returns for your plant!

» sales@barberassociates.com» (888) 200-4BBA [4222] or (210) 782-8910

27 August 2012© Copyright 2012 Barber & Barber Associates, Inc.# 1 Empirical Capital Allocation...

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