By Heather Douglas
“Plant turnarounds, also known as shutdowns, are one of the most crucial events in the routine operation of an oil or gas plant. They also have the power to strongly affect a company’s bottom line. A turnaround that goes badly, lasts for too long, or exceeds its budget could result in the company unexpectedly reporting fiscal losses. On the other hand, a turnaround that goes well and stays within its budget and timeline will make a huge contribution to the plant’s efficiency and safety … setting the plant up for even bigger success in the future.” The Importance of Turnarounds in a Plant’s Operations (March 2013).
As plant and refinery owners look to 2018, many believe the economic outlook will remain challenging. They want the shutdowns, turnaround, and outages (STO) to be efficient, safe, and cost-effective. To protect slim margins, they want to extend the intervals between shutdowns, or plan for small, targeted times of maintenance. Yet risk remains the major challenge and no one wants to compromise safety.
STOs are normally large projects which must be finished on-time and on-budget. Plant operators shut down the day-to-day operations and, alongside contractors, work around the clock to clean, inspect, and repair each piece of equipment so the plant can resume normal processing or refining operations. While speed is essential, STOs often face scope changes, sometimes involving significant repairs, unexpected but crucial to the ongoing safety of the plant.
STOs are often views as a “necessary evil” by industry because they are extremely costly – a few weeks work on a turnaround might cost the entire year’s maintenance budget – because it is expensive to shut down a plant, forfeit the profits during the process, and pay the hundreds or even thousands of workers needed to implement the project.
Halve Number of Turnarounds
The world’s best STOs managers claim the industry already has the methodology, and when followed properly, can safely halve the number of turnarounds needed by any facility. John Woodhouse, an internationally-known specialist in integrated asset management, says there are three important areas that need to be evaluated before any manager should decide to lengthen the time between shutdowns.
“Firstly, the human factors of psychology and self-interest have to be addressed,” Woodhouse says. “I mean proactively handling the differences between what is right for the business in total cost/risk terms compared to localized self-interest and short-term gains that tend to affect personal motivations.”
The second area Woodhouse believes is important is to analyze the assets he defines as the diverse needs of each piece of equipment and the differential importance each presents. “The risks, failure modes, and mandatory obligations of the daily running of a facility needs to have cross-disciplinary collaboration and discipline to sort out the ‘must-do’s’ from the should-do’s to the could-do’s from the won’t-need-to do’s.”
The third major factor is the cost. “It’s not just cash, it’s resources and ‘lost opportunity costs’ as well,” Woodhouse says. “This addresses the capability constraints and value-for-money dimensions – funding and skills and so on. It’s analyzing what can be done to achieve what business benefits.”
Woodhouse divides his methodology into six steps:
1. “Systematic development of asset management strategies – identify and prioritize the problems/opportunities and decide what is critical and what is urgent;
2. Specific asset cost/risk/performance problem – define the challenge, create boundaries around the challenge, identify the underlying root causes, look at related cases for improvement;
3. Identify potential solutions – asset the intervention (e.g. maintenance, modification, or renewal) and non-asset options (e.g. process, training, mitigation, insurance);
4. Evaluation of specific project or intervention or systematic activity reviews – optimize timing of discrete options (life cycle costs, optimal intervals, premium for compliance, premium for intangibles, and cost of uncertainty); and
5. Evaluate and optimize combinations of options – optimal blending versus optimal bundling; and
6. Assemble total portfolio and programme – capital investment plans, resourcing needs, risk and cost forecasts.”
Woodhouse cautions that companies need to look at the rate of change of risk. “This needs to be built into the activity selection and prioritization criteria. It’s not just a matter of how big is the cliff but also how close to the edge are you standing.”
Tracking Tools Key to Success
According to Arash Shahi, civil engineer with a Ph.D. in project management from the University of Waterloo, a comprehensive scope management system with an integrated change management process is essential, followed by a “complete cost capture tool capable of tracking labour, materials, and equipment on a shift-by-shift basis, and an integrated budget management system to track incurred costs against budget values and generate accurate daily cost and performance measures.”
Shahi says the operational cost component of the budget is usually the key factor to determine the overall complexity of the project. “In general, larger operational expenditures translate to an exponentially larger number of activities and labourers on the site. A 200,000 bbl/d refinery may go from normal operations with about 500 staff to a turnaround project with a peak of 2,000 to 2,500 on-site staff. At this scale, traditional spreadsheet-based project control tools struggle to address the requirement to deliver real-time, highly accurate cost, and performance metrics to key project stakeholders during STO project execution.”
Shahi breaks his methodology into five steps:
1. “Approve, budget, and schedule all work that is executed;
2. Accurately understand work progress on a shift-by-shift basis (twice a day) to within +/- one to two per cent;
3. Understand 90 per cent of incurred costs with no more than a 24-hour delay, reported daily with maximum of a two-shift lag;
4. Accurately forecast cost and schedule variances, using the timely information as listed above; and
5. Understand and mitigate risks to personnel, cost, and schedule.”
STO projects must factor in the challenges of having large numbers of workers on-site operating big pieces of machinery in tight quarters. Since the crew typically triples in headcount, with most coming as contractors who are unfamiliar with the processing equipment and operations, adding to the level of risk. “The conflicting objectives of the vast amount of activities taking place during a short period often results in very hazardous working conditions,” notes Shahi. “As the project progresses, and particularly if it is delayed, labour fatigue also becomes a serious concern. The scope changes can also be challenging, as the found or extra work is normally not planned to the same level as other work and therefore increases the risk of the overall project.”
Once the STO is finished, project managers can congratulate themselves on controlling the scope change process, accurately tracking all the labour costs, equipment rentals, new materials, managing the budget, and integrating the safety components to prevent any lost-time accidents.
Companies know that STOs are critical to the plant’s ongoing successful operations. The maintenance issues are addressed, every piece of equipment has had an internal inspection, and repairs have been done. The owners know it is the ideal time to overhaul major systems. The plant can then return to peak performance.
