Final Presentation

Hello All,

Here is my final presentation.  If any edits are made to it the file will automatically update to include them.  Thank you for reading the blog over the past weeks and I hope I was able to educate you about the optimization of oil refineries.

Presentation Link

Who Does What?

Hello,

So this week is going to be a bit different from the past few weeks.  Rather than focus on the actual optimization of oil refineries, I feel it is important to have a post on the industry as a whole, and more specifically on Fluor’s position within it.  Some of this will be slightly similar to what I have put in in other posts, but those posts never focused on industry.  For this reason I hope to paint a clearer picture than I have regarding this topic.

So where does this fit into my research of oil refinery optimization?  Well, outside of expanding upon the company I worked at, it also will help to show how the industry operates.

Within the oil refinement industry (or at least the part of it that matters to this project) there are three main groups of companies.  These include oil companies, licensors, and project management companies (Fluor falls into this group).  What do each of these groups do?

Let’s start with the oil companies.  As discussed in a previous post, their main job is to make money.  Opinions on that aside, they have a financial obligation to their stockholders to do so, and by not working to maximize profits they would risk the company moving towards failure.  Luckily for me, this in many ways is what drives optimization of oil refineries in the first place.  

Onto the licensors.  These guys generally have a product or technology that they have created that they then license out to be used in an oil refinery.  Tough to figure out where their name comes from huh?  They do contribute more to the process than just licensing though.  These companies also consult as to how their technology can best be implemented in the refinery.  I have thoughts that this also helps them to make sure their product is in the best place to succeed, thereby making their company look better, but that is just a thought and is by no way confirmed (thought it was interesting to share though).

And the most important group to the project is the project managers (definitely not biased here).  Fluor is in charge of planning and managing the project as a whole.  They have to decide how to revamp and/or design a refinery based on the agreed to budget.  Fluor will also bring in the licensors they need for the necessary technology to achieve the desired optimization.  This does mean that Fluor does not have the ability to make the final decision though, as the oil refinery decides how much money they are ultimately willing to spend as they are the client Fluor is working for.

Anyways that is the general overview of the players within the oil refinery industry, and it was one that was fascinating and exciting to work within.  Thanks for reading.

Stephen

Raising The Productivity Anywhere Possible

Hello,

Before I get started, I’m going to give a fair warning.  This week may be a bit more on the technical side.  I’ll try to stop and explain as I go, but I may overlook something, and for that I say sorry in advance.   Well, let’s get into it.

This week we will discuss the optimization of a more specific part of the process allowing us to gain insight into just HOW much goes into oil refinery optimization (from the very general layout to the extremely specific).  For that we will be using the catalyst in the fluid catalytic cracker (FCC) as an example.  Don’t worry, I’m already taking a step back to explain.  So the FCC is a unit that is very important to an oil refinery.  It is one of the more productive units that is used early on in the refinery process to crack hydrocarbons to create gasoline.  To help heat the oil the FCC unit uses a catalyst (hence fluid catalytic cracker).  

Cool now that we got that explanation out of the way, what is there to optimize here.  Let’s look at the catalyst itself.  The catalyst has been heavily optimized, looking for the best compound to use to get the best production from the unit.  However, optimization goes further.  At Fluor I learned that they have looked further here than most anyone else.  Currently, there is a tray sitting over the catalyst that distributes the oil down onto it, and the tray sits on a ring on the unit’s wall.  This means that some of the catalyst lays below this ring.  How much? Up to 20% to be exact.  The reason this is important is that the current system of distributing the oil has an extremely difficult time of distributing the oil unto this 20%.  As you would expect, this causes a loss in productivity, and is one of the many reasons (more possibly overlooked even now) that the actual productivity is lower than on paper.  

So how did Fluor look to solve this problem?  They developed a new way distribute the oil, allowing it to spread out more.  This means that the oil is able to reach the edges more as well as making the catalyst in the middle areas do less work.  Overall, this leads to a large productivity increase.  I don’t want to go into much detail as to how they do this to make sure I don’t share anything I shouldn’t.  Anyways that is what I have for this week.  Next week I’ll have another example and will go into the importance of these specific examples of optimization.

Stephen

Clearing the Smog Around Oil Refineries and the Environment

Hello again,

So this week will be on how the oil industry deals with environmental regulation.  However, before I get into that, I’ll take a second to lay out what the next few weeks will be on.  After this week, the general overarching topics will be covered, and I will go into specific examples of optimization on a very detailed level to gain insight into just how far optimization goes with oil refineries.  

Anyways, back to environmental concerns and oil refineries.  So, first off, optimization of oil refineries and environmental regulations don’t exactly go hand in hand.  This is because generally it takes further refining of the product to make it more environmentally friendly, and thus more costly to produce it.  For this reason, unless it is mandated by law, oil refineries tend to work to meet specification without going much further in order to stay competitive.  There are some refineries that take a slight hit in the profits to lower their environmental impact, but this is mostly done by smaller private companies (as opposed to publicly traded companies, a.k.a companies traded in the stock market) if at all.  The reason for this is kinda outside my scope so I’ll keep the explanation brief: If a publicly traded company made that trade for environment over profits, it's likely that their reported net earnings would decrease.  The risk is that if the decrease is large enough, the company would potentially have their stockholders sell their shares, lowering the company's value.  Basically, not good.

This is where governmental regulation comes into play.  The government sets certain specifications to meet in order to sell oil in the given state (usually done on a state level within the United States), and the oil industry then adjusts to meet them.  By doing so, the government effectively increases the price of refining oil and thus increasing the price of gas, but helps the environment in the process.  Not a bad trade off.  

So what does the government regulate to help the environment exactly?  The answer is sulfur, and to be honest I was a bit surprised as it feels that the sulfur levels are rarely mentioned.  And this regulation has helped the environment a lot.  Sulfur is one of the main contaminants in oil, and lowering it greatly aids air quality.  Unsurprisingly, California generally leads the charge in lower sulfur, followed by the rest of the United States usually, and then the rest of the world (not a hard set rule, but generally true).  Over the last few decades, sulfur levels have decreased from a few hundred parts per million, down to the 10-15 ppm range.  This staggering decrease has helped, however the government on both a federal and state levels have continued to lower allowable sulfur levels, especially now focusing on diesel fuel (as that is currently higher).  Anyways, that's what I going on as far as environmental concerns and oil refineries.  Thanks for reading!

Stephen