Discoveries – You cannot properly determine the value of reduced variance without optimizing the mean first. In fact the farther the mean is from its optimum, the less the value of reduced variance because deviations effects cancel out. Its maximum value is about the optimum mean where deviation effects are additive. Setpoint optimization cannot be properly done without accounting for variance risk.
The use and value of control and optimization are not separate; they are fundamentally linked. The value of each component of Clifftent, equipment and information can be determined by their contribution to determining and holding the optimum mean.
Human judgment and experience can now focus on the accuracy, reality, validity and truth of useful input data for near term forecasts; setpoint determination decision-making follows naturally. Operator focus changes from CV setpoint setting to CV variance forecasting. Those with sufficient know-how of their business and corresponding CV clifftents can reap measurable gains with little cost; others must develop that business know-how to capture and sustain higher profit rates8, 9.
Process Modeling – Model the physical and financial consequences of exceeding limits and specs like temperature, pressure, level, composition, vapor velocity13, product quality, distillation flood, compressor surge/load, heater duty and FCC circulation reversals. This is just as important as process modeling the effects for approaching limits like these6. Clifftents shown in Figure 2 are real and essential.
Instruments – Measure the performance and value of instruments, models, APC, IT and CIM solutions on HPI operations. They must provide the correct data more accurately and promptly or reduce CV variance directly.
Multivariable Control – Set CV limits and measure dynamic control financial performance with clifftent. Quantify the financial value of controller tuning.
LP and Online Optimizers – Linear programming optimization is the standard tool for planning and scheduling oil refinery operations since 1970. Their solution is invariably at a constraint set boundary intersection of dependent variables. The LP constraint value inputs should be set by optimizing the risky tradeoff for each6.
On-line, real-time optimizers of basic process models such as olefin plants, catalytic crackers, distillation columns and blenders also find the best constraint set boundary intersection of dependent variables used for setting setpoints. However they don't really determine the best setpoint value; that is an optimizer input for the constraint. So the constraint value inputs to these optimizers should be set by optimizing the risky tradeoff for each16, 17.
IT – If the financial value of IT can be quantified rigorously, if the cost of delivery and sustainability of that performance is substantially less than the value creating a sustaining profit stream, and if that profit is shared equitably between the HPI opco customer and the IT solution provider, then IT has a chance to become a profit center.
All HPI Equipment –The Clifftent risky tradeoff optimization method allows measurement of the value added by any component of a control, alarm or information system. Since it is universal, it can also be used to determine the value of any plant equipment change, since they all have a bearing on the best operating conditions: flows, temperatures, efficiencies, compositions, constraints and economics. Just identify all CVs affected, update their clifftents and sum the value of changing them to the new optimum operating settings.
Business – Adopting this best practice assures the HPI it is making the best of the hands it is holding18-23.
Operating companies are more willing to share a percentage of the profit action with solution providers when they see clear profit gains and providers are dedicated to identifying, capturing and sustaining significant benefits for them. The adversarial relationship between both parties hungry for profits matures to a lasting business partnership where both win. This allows solution providers to license based on value-added financial performance9, 10, 12.
Operating companies seeking performance guarantees should operate with Clifftent, show their potential solution partner their base case operation and weaknesses, and solicit the provider's offer for a percentage of the improvement he creates, where it comes from, how he creates it and the commercial risk he assumes. It is conceivable the operating company can secure a risk-free, somewhat variable profit stream with minimum risk, which is the purpose of performance guarantees.
This means if a solution provider can deliver sustained performance2 of about $1.3/barrel crude at a cost of about $0.1/barrel, he can offer an operating company a no-risk variable annuity worth about $1.0/barrel, net. For a 200-kbpd (thousands of barrels per day) oil refinery, that is $72 kk/year or net present value (NPV) (72, 30 years, 10%) = $680 kk. And the solution provider nets NPV = $136 kk. All they have to agree on is how to measure performance and that 100/20 profit split.