Category Archives: CJ’s FCC Blog

Refining industry uncertainties

2009 has kicked off with the market in panic over tremendous uncertainty in the future.  Oil prices have slumped, we are seeing some short term increases in pricing today, but market ‘experts’ are still split on what is going to happen in the future.

In terms of the FCC world, many refiners are running lower throughputs, almost all are rigorously investigating dramatically altered yields from their norm if they have not already changed, and many high cost (many with previously expected high rates of return) projects are on the chopping block as uncertainty and pessimism dominates thinking.

I am presenting at the upcoming Shaw FCC Forum in Abu Dhabi in early April, and I think it will be interesting to see if the market uncertainty and current financial performance are impacting attendance.  I will also be at the National Petrochemical & Refiners Association Annual Meeting in San Antonio in ~ 10 days.

As I watch this as a partially informed observer, I cannot help but think about the role the media and the numerous financial experts have in the overarching economic situation. 

I have to wonder about the credibility of ‘experts’.  I am in an industry where it is notoriously easy to be an expert – I have repeatedly said that “Often, the only requirement to be considered an expert is that you flew to the meeting.”

I have stepped back from the direct feed of ‘facts’ from the marketplace on a daily basis, and have instead spent this time doing some reading.  I highly recommend Outliers by Malcolm Gladwell.  This is Gladwell’s third book (the other two are very worthwhile reading as well, Blink and The Tipping Point), and it explores what is behind personal statistical anomalies, both on the positive and negative sides of typical distributions (think Bill Gates, the Beatles, how a co-pilot’s culture can lead to plane crashes) .  It explores the impact of culture, family support, and what it takes to be a real expert. 

It has some interesting ideas for all of us in this refining industry.  A key idea in Outliers is the amount of time someone has to spend in their field to really be an expert – the number is 10,000 hours, but understand what this really is…it’s 10,000 hours practicing the actual skill set needed to be an expert.  The hours spent sitting in meetings talking about budget or doing employee reviews do not count towards being a process expert.

I also highly recommend The Drunkard’s Walk:  How Randomness Rules Our Lives by Leonard Mlodinow.   This book explores some of the science of statistics, their impact on our lives, how poorly we as human beings perform in recognizing true odds, and in one section, lays out how many financial ‘experts’ are the product of randomness.  The book reads very quickly, and the final chapter is extremely interesting.  In the final chapter, Mlodinow charts the relative performance of 800 fund managers  from 1 to 800 based on return minus median rate for a 5 year time period 1991 – 1995.  A positive number therefore indicates above average market performance.  Mlodinow then charts how the same managers did 1996-2000 and shows them in their prior ranking spot.  The best performer for this second 5-year period was # 360 in the first 5-year period.  The #2 performer in the second 5-year period was a tie between #s 700, 10, and 50. My conclusions do not entirely agree with Mlodinow’s in this section, but it’s clear that at least 1/3rd of the top 50 performers did worse than the market average.  This 1/3rd were in the top 10 percentile for the first 5 year look, and they tumbled to be no better than the 26-50th percentile.  

So, as we march through this year, I am cautiously optimistic but know enough to not be absolutely sure what the refining industry is going to see.  At this point, my reading tells me that only time will tell what is going to actually transpire.  My advice is that every time you see an ‘expert’ opinion on the marketplace, and they back their expertise up with what they predicted last time, there is no guarantee of them being correct now.

At this point in time, it’s your turn, the reader, to respond – what do you think will happen this year for your industry?

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FCC shutdown survey results and more…

It’s been an interesting year so far, one that I misdiagnosed at the start.  I have been far busier than I expected, which is a good thing, but it also brings along an entire series of unintended consequences.  The response to the survey about FCC downtime has been great, and I have been waiting for responses to slow down, but they are still coming in.
 
In terms of upcoming events, Astron will be hosting an FCC Health Check workshop at the NPRA FCC Symposium being held during August 2008 in Houston.  The exact dates of the NPRA FCC program are August 19th and 20th.

If you have never attended the NPRA FCC program, it is held every other year and is very much worth attending – the focus is on both reliability/maintenance and process topics.  Attendance is typically in the 500 – 700 person range, and is generally split evenly between mechanical oriented versus process oriented people.  Feedback about the meeting has been overwhelmingly positive.  As of today, it is accepted as being the best industry wide FCC event, and serves as a great place to meet other refiners and talk to many experts in one place.   There will be a Q&A panel on the first day, followed by workshops on the second day.

I encourage everyone that is free to attend this meeting make the trip to Houston.  In recent NPRA programs, there have been numerous international companies represented, some from as close as Mexico, others from as far away as Korea, India, Australia, and Saudi Arabia. 

The results from the first survey are available.  They largely confirmed most of the expectations most people in the industry have, but were still interesting.  Information from many FCCU outages came in and have been tabulated.  Total results are shown in figure 1; approximately 70 % of outages are due to the combined reasons of major rotating equipment (air blower, wet gas compressor, and expander), cyclone failures, catalyst circulation upset, or utility failures.  While not surprising, the survey results indicate that only about 10 % of FCCU outages take place on a scheduled basis.

Figure 1

Major rotating equipment made up almost 40 % of the total and was the single most common reason for FCCUs shutting down early.  Figure 2 shows the breakdown of major rotating equipment outages.  Air blower outages make up about half of the total for major rotating equipment.

Figure 2

The sample size was respectable, representing hundreds of FCCU outages going back over the last 6 years.  Over the next couple of weeks, some geographic sorting will be done.

Also, if readers have not sent in survey results, go ahead and the survey regarding FCCU outages will be updated periodically as additional information comes in, probably 3 more times this year.

One of the things I think I have noticed in the refining industry in the last several years is that the people accountable for performing routine FCC technical service at refining locations are being stressed more and more by their employers to do new activities in addition to the historical focus on FCC optimization/troubleshooting. 

The refining industry has changed in many ways over the last several years, mostly for the better, particularly in the areas of being a good neighbor in local communities.  In most cases, I think it’s been the front line operations, engineering, and maintenance staff that have shouldered the majority of this worthwhile work.

Fortunately, the industry has been able to lean on the increased computing power of the IT world to free up some of our time so we can devote ourselves more fully to these other initiatives, but the downside is that we have to keep finding the best ways to turn our reams of data into useful information. 

Please take a moment and send your responses in to the below second survey – we will let this survey run for 40 days and post the compiled responses.  And, again, if you have not responded to the first survey, go ahead and send that response in as well.

Survey #2: Breakdown of your FCC job duties

Thanks!

Causes of your last 3 FCC shutdowns?

I have been working in the refining area almost 18 years.  It is an industry that has had several ups and downs in this time period, and I’m hopeful that I am into the second half of my career.  In January, 2008, I joined Astron International, Inc, as Vice President of the newly created Refining Consulting Division.

I have willingly headed down the path of being, in the words of a friend of mine, Johnny One-Trick, an FCC specialist first and foremost, with a smattering of general knowledge in enough other areas to get me by with solid understanding.  I started my career in the Marathon organization, working several FCC units, with heavy tech service and operations experience.  I then went to work an MW Kellogg (now KBR) in the FCC design and service area.  In 2001, I went to Engelhard Corporation and eventually became the Marketing & Technical Service Manager for their FCC team.

I will be showing up frequently on the Refining Online website, with one of my regular areas being this blog.  I’ve decided that initially, my blog entries will be running a poll question for 3 – 4 weeks, then sharing the compiled results with the refining online community.  I’m confident that dialogue on this site will help the entire industry and provide some clarity on issues facing us today.

At some point this year, I will also have several blogs dealing with some hard core technical nuts and bolts, but those are currently in development and probably will not be showing up until May or June 2008.

The first question for 2008 is a tangential repeat from a presentation that UOP did in the 2006 NPRA Principles & Practices FCC workshop.  UOP did a survey of several customers asking about FCC shutdowns.  Here is the follow-up question:

What were the causes of your last 3 FCC shutdowns?

– Scheduled turnaround
– Wet gas compressor failure
– Air blower failure
– Expander failure
– Other rotating equipment failure
– Utility failure (steam, power, instrument air, cooling water)
– Catalyst circulation failure
– Cyclone failure
– Main column/gas plant upset
– Human error
– Logistics (out of feed, catalyst, product storage)
– Other (please describe)

Please fill a quick survey by clicking the below link and let me know your answer.

Survey: Causes of your last 3 FCC shutdowns

Thanks!