Profit Maximization Techniques for Operating Chemical Plants - Sandip K. Lahiri

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1.1 Various constraints or limits of chemical processes

      The most common way to increase profit is to run the plant at maximum possible capacity. This essentially means push the plant to its limit so that multiple pieces of equipment or assets touch their maximum operating limits. This is called “sweating of the asset.” One major target of the profit maximization project is sweating of all assets in the plant. Plant engineers and managers are also considered as valuable human assets of the company and sweating them intellectually is also needed.

      Running the plant at maximum capacity does not mean to run it at its nameplate capacity, i.e. process flow diagram (PFD) capacity. That is the bare minimum target. All over the world, good companies are running at 125–150% of their nameplate design capacity. Normally they follow three basic steps to increase plant capacity:

       Step 1: A 10–15% capacity increase over its nameplate design capacity is usually possible by exploiting the design margin usually available in process equipment.

       Step 2: Another 5–10% capacity increase is possible by a small investment or minor modifications with resources already available in the plant or outside with little capex.

       Step 3: Rest 20–25% capacity can be done by a major revamp and with big capex.

      All good plants follow these three steps in order and continuously improve themselves so that with the same plant they can run 25–50% extra capacity. This is one of the surest ways to increase profit.

      Running the plant lower that its nameplate design capacity is no longer a viable option and all the plants running at a lower capacity will not be able to cope with stiff international competition and eventually will perish over time. Hence the first and most important step in profit maximization is to know the techniques of how to run the plant at its highest possible capacity. This essentially means:

       How to know and exploit the design margin available in installed equipment?

       How to know the equipment that is a bottleneck for a further capacity increase?

       How to carry out a detailed cost benefit analysis for a major revamp project?

      However, the profit maximization project does not end by maximizing the capacity only and involves all the multi‐faceted activities to increase profit in the plant. Following this project an old generation plant can be transformed to a new generation plant. As the scope is vast, this book only addresses some of the proven techniques related to chemical engineering and suggests some alternative innovative ways to generate profit. Some of the ways to increase profits (but are not limited to these) are given below (make a diagram similar to that in Figure 1.2):

       Assess existing plant operation and identify and exploit the opportunities to increase profit.

       Implement an advance online process monitoring system to monitor equipment and process performance in real time.

       Implement a real‐time fault diagnosis system to detect any abnormality of equipment/process at its incipient stage and take preventive and corrective action.

       Identify and implement a major debottleneck project.

       Utilize a process modeling and simulation technique to optimize process parameters to increase profit.

       Identify hidden margins available in major distillation columns and push them to their limit.

       Utilize different modeling techniques (data driven or kinetic driven) to generate a model of a major reactor and subsequently optimize reactor parameters to increase profit.

       Identify the scope of utility savings and waste reduction to increase profit by implementing them.

       Install APC and RTO to stabilize and optimize the process in real time to increase profit amid various disturbances.

      Due to globalization today CPIs have to compete with the global competitive market. The raw material costs of refinery and petrochemicals are varying along with the global crude oil price. Crude oil prices are unpredictable and depend on many complex geo‐political parameters of OPEC and devolved countries. As raw material cost comprises a major component of the product price, profit margins of refineries and petrochemical companies vary in tune with the crude oil price. The final product price of polymers and downstream chemicals are also varying with the crude oil price but the amplitude of variations is not the same as the crude price. Some of the major challenges faced by CPI today are as follows:

       Middle East companies (especially those in Saudi Arabia, Qatar, UAE, etc.) and those of China are building plants of world scale capacity, which therefore minimize their production costs. Eight of 10 of the world's largest refineries or petrochemical plants are situated in the Middle East countries or China.

       Cheap raw material costs of Middle East companies make them so competitive that companies in other countries find it difficult to compete with them.

       Companies have to operate in a global market (both purchase and sales) due to rapid globalization where there are no trade barriers.

       Cheap manpower costs of China and SEA companies make them cost effective.

       CPI has to fulfill more and more stringent pollution control norms imposed by local pollution control authorities.

       Discovery of cheap US shale gas and the building of mega sized refineries and petrochemical factories in the US will change the business map of global competition in the near future as major oil and chemical demands of the US will be satisfied by US companies themselves. This will reduce US demands from China and OPEC countries.

       The US may very soon drastically reduce their oil import from OPEC countries and rely on their own oil production. This will change the global oil demand pattern as the US is the major oil importer from Saudi companies. This new oil demand supply equation will affect the crude oil price in an unprecedented way, which may lead to uncertainty in the global crude oil price.

       The recent trade war between the US and China will make the polymer and chemical pricing and demand supply scenario uncertain as it evolves.

       A faster gross domestic product (GDP) growth rate of the world's top two biggest countries, China and India, will increase demands for polymer and oil, which may shift the global demand pattern into the Asia region in the near future.

      Today's CPI has to operate under all of the above uncertain scenarios. Unless it finds an effective mechanism to optimize all the resources that are under its direct control and maximize its profit, it will not generate enough cash to prepare it to deal with uncertain product prices and uneven global competition.

      Companies need to be flexible in their product pattern

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