Automation DICK HILL, VICE PRESIDENT
Strategies ARC Advisory Group
Drive maximum asset capability
with operational technologies
Owner-operators across the hydrocarbon processing indus-
try (HPI) strive to gain maximum business value from their
process plant assets. Here, automation assets and other opera-
tional technology (OT) typically play a major role.
While not always obvious, most process plants are designed
with hidden or contingent processing capabilities. Chances are
that, from the moment the plant is commissioned, opportuni-
ties exist to improve on the way OT drives production. Equally
likely is that corporate management has little visibility into
these potential performance improvements. If visibility exists,
it is often expressed in terms of failure rates, off-spec production
or other non-financial measures.
In today’s highly competitive global manufacturing envi-
ronment, it is essential that all opportunities to invest capital
be considered on an equal basis. These opportunities must be
expressed in terms of business value, such as return on assets
(ROA), net present value (NPV) and other measures that align
with the corporate governance process, so that they can be eval-
uated equally with other opportunities for capital expenditures.
Achieving maximum business value from OT assets.
Plants may be operating well today, but hidden or contingent
processing capabilities often exist in production processes.
When these capabilities are unleashed, they can improve pro-
ductivity, product consistency and environmental performance,
while lowering risk.
One of the best ways to improve business performance in
the face of continuously changing challenges and priorities is to
achieve maximum asset capability throughout the asset lifecycle.
So, what does “maximum asset capability” mean? For a de-
fined process unit or a logical aggregation of units in a process
area, the maximum production output has been demonstrated
for a sustained period (typically 30 days). This is to be distin-
guished from “maximum design capability,” or the theoretical
production output, as calculated by engineering design princi-
ples. Output must be produced within the quality specification,
under normal operating conditions, and in compliance with all
health, safety and environment (HSE) regulations.
Maximum business value and corporate governance.
Operations management is responsible for the performance
of a plant or plants. The goal of operations management is to
maximize the ROA for all production assets.
Allocating investment capital is part of the governance pro-
cess, which should include an analysis of the performance of
production assets to use as a baseline for a gap analysis to expose
the potential additional ROA that a plant’s assets could provide.
To determine where to best allocate the limited investment
capital available, operations management must also know what
solutions are available and the cost to achieve the desired per-
formance using these solutions. Sometimes, the solution in-
volves mere changes in how OT is applied, rather than whole-
sale changes to production assets.
Unfortunately, many HPI companies have not made an ad-
equate assessment of the potential to uncover unrealized ROA.
ARC Advisory Group believes that such assessments are an es-
sential part of the ongoing governance process. Manufacturers
must understand what their OT assets are doing for them, and
have plans for managing and improving these assets.
Timing for selecting new operational technology. Too of-
ten, an impending crisis drives the need for a company to initi-
ate a technology selection process. Such a crisis may result from
a supplier removing a product from the market, thereby forcing
the end user to buy a different model, or even turn to a new sup-
plier. The crisis may also involve a sudden urgency to replace an
obsolete system—a decision that was postponed until no other
option existed, except for an often-massive replacement project.
Due to the possible threat of an impending shutdown, these
decisions must often be made quickly, without adequate time
to consider how well the replacement choice meets current
and projected future needs, and how to smoothly perform the
changeover process to the new technology.
ARC encourages its technology user clients to think in stra-
tegic, rather than tactical, terms. With regard to replacing op-
erational technologies, it is best to have an ongoing, strategic
plan in place for a variety of scenarios. In this way, companies
can turn a potential crisis into a strategic business opportunity.
A session at ARC’s upcoming Industry Forum in Orlando,
Florida, February 6–9, 2017, will focus on these important
topics. ARC invites Hydrocarbon Processing readers to join us
and learn what their peers are doing to drive maximum asset
capability.
DICK HILL, vice president and general manager of
manufacturing advisory services at ARC Advisory
Group, has 40 years of experience in manufacturing
and automation. As a process engineer, he gained
experience in oil refinery operations and applications
of advanced process control. He has been with
ARC since 1995. Mr. Hill is a graduate of Lowell
Technological Institute in Lowell, Massachusetts,
and holds a BS degree in chemical engineering.
He has completed post-graduate courses in network
technologies and relational database structures at
Northeastern University in Boston, Massachusetts.
Hydrocarbon Processing | DECEMBER 2016 23