CORPORATE ENERGY MANAGEMENT
PROGRAMS: A CASE STUDY
Jimmy D Kumana, MS ChE
Kumana & Associates, Houston, Texas
Tel 281-437-5906, jkumana@aol.com
ABSTRACT
This paper identifies the critical elements of a successful
energy management program for energy-intensive process
industries. It describes the organizational structure,
strategies employed, resources required, and results
achieved at a national oil company in a middle-eastern
country, drawing upon the author’s extensive experience.
It also describes some of the challenges encountered,
both expected and unexpected, especially with respect to
non-technical issues such as culture change, knowledge
sharing, human resources, project financing, and politics.
The paper provides valuable insights into how to organize
and successfully execute a comprehensive energy
management program for large bureaucratic corporations
with multiple plants and that should be of interest to
corporate energy managers and government energy policy
makers.
INTRODUCTION
Back in the mid-1970s, in the aftermath of the first
“oil shock”, energy efficiency first entered the public
consciousness as the consequent high inflation severely
eroded the purchasing power of the average family in
oil-importing nations. However, once some modicum of
38 z chemical news november 2010
price stability was restored, and the economies adjusted
to higher oil prices, energy concerns receded into the
background once again.
After just over three decades, energy supply security
and costs have recently returned into the limelight, with
international oil and gas prices more than doubling
from mid-2007 to mid-2008. As high prices begin to
adversely impact corporate bottom lines, especially for
energy-intensive industries such as oil & gas, chemicals,
and pulp/paper, “energy conservation” has once again
begun to attract the attention of company management
and government policy makers. Unfortunately there is
no magic quick-fix to this situation. Successful energy
conservation (or more appropriately, energy optimization)
is a long-term effort. Success requires a genuine and
sustained strategic commitment, not just passing concern,
ad hoc measures, or lip-service. An energy program
undertaken with the primary objective of boosting the
company’s public image is doomed to failure.
On the positive side, the past three decades have
seen significant innovation in the efficient conversion and
use of energy. Many new products, design techniques,
and operating practices have been developed both
in academia and industry that offer the potential to
significantly slash the energy intensity of virtually all
manufacturing processes, reducing the carbon footprint
(ie. greenhouse gas emissions) of their end-products in
the bargain.
There is now an established body of literature that
documents the methods and benefits of what could be
called “conventional” technical approaches that address
the more obvious areas for improvement:
a) Insulation of equipment and piping
b) Steam-trap management – proper selection,
monitoring, and maintenance
c) Compressed air management –leak detection and
repair, pressure optimization
d) Boiler/furnace efficiency improvement, via excess air
control, burner modifications, leakage reduction, etc.
e) Multiple effect evaporation – well-known in pulp/paper
but less well in other industries
f) Heat pumps (thermal and mechanical)
g) Preventive maintenance of rotating machinery (pumps,
compressors, steam turbines) based on condition and
efficiency monitoring
h) Motor replacement – right-sizing, high-efficiency motors
i) HVAC upgrades – better controls
j) High-efficiency lights and lighting management
k) Power factor correction
l) New types of equipment design, eg. dryers, low-P filters,
etc.
The vast majority of industrial energy programs that
have been undertaken over the past 25 years have
focused on the foregoing tools and techniques. While
these are undoubtedly good measures to take, in most
cases the cumulative savings potential is limited to a
relatively meager 5-10% of the base-case energy intensity.
MODERN CORPORATE ENERGY PROGRAMS
To capture truly significant savings, on the order of
15-50%, advanced process optimization techniques
developed over the past 20 years, and encompassing both
design and operational best practices, must be employed:
1. Operational Optimization
a) Optimum load management (for series/parallel
networks of multiple equipment – pumps,
compressors, turbines, boilers, furnaces, heat
exchangers, etc – for the same service or application)
b) Monitoring fouling rates in critical heat exchangers, and
optimum cleaning schedules
c) Floating-discharge-pressure compressor control
d) Multi-variable control (MVC)
e) Optimal control of CHP systems – see item 2d below
f) Optimum driver selection for rotating machinery (fixed-
speed motors, multi-speed motors, motors with VFDs,
steam turbines, gas turbines)
g) Monitoring & Targeting, including development of
equipment EPIs and overall process/product/plant
energy KPIs. Data collection and quality is a critical
issue.
To capture truly
significant savings, on
the order of 15-50%,
advanced process
optimization techniques
developed over the
past 20 years, and
encompassing both
design and operational
best practices, must be
employed
2. Design Optimization
a) Identifying relatively minor process modifications,
such as small adjustments in operating pressure or
temperature of critical reactions and separations
(eg. distillation, evaporation) that could have a major
impact on the energy targets for the process
b) Optimum design of heat exchanger network (HEN)
structures, using Pinch Analysis combined with
mathematical programming (MILP, Genetic Algorithms,
etc)
c) Identifying the optimum combination of site utilities
(cogeneration type, steam pressure levels, hot oil loops,
refrigeration levels and refrigerant selection, etc) that
will result in the lowest operating cost, using Pinch
Analysis
d) Optimum design of the Combined Heat and Power
(CHP) system structure, including cogeneration. This is
done using simulation models based on the results of
item 2c. A key element is introducing new degrees of
freedom to support items 1e and 1f above.
e) Evaluation of Adjustable Speed Drive applications –
whether VFDs for existing motors, or replacement with
a steam turbine drive.
chemical news November 2010 z 39
 Probably the most significant development of the past
30 years since the first oil shock has been Pinch Analysis.
It burst onto the scene in the late 1970s, and captured
the imagination of the international chemical engineering
community with its elegant synthesis of thermodynamic
rigor and graphical techniques to solve the hitherto
intractable “structural optimization” problem, using
simple heuristics. Imperial Chemical Industries (UK) and
Union Carbide Corp (USA) were the early pioneers. By the
mid 1980s, a torrent of literature on new advances and
industrial success stories was pouring out, both from the
universities and from industry.
Many companies jumped on to the new bandwagon,
attempting to develop in-house expertise, but most
of them found success elusive. Gradually, but not
surprisingly, Pinch Analysis developed an undeserved Pinch Analysis - Basic Concepts
reputation for being just another passing fad that had All chemical manufacturing processes require energy in
been oversold by unscrupulous consultants posing as the form of heat and power. Power is consumed both
experts and seeking only a quick buck. for shaftwork and for cooling. The individual process
Although it is undeniable that some of the “copycat” heating duties can be combined into a single “cold
consultants were indeed under-qualified, it is instructive composite curve” drawn on a temperature-enthalpy
to dispassionately examine the whole range of reasons (T-H) diagram; it represents the enthalpy demand profile
why some companies achieved such spectacular success of the process. Similarly, all the cooling duties can be
while others failed so miserably. From over 20 years of combined into a single “hot composite curve”, which
experience in the energy business, both as a buyer and represents the enthalpy availability profile of the process.
seller, the evidence is clear that most of the failures can When both curves are plotted on the same T-H
be attributed to the following critical mistakes on the part diagram, they show the opportunity for heat recovery
of senior management: as well as the minimum net heating and cooling
z Believing that just because Pinch Analysis is easy to requirements. The point of closest approach, where
understand at a theoretical level, it would be equally available temperature driving forces between hot and
easy to apply at a practical level. Attending a one- cold streams are at a minimum, is called the process
week course on the subject does not instantaneously pinch. It separates the overall process into two distinct
transform the student into an expert; it takes at least thermal domains: (a) a net heat sink above the pinch
2-3 projects worth of experience to use the software temperature, meaning that hot utility must be supplied,
and apply the methodology correctly. and (b) a net heat source below the pinch temperature,
z Failure to become sufficiently knowledgeable to meaning that cooling must be provided.
develop a suitable corporate energy strategy, and The temperature difference between hot and cold
select the right consultants. streams at the pinch is called the Minimum Approach
z Expecting that identification of energy optimization Temperature (MAT). For each value of MAT, there are
opportunities would automatically result in project corresponding values of minimum heating and cooling
implementation. requirements (Qh)min and (Qc)min. These are the
z Focusing on only the supply side (eg. boilers, turbines, energy targets.
motors) rather than taking an integrated approach
that includes the demand side (process energy
consumption efficiency).
z Underestimating the vital importance of reliable data
and a supportive organizational infrastructure.
z Starving their corporate energy teams of the required
resources in terms of adequate authority, staffing,
budget, and time to do the job properly.
Good technology, while necessary, is not sufficient
to ensure success. It must be supported by a
comprehensive organization-wide program that removes
institutional barriers related to entrenched legal, financial,
and bureaucratic practices.

40 z chemical news november 2010


Composite Curves (a) without heat recovery (b) with
heat recovery
In order to achieve the targets, the HEN design must
satisfy three criteria:
1. No hot utilities used below the pinch temperature
2. No cold utilities used above the pinch temperature
3. No heat transfer from hot streams above the pinch to
cold streams below the pinch
From these fundamental rules, it is possible to derive
a number of useful design guidelines. For example:
z Heat engines must not cross the pinch, i.e., the supply
and exhaust temperatures should both be either
entirely above or entirely below the process pinch
temperature.
z Heat pumps must be placed across the pinch, i.e., the
supply temperature must be below the pinch, and the
exhaust temperature must be above the pinch.
z Distillation and evaporation operations must not cross
the pinch.
These and other corollary rules and guidelines help
the engineer to design the process for maximum overall
efficiency, achieving the optimum balance between
capital costs, energy consumption, operating flexibility,
and environmental emissions.
CASE STUDY – NATIONAL OIL & GAS COMPANY
This government-controlled NOC is one of the largest
oil and gas producers in the world. The Company owns
(wholly or partially) more than 20 large Gas-Oil Separation
Plants (GOSPs), about a dozen oil refineries across three
continents, half a dozen gas-processing plants, and two
condensate fractionation plants.
From a standing start in 2001, the Company reduced
its energy intensity by 25% within six short years (Figure
1) and was on track to reaching 40% reduction by the end
of 2008. How did it manage to achieve such spectacular
success despite an economic environment of low
energy costs ($1-2 per MMBtu for gas and 3-4 c/kwh for
purchased power), high capital costs (about 1.3-1.5 times
US Gulf Coast), and an accounting system that did not
even include fuel and power as line-item operating costs?
Figure 1: Corporate Energy Intensity Index
It all started in 1997, when one of the Company’s
engineers attended an energy conference and came to
the realization that their corporate policies and practices
were based on incorrect assumptions that urgently
needed to be revamped in light of a changing economic
chemical news November 2010 z 41
environment (Figure 2). With support from a far-sighted
Vice President, he obtained approval for an internal
company-wide survey to compile actual fuel and power
consumption data. Even at the low values assigned to
energy by the accounting department the total cost proved
to be staggering, approaching a billion US dollars per year.
When this hitherto unreported information was brought
to the attention of senior management, they committed
the required internal manpower and budget to conduct
a more comprehensive and detailed study by a team of
specialized energy/management consultants.
Figure 2: External Environmental Forces
The 8-month study (1998-99) included verification of
energy consumption data, an estimate of economically
feasible savings potential based on quick week-long audits
of 12 representative facilities, and an assessment of
company policies and practices that should be instituted
or modified to ensure success. The Company’s senior
management understood, accepted and supported
virtually all of the consulting team’s recommendations.
A corporate energy policy was promulgated in 2000
(Figure 3). An Energy Management Steering Committee
(EMSC) was formed, with representation at the plant-
manager level, to oversee the program (Figure 4). They
decided to develop core in-house expertise to manage
the program and to supplement short-term peaks in
Figure 3: Corporate Energy Policy
42 z chemical news november 2010
manpower needs through the use of external consultants.
A new Energy Systems Unit (ESU) was established at
corporate engineering, with funding approval for 9-12 full-
time engineers to help develop and implement the EMSC’s
strategic plan.
Figure 4: EMSC Organizational Structure
The EMSC’s 10-year goal (publicized company-
wide) was to reduce corporate energy intensity by 50%
compared to the year-2000 baseline, and rolling 5-year
plans to achieve this target. The results as displayed in
Figure 1 are a testament to the success of the program.
The projected reduction in energy intensity index was 40%
by the end of 2008, from projects that had already been
identified and approved by the end of 2006. Additional
projects scheduled for completion in 2009-10 should
comfortably enable meeting the original target of 50%
reduction in energy intensity.
The EMSC’s strategy was simple but comprehensive,
including a blend of technical, organizational and cultural
factors:
1. Optimize facility design and operation through
deployment of industry-accepted best practices and
economically-sound leading edge technologies
Energy optimization of existing facilities (retrofit)
Energy optimization of new plant designs
2. Build a supportive organizational infra-structure
3. Promote transparency and accountability through
development and deployment of energy KPIs and EPIs
4. Develop in-house technical expertise supplemented by
outsourcing as needed
Energy Optimization of Existing Facilities (retrofit basis)
was a critical first step in establishing credibility for the
technical approach, and demonstrating that the targets
set by EMSC were indeed realistic and achievable. To start
with the Energy Systems Unit was staffed by one energy
experienced energy consultant recruited from the US and
four engineer-trainees. The first few energy optimization
studies were conducted exclusively by this in-house team,
principally as a means to gain experience and
build in-house technical expertise. As the workload grew,
additional engineers were transferred in to ESU from other
parts of the company, and a second US-trained energy
specialist with Pinch Analysis experience was recruited.
This multi-year effort helped to foster close working
relationships and build trust between the plant engineers
and the corporate staff. When the workload began to
exceed the in-house capacity, some of the detailed energy
studies were outsourced to qualified consulting firms from
the US, UK and India.
One of the key requirements for successful
outsourcing is that the buyer should be able to specify
the proper scope of work, be able to judge consultant
qualifications and capabilities correctly, and to
negotiate a fair price. It took 2-3 years for the trainees
to develop the skills to become sophisticated buyers,
viz. to understand data requirements, and know what
to expect in terms of quality of work, schedule, and
cost. They were able to redirect the consultants’ work if
they felt the project was on the wrong track, and could
make contractual workscope changes on the fly. They
knew when to allow more time or money and when to
not. Unless the buyer is knowledgeable, or engages a
trustworthy consultant, outsourcing can easily turn into a
disastrous experience.
Between 15-20 retrofit studies were carried out
over 9 years by ESU. During this period, more than100
Company engineers, mostly from the plants, were put
through 1-2 week training courses in energy optimization
that included both technical and management issues. Of
these, those who showed interest and promise were given
Unless the buyer is knowledgeable,
or engages a trustworthy consultant,
outsourcing can easily turn into a
disastrous experience.
further training via 1-2 year internship programs where
they each participated in conducting two or three retrofit
energy optimization studies. They then returned to their
respective facilities as leaders of newly established plant
energy teams.
The results achieved speak for themselves. From
2001 through 2006 a total of 380 project ideas were
identified, with net energy savings potential of 148 MBD
(oil equivalent) and CO2 emissions reduction of 50,300
TPD. Of these, projects worth 90 MBDoe savings passed
the company’s hurdle rates for implementation. More
than 50% of the project ideas, mostly falling into the
“conventional” category, came from the plant energy
teams themselves, with technical support from corporate
engineering only as needed. The corporate energy
group focused on more advanced techniques such as
Pinch Analysis to address the less obvious optimization
opportunities.
The actual overall implementation rate (in terms of
dollars) was 54%. However, the energy KPIs showed
unambiguously that there was a huge variation in
performance among the 21 business units, with some
having implementation rates over 90%, while others were
below 5%. Clearly there was a problem with acceptance
of the technical solutions, which was identified as a high
priority concern. In 2007, the Company initiated an
extensive internal survey to determine the root causes
for poor implementation rates, and to identify the key
predictors of success. Two success criteria stood out:
z Having high level support (viz. from the Plant Managers
and business unit VPs) for energy projects
z Empowerment of plant engineers, by providing
adequate resources to the energy teams in terms of
qualified manpower, training, and budgets that would
enable them to prepare credible well-documented
capital budget requests to corporate engineering
Strictly speaking, if capital and energy prices are
rational and consistent with thermodynamic principles,
they will change at approximately the same rate as long-
term inflation, and so the optimum design structure for
the process plant should remain stable. Nevertheless, it
is good practice to review and update the optimum design
for every plant whenever there is a significant revision
of capital and energy costs, particularly during times of
economic volatility.
Energy Optimization of New Plants. Once the credibility
of the technical approach had been established through
retrofit studies, ESU turned its attention to new projects
being planned for construction by the company – both
new process units at existing sites, and greenfield sites
– to try and build energy efficiency into the design from
the start. While the concept makes eminent sense in
principle, the team encountered unexpected hurdles
chemical news November 2010 z 43
rooted in established company practices. Historically, the
Company had never developed process designs internally;
rather the policy was to rely on technology licensors and
EPC contractors to provide them. Further, design/build
responsibility rested entirely with the Company’s project
management organization, where the path to promotion
was through just two performance measures (a) beating
the schedule and (b) completing construction under
budget. No consideration was ever given to optimizing life-
cycle costs. Energy consumption, therefore, did not even
enter into the equation. The entire organizational culture
was heavily biased towards tried-and-true technologies
(which necessarily implies out-dated) and towards
sacrificing energy efficiency in order to minimize initial
capital cost. There were even instances of EPC contractors
being pressured to simply re-use old design drawings
from other projects in other countries, without so much as
changing the title blocks!!
Not surprisingly, all attempts by ESU to introduce
modern energy-efficient design practices met with
determined resistance, on the grounds that they might
extend the design schedule or increase capital costs.
Despite providing many real-life examples where energy
optimization led to shortened schedules as well as lower
capital costs, it took three years of lobbying with key
influential people just to gain grudging acceptance of the
idea that the correct way to optimize a design was on the
basis of Life-Cycle costs, not first cost.
Once this was accomplished, though, it paved the way for
introducing the concept of optimizing process and utility
designs for site-specific conditions, with energy costs
included among the economic parameters. Ultimately,
the requirement for an integrated process-CHP energy
optimization study during the FEED stage was accepted
as an internationally recognized value-improving practice,
and written into the company standards.
Building a Supportive Organizational Infrastructure.
These activities generally fall into the categories of
awareness, training, knowledge management, and
standards/procedures:
z Annual company-wide “Energy-Awareness” events
including technical exchange of successes and failures,
vendor exhibits, etc.
z Quarterly energy newsletter, distributed both in print
and electronically
z Regularly scheduled 3-10 day training courses
on various aspects of energy optimization and
management, offered several times a year
z Preparation of around a dozen Best Practice Manuals
for equipment/process design as well as operations
z Corporate memberships in international energy research
consortia and benchmarking organizations, eg. the
PIRC at the University of Manchester, the Refining Best
Practices consortium, Solomon Associates (for refinery
operations), and IPA (project execution)
44 z chemical news november 2010
z Creation of a virtual Community-of-Practice for
knowledge sharing, via the company intra-net
z Revision of company equipment standards to reflect
current best practices with respect to energy-efficiency
z Revision of company engineering and construction
standards/procedures to require energy optimization of
any new plants that are to be built
z Development of a standardized simulation-based
procedure for computing site-specific average and
marginal prices of intermediate utilities such as steam
(at various pressure levels), boiler feed water, hot-oil
circuits, cooling water, refrigeration, and cogenerated
electric power.
Promoting Transparency and Accountability. When
the idea of energy KPIs was initially broached within the
company, it found no audience, as it was not considered
to be common industry practice during the early years
of the program. In fact, when the energy team surveyed
the industry, we could not find a single company who
were using such KPIs. Even high-priced management
consultants we spoke to had very limited experience
in this area. Almost overnight, though, it seemed that
the situation changed dramatically, with all the top
international management consulting firms promoting
the virtues of company-wide KPIs for a wide range of
critical company performance metrics for the corporate
“dashboard”. One of them was retained by senior
management in 2005 to develop such a dashboard. They
became ESU’s ally in jointly developing a corporate Energy
Efficiency Index for the new dashboard. It put everyone in
the middle echelons of company management on notice
that the energy efficiency of their business units was going
to be on the radar-screen from that point onwards.
Despite their clear potential to introduce transparency
and accountability, KPIs in general can be problematic
to implement in practice. The mathematical formulation
of KPIs must keep in mind the ultimate objective(s). In
our case we had multiple applications in mind. One was
to monitor progress towards the EMSC goal by keeping
tabs on overall plant and corporate energy intensity.
Another was to provide a diagnostic tool to help plant
engineers troubleshoot problems and identify areas for
improvement – both regarding process efficiency and
equipment efficiency. One example of a process problem
might be steady deterioration in the inlet temperature to a
crude oil distillation column, which would suggest gradual
HX fouling in the preheat train, and the need for cleaning.
If on the other hand there was a sudden drop, it might
suggest a HX tube rupture. A third (future) objective was
to provide guidance in making dispatching decisions – ie.
what the product mix should be at each manufacturing
plant.
Each application requires a different formulation
for the energy KPI, which we called EPIs for short. We
classified them into four categories – product EPIs for
dispatching (to be used by the planning staff), equipment
EPIs for condition monitoring and preventive maintenance
(to be used by the operators and engineers), process
EPIs for troubleshooting (to be used by plant engineers),
and overall plant EPIs for reporting (for use by senior
management). While process and equipment EPIs are
relatively easy to formulate, product EPIs are not. For
example – how should the energy cost of a distillation
column that is separating two saleable products be
allocated between them? A common first reaction is to
prorate costs on the basis of either value or volume, but
both can lead to absurd conclusions. The only logically
consistent way that gave sensible answers was to do the
allocation on a value-added basis. This created a new
problem – computing transfer prices for each stream
within a process unit. After several months of trial and
error, we succeeded in developing a procedure that gave
reasonable and meaningful results.
Formulating an overall corporate energy intensity index
also proved to be a challenge, as our goal was to measure
the effectiveness of the energy program itself – ie. How
Another was to provide a diagnostic
tool to help plant engineers troubleshoot
problems and identify areas for
improvement – both regarding process
efficiency and equipment efficiency.
much difference did it make compared to doing business
as usual? This was in fact the single global metric that was
initially proposed to management (with the management
consultant’s approval) for use on the corporate dashboard,
and is shown in Figure 1. The consultant independently
developed an alternative simplified formulation that was
designed specifically for commercial benchmarking only.
Data availability and quality turned out to be two
other difficult issues. When plants are designed by
EPC contractors, they rarely include instrumentation to
measure all the parameters that are needed to compute
KPIs. So there was a need for considerable additional
instrumentation such as temperature and pressure
gages (which are relatively cheap) and flow meters
(which are not). Then there is the cost of programming
all the equations and testing the system for bugs, adding
graphing/display capability, and designing report formats
for printing. But that was the easy part.
The real challenge lay in reconciling discrepancies in
the metered mass and energy balances. For that the team
turned to a small high-tech Belgian software company that
we felt was the world leader in on-line data reconciliation
techniques. Two field trials lasting nearly two years overall
were conducted – one at an oil refinery and one at a gas
processing plant – which made clear that it took a very
high level of technical skill to get reliable results, and that
chemical news November 2010 z 45
long-term technical support from the vendor would be
required before our engineers would be sufficiently trained
to take over. The original proposal was to purchase a 20-
plant license of the software, but given our concern about
the vendor’s ability to provide long-term technical support,
the project was put on hold until a satisfactory solution
could be found. Despite these difficulties, the foregoing
problems are not intractable, and can be solved given
enough time, talent and budgets.
The most difficult problem of all turned out to be non-
technical: getting agreement from all facility managers
on a set of common metrics and a common GUI. Expect
to encounter various delaying tactics by powerful
vested interests who may feel threatened by increased
transparency. The principal hurdle, in short, is likely to be
political, for which there is no easy solution.
Determining the right level of in-house technical
expertise and management capability is the final strategic
decision. It is not necessary to do all the work in-house,
but it is absolutely essential that the corporate energy
group should have sufficient expertise to effectively
outsource the work to outside consultants. For those
companies who do not have sufficiently high energy
bills to justify maintaining a fully staffed energy unit,
one option might be to appoint a single full-time energy
“guru”, reporting directly to a VP, and then to retain a
trusted energy management consultant to help select and
supervise other consultants, EPC contractors and ESCOs.
Various options for accelerating the implementation
rate for energy projects were considered that included
heretofore revolutionary ideas such as:
z Establishing a separate capital budget for energy
projects, similar to what had already proven successful
for environmental compliance projects.
z Empowering VPs to sign contracts with Energy Service
Companies (ESCOs) for shared savings contracts,
as a mechanism to effectively bypass the internal
competition for limited capital funds with higher-priority
safety, environmental, or capacity projects.
z Changing the mission of the EMSC from being an
advisory to an executive committee, with company-wide
responsibility for implementing energy projects.
z Streamlining company procedures and practices to
ensure that the Operating plants, Engineering Services,
Environmental Dept, Corporate Planning, Finance,
46 z chemical news november 2010
Human Resources, and Law Dept all operate in
alignment towards the common objective.
z Linking selected plant energy KPIs to overall
performance evaluation and compensation of key
employees/positions.
These are not easy things to accomplish in an
organization with tens of thousands of direct employees
and contractors on the payroll, but they have to be done.
As an example, bullet item two above has internal
organizational implications that had to be cleared with
the Law and Human Resources departments. In addition
there were difficult technical issues with respect to
measurement and verification of savings, legal issues
with respect to dispute resolution with the ESCO, and
insurance/security issues if the ESCO is a foreign
company whose employees must be given access to
company plant sites.
Similarly, bullet item four requires breaking down
long-established boundaries and building trust between
rival organizations that may have had a prior history of
internal power struggles and mutual suspicion. The criteria
for economic evaluation of energy projects may have
to be revised to include concepts such as capital cost
offsets, environmental credits, and risk-adjusted hurdle
rates. And last but not least, the technical career path
has to be made sufficiently attractive to retain competent
engineering talent by providing them with a viable
alternative to the management track.
CONCLUSIONS AND RECOMMENTATIONS
One solution does not fit all, but the experience of others
can provide useful insights. The key elements for a
successful energy program can be summarized as follows:
1. Unwavering and sustained support of top management,
demonstrated by formal policy statements,
making energy at least as important as safety and
environmental issues in the organizational structure,
and allocating adequate manpower and budgets.
2. Selecting the right technical approach, including a mix
of conventional and advanced technologies for design/
operating practices.
3. Ensuring that there is a clear plan and mechanism for
effective implementation of projects identified through
energy studies – whether via internal funding or ESCOs.
4. Creating a culture of transparency and accountability
 by instituting a system of EPIs and energy KPIs REFERENCES
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terms of awareness and internal communication Cogeneration Systems using a Rational Allocation Procedure”, Proc of
26th Industrial Energy Technology Conference, Houston, Tx (April 2004).
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proper project evaluation procedures, and recognition/ Process Diagnostic Tool”, presented at Process Performance Monitoring
removal of bureaucratic hurdles. and Data Analysis Symposium, Manama, Bahrain (Nov 7–8, 2006).
5. J D Kumana, Ali H Al-Qahtani, and Abdullah Y Al-Juhani, “Energy
Optimization Experience at Yanbu Refinery”, paper 655a, presented at
It may sound daunting, but it is well worth doing. The AIChE Annual Meeting, San Francisco, Ca (Nov 12-17, 2006).
results prove it. 6. J D Kumana, Ali H Al-Qahtani, and Faiz H Al-Farsi, “Power Savings via
Load Management at Rabigh Refinery”, presented at 2nd Saudi Arabian
Energy Conservation Forum, Dammam (Nov 28-29, 2006).
ABBREVIATIONS 7. G T Polley and J. D. Kumana, “Energy Saving Retrofit of an FCC Plant”,
Abbreviation Description paper AM-07-30 presented at NPRA annual meeting, San Antonio, Tx
AIChE American Institute of Chemical Engineers, NY (Mar 18-20, 2007)
8. J D Kumana, “Success Factors for a Corporate Energy Program”,
ASD Adjustable Speed Drive presented at 29th Industrial Energy Technology Conference, New
bpd Barrels per day Orleans, La (May 9-10, 2007).
CHP Combined Heat and Power
This article was reprinted, in part, from the November and December
EPC Engineering, Procurement and Construction 2008 issues of Insulation Outlook magazine with permission from the
EPI Energy Performance Index National Insulation Association. Copyright 2008. All rights reserved.
EPRI Electric Power Research Institute, Palo Alto,
California
ESCO Energy Services Company
FEED Front-End Engineering Design
GUI Graphical User Interface
GW Gigawatts (= 106 kilowatts)
HEN Heat Exchanger Network
HVAC Heating, Ventilating and Air-Conditioning
HX Heat Exchanger
IPA Independent Project Analysis Inc, Ashburn, Va
K Thousand (as prefix)
KPI Key Performance Indicator
MBD (oe) Thousand barrels per day (oil equivalent)
MILP Mixed Integer Linear Programming, a
mathematical technique for optimizing resource
allocation
MM Million (as prefix)
NPRA National Petrochemical and Refiners
Association, Washington DC
PIRC Process Integration Research Consortium,
Manchester, UK
scfd Standard cubic feet per day (of gas)
TPD Tons per day
VFD Variable Frequency Drive (subset of ASD)

Mr. Kumana holds a masters degree in chemical engineering from the University of Cincinnati. He has been professionally
active in Energy Optimization and management for over 20 years with both operating companies and consulting firms.
Before that he spent 15 years in process design with several EPC companies catering to the oil/gas/chemical, food/
beverage, and pulp/paper industries. Through his company he has provided consulting services to blue-chip international
clients including Amoco (BP), Union Carbide (Dow), Dupont, Enron, General Motors, IBM, Maharashtra Sugar, Mitsubishi
Heavy Industries, Monsanto (Solutia), SASOL, SABIC, Saudi Aramco, as well as to the US Dept of Energy, Canadian ministry
of Natural Resources, EPRI, and IFC (World Bank Group). He is a member of AIChE, and has authored or co-authored over
65 technical papers and book chapters.

chemical news November 2010 z 47