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Petroleum Refinery Planning and Optmization Using Linear Programming

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Introduction

appliance DESIGN

Modern optimization techniques have challenged organizati rethink the way they conduct business both internall externally, i.e. how efficiently and effectively their entire supply chain is managed. Supply Chain Management (SCM) is one such business function that has benefited substantially from optimization software advances and solutions. The primary goal of SCM is to maximize profit by integrated management of material and transactional flows within a business and to customer and partner companies.

The petroleum refining industry has effectively embrace software solutions to optimize the business supply ch maximize the profit margins and create order in the cha numerous opportunities and challenges. The supply chai typical petroleum refining company involves a wide spectr activities, starting from crude purchase and crude transpo to refineries, refining operations, product transportation and delivering the product to the end user. The nature of the chain is such that its economics are extremely comple heavily linked (Refer to Fig. 1.0). For example, the proc selecting the right crude is linked not only to the transpo costs involved in delivering it to the refinery, but it must tak consideration the refinery configuration, capabilities

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constraints in converting the crude into products, as well product volume and price fluctuations.

Figure 1: Typical Supply chain of Petroleum business

Software solutions based on Linear Programming (LP) tech have emerged as leaders among various mathem optimization techniques available to optimize the entire chain from crude evaluation and selection, production pla and product logistic planning.

The objective of this article is to create an appreciation a readers about the application of Linear Programming (L refinery planning and optimization as a key component business supply chain.

The article includes: Petroleum Refinery: Complexity of operations and the and scope of optimization Implementation of Linear Programming for refinery pla and optimization Experiences in implementation and usage of Programming

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The bottom line

Refinery planning and optimization is mainly addressed th successive linear programming software like RPMS (Hon Hi-Spec Solutions), PIMS (Aspen Technology), and GR (Haverly Systems), while more rigorous non-linear pla models for refinery planning have been recently developed experiences discussed in this article pertain to RPMS, a authors have been involved in the development and applica refinery LP models using RPMS (Refinery and Petroch Modeling System). RPMS was developed more than 35 ago by Bonner & Moore, which was acquired by Honeyw Spec Solutions in 1999. RPMS is used today at more tha refineries and petrochemical plants worldwide for oper planning, crude oil evaluation and selection, inv management, future investment analysis and to analyze scenarios.

PETROLEUM REFINERY: COMPLEXITY OF OPERATIONS AND THE NEED SCOPE OF OPTIMIZATION COMPLEXITY OF REFINERY OPERATIONS

Crude selection

Modern petroleum refineries are designed to process a var indigenous and imported crudes. As the crude cost is abou of the refinery input cost, the selection of optimum crude extremely important to achieve higher margins. Howeve number of options for buying the crudes under a fluctuating scenario and transporting them to refineries are so enormou it is very difficult to evaluate all the crudes and decide o optimum crude mix for the refinery. Refineries buy crudes b term contracts with leading suppliers and also by spot purc from the market. The optimum selection of term and spot c is extremely difficult when multiple refineries are involve work in an integrated scenario. Crude transportation

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Once the crudes are selected and purchased, the focus optimize the transportation cost from the crude suppli refineries. The transportation cost can be minimize considering the multiple options available for cargo size routes, loading and unloading infrastructure facilities, taxe duties, etc. Crude processing

The crudes often land at refinery sites as a mix of various c and various options of crude blending are evaluated befor processed. The ultimate challenge a refinery faces is proc the crudes in the best possible manner and maximize the (dollars per barrel) for the crude input. Determining the possible option is a very difficult task, as modern day ref are built with complex processing schemes, having a comb of various technologies for heavy ends upgrading, product improvement, efficient fuel usage and controlling re emissions. The most common configuration includes ca cracking, hydro cracking and thermal cracking to maximi bottom of the barrel. The other process technologies like ca reforming, hydro treating and sulfur recovery are a must to c with stringent environment and product quality regulations to Fig. 2.0 for a process flow diagram of a modern refinery).

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Figure 2: Process flow diagram of a modern refinery http://www.uop.com/refining/1010.html Product demands

The product demands, quality and prices drive the entire processing and secondary unit operations. Multiple stream multiple blending options to make different grades of a p further make the task of refinery planning cumbersom demanding.

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Moreover, the future promises to add even more com through additional product specifications, environmental n changing feedstock, product prices, mergers and acquisition

NEED AND SCOPE FOR OPTIMIZATION IN REFINERY OPERATIO

Most refineries are owned by integrated oil companies ha variety of interests, from exploration and production th refining and marketing to retail sales. Within such an organ the refinery works under the direction of the Head office Head office negotiates long-term and short-term crude contracts while the product Supply and Distribution depa sells products. The refinery itself typically works within the framework of the organization to maximize the cor profitability. This makes the refining an extremely comple dynamic activity. Along with the complexity of refining, ther exists a great degree of freedom in refinery operations example, one of the most commonly used refinery products for automobiles, and the customer does not care abo complexity or simplicity of the refinery, what crudes it purch which processing technology it used, what blending or a components it used in making the fuel. The customer i concerned with the proper running of his vehicle and the va the money spent. Therefore, the refiners have got bo enormous complexity and considerable freedom to satis customer requirement and make profit. This require optimization of multiple objectives in the refinery supply chain.

The table below provides a glimpse of the multiple objecti refinery optimization:

Minimize crude landed cost at refinery Optimize refinery crude mix Optimize black oil generation and upgradation, optimize o product mix and dispatch Minimize quality giveaway Optimize fuel consumption, minimize losses

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Optimize utilization of the assets Optimize inventory management Optimize capacity utilization and shutdown planning Optimize unit operations maintaining highest standard safety, catalyst life and activity, etc. All of the objectives mentioned above present a refinery challenging problem and an opportunity to maximize the profitability.

In a nutshell, the need and scope for optimization is so va refinery that it is essential to use software tools not only to at the best plan, but also to quickly evaluate the new op with internal or external changes in the business sce However, in todays refinery environment, data acqu simulation and optimization tools often reside in silos groups across the refinery. This results in various local and level optimizations only, not the most profitable refiner optimization. A holistic view via an integrated model refinery is required to give refinery planners the ability to ev opportunities optimally, accurately and quickly.
MEANING OF OPTIMIZATION AND LINEAR PROGRAMMING

Optimization means "the action of finding the best solution the given constraints and flexibilities. Linear Programmin is a mathematical technique for finding the maximum va some equation subject to stated linear constraints. It is com used in refinery planning to identify with confidence the profitable refinery-wide operating strategy.

LP has been around since the 1940s and has now reached high level of advancement with the meteoric rise in com power. The "linear" in LP stands for the algebraic aspect, the constraints and objective functions are linear and satis fundamental properties: proportionality and additivity. "programming" in LP actually means "planning" only. implementation of LP involves the development of an inte LP model representing the refinery operations with all cons

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and flexibilities and then solving it to determine the optimum

The refinery-wide optimization using an LP model has proven to bring economic gains far higher than unit simulation models or advance process control techniques. In short, the LP model is an excellent economic evaluation drive the entire supply chain toward higher profit.

Some of the key areas for LP applications in the oil industry Grassroots refinery design/configuration Selection and evaluation of crude oils and raw materials Long-range and short-term operations planning Capital investments evaluation for process equipment Analysis of the profitability of merging and acquisition pl and the creation of ad-hoc models for joint venture refin Evaluation of processing agreements and product excha contracts Evaluation of new process technologies Control of the refinery performance Product blending control Down-time planning Inventory management

IMPLEMENTATION OF LP FOR REFINERY PLANNING AND OPTIMISATIO

Refinery planning forms the foundation for the business dec that have the biggest impact on refinery profitability.

A refinery typically prepares the following types of plans: Annual plans for annual budgeting, term crude contrac maintenance shutdown planning Monthly rolling plans for spot crude purchases conducting refinery operations inline with product dema Weekly plans for finding operating strategies for units weekly level, i.e. the refinery knows precisely which cru has and must decide which crude cocktails to run, how to do so and how it is going to meet any particularly la

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difficult product demands Strategic plans for future years and expansion projects Profitability improvement plans for plant modifications and revamp projects

The preparation of any of the above types of plans requires of standard procedures and an LP model customized f refinery configuration.
DEVELOPMENT OF A REFINERY LP MODEL

Development of a refinery planning LP model primarily in customization of commercially available LP modeling softw refinery configuration. The table below provides a list of suppliers and the LP software. Supplier Honeywell Hi-Spec Solutions Aspentech Haverly LP Software RPMS Refinery & Petrochemical Modeling System PIMS Process Industry Modeling System GRMPTS

Development of a refinery LP model is an arduous tas demands sound, accurate and complete understanding refining process and planning functions. It requires compila enormous plant data and meticulous documentation of the s
Major steps the in development of a refinery LP model

Some of the major steps involved in the development of a re LP model include: Mapping of the existing planning process and data colle Development of a future planning process inline with practices Finalization of Functional and Design Specifications (FD the refinery LP model building, software and har configuration

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Refinery model building as per FDS Factory acceptance test of refinery model Tuning of model at site and trial usage for planning and studies Site acceptance test of the refinery LP model

The list of steps mentioned is not exhaustive and requires level activity planning. The role of an LP consultant is important as he has to balance the needs of the refinery p and the intricacies involved in modeling each constrain options. Initially, it is better to keep the model simpl understand its behavior. The complexities must be gradually, keeping in mind what economic impact they ha refinery profitability.
Description of a refinery LP model

A good LP model is one that closely represents the oper reality of a refinery. A typical refinery LP model contains th to-end configuration of the refinery with a detailed represen of primary and secondary processing units, blending fac power and utilities. A model contains structural data, or data, which represents the physical reality concerned variable data, which expresses the contingency of the par problem. The addition of variable data like costs, price materials availabilities and products requests, process capacities and product quality specifications enables the mo set up a problem, from which infinite variant cases can be c and run to arrive at the optimal plan.

Mathematically, an LP model consists of a matrix, while f users it can be better thought of as a set of data tables nec and sufficient for the automatic matrix generation. refinery model represents an LP matrix with 1,500 rows, columns, 1,500 equations, 1,500 constraints and 5,000 vari The LP software uses different optimizers like MOPS, XPR OSL, etc. to solve the matrix. RPMS uses the state XPRESS optimizer software licensed from Dash Associates

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The model can have different time period variants to different planning objectives associated with Annual Pla (1X4 quarter), Quarterly Planning (1X3 months) and M Planning (1X4 weeks). Some of the key features of a refinery LP model include: Objective function in an LP model

A refinery LP model is generally configured with a single obj function of maximizing the profit as explained below: To maximize { (Product value) - (Raw Material co (Refinery Variable Costs), subject to the various cons defined in the model including the inventory valu carrying cost parameters. Modeling techniques and optimization features

A refinery LP model contains modeling capabilities Successive Linear Programming (SLP), Mixed i programming (MIP), Implicit and Explicit Pooling, Multi modeling, Distributive property recursion, attribute error tra rigorous sulfur distribution, etc. Compared to an approach on average values, these techniques provide very ac estimates of yields and qualities of finished goods, all the keeping short computation times.

Additional information can be obtained by referring to sta books on LP to understand the meaning of the LP terms

above. A good reference book is Operations Researc Edition by Hamdy A. Taha, Univ. of Arkansas, and Fayettev

The refinery LP models use latest unit modeling technique swing cut modeling, delta vector modeling and mode modeling.

The crude and vacuum unit is modeled based on the stream (True Boiling Point ) cut point scheme. The crude assay ma software like ASSAY2, PASSMAN uses TBP cuts and the

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curve of the crude oils from the various crude assay databa generating the crude wise yields and properties. It is poss model the single physical crude unit into several logica depending refinery specific requirement. For example, a re processing high sulfur (HS) and low sulfur (LS) crudes in b out operation can be modeled with two logical unit one for H another for LS crude operation.

The secondary units are modeled using delta-yield vector or wise yield vectors. For example, the catalytic cracker is ge modeled by setting up base yield vectors with yield con delta vectors for Feed UOP K, MeABP and Severity/Conve The static input data for determination of delta vectors c generated from kinetic models, test runs and sta correlations. Relevant capacity and quality constraints o feed and product side are configured. All possible ble options for unit feed and products are configured. Uni steam, power, fuel consumption and catalyst consumptio also built in. The rigorous recursion structure for feed and p stream properties is set up. For example, sulfur in cat c streams is recalculated on the basis of feed sulfur changes.

Model Input

Once all the static data is configured, the model is update the variable data in model for solving a particular problem common variable data required includes:

Crude oil or any other raw material prices and min and maximum availability

Selling prices and minimum and maximum deman for the different finished goods Available process unit capacities

Available Inventory stocks and minimum and max storage limits

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Quality specifications, etc. User Interface

LP software commercially available today is highly advance features to provide a maximum user-friendly experience. has a powerful Graphical User Interface (GUI), which prov highly effective and intuitive interface for working with the m It contains a model navigation window with graphical objects graphical objects contain information on Charge Yields, F Products, Results, etc. Data and Report factory is an inte application of RPMS for input of static and variable dat generating standard reports in Excel (Fig. 3.0 provides a g of a GUI for a refinery LP model).

Figure 3: RPMS GUI Model Output

The LP matrix generator transforms the input data into a number of equations and variables. The LP optim

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algorithm solves the matrix and calculates which combina supply, processing, blending and selling activities give highest margin. The LP reporting system reports this o combination of activities, together with the financial results output is generated in the form of different types of text and files. RPMS has a powerful report factory utility for gene various customized Excel reports. The reports contain output with respect to crudes quantities, product num capacity utilization, power, utilities and chemical consum levels. The outputs also provide valuable information like re cost, pi values, DJ values, etc.

For further information on RPMS, explore the RPMS link under References.
TRADITIONAL LIMITATIONS AND LATEST ADVANCES IN LP

The LP modeling has changed substantially. The static driven models with fixed stream properties have now replaced by variable property-driven models using lates linear distributive recursion techniques. Swing cuts for cu optimization have been semi-automated using implicit p techniques. Multi-period and multi-refinery modeling capa have been enhanced. The linkage of crude assay data in LP assay tables has been enhanced and automated. P unit representations have changed from multiple mode structures to base-delta vector yield representations.

In a nutshell, current LP systems offer embedded p simulation and other non-linear representation capabilit provide even more accuracy and realism for refine representations. The LP technique is far superior when com to any Excel programs traditionally used for planning. is worthwhile to keep in mind certain limitations of LP in or appreciate the LP solutions: 1. Non-linear nature of refinery processes: The nature refining processes is mainly non-linear whereas programming - as the name already suggests -

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a linear combination of the provided options is valid. uses a specialized recursion technique called Succ Linear Programming (SLP) for modeling and solving linear problems. For most of these, engineers developed "linear blend indices," which transform measured qualities into index values, which ca constrained using ordinary linear constraints.

2. Data overload: While developing the model, providing possible processing options is impossible. Increasin number of variables and constraints increases the eff maintain the database and the difficulty to mainta required data consistency. It also reduces the sy transparency, therefore increasing the chances of big in data and logic. RPMS has a powerful interface with and tools like Fast Data Import, model comparison, minimize the data errors.

3. LP does not consider the elements of time and stor assumes that all activities occur simultaneously and t identified components are separately available for processing or blending (like there are separate available for all individual components). A refinery process HS and LS crudes in a blocked-out fashion, wh an LP model mixes HS and LS crudes simultaneously limitation is addressed by reducing the time bucket making the plan and using multi-period models. W planning methodology can be used for making plans clo actual operations and address scheduling issues.

4. LP exercises no judgment: One point must alwa remembered: LP Models are just as good as the data and the assumptions used to create them. Models shou replace good and sound engineering judgment. requires quality input data in order to provide workab practical solutions. Yield and property data are bas plant measurements and rule-of-thumb calculatio estimations. Pricing data used is often based o

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statistical average of past months or years. Based o input data only, the LP model solves the problem exercises no judgment. A small change in one piece o may result in a completely different solution, and will ign uncertainties and risks to achieve just a minor incre profits. This problem has been tackled by sensitivity an where many cases can be run using Model Modifier (M feature of RPMS and arriving at practical and implemen solutions.
EXPERIENCES AND BENEFITS

Building a refinery LP model is not a trivial exerc needs clear understanding of the entire web of re operations and the compilation of good quality data model development activity is very time consuming an take about a year for developing a good and robust m The following important points need to be kept in mind building the model: Make sure that the crude cut strategy repr accurately the qualities (and variations) of the cu are critical for a site. For example, if there are concerning distillate 95% point or CCR v characterize your crude cuts very thinly around the gas oil/atmospheric residue cut (typically in the 390C range). Obtain good representation of unit operating mode parameters from process models. As the LP canno with non-linear correlations, there is a need to lin the non-linear behavior of process units by intro several linear "vectors. These vectors can be gen through sound refinery process models (e.g. Profimatics FCC-SIM for the FCC, REF reformer, etc.) for different feeds/crudes, ope conditions (severities, conversion, etc.), etc. Ensure that the model has sufficient flexibility to ge feasible solutions in the first place. It is easier to sta a fairly "loose" model, which can be subseq tightened.

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Interpretation of LP Output: The task of analyzing t output is not a simple exercise, mainly due to the limi of the technique and the complexity of its output. It re sustained effort in generating and analyzing the v feasible and optimum solutions and rigorous sen analysis.

Computation Time: Today, we solve substantially complex LP problems in mere seconds on our desktop The running time limitations have lost much of relevancy with the availability of desktop PCs with computing power. For example, solving four-period m takes only about two to three minutes on a Pentium 256 MB RAM PC.

Benefits of LP in refinery planning

LP works on the principles of pure mathematics and Petr Refining is more complex than the mathematics that descr With all the approximations and uncertainty we should not or even desire a true mathematical optimum. LP shou viewed only as a mathematical optimization technique, o convenient method to obtain a feasible and economic plan supply, processing and logistic activities of a petroleum co together with a description of its driving forces and constrain day-to-day working, an LP solution helps in achieving tw practical aspects: It facilitates in the decision-making process by keepin focus on profit under any scenario It provides the targets and operating strategies for the operation

LP does much more than planning for the future. LP re models always challenge the people and their deep of-thumb approach in the refinery operations. The implemen of LP models often creates awareness among executive management about the profit factor. LP-based plannin provide potential benefits to the tune of 15-20 cents/bbl. O

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the major advantages of LP programming is that it acts as a dog for the refinery operations always asking for more, t model helps in identifying the bottlenecks in processing crude and directs in achieving the benchmark for operat clearly tells the inefficiency of operations in terms of mone thats where it is very close to managements heart.

The LP solution has not only enabled arriving at a better pla has also provided many valuable insights for optimizin operations, crude mix and product blending. The other important benefit realized is it quantifies the impact of a cha a variable on overall refinery profitability. As a tool, provides answers to the typical questions that re management asks for faster decision making, including: W optimum HS-LS crude mix?, How to maximize distillate yie minimize the fuel & loss?, What products to be maxim Which units to be run and what capacity levels?, When t unit shutdowns?, etc.

Key to successful implementation of LP in re planning

The output from an LP model gives us an optimal pla practice, the real benefit comes from implementation strategies and guidelines from the model. Implementing all LP solutions in a refinery is a difficult task. Product pricin unit constraints often change weekly, but changing unit ope philosophy and addressing hardware constraints take ti accomplish. Even after the steps for improving o performance have been identified and implemented, pressure to improve is removed, operation tends to return older, more comfortable routine. The LP optimization group continue to stress the potential savings while improvin operations until the savings are achieved.

The key to the successful implementation of LP in re planning is an integrated approach that addresses the fol issues:

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Regular Model updates and maintenance: human tendency of giving maximum care and attention thing which is very valuable or important to him. The tendency should be kept alive for LP models, as models provide the decision-making power (involving amounts of money), money-related policies and future plans. The models are continuously interacting with constraints and outside changes (price and p demands), making them dynamic in nature. All of factors imply that the maintenance of these models sho carried out as regularly as possible. The type of update be a reduction in the yield of unit, change of catalyst, pr change of secondary stream, energy consumption red due to application of energy conservation suggestion, et

Integrated application of different software solu Refineries use a number of stand-alone software so like Automation Blenders, Online analyzers and se APC, Scheduling software, Simulation software, RTDBM optimization of operations. There is a strong ne integrate the working of such software to create the ma benefit by bringing the operations and blending close LP output.

Clear and well documented planning procedures: are no two opinions on using LP based software for plan The real problem of using the LP for economic de making is how to interpret the LP results and how to us decision-making. The planning tool needs to be back clear cut and systematic planning procedures. The planning process should be carried out under the supervision and guidance of top management group integrated way. The procedures for the four key functi plan preparation, plan implementation, plan monitorin what-if case studies must be in place and working to e the success of LP optimization.
THE BOTTOM LINE

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Petroleum refining in the new millennium will continue to extremely competitive business. The application o methodology has shown potential margin benefits of cents/bbl for the refineries.

The bottom line is that experienced people are the k success: software and computers, no matter how powerf quick, are not the substitutes for understanding and optimizi refinery business. However, LP technique has provide efficient and effective method to quickly evaluate and quant impact of internal and external changes on overall re profitability.
REFERENCES :

1. LP Modeling Past, Present and Future , Michael A. Tu Senior Staff Consultant ,KBC Advanced Technologies, I Houston, Texas 2. Notes on LP , Uberne A. Tapia , Manager , Refinery Pla & Optimisation , Honeywell Hi Spec Solutions , Houston Texas
th

3. Operations Research , 7 Edition , Hamdy A. Taha , U Arkansas , Fayetteville 4. Decision-making and Modeling in Petroleum Refining , H Hartmann, Independent Consultant 5. Multi Objective Intra-Refinery Optimisation , Ahmed Sira Khogeer Department of Chemical Engineering , Colora State University 6. Honeywell Web site , www.honeywell.com 7. Hartmann, J.C.M.; Distinguish between scheduling and planning models; Hydrocarbon Processing, Vol. 77 Issu p93-98, Jul 98. 8. RPMS Introduction http://www.acs.honeywell.com/ichome/Doc/0/O2

About the authors:

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M.K.Sahdev, Associate Content Writer, www.cheresources.com

Deputy Manager ( Refinery Optimisation ) at Panipat Refine Indian Oil Corporation Ltd. At present , working in the Proce Planning and Coordination Group. Graduate from Panjab University, Chandigarh , India ( 1993) . Has six years of experience in the commissioning, operating, and monitoring Continuous Catalytic Reforming Units (CCRU) and Visbreak Units at Panipat Refinery. Implemented RPMS (Refinery & Petrochemical Modeling System) , a Linear Programming( L software tool from Honeywell Hi-Spec Solutions for optimisin Refinery production planning. Experienced in working with M plant Multi-period LP models . K.K.Jain, Guest Author, www.cheresources.com

Graduate from Indian Institute of Technology Roorkee, Ind (1981), having 23 years of experience in plant operations, refinery-related Advanced Process Control and Optimization Linear Programming related to supply chain planning and optimization. At present, working as Chief Manager, Corpor Optimization , Indian Oil Corporation Ltd. Pankaj Srivastava, Guest Author, www.cheresources.com

Graduate from Indian Institute of Technology Roorkee, Ind (1996), having more than eight years of experience in Linea Programming, plant operation and optimization, commission basic and detailed engineering design, dynamic and steady simulation, working as Deputy Manager in Reliance Industrie Limited, L&T Chiyoda and Onward Technologies. At presen working as Deputy Manager, TATA Honeywell Hi-Spec Solu Pune, India as Planning and Optimization Consultant.

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Petroleum Refinery Planning and Optmization Using Linear Programming

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