Oil, Gas & Chemicals

  • Changing Product Mix Demand

    Fuel vs. Petchem

    Overview

    Alternative energy sources (Shale gas, CBM, Solar, Wind etc. ) have achieved cost parity and even better at many places. Call for environmental action is forcing Refiners to move away from fuels and change product mix to Petrochemicals & Lubes. There is an extent to which product mix can be altered. Return on investment of such assets will be challenged in near future. Greenfield project also face similar dilemma.

  • Intermodal Complex Logistics

    Fulfillment & VRP

    Overview

    Outbound logistics in Oil, Gas and Chemicals can be complex. Unlike other industry verticals open truck operations are not possible. Often logistics is inter modal (Rail, Road, cross country pipeline, Ship vessels) in Primary network. Last mile delivery by Tanker Trucks has other challenges of Routing, Inventory Distribution, Stock outs, Cost, Empty Mile Travels, Idling etc.

  • Hedging & Forecasting Challenge

    Price Variation

    Overview

    Margin erosion due price fluctuation in commodity at scale can impact financials significantly. Hedging against fluctuations has its cost. Being able to predict prices for your market can safeguard against the risk. Prediction of price is a complex process in this industry given Geo-politics, government interventions, alternate energy sources, shipping/logistics cost etc.

  • SCADA->BOARDROOM

    Data Management

    Overview

    Some industries have complexity in its work processes in Production or Logistics or compliance Management. Oil, Gas and Chemical industry is complex in all work processes. Process recipe, routing, quality paradigm has countless option. Equipment reliability in this continuous process industry is paramount. Inbound and outbound logistics has all the flavors of bulk cargo, container (solid products), pipeline batches, shared infrastructure, commodity swaps etc.

    Data management is crucial for safety, quality, energy intensity, demand fulfillment, cost and productivity management.

    INDUSTRY CHALLENGES & SOLUTIONS

    Complete Picture- Visibility

    Challenges of Visibility

    Business, Operational or Tactical KPI’s, observing deviations at the right frequency can keep you on track. Expectation and reality are two sides of  the coin. It is like Not having either will keep Organization in Dark.

    Each aspect of interest in business is affected by several other variables. Using data to build the big picture creates situational awareness which is critical to take informed decision.

    Drilling down from deviating KPI to data or to Balance scorecard contributors, helps identifying and fixing the root cause.

    Usually there are signs before something goes wrong. Leading indicators can come in different forms- data points, derived calculations, or some form of unstructured data.

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    VISIBILITY

    Dashboards, KPI/Metric Management, Drill downs, Root cause analysis, Business Intelligence.

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    Accurate Reliable Predictions

    Challenges of Prediction

    Several market and geopolitical events influence demand and price in different ways. Being able to predict the pattern well in time is valuable. Some of the data required is unstructured, some structured and some available with field agents requires collaboration. Putting different pieces in right context could give a complete picture.

    Retailed Fuels are affected by seasons and events while others affected by Business activity of large bulk customers and pricing. Geographically spread and large number of Products (Petchem, Chemicals, Lubes) poses significant challenge in Demand planning activity.

    Margin erosion due price fluctuation in commodity at scale can impact financials significantly. Hedging against fluctuations has its cost. Being able to predict prices for your market can safeguard against the risk. Prediction of price is a complex process in this industry given Geo-politics, government interventions, alternate energy sources, shipping/logistics cost etc.

    Equipment OEM Maintenance Schedule could be off significantly on either side, each raising question of Cost, Production losses or Risk. Operating Conditions can truly determine the right time frame of Preventive Maintenance of critical Equipments.

    Most real life phenomenons are affected by multiple variables. e.g. machine failures, commodity price, employee attrition, Corrosion and structural defects. Factor analysis can help understanding the variables that influence an outcome.

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    PREDICTIONS

    Forecasting, Risk Assessment, Pattern Study, Segmentation, Factor Analysis, Price Elasticity, Predictive Maintenance.

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    Optimal decisions

    Challenges of Decision Making

    Raw Material availability, Production Operations Rules, Maintenance Interruptions, Logistics Dependencies… With so many factors affecting fulfillment of Demand, it would take better Planning and Orchestration.

    Changeovers causes loss of capacity and cost. Optimal Campaign plans are key to high production efficiency. Sometimes process constraints force transition sequences, which may make inventory planning difficult.

    Lot of moving parts between, Processes, People, Systems etc. Right Planning, Orchestration, Resource Deployment, Monitoring required to achieve the desired results. Productivity achieved in one process in isolation may be nullified by its impact elsewhere.

    Balance between Inventory Management and customer service is difficult. Synchronizing the Distribution and production process with demand signals will keep working capital and customer service levels in balance.

    Spot pricing vs. capacity /campaign size advantage, taking advantage in across time pricing difference in multi-period planning with inventory movements requires sophistication in planning process. This holds true for raw material as well as finished product and consumables.

    Capacity (production, storage, logistics) comes at high investment. Managing it well with varying demand and seasonality can yield significant benefits.

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    Decision Support System

    Supply Chain Planning, Scheduling, Simulation, Line Balancing, Inventory Optimization, What-if Scenario Study, Revenue Optimization- Dynamic Pricing.

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    Efficient Execution

    Challenges of Execution

    Sampling based quality management, SOP’s not followed, Shift Operator availability & skill issues affects Quality management. Compliment your quality assurance process with computer vision, sensor based data gathering and machine learning/AI model based assistance.

    Automation with high precision execution is desirable. And now it is possible with complex identification, segregation or multi-step workflow tasks with help of sensor (IoT field devices) and ML/AI models.

    Risk perception by humans have limitation of information that they can work with. There is a lot of unstructured data, news feed, chats, emails, consumer complaint blogs that cannot be consumed by humans. But ML algorithms can assess risk and change in preferences accurately.

    Perimiter and visitor are expensive affairs and often difficult to cover 24×7 and full alert service. Computer vision and image detection can alert intrusion or other risks.

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    Machine Learning & Artificial Intelligence

    Defect Identification, Comprehensive Quality Testing, Automation of Tasks, Sentiment Analysis (Consumer), Early Indicators and Risk Assessment.

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    WHAT'S NEW?

    Need Help?

    Past decade has seen major changes in economics of Oil, Gas & Chemicals.
    Shale Gas, Alternate energy cost coming at par with conventional energy sources, advances in material sciences.

    Performance Polymers and New Applications

    Petrochemicals and Polymers will find new applications or need for Performance polymers will continue need for more innovation.

    Electrochemistry of Batteries

    Chemical Industry is getting a boost from research and commercialization of new Battery technology.

    Biodegradable Plastics

    Environmental concerns will see much more stringent rules for biodegradable plastics. Now adoption is becoming more voluntary instead of earlier being forced as regulations.

    Gas over Oil and Coal to continue

    More consumer and companies will switch to natural gas for energy instead of diesel and fuel oil. The trend may continue beyond 2030 when renewables and off grid energy production will see mass adoption.

    Crude Oil Refining Assets may take a beat

    Globally Crude oil refining assets will come under stress as fuels demand may reduce due to electrification of transport sector. Gasoline demand (passenger vehicles), followed by Diesel (commercial and passenger vehicles) will take a beat. New Refineries will have difficulty in disposing fuels or engineering the product mix.

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