Mar-2014

Accurate front-end scope definition: the key to a successful revamp project

One of the characteristics of a mature industry such as petroleum refining, particularly in the U.S., is that many capital projects are facility revamps.

R E (Ed) Palmer
Wood Group Mustang

Article Summary

These projects typically target increased capacity, product yield improvement, energy efficiency or modernisation to take advantage of advances in technology. Projects involving the construction of new grassroots facilities on a clean, uncongested site are becoming increasingly rare.

Refinery revamp projects require attention to a variety of special considerations that are not normally an issue for grassroots designs:
• Because of potential lost revenues, down time must be minimised for final construction and tie-ins in the facility that is being revamped. This requires maximum construction work in an operating (hot) facility prior to the shutdown, which in tum involves numerous daily work permits and increased monitoring to ensure safe work practices. The result is increased construction costs.
• Difficulties may be encountered finding locations for new equipment in an existing, congested process area that has undergone numerous previous revamps.
• Equipment and material deliveries have to meet to a narrow window afforded by scheduled turnarounds for the affected areas of the refinery.
• Existing equipment is often required to per- form at conditions substantially removed from the original design, or in a totally new service. This requires a careful evaluation of the new operating conditions, the suitability of the equipment mechanical design and the condition of the equipment.
• Tie-ins must be identified and then planned consistent with the turnaround schedules of surrounding process and infrastructure facilities.
• Document records such as flow diagrams, equipment and instrument design data and inspection reports must be verified for accuracy.
• Up-to-date drawings for piping, civil, structural and electrical designs are rarely available.

Front-end scope definition is important for any project; however, for a facility revamp, it is critical that certain steps be followed, even in the preliminary design phases, to ensure that information regarding project cost and financial viability is accurately communicated to those who are charged with the responsibility of approving capital expenditures. Regardless of the sophistication employed to engineer and plan a revamp, if the front-end scope is not accurately defined, the results can be a project that is technically flawed (it doesn’t work!), is behind schedule and is substantially over budget.

Obviously, the same argument regarding front-end scope development is valid for grassroots projects, but achieving the same degree of confidence and accuracy with a revamp requires considerably more conceptual design effort and experience.

For any project, including a revamp, it is often tempting to shortcut certain critical development steps in order to either save engineering costs or accelerate the project schedule. A good example is the purchase of long lead equipment prior to adequate front-end scope definition. The result can be equipment that underperforms. Another example is lack of attention to the project’s impact on offsite and infrastructure facilities such as feed and product handling, utility systems, emergency pressure relief, etc. Often these shortcomings are discovered during a subsequent phase of the project, when substantial additional costs must be incurred to correct the problem. From an overall perspective, a little extra time and money for front-end engineering to accurately define the project scope will pay substantial dividends.

The balance of this article will focus on the three most critical aspects of front-end project scope definition:
1.    Preliminary project justification
2.    Feasibility study and cost estimation to verify project economics
3.    Preparation of a definitive front-end engineering design (FEED)

Preliminary Project Justification
In many instances plant engineering and operations personnel initiate revamp project ideas. However, there is no need to engage the owners’ corporate engineering group or an outside consultant/contractor to perform significant engineering studies if the potential benefits of the revamp project are suspect. Initially, a preliminary evaluation involving the following steps should be undertaken:
•    Determine the approximate magnitude of the increase in revenues associated with implementing the project;
•    Identify other reasonable alternates that might achieve similar results;
•    Estimate the order-of-magnitude capital investment for each alternative;
•    Prepare a preliminary financial analysis of each option.

Estimating the potential increase in revenue for a project requires knowledge of the various values of feed stocks, products, and other costs parameters such as plant utilities, labour, etc. The plant economic planning model, such as a linear program, can be used to determine the increased revenues associates with the project. For example, the revamp project might involve a crude unit expansion to process additional quantities of the current crude mix or a conversion to handle heavier, less expensive crudes. LP modelling can be used to estimate the improved revenue compared to the current operation.

Input from a third party, such as a technology licensor or catalyst supplier, may also be required to prepare a preliminary estimate of project revenues. A good example is the modernisation of an existing fluid catalytic cracking (FCC) unit with new feed nozzles and riser termination technology. Another example might be the revamp of a heavy gas oil hydrotreater to accommodate poorer quality feeds, such as heavy coker gas oil. The licensor will provide the conversion and yield benefits and the cost of supply for any proprietary equipment. For the hydrotreater revamp, the catalyst supplier might provide the required parameters based on the new feed definition and performance targets.

This phase of project development should also include the identification and preliminary screening of other revamp alternatives that have the potential to realise benefits similar to the base case. For the crude unit case noted above, an alternate that could be considered is the installation of a new crude unit to obtain the expansion capacity target. Potential benefits would be improved recover of more valuable products, energy efficiency and minimum loss of revenue associated with downtime to revamp the existing facility. The disadvantages might be overall project cost or permitting considerations. For the hydrotreater revamp, alternatives that might be screened could involve the interaction between the predicted catalyst cycle length/performance and the benefits of a new reactor or new/revamped recycle hydrogen compressor capacity. Alternatives for the FCC modernisation could consist of a comparison of competing technologies from several licensors.