Crisis forces producers to optimise processes

Wake-up call

01 May 2009 00:00  [Source: ICB]

The global recession has set alarm bells ringing for producers, prompting a drive for increased efficiency and flexibility within their production setups

THE GLOBAL economic crisis is motivating chemical producers to optimize their production processes. As the focus changes to "make to order" from "make to stock", they are cutting their operating rates and idling capacity.

Before the global economic crisis, there was little incentive to drive innovation in process engineering, says Alison Smith, US-based AspenTech's vice president of marketing strategy and research. Now, however, chemical producers are rethinking their production setups.

Companies need to invest in reengineering now, so that they are in a better position when they emerge from the downturn, says Smith, whose company supplies manufacturing optimization software. Software tools such as predictive modeling and supply network optimization can be used to build flexibility into production processes. Crucially, they can enable cuts in energy inputs and environmental emissions.

Faced with dwindling demand and customer destocking, chemical producers around the world are cutting back their production (see related story on page 18). Germany-based BASF idled as much as 25% of its production capacity in late 2008 and US-based Dow Chemical's operating rate in the fourth quarter was just 64%, the lowest in 25 years.

"I think you will see that as we come out of this recession, maybe two or three years from now, companies that made the investments during this time are going to catapult ahead of their competition globally," says Smith. Otherwise they could end up being acquired by more successful companies or could simply go out of business, she adds.

"As much as this downturn is awful for everybody globally, I think it's an important wake-up call," continues Smith. "One of the things that comes out of it will be a tremendous amount of innovation on the process design side of the world."

focus on COSTS
Attempts by companies to design out unnecessary costs, relating to energy use, raw materials and catalysts, for example, have accelerated during the current downturn, agrees Mark Matzopoulos, chief operating officer at UK-based Process Systems Enterprise.

The challenge is to reduce the variable costs, Matzopoulos says. "The focus has shifted from producing as much as possible to operating within the tightest margins. It's all about reducing material and energy costs at this point."

It is particularly difficult for large-scale producers to run their plants at reduced rates, as much of their equipment is purpose-built and specifically designed to handle a particular throughput, observes Matzopoulos. "Even the more generic configurations, such as large continuous stirred-tank reactors, are specially optimized for a particular reaction. This means you will always be operating at non-optimal conditions in a number of the production modes."

The difficulties involved in ramping up and down production rates in continuous process plants often result in plants being idled instead, says Smith. "Because of the way these processes were designed up front, once you start operating outside the optimal design envelope, there are inherent inefficiencies in the process, from the way you consume energy to the way you convert raw materials."

Despite these difficulties, companies have been impressed by how their plant engineers have been able to maintain continuous processes at much lower operating rates, achieving new levels of energy efficiency. The ingenuity of process operatives and engineers has been exemplary, company officials have remarked.

In future, plants could be designed with wider optimum operating envelopes, to better cope with variations in demand. Batch production could also become more popular, particularly for specialty chemicals.

"Companies are going to realize we do need to handle that higher-mix, shorter-run, more-efficient-batch kind of capability in order to survive these kinds of market shocks," says Smith.

predictive modeling
Process Systems Enterprise builds predictive models that allow customers to explore different modes of operation. A key application area is terephthalic acid, where modeling can allow a reduction in the paraxylene (PX) and acetic acid feedstock. "Simply doing that can release something like $2m [€1.5m]a year in terms of savings in raw material feedstock costs," says Matzopoulos.

Models can be used to perform "before the event" verification of the economics of potentially expensive capital expenditure decisions, such as impeller replacement. They can also help companies understand how to ramp up and down safely and economically, and allow the optimization of production on a daily basis as raw material price ratios fluctuate.

"Modeling enables the exploration of different aspects of process operation," explains Matzopoulos. "You can iron out the operating risk of moving the process to an unknown state and you can also optimize the process at that new state."

In make-to-order processes, software can be used to minimize the changeover time between different product grades. As well as increasing throughput, this can reduce the amount of off-spec material produced during the changeover period, says Matzopoulos. "If you want to get to a new operating state, you want to minimize the time that your process is going up and down, and you want to get there as quickly as possible."

For producers with a global network of production sites, decisions about where to produce a particular product and where to cut back production are critical. Supply network optimization software can be used to help companies decide which plants in the network can produce a particular product or product mix most profitably. Production can then be diverted to those plants, while other facilities can be idled.

Adding instrumentation can provide visibility into how plants are operating in real time. This is a "huge trend," not just in chemicals but industry wide, Smith says.

At a time when companies are cutting back on large-scale investments, and are canceling or delaying projects to build new capacity, investing in process optimization can offer an attractive return on investment (ROI). Software tools provide a low-cost means of improving companies' production, says Matzopoulos. "A typical project takes us three months, and the payback is six to 12 months. We provide a rapid means to improve production."

Even companies that are idling plants are continuing to invest in innovation, says Smith. "Despite the fact that economically, globally, the picture is not very pretty, leading companies are continuing to invest and looking for areas to innovate."

The difference now, she says, is that companies are stipulating higher ROIs. They are only investing in process optimization projects if they can see an ROI of about 80%, whereas previously the ROI threshold might have been 30-40%, she adds.

"They need more flex in the process in order to move to "make to order." It's funny that for years now, we've worried about how to scale up profitably. Now industry is faced with just the opposite, how to scale down profitably."

Listen to interview clips with AlisonSmith and Mark Matzopoulos at http://tinyurl.com/c5yav2 and http://tinyurl.com/ca4zhw


By: Anna Jagger
+44 20 8652 3214



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