PETROCHEMICAL 4.0 The role of digitization for the ... · An overview of industry transition covering the different “revolutions” or step changes lfagg_Nexant. APIC 2018 Industry

PETROCHEMICAL 4.0

The role of digitization for the

petrochemical industry

Lee FaggPrincipal

Nexant

Thailand

The role of digitization for the

petrochemical industry

Petrochemical 4.0

Lee Fagg

▪What is Industry 4.0

▪How will it impact petrochemical industry

▪What to expect next

Agenda

lfagg_Nexant. APIC 2018

What is industry 4.0?

Since APIC 2006 (held in Bangkok) the world has changed dramatically

and rapidly due to better connectivity


75

7 4 2 0.080

20

40

60

80

Tim

e ye

ars

Time elapsed to reach 100 million users Products & brands not available in 2006

An overview of industry transition covering the different “revolutions”

or step changes


Industry 1.0 Industry 2.0 Industry 3.0 Industry 4.0

1784

The first industrial

revolution mechanized

production using water

and steam

1870

The second industrial

revolution introduced

mass production using

electrical power

1969

The third industrial

revolution was a digital

revolution using robotics

and IT to automate

production

Now

The fourth industrial

revolution utilizes cyber

physical systems to

communicate to one

another using the internet.

The goal of Industry 4.0 is to produce intelligent products using intelligent methods and processes.

The concept of 4.0 is associated with the “physical-to-digital loop”


Capture signals and data from

the physical world to create a

digital record.

1. Physical to Digital

Exchange and enrichment of

information using advanced analytics

in real time on a continuous basis

2. Digital to Digital

Apply algorithms and automation to generate

actions and changes in the physical world.

3. Digital to Physical

Physical Digital

1

2

3

Connected sensors Big data Predictive analysis

Key levers required to enable 4.0

Example of how 4.0 and the application of sensors can impact businesses


Actuation of motor.

Operation based on

external inputs.

Industry 3.0:

Motor can now sense the “precise”

cargo weight in “real time”.

Providing greater accuracy

Industry 4.0:

+

Advantages achieved utilizing Industry 4.0

▪ 3D models are created in real time allowing faster and more accurate freight

loading across the vessel.

▪ Optimised weight balancing leads to greater fuel efficiency this has been

estimated at approximately $1000 per day for medium sized vessels (5-8% fuel

saving via container optimization).

▪ No need for detailed preplans for container loading.

Compared to the 3rd IR, the 4th IR will have relatively high impact at a

comparatively low replacement on equipment


100Replacement of

complete loom

necessary

10-20Little replacement

as tooling

equipment reused.

Only conveyor

belts needed

80-90High level of

replacement as

tooling equipment

was replaced by

machines

40-50Existing machines

are connected, only

partial replacement

of equipment

required

Industry 2.0Industry 1.0

Industry 3.0 Industry 4.0

Replacement of equipment (% of installed base)

Where the chemical industry will need to

invest

▪ Plant sensors

▪ Security/data security

▪ Training and reallocation of staff

What are the risks to the chemical industry

▪ Bad data

▪ Data security

▪ Network failures

Potential benefits of 4.0 to the chemical industry

Aspect Key objectives Transformational plays

Operations▪ Improve productivity

▪ Flexible manufacturing

▪ Reduce risks

Smart Manufacturing

▪ Predictive asset management: minimize downtime and maximize

utilization.

▪ Process management control: reduce waste and improve product quality

▪ Energy management: reduce energy costs via optimization and efficiency

▪ Safety management: Continuous monitoring on a real time basis

Supply Chain Planning

▪ Production planning and forecasting: monitoring of demand trends across

the value chain.Business Growth

▪ Add incremental

revenue

▪ Generate new revenue

Smart Products & Services

▪ Forward integration of business models into customer operations across

the value chain. Leading to better decision making and resource

allocation.

4.0 has the potential to contribute to both operational and commercial side

of the chemical business


4.0 will lead to an increased emphasis on value chain integration

Crude Oil Refinery CrackerPolymer

ProducerProcessor OEM

Branded

Seller

Increasing Impact of Industry 4.0

Planning

Manufacturing LogisticsPurchasing

Impact of 4.0 across the value chain

▪ The goal of creating a Smart Factory is characterized by adaptability, resource efficiency and ergonomics.

▪ Additionally, integration of customers and partners in value processes.

▪ The impact of 4.0 will be greatest between OEMs, their suppliers and their customers.

▪ Increased value chain integration of the chemicals industry is also expected to occur


Automotive Value Chain

4.0 provides clears benefits to the automotive industry due to the

complexity and scale of the value chain


Supply Chain Product SupportManufacture

Tier III Tier II Tier I Sales, delivery & ServiceCKD OEM Parts Development

Body Shop

Paint Shop

Final Assembly

Engines

Axels

Gear Box

Styling &

engineering.

Design, testing and

validation

Opportunities for direct production cost savings will be associated with

other plant running costs


Utilities24%

Labour11%

Maintenance25%

Indirect Costs40%

0.0

0.5

1.0

1.5

2.0

Indirect Costs Maintenance Labour Utilities

Mill

ion

US

dol

lars

per

ann

um

Cost Distribution for conventional methanol complex ($mn)

Other Costs24%

Raw Materials

76%

Estimated cost savings conventional methanol complex ($mn)

Annual cost savings

estimated at between

5-30%

Companies with expansive diversified manufacturing footprints have the

potential to make significant cost savings with 4.0


Overview of BASF’s major production sites

Advantages targeted utilizing 4.0

▪ Centralized control for all sites.

▪ Greater production optimization across

entire business

▪ Optimization of working capital

▪ Improved productivity and reduced

waste.

▪ Improved safety.

▪ Selective value chain integration with

key customers

Real time, automated production optimization across multiple sites is now

a realistic goal for the chemical industry


Site 1

Site 2

Site 3

Customer 1

Customer 2

Customer 3

Impact of 4.0 across different

sites and value chains

▪ Stage 1 – single sites are

optimized further by using

sensors across different

production units across the site.

▪ Stage 2 – multiple sites can be

linked to extend optimization

between sites – better inventory

controls (real time) and

opportunities to synchronize

turnaround schedules

▪ Stage 3 – connectivity with

customers. This will be highly

beneficial for polymer products

with various grade types being

produced by single plants –

therefore further optimization

benefits are achievable.

What to expect next

4.0 will potentially improve our ability to predict future markets


“A good hockey player plays

where the puck is. A great

hockey player plays where the

puck is going to be”.

Wayne Gretzky

Data has immense value and is being described now as the new gold


Valu

e

Machine Learning

Difficulty

What

happened?

Static Data

Flow Data

Behavioral

Data

Company’s P&L

Trade statistics

Transaction Data

Market Data

Utilities Telecoms

Transport Payment

Social Media

What actions to take?

Prescriptive

Analytics

Descriptive

Analytics

Why did it

happen?

Diagnostic

Analytics

What will

happen?

Predictive

Analytics

The evolution of data analysis

Example of “behavioral data” from the ride sharing industry


• Leading tyre companies are aware of the impact of ride sharing and its potential to disrupt markets further longer term.

• However these companies are able to use the data available to better plan future investment decisions within their business.

• With the introduction of tyre sensors more real time data is becoming available, e.g. millage tracking, tyre condition etc., thus

enabling better forecasting on future market trends across different markets.

Developing trends

• Fewer cars being used on

the road e.g. 3 journeys

being reduced to 1 journey

• Less congestion, less

pollution.

• Less energy consumption,

less miles driven.

Impact to petrochemicals

• Lower demand for tyres

• Lower demand for synthetic

rubbers (SBR, PBR IIR etc.)

• Less demand for butadiene.

Ride Sharing

• Concept: multiple customers

sharing taxi services to

complete the same journeys.

• Interface: smart phone

technology using real time data.

• Data: total miles driven, routing,

frequency, journey duration,

customer profiles etc.

4.0 has some potential to reduce market volatility however various

unpredictable components will continue to disrupt markets


Nothing travels faster than the speed of light

– except bad news!

Some final thoughts


Nexant, Inc.

San Francisco

New York

Houston

Washington

London

Bahrain

Singapore

Bangkok

Shanghai

Kuala Lumpur

www.nexant.com

22nd Floor, Rasa Tower I,

555 Phahonyothin Road,

Kwaeng Chatuchak,

Khet Chatuchak,

Bangkok 10900 Thailand

Telephone: +662 793 4600

Facsimile: +662 937 0144

www.nexant.com

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PETROCHEMICAL 4.0 The role of digitization for the ... · An overview of industry transition covering the different “revolutions” or step changes lfagg_Nexant. APIC 2018 Industry